Sunday, 3 February 2013

If you pay peanuts you get apathy.

Workers in the UK are producing 2.6% less now than they were in 2008 according to a report published by the Institute of Fiscal Studies (IFS). The report cites as causes low wages, a lack of investment in businesses and the misallocation of capital.

Other research suggests that the drop in productivity is due to labour hoarding, the demise of the financial sector and changes to the composition of the workforce. The IFS disagrees with these conclusions, but where would be the fun in experts agreeing with each other?

Anyway everyone agrees that workers in the UK produce 12.8% less now that they would if pre-recession levels of growth had been maintained. Not good for the GDP I suppose, but at least more people have kept their jobs during this recession that previous ones.

Helen Miller, a researcher for the IFS told that the government appears ‘to have learnt from some of the great mistakes of the 1980’s’ and that the benefit system was ‘doing a much better job of ensuring people remain in touch with the labour market.’ If you mean strong arming graduates into taking jobs at Poundland I suppose she’s right.

Actually you don’t need a report from the IFS or anyone else to know that if you pay your workers peanuts they tend to be apathetic; you just need to have had a real job. Sadly this is something our elected representatives mostly haven’t had, unless you count a couple of years spent as a ‘consultant’ between Oxbridge and finding a safe seat.

The same is true when it comes to the inescapable fact that without imagination on the part of investors you don’t get the new businesses and products necessary to increase productivity and drive economic growth.

Just because a thing is as plain as the nose on your face doesn’t, of course, mean that the people in charge will actually notice it. The government prefers to focus its efforts on appeasing a charmed circle of ‘wealth creators’ whilst ignoring the one group without which no business or country can hope to prosper; the workers.

The only way to build a strong economy is through a fair distribution of wealth and opportunity , an idea from which mainstream politicians recoil in almost comical horror, leaving the shouters and placard wavers of the far left as the only people willing to talk about redistribution.

To his credit Ed Milliband had a half hearted go on the eve of the Labour conference prattling earnestly about ‘predistribution’, but what he was trying to say was so hopelessly buried in obscure jargon nobody could understand what he was wittering on about. Nick Clegg has also made gestures towards recognising the need for redistribution talking about the need for a ‘John Lewis’ economy where workers have a stake in the success of businesses, but lacks the influence and the political courage necessary to turn a noble aspiration into a workable policy.

As for the Tories, they daren’t so much as think about redistribution, even though a workable case can be made for it from a right as well as a left wing perspective, for fear of a disapproving Thatcher shaped shadow blocking out the sun. The closest they have come is suggesting that workers might be given free shares in return for abandoning their employment rights; a total non-starter.

In place of the eminently sensible idea that the only way to get sustainable growth is through crating a situation where people work together and the rewards are shared out fairly we get thinking of the sort that once convinced people the earth was flat. A misplaced faith in the power of the market to solve every problem and a shameful timidity when it comes to investing in research and development combined with a mad belief that changing you mind to reflect changed circumstances is a sign of weakness.

Whilst this sort of thinking is prevalent we will never get sustained growth and will see our society grow more unequal and brutal by the year. Every one of the ‘great mistakes of the 1980’s’ is being repeated with an extra dollop of pain and chaos added on top.

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