Employment

The burden of higher taxation must fall on those with ‘the broadest shoulders’, says the Prime Minister, and City folks assume that means yet more raids on banks. Soft targets because no one loves them, they have also profited from higher interest rates. But they’re already subject to a surcharge on corporation tax and an extra levy on the size of their balance sheets – one effect of which has been to shrink their appetite for the corporate lending which is essential for Labour’s growth ambitions. Loans to small- and medium-sized enterprises fell for five successive quarters to the end of last year and the level was still lower in Q1 2024 than in Q3 2022.

Bernie Sanders is the bottomless cup of bad ideas. He keeps refilling it. Take his latest venti, a law that says everybody gets to work thirty-two hours for forty hours pay. That’s a magical 25 percent pay increase. His next trick is to pull free steak dinners out of a hat. What do you think would actually happen if such Bernie’s law were passed, enforced and found constitutional? (None of those would actually happen, of course.) The immediate effects would be another 25 percent price increase for labor-intensive products, a huge burden on low-income consumers and an additional incentive to replace more expensive workers with machines and computers.

America’s post-pandemic employment picture is an unsettling paradox. On the one hand, job totals are finally back above pre-pandemic highs — and unemployment rates skirt fifty-year lows. But at the same time, overall work rates are lower than they have been since the 1980s — and millions of workers who dropped out of the labor force during the Covid-19 lockdowns have yet to return. A peacetime labor shortage has erupted, yet vast numbers of men and women are still sitting on the sidelines of the economy. America is renowned for its work ethic — and rightly so. The average worker in the United States clocks more hours each year than those in Canada, Australia, Western Europe and now even Japan. But those are the work patterns of US men and women holding down a job.

Is low unemployment causing us more problems than we realise? The suggestion might seem absurd, offensive even. It’s reminiscent of the days of Mrs Thatcher’s supposedly ‘cruel’ monetarism, when we had three million unemployed. Some on the fringes liked to argue that unemployment was good for the economy because it made people work harder, being fearful for their jobs. Mass redundancies would not, of course, help the economy now or at any other time. If a million people were to lose their jobs, as happened in the early 1980s, that would be a million households suffering a collapse in the spending power. As well as a human tragedy, it would be an economic one, too. Many graduates are not doing graduate-level jobs But then who mentioned anyone losing their jobs?

Brexit, as Boris reminded us many times during the referendum campaign, would give Britain the power to make its own laws, unencumbered by constant directives from the European Commission. But it will take a long while to disentangle UK laws from the influence of the EU, as the government may be about to discover in its attempt to punish P&O ferries for sacking 800 workers and replacing them with agency staff. It will take a long while to disentangle UK laws from the influence of the EU At last week’s Prime Minister’s Questions, Johnson declared that P&O had contravened section 194 of the Trade Union and Labour Relations Act 1992, which required employers to give the government 45 days’ notice of any intention to make more than 100 workers redundant.

It goes without saying that sacking your entire staff via a ten-minute video call while their cheaper, foreign replacements sit outside in buses is a pretty disgusting way to treat people. True, P&O’s cross-Channel operation has been rendered unprofitable as a result of Covid, but this wasn’t a case of a headcount reduction or management urging pay restraint until the company can get back on its feet again. It was a wholesale dismissal of workers, plenty of whom will have had decades of service. No wonder some refused to leave their ships. How ironic, however, that so many of the biggest critics of P&O this week are ardent Remainers.

I’ve had the opportunity recently to take part in wage-rise discussions for several small entities in which I’m involved. The conversation has been much the same everywhere. ‘How about we offer them 3 per cent?’ ‘But that’s less than current inflation and they didn’t have a rise when they were on furlough last year.’ ‘So how about 5 per cent?’ ‘Safer to say 7, but they’d still be worse off than before the pandemic. And they’ll get 10 per cent or better if they move anywhere else.’ All of which was perfectly confirmed by official figures this week: annual pay settlements running at 3.7 per cent but (because so many people having been moving jobs for better wages) average pay up by 6.