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Are you afraid to pick up the phone?

Are you afraid to pick up the phone?.


Would Increasing the Mininum Wage close all “loopholes” and solve all problems

3 days after Miliband announced his intentions to close a “loophole” which allow employers to employ cheap (apparantly mostly foreign) workers at the expense of the great British worker, I am still no closer to understanding what the loophole is nor how the Man with the Unelectable Forehead proposes to close it.

Presumably he refers to “Swedish Derogation”, in effect an amendment to the Agency Workers Directive. The AWR guarantees agency workers who are employed by one company for 12 weeks or more the same rights as workers in the company they are contracted to. The Swedish Derogation put simply, allows employers to offer workers pay whilst not working in exchange for a waiver of the right to equal pay. Conditions as ever apply.

For a brief but effective overview see here:

So we can see that this is no “loophole”, “get-out clause”, choose your cliche, but a solid, if confusing piece of EU generated employment legislation, one which strikes me as burdensome to both workers and employers, though employers have the advantage by a short head. Does Labour thinks they can indeed find a loophole in the loophole and get out of Swedish Derogation? I’d be delighted to know what they propose. Swedish Derogation has already been tested and found not wanting with regard to a significant arena for interpretation, namely whether it applied to new hires or long term temps.
In a tribunal back in January last year, a tribunal found that it DID apply to long term temps. For a surprisingly readable account the following is excellent:

It’s worth noting that this first test case did not feature low paid immigrants in food factories, but well paid tanker drivers who had in some cases had been doing the job for years, albeit at 70p an hour less than than the permanent drivers.

This is not to say that the impact of Swedish Derogation will not most keenly be felt by those at the pointy end of the labour market, but to assert that this means employers can cut wages to indigenous British workers by employing immigrants is not merely misleading but technically incorrect. It is also a disappointingly disingenuous piece of populism.

Furthermore it seems to obvious to point out that should employers want to avoid AWR altogether then they simply have to ensure that they don’t hang onto them for longer than 12 weeks. Given the competition for jobs in the unskilled sector this shouldn’t be a problem. Anecdotal evidence locally would indicate this practice is not unknown.

Whatever the fact is that the use of temporary workers is increasing and that, as far as my crude research and intelligence-gathering can determine, most employers are quite happy to go with AWR. Also the idea that temporary work is exclusively the province of low-paid occupations can be blown apart by looking at very recent stats from the Office of National Statistics, which shows the increased use of temporary workers being used across the board. Many temporary workers are also happy to work like this.

So  there you have it, not only is a Party leader talking carelessly but he is unlikely to be able to deliver what he promises – finding some way of re-interpreting and implementing that re-interpretation is frankly, not only impossible, but would not I believe, help with the problem of low wages. This is the core problem for not only many temporary workers but millions of others and addressing it removes the need for ineffectual tinkering with complex and burdensome legislation at a stroke.

I am not alone in thinking the solution to this is to bang the minimum wage up to a decent level. I would guess that 7.25 is about right, above the “living wage” touted elsewhere. The difference between the living wage and any increase in the minimum wage is not merely being money, but that the minimum wage is laid down in law. The effects of this could, I would suggest be immediate and significant and any potential negatives insignificant.

The most obvious and easy to predict would be an increase in consumer spending, whilst also important would be a reduction in ruinous short term borrowing and a reduction in the payment of tax credits.

The possibility that such an increase in wages could result in job losses could be discounted, indeed I think that it could result in a further reduction in the claimant count as the differential between benefits and wages was narrowed.

Whatever, if there is a living wage or beyond guaranteed, the need to beggar about with interpretations of EU legislation will be eliminated and two fundamental problems of any economy will be addressed to some degree, namely poverty and demand.

Meanwhile Miliband is merely “campaigning” and, unless I have interpreted his speech on the Living Wage incorrectly, there is no proposal should (hah!) he be elected, to increase the minimum wage. It would all be about “incentives”

Shame really. As Miliband himself reports the living wage is supported by business who, like myself are hardly supporters of socialism. Making the living wage, or above it the minimum wage should be something at least the Labour party should commit to. Who knows, it might even make them electable.

Who Ate All the Votes? Ed Balls hands out pies at Asda oop north

There you have it a leading opposition socialist politician doling out food with the co-operatiion of a multinational corporation. Is the indication of the future direction of campaigning?

As I said on Twitter – there has to be a better way of buying votes but not a cheaper one for sure.

Having said that Balls doesn’t have a trading standards issue with his name and is one of the few frontline Labour lot who has something to say and the personality to say it.

Will Miliband be doing something similar down south with Waitrose? Image

Meanwhile anyone who wants my vote, endorsement, anything really, merely has to send the food to my home address.


Grey Doubt – Is there really a future for the state pension at all?

The recent proposal to raise the state pension age to 70 has met with a predictably mixed response varying from those who regard it as outrageous to those who regard it as sensible. But is it the state pension itself which is heading for retirement?

First of all let’s point out that what I refer to as the Worldwide Liberal Democratic Project has at it’s core the reduction of the role of and dependency on, the state. In the UK a key example is the “Workplace Pension” scheme. This is in it’s early days and may be regarded as a live experiment, so expect much development in the years to come.

Info on Workplace Pensions here

Whatever happens though my guess is that this scheme will, in some form or by another name, replace the state pension as we know it, by forcing as it does, employers and workers to contribute to a scheme in which they have some choice (in terms of where they invest and when they take the benefits) rather than by taking money off everyone and then handing it out at a flat rate to those who are over a certain age regardless. This direct taxation approach creates the so-called “dependency ratio” of those who are working and paying taxes to those who have retired and are (generally) not paying taxes. Predictions are that the ratio will increase substantially over the coming decades, though the UK is not in a particularly bad position compared to other developed countries.

The state pension, being fed by taxation rather than drawing from an invested state pension fund, is thus a growing liability and it is understandable that the government should develop a scheme which transfers the risk to the individual worker and business. However this is, I would suggest, merely changing the form of dependency, not removing it and however pensions are paid, the cost will become ever greater to those who are paying it, whether through compulsory private contributions or rather more old-fashioned forms of taxation.

Indeed, when and if the Workplace Pension scheme replaces the state pension then there will still be a need to provide for those who have worked insufficiently to have amassed a worthwhile pension, but again, my guess is, such provision would be made not by direct taxation but by a levy on scheme providers. So, those who have, will still pay for those who have not, one of a civilised and prosperous society’s Great Unavoidables.

Meanwhile the state pension as we know it remains one of the two pillars of the modern British state, along with the NHS, and while successive governments claim they worship and believe in them, they steadily chip away at their base.

But speculate as one might about the future the facts about the present, and what they mean for that future make interesting reading.

First of all, the majority (77%) of pensioners have some either a personal or occupational pension. However the proportion of those currently working and accruing some kind of non-state pension is a minority (under 40%)

Check the info from the Pensions Policy Institute

Secondly the average retirement age whilst it is still way short of 70 is increasing

Here’s what the Office of National Statistics has to say

Their comments on demographic inequalities whilst a statement of the obvious are nevertheless significant, perhaps of the greatest sigificance in all of this.

Then there’s the question of future employment and wage levels. Would anybody be reckless enough to suggest where we will be in 30 years time? And what work will be available to those who are older and may suffer some decline in their working capacity? I’d like to be positive, but optimism in economics is the ultimate recklessness, and it may be worth pointing out that the author is “between jobs” at 57 and has taken over a year and substantial volumes of applications before being shortlisted this week.

Whatever, the future seems inevitably one of more people needing retirement provision. If we are to keep the state pension at it’s current level, let alone raise it to a decent level, this will mean a rise in taxation to accomodate it. This is something the Amateur Analyst don’t see any government doing or even mentioning, hence the current distraction technique of the recent age-rise proposals and the onward march of Workplace Pensions.

And don’t forget we haven’t even mentioned the other costs and problems associated with an ageing population!

You’ll excuse me finishing this post in a hurry but I have to go to the toilet…