Tag Archives: wealth

Quality of Life (2) – work and unemployment

This is the continuation of my series of posts in response to the Lib Dems’ Quality of Life consulation paper, the first of which can be found here.

Taking the next three questions in one go next:

6. Should there be compulsory limits to working hours? Can employees make a genuinely free choice to opt-out of the European working time directive? Is it liberal to restrict how much we work?

7. Would a more flexible approach to working make a difference to people’s happiness? How would this be achieved without creating unnecessary bureaucracy?

8. Should we incentivise part-time jobs through NI or other employment tax breaks, especially to encourage employers to create senior part-time roles?

I have to admit that I don’t have much of a problem with the current working time directive (i.e. 48 hours). Most countries have worked perfectly well without the opt-out and the 17-week reference period stops the rule from being silly. There might be a few areas where we might allow for some exemptions but the current blanket opt-out option, in practice, seems as meaningless as the rules of shop workers working Sunday shifts (I worked in a shop full time when these rules were introduced. I was formally told I had the right to opt out but it was made very clear that anyone who did would be looked at unfavourably in the future). If a compromise could be brought forward between the opt-out and compulsory options I’d be open-minded about it, and I would certainly be sceptical about a France-style 35 hour week, but I would have little problem with the current European law.

With all that said, I do think there is a lot we could do to make it easier for both employers and employees. Fundamentally, we tax work far too much in this country while leaving wealth almost untouched. While this is the case there will always be pressure on employers to employ fewer people for more hours (as opposed to more people for less hours) and pressure on staff to work whatever hours they can. The right to flexible working is all very well, but are making it has hard as possible for people to be flexible. A liberal government would consider changing this to be a priority. The poor record of the Lib Dems in this respect has been deeply disappointing.

The party’s move towards lifting the poorest paid out of taxation is a long overdue step in the right direction (it should be noted that this was party policy in 1997) but I would like to see us go much further.

The 1992 Lib Dem manifesto, which more than anything else is the document which made me join the party, contained a commitment to a modest citizen’s income. I believe we should revisit this policy.

How would all this be paid for? The only way I can conceive is by establishing a national Land Value Tax, something which has been Lib Dem policy for a long time but which we have been very lukewarm about in recent years. Instead of cravenly following public opinion on this one, it is time we started to make the case for a fundamental shift in the burden of taxation. I really do believe it is an argument that can be won.

9. Are they ways we can promote greater employee responsibility for their work, and/or involvement in deciding how they work? How could we encourage staff stake-holding?

All the evidence I’ve read – and personal experience – indicates that greater democracy in the workforce leads to a happier workforce and greater efficiency. It would almost certainly also help control out of control executive pay in a way that crude mechanisms such as a “maximum wage” could not.

Again, in the not so distant past the Lib Dems had much stronger policy on this and the time is right to rediscover our passion for “industrial democracy.” This means much more emphasis on obliging companies to consult their workforce, share ownership schemes and mutualism.

10. How could quality of life thinking shape our approach to education, training and career choices?

This is a huge topic and I am not an expert in education. I certainly think we need to broaden apprenticeship training in this country. A shift away from income taxes would encourage this, as would greater workplace democracy.

Vocational qualifications such as MBAs can be fearfully expensive. Some employers are better than others at helping staff cover the cost of these. A great many employers are simply too small. I certainly think there is a case for government subsidising these qualifications through small businesses and non-profit organisations.

11. Should we have more public holidays or increased holiday entitlements? Or even statutory education and training days where employees would be free to pursue skills related either to their current job or future employment prospects?

A few more public holidays would bring us up to the European average. I’m not convinced about the need for statutory training days as the need for these would vary enormously depending on the employee and employer.

12. Technological developments have changed the way we work and at times can contribute to unemployment as companies need fewer people to do the same work. Would it be better for wellbeing if we reversed this trend?

I didn’t realise Ned Ludd was on the working group! Technological developments certainly can lead to structural unemployment in the long term but if anything the experience of the past 250 years points in the opposite direction: we are working longer hours than ever and are able to afford a welfare state. Technology also creates new types of work and will continue to do so in exciting ways. The fact that fewer people are working themselves to death in factories and farms than in the past is a good thing.

With that said, it does bear repeating that while companies are free to make whatever capital investment they wish, labour costs come with a deadweight cost. We should be less concerned about technology putting people out of work and more concerned about ensuring that the two are put on a level playing field. Once again, this means taxing labour less.

13. How can we tackle the stigma of unemployment?

14. Should employment policy be refocused on creating a more flexible employment market with more active government intervention, like Denmark, where it is easier for the unemployed to find new work and consequently less necessary to have high job protection? How would this be achieved?

15. Can we better use unemployment as an opportunity for people to retrain and gain new skills?

Unemployment should carry a stigma and there are too many parts of the country where it doesn’t have enough of one. That isn’t to say we should ever write people off – quite the opposite.

Again, I think a shift away from taxes on labour would help increase the fluidity of the labour market (I know I sound like a stuck record here, but this is the problem with answering each question in turn). This, combined with a citizens’ income would reduce the disincentive within the benefits system to take on low paid work.

We also need to remove the barriers for internships and volunteer work. Currently in my experience the system all but discourages these by forcing people to do less than 16 hours a week and insisting on a paper trail. Yet such activity ought to be encouraged – even incentivised. We could even extend this to political parties: there are much worse things people could be doing with their time than actively working within their communities.

I don’t know enough about the Danish system. Since the working group is clearly looking at this model, it would have been useful to have an explanation, or at least a footnote for us to explore in more detail.

Nine wishes for 2009 #4: An end to “money for nothing”

I’ve spent days resisting blogging this wish because, quite frankly, I don’t think it will happen. But it certainly is a dearest wish, so it makes the cut.

What I mean by “money for nothing” is the tendency of the late 20th and early 21st century to look at everything as if it were capital to be exploited, and yet at the same time to think that capital doesn’t behave like capital any more. When the classical economists wrote about capital, they were, in the main talking about widgets – things you build. They can make you a lot of money but they always break, rust or wear out in the end, and then you have to buy new widgets. Stocks and shares were part ownership of big widgets, and ultimately behaved by the same laws.

(As an aside, my reading of Locke’s definition of “property” is that it informed and is essentially the same as the classical economist notion of “capital” – it is one of the reasons I despair about this modern vogue for rightwing libertarianism in which people invoke Locke only to insist that when he talked about “property” he was referring to everything you might happen to “own” even though it contradicts his whole argument about rights to “property” coming about due to self ownership.)

We’ve been moving away from that model for 200 years, but in the last two decades it accelerated. Everything, from homes to public services to loans, became capitalised. Intellectual property, at the same time, has become less like capital as the limitations of copyright get extended and patents become renewable (I ended 2007 by declaring the 21st century to be dominated by IP Wars – we ended 2008 with the government capitulating and agreeing to extend recording copyright). Speculation, speculation on speculation and even speculation on speculation on speculation has become a central part of our finance system. All talk about “value” – financial value never mind ethical or social value – has become lost.

I’m not convinced that much will happen to change. The Lib Dems’ Green New Deal is very welcome indeed, but we don’t appear to be saying very much to ensure that the economy changes course – we aren’t arguing for much more than a greener, kinder version of the status quo. Brown just seems to be firing off in entirely random directions and even though I’m not convinced that piling up the national debt is the big problem the Tories keep claiming it is, my mind does boggle how he can keep coming up with more and more spending commitments with no idea how he intends to pay for it all. As for the Tories themselves, well, they appear to have looked at Japan in the nineties and said to themselves “we’ll have some of that!” Having got us into this mess, dragging the rest of the political class in the mire with them, their new approach seems to simply be to wallow.

Like I say, I don’t expect this wish to be fulfilled. Yet strangely, almost every day I seem to hear a new person expressing it. Are we looking at a longer term shift in attitudes? Either way, we won’t know for sure by the end of 2009.

The Wintertons aren’t abusing the system – the system is the problem

So, let’s get this straight. Nicholas and Ann “ten a penny” Winterton have used the Commons’ Additional Costs Allowance to buy an expensive Westminster flat and, having bought it, have passed it onto a trust to which they now pay rent – via the Additional Costs Allowance.

Shocked? Horrified? Well, you should be, but not at the Wintertons. They are just taking advantage of a fundamentally flawed system. This trick is played by middle class families across the country on a daily basis – the Mail on Sunday commenter claiming that “One rule for all of us, another for MPs” could not be more wrong. And would it really be any less of a waste of taxpayers money if they had never used it to buy a property and instead enriched a private landlord, as a number of MPs self-consciously and piously do? In that respect I have to take issue with Dr Pack over at Lib Dem Voice: the system is most certainly not “reasonable enough.”

If MPs were serious about reform, they’d scrap the ACA and replace it with a trust which MPs could use to buy or subsidise accomodation. If that asset were ever realised, the equity purchased by the trust would simply revert to the trust. This is hardly revolutionary – it’s how the government’s own shared equity scheme for key workers operates. Instead of blowing £20,000 per MP every year, that money would be recycled every time an MP vacated their seat. Given the nature of the housing market, the taxpayer would probably end up making a tidy profit.

But of course, that would mean admitting that the wealth accrued from such investments is fundamentally unearned and a drain on the economy. MPs dare not admit that as it could be the thin end of the wedge. Next thing you know, people would start demanding we tax this unearned wealth in exchange for tax breaks elsewhere. Revolution!