One of the largest employers and subcontractors of bricklayers said privately the other day that the average pay of one of his skilled craftsmen today was back at the level of 15 years ago. This of course reflects the weak state of the housebuilding market, though it is less weak than it appears at first sight because the detached three-bedroom houses for the middle-aged market, which are the main thing being built at the moment, use a lot more bricks than the high-rise young people’s flats so popular five years ago.
It is also, however, a practical example of Britain’s “flexible” labour force — the fact that hiring, firing and pay cutting are much easier here than in the rest of Europe — and the reality which lies behind the euphemism.
A fair number of ministers seem to believe our future prosperity requires us to be an even lower-wage economy. Vince Cable may have seen off the Beecroft proposals, which would have made hiring and firing even easier. But George Osborne seems determined to bring them in by the back door by persuading employees to swap their employment rights in return for shares.
The merits of this can be debated elsewhere. What struck me this week was the leak of a report which said that employees in this country were the most prone in Europe to depression. The diagnosis rate for the condition here was 26 per cent, whereas in Italy, the lowest country, it was 11 per cent.
According to the compilers of the report, the European Depression Association, the overall cost to the European economy in 2010 was estimated at €92bn (£74bn). This comes in part from lost productivity caused by sufferers being off work typically for a month or so — longer here than elsewhere, incidentally. But it also reflects people concealing or suppressing their symptoms from their colleagues, staying at work but under-performing. It did not say what the UK’s share of this financial cost was, but given that we are the second-largest economy after Europe, we must be looking at quite a few billion.
My observation simply is this. Government should be concerned about the total costs to the economy of its policies. Not just the easy-to-calculate, direct costs, but the externalities, which is economist jargon for the costs which fall in society as a whole rather than on a specific business.
It would be interesting to know how much of the extra depression in this country is a result of the insecurity caused by our flexible labour market, and whether taking this into account “flexibility” is really the advantage it is cracked up to be. And are we really going to secure our economic future by becoming even more “flexible?”
A long-overdue rallying call in favour of Europe
On Wednesday, the gilded surroundings of the Mansion House played host to the annual dinner of TheCityUK, the body whose job it is to promote the British financial services industry at home and abroad.
There was a high turnout, a reflection, perhaps, of the concern among insurers, fund managers and advisers that their reputation is being tarnished by the backlash against banking, so they had better support the body whose job it is to do something about it.
The highlight of the evening was the speech by the body’s incoming chairman, Gerry Grimstone, for the past few years chairman of Standard Life. What was special was that he steered clear of the usual bland platitudes and self-congratulation which are the typical fare on these occasions to deliver a rousing call to arms to the City to come out in full and open support of the European Union and Britain’s continuing place at the heart of it.
The Mansion House has not heard a speech like it for 10 years or more — not since Lord Levene was Lord Mayor and used to speak passionately on behalf of Europe and the euro. In recent times those who profess to lead the City steer well clear of politics, and it has taken Mr Grimstone to remind them that politics will not steer clear of them. Clearly there are signs of panic in the upper circles as they realise that the Government’s persistent sops to its extremist backbenchers have set us on a slippery slope towards a referendum, where the outcome is hugely uncertain but where for the first time there must be a serious possibility of a “no” vote.
Mr Grimstone clearly thinks this would be a disaster and has the courage to say so. He told his audience it was absurd to think the UK financial services sector had a future cut off from Europe, or indeed that Europe would be better off without London as its financial centre. So City firms and City figures needed to stand up and articulate this fundamental truth, rather than indulge as many do in a romantic but dangerous flirtation with UKIP.
It was a brave performance, and overdue.
Darling could be the man to captain the Bank
The other talking point at Mansion House was speculation about who would be the next Governor of the Bank of England, the City’s favourite, Deputy Governor Paul Tucker, or his strongest rival, the FSA chairman Lord Turner.
“Neither!” remarked one well-connected City veteran. “My money is on Alistair Darling.”
His logic was that with all the extra powers now dumped on the Bank the job is far too big for one person. What it needs is a strong skilled chair and three specialist deputies; one for prudential regulation of the banking system, one for monetary policy and one for insurance and non-banking supervision. Mr Darling, though obviously of the left, is much more highly thought of in the City than the current Chancellor and could be just the right person to chair.
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