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Stride forward to insecurity

Economic view
When Kenneth Clarke famously "misspoke" last week, in suggesting that the British may not enjoy economic happiness for years to come, he apparently did no service to his reputation as a cool political operator. But he did perform a service to the public. He promoted a highly appropriate debate on economic contentment.

It is a debate that needs to get away from the banalities of the "feel- good factor" - interest rates, taxes and the fate of the Government - and into the changing nature of the jobs market. Are we really entering an age of job insecurity? And if we are, what practical steps should we take to deal with it?

The public believes that employers are becoming more promiscuous. It is widely thought that they prefer to do business through short-term contracts than through long-term stable relationships in which employer and employee offer commitment and allegience to each other.

The truth on this matter is harder to ascertain. Figures are not published on it very often, but those that are available offer limited support for the public's perception. The number of "temporary" jobs in Britain, for example, rose from 7 per cent of the total in 1985 to 7.3 per cent of the total last year, according to the Labour Force Survey. But flexible Britain - which ought to be the European country most subject to the winds of international competition - had a smaller temporary sector than France, Germany, Italy or Spain.

Of course, the number of temporary workers does not provide a good measure of labour force casualisation. One explanation for the low British propensity to hire temps could be that permanent employees are now so like temps that no one feels a need to employ the real thing any more. Evidence for casualisation comes from more regulated labour markets, where the employment of temporary workers can be an important method of avoiding regulation, and has grown over the last decade.

Moreover, job tenures in Britain have shortened in the last decade. Self-employment - which sometimes really amounts to casual employment - has grown too. And even if the changes do not appear large enough to justify Mr Clarke's disquiet, remember that the recession had the effect of wiping out short-term jobs and thus perversely increasing the apparent tenure of those in work.

In summary, change is afoot in the labour market, but it should not be exaggerated.

Golden era

The same can be said for the consequences of increased job insecurity. So far, the view that the public can never be happy in a world where jobs come and go has gone largely unchallenged. The golden era has gone, it is assumed, and life will be miserable from now on.

In fact, if we stopped reminiscing for a bit, we might think about how we can generate more economic contentment in a world where people change job more frequently.

In a normal year the labour market should typically offer people a menu of job options - some with more security, others with more pay. Employers who do not have to carry expensive staff when there is nothing for them to do may be willing to offer more money for their services. To some extent, the public will decide for themselves whether they want to take their remuneration in the form of cash now or a more certain job in the quiet moments later.

Personal financial management is also an issue, particularly for people with uncertain income. Variability does incur genuine economic costs for people. But this is an issue the self-employed have always lived with. To some extent insurance is an answer, and to some extent people must simply live with a slightly larger stock of personal reserves. Either way, contentment is not necessarily undermined. The self-employed are a hard-working and vulnerable group, but probably have a more fulfilling economic life than many of the employed. The challenge of insecurity breeds pride, a sense of mission and a sense of personal ownership.

Then there are also issues for employers. Just how do you motivate your staff when they do not perceive themselves to have an emotional and financial stake in the firm? Co-operation usually develops most effectively between people who know they will be encountering each other on a repeated basis. It is the fact that I may want your goodwill tomorrow that induces me to co-operate with you today. But what if there is no tomorrow in the relationship? Managers already know that employees who have handed in their notice are more difficult to control than those who have not. But what if most employees permanently felt as though their employment could end imminently?

There are techniques to minimise the problem of short-termism if only we devoted more effort to developing them. Most important of all - and quite contrary to the impression many managers have - are good personal and personable relationships. Civility and familiarity give casualised employees a stake in their work; they are something to lose should they let you down. They foster the attitudes and involvement of long-term relationships, with some of the corresponding motivation.