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How the state promotes unemployment

    The language is appropriately Orwellian. Under the general heading of Employment Safeguards, Westminster churns out rules which any honest person would label Employment Endangerment. Government has made providing jobs yet another hazard for the businessman. He has become all too well aware of the threat. There is always liable to be some clause in the veritable tsunami of legislation which enables the militant employee to haul his employer before a tribunal or a court. Unnaturally high unemployment is the inevitable result. Can the average employer drowning in paper work already even understand the rules he is supposed to follow for every new recruit? Does he appreciate the perils of Section 147 of the Equality Act 2010 or Regulation 10 of the Fixed Term Employees (Less Favourable Treatment) Regulation 2002 or the literally innumerable other items he has to study before he gets down to running the business? Probably not. He will opt for external lawyers or legally trained in house staff – all expensive and a diversion of effort.

    Or he might say, hang it, can’t we find some way of automating the job – whatever the price? The joy of machinery is that it does not answer back, cannot belong to a union, go on strike or grandstand about working conditions or unsocial hours. If government makes people too complicated or too expensive, automation takes on whole new attraction. There may be nothing new about mechanisation or automation. It has been with us ever since the start of the industrial revolution. And has so far been handled successfully. But that was before governments set out over the last twenty years to make employing people as complicated and expensive as possible – in the name of ‘safeguards’ or with the thought that those in employment command more votes than the jobless.

    The minimum wage may be the most obvious problem for the employer trying to drive down his costs. But it is far from the only one. In any case, a whole new factor has entered into the businessman’s life – low interest rates. His only resources are capital and labour. He tilts from one to the according to their cost – or in this case according to whatever poses the least hazard.

    But here we confront a myth about the government policy for curing unemployment. The solution is officially seen in lower interest rates, as low as possible for as long as possible. The more economic growth the better our unemployment figures will be, or so our masters claim. They have got the argument back to front. Our businessman is not interested in how the unemployment figures assist the government of the day in cultivating more votes. He takes a sternly unsentimental view of relative costs. And if borrowing is cheap – as we are promised it will remain for a long time – he looks to employing more capital rather than more labour. Even in such straightforward businesses as supermarkets technology advances relentlessly. So it becomes possible for the economy to show a reassuring level of growth without any diminution in the unemployment level, even with an increase.

    The message does not seem to have got through, least of all to London Mayor Boris Johnson, tipped as a possible successor to the Tory Leadership. Johnson urges a rise in the minimum wage. He comes in a pattern familiar to the businessman – another politician who thinks wealth can be created by the stroke of the pen, especially if the pen is in his hands. 

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