Posted in Politics

Costing employment: regulation, high pay and redistribution

Costing employment: regulation, high pay and redistribution Posted on 23 November 2011Leave a comment

Shutters are shut, graffitti scrawled over the surface. Windows display vacant rooms. Old signs have letters falling off. It’s nearly Christmas, but the streets are empty – except at the pound shop, betting agencies, and thrift shops. This has become my journey to work – where the number of small businesses have diminished significantly just over the last six months.

In a study for the “independent” Centre of Policy Studies, Dominic Raab MP (Conservative)  has concluded that the main reason that small businesses sink is because there is too much legislation protecting the rights of workers, or in his words, “regulation”. His argument is that companies “waste” £112 billion on paperwork to comply with employment policy.

His solution (to name a few):

  • to make it easy for companies to fire employees after they have worked for 2 years;
  •  to cull dispute/unfair dismissal tribunals;
  • and in small businesses –  to remove minimum wage for under 21s, for flexible working regulation, for training requests (for time off).

In other words, make employment opportunities for women, youth and vulnerable simply impossible. Despite claiming quite the opposite. Poor working conditions, he argues, will bring about more jobs.

(The people on the left should be younger, browner and more female dominated)

This report comes out as the High Pay Commission publishes its final report, despite job losses to lower income earners. The average paperwork of the country per annum cannot quite match up to the multi-million packages that are offered to top managers – even when the company is not performing well. But it is not the actual amount that is staggering, but the pay ratio between the average pay and the pay of CEO of the company – often matching factors of 80 to 100! To put that in perspective – the company can employ 60 t0 70 average income staff for the amount they pay one man. Compare this to the 1979 to 1980 figures, where CEOs were paid only 13 to 15 times the average pay.

If that’s not shocking enough yet, various companies have tried to argue these inequalities away with supply and demand curves – including those who were bailed out by the tax payer. Despite a very long list of evidence showing how lowest paid workers (from slaves, to factory workers, to secretarial work) have been deprived of fair wages, and a wealth of knowledge to dispute the theories of absolute market analyses – low pay workers are still told that the reason they face unequal pay is their fault.

If Dominic Raab really wants jobs within the current economic system, the problem is not the regulation small businesses face, but that there is no financial support. People will only use their services when there is a thriving economy – and that can only happen when people have money to spend. If wealth is monopolised by those at the top of large companies, the chances of small businesses gaining access to it is small to none. However, should that money be either redistributed into the system (through increases in Corporate Tax, per se) and regulation on high pay, and invested into funds that are targeted to support smaller businesses and local services, employment opportunities can increase: 60-70 fold per top boss!

The real question is: does Dominic Raab want more jobs for people, or more leeway for companies to mistreat their workers? You know my answer.

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