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August 15, 2005

Hattersley on Labour.

It takes a certain form of blindness to make this sort of statement:

There are two views about the propriety of the way in which the Gate Gourmet employees - at the heart of the Heathrow disruption - behaved. One is that, by "withdrawing their labour" before a strike ballot had been called, they broke the law. The other is that their canteen "sit-in" was a legitimate protest against the company's unlawful failure to tell them the truth about its plan to replace most of its full-time staff with casual labour. It seems unlikely that many of the unhappy families who slept on the floor of the departure lounge last Thursday night agonised unduly about the legal niceties of the dispute. However, some of them must have spent the weekend wondering if the unregulated labour market is such a good idea after all.

Unregulated labour market? Roy, you’ve just told us that if they did this, then it was legal, and then if they did that, it was not. That does appear, on the face of it, to be evidence that there is regulation of the labour market. And this is simply wrong:

But, despite all those advances, the sort of treatment that the Heathrow Gate Gourmet workers endured last week - dismissed on the most dubious of pretexts, with the announcement made through a bullhorn - is less common in Christian Democrat Europe than it is in New Labour Britain.

That is not because the employment protocols of the Maastricht social chapter offer explicit help to people such as the Gate Gourmet employees. It is because the ethos of labour relations in continental Europe makes it virtually inconceivable that a firm working for a great national company would treat its workforce in that way. The worst American habits have not yet infected the management of industry and commerce in continental Europe.

Formal workers in the formal economy have greater job protections, yes. And there’s a huge swathe of the workforce that cannot find work in that formal economy and so are either left on the unemployment scrapheap or working on short term contracts or illegally in the grey and black markets....with absolutely no protections, not even that their agreed wages will be paid. Ask the 25% of French youth, the 50% of their immigrant population, which system they would prefer? Their current inability to get any type of work or the UK system, with work?

The Continental (or Christian /Social Democrat if you prefer) system is great if you’re one of those on the inside looking out. Less good if you’re one of those that doesn’t qualify for those protections....and the more protections there are the less will qualify for them, of course. The UK system is better for you if you’re actually one of the unskilled poor, for whatever the iniquities of our labour law, one can at least actually find a job. And unfortunately, the evidence seems to be that you cannot actually combine the two systems, extensive legislation about the rights of the workers, the benefits that must be paid to them, with all of those who wish to work actually being able to find jobs. This isn’t a surprising finding. Raising the price of something above its market clearing level means there will be an unused surplus of it.

So we actually come to an unsettling conclusion for My Noble Lord Hattersley. He’s supposed to be motivated by what is good for the poor (good socialist that he is). Which appears to mean lighter regulation of the labour market.

August 15, 2005 in Politics | Permalink


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RH continues his pontificating from somewhere out there in the middle of nowheresville. He will score points with anti-globalisers and various fringe groups such as the left of the Labour Party.

More regulation would mean that Gate Gourmet would probably just close if it was uncompetitive rather than trying to survive through lay offs. This is because lay offs would not be possible, they would be uncompetitive as a supplier or would be facing balance sheet meltdown.

One of the reasons that the 'christian social democrats' et al are in such economic stagnation is because their market economies are too tied up in state regulation and inflexible labour markets.

No doubt Gate Gourmet could have done better as an employer and could have treated employees more fairly, and I pity the employees - but in the UK's more open labour market, there are more opportunities for them to get further work.

Gordon Brown (who will make a crap Prime Minister by the way) did really well to push through New Deal and tax reform I think to help folks marginally in the labour market to push them back in. Tax credits didn't work well in practice. But I think there's a legacy that has well established "work first" active labour market policy that is enabling of the market, rather than tying it up in regulation.

Anyhow a short answer is that Roy Hattersley is talking a load of gubbins. As Tim points out who wants big unemployment amongst youth and ethnic minorities as found in France and Germany?

Who would sign up for that? its a model which serves the middle class state apparatchiks (such as myself) well, and is deeply entrenched in France and Germany.

Posted by: angry economist | Aug 15, 2005 9:55:06 AM

Well, be fair. A job you might lose is much worse than no job at all, because it introduces the element of uncertainty.

Posted by: Professor Froward | Aug 15, 2005 5:00:38 PM