IoD director general on the living wage, refugees, the latest ECJ ruling and trade unions

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Simon Walker Living Wage column

In this month’s column, Simon Walker discusses the living wage, the economic argument for welcoming refugees into the UK, an ECJ ruling on working time and the impact of trade unions on public services

The living wage

The IoD gave modest support to George Osborne’s budget proposal for a living wage, even though it will put up employers’ wage bills.

We took this approach reluctantly: free marketeers rightly chafe at government imposing any pay levels. The impact on struggling sectors such as retail, hospitality and care homes will be considerable.

But there is a wider consideration. Of course pay should be determined by the market, not the state: but the state has already skewed the market.

A consequence of Gordon Brown’s chancellorship was to increase the number of workers receiving tax credits from 400,000 to almost five million.

That’s almost one in five of all employees, and it cannot constitute the basis of a sustainable economy. A continuing dependence on government largesse can only exacerbate the trend to turn elections into a wage auction.

The living wage concept is far from perfect. It will dislodge workers over 25, to whom it applies, in favour of workers under 25 to whom it does not.

It will encourage moving rapidly to greater mechanisation and digitalisation at the expense of actual employment. We endorsed Osborne’s move as the lesser evil, and I still think it’s the right course.

Refugees welcome

Business leaders have been deeply moved by the refugee crisis so many of our members will welcome the government’s move for straightforward humanitarian reasons.

We also recognise that there is an economic rationale for bringing in refugees. Historically, victims of conflict – from the Huguenots to the Jews fleeing Nazi brutality, and refugees after the crushing of the 1956 Hungarian revolution – have, ultimately, made a valuable contribution to British society.

If one is an optimist, then welcoming into any community people willing to integrate and work hard to rebuild their lives will end up as an economic positive.

In a generation Britain may look back on refugees from Syria and applaud the dynamism and determination which they ended up adding to our society, as we do now the Ugandan Asians expelled by Idi Amin.

That is not the prime reason for a humanitarian gesture, but it may well amount to an additional benefit. Apple co-founder Steve Jobs, let us not forget, was the son of a Syrian immigrant.

Daft ECJ ruling

Sometimes the institutions of the European Union seem to be the EU’s own worst enemy. The European Court of Justice has ruled that time spent travelling from home to work should be classed as work in terms of the working time directive.

Its view flies in the face of a century of British practice at precisely the point business leaders are formulating their view on the EU referendum.

This daft judgement heaps scorn on the principle of subsidiarity and can only weaken UK corporate support for EU membership.

As employment lawyers point out, it is the equivalent of changing the speed limits while the driver is happily breezing along the motorway: whoops, you thought you were doing a legal 70mph, but the limit went down to 50mph as you drove.

Does the ECJ really operate on such a distant planet that is oblivious to the impact this imposition of alien practice will have on employer sentiment?

Stubborn BMA

Living wage, refugees and BMA ruling

We rightly castigate trade unions for creating chaos on London Underground in response to plans for all-night Tube services.

So let’s behave in the same way to that even more effective trade union, the British Medical Association, as it works to block proposals for seven-day hospitals, and GP surgeries that are open over evenings and weekends.

The world has changed. We all expect to be able to do our shopping at weekends and to call on skilled tradespeople when we need their services.

Nor is this a distinction between ‘professional’ and other roles: a mergers and acquisitions lawyer who refused to work into the night would face limited career prospects.

Monopoly providers, be they Tube drivers or NHS doctors, have the public over a barrel, and they know it. That’s why there is a need to ensure that essential services without effective competition face the same disciplines markets bring to the private sector.

If Jeremy Hunt imposes a settlement on a recalcitrant consultants’ union, he will deserve public support. His job is secretary of state for health, not secretary of state for doctors.

@The_IoD

Do you agree with Simon Walker? Comment below

About author

Simon Walker

Simon Walker

Simon Walker served as director general of the IoD from September 2011 until January 2017, having enjoyed a career spanning business, politics and public service. From 2007 to 2011 he was chief executive of the BVCA, the organisation that represents British private equity and venture capital. Walker has previously held senior roles at 10 Downing Street, Buckingham Palace, British Airways and Reuters.

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