Dead Men Left

Friday, June 03, 2005

Working hours and the ramshackle UK economy

Further proof, if any were needed, that this country is run by utter bastards:

The UK has won the first stage of the fight to maintain its "opt-out" from the European Working Time Directive.

EU employment ministers were to make a decision on removing the clause, after the European Parliament in May voted to scrap the opt-out by 2012.

You'll notice that New Labour has rounded up a motley crew in support of screwing workers. So much for Britain being pulled to the left by its engagement with the EU; once again, the British government has acted as the leader of a right-wing, free-market claque.

Yet some of the UK's unions reacted angrily to the news.

"We think it's appalling that our government should be persisting with the opt-out," said Dave Prentis, general secretary of Unison.

"We already work the longest hours in Europe.

"If other countries can manage without the opt-out, why should British workers be singled out for different treatment?"

"Yet"? Must be that notorious left-wing BBC bias. The tone of the entire report attempts to show retaining the opt-out as a "success" for the government and the country.

Two further quick observations: first, the British economy has a long-standing peculiarity that successive governments have failed to eradicate - not even Thatcher's great overhaul of British industry. Britain has some of the most productive workplaces in Europe, and some of the least; in other words, the average productivity figure you see doesn't tell you much about the true state of British productivity, because many firms are significantly more productive, and many significantly less. Other EU countries have much less variation around their average productivity.

One probable side-effect of this British peculiarity is that the UK also has some the greatest variation in working hours in Europe (PDF file), with some firms (and even whole sectors) attempting to compensate for their low productivity per hour through longer working hours. This creates a marked pressure for businesses to demand complete flexibility in working hours across the British economy, reflecting its unusual position relative to the rest of Europe; such pressures are prevalent everywhere, but are no doubt of less importance.

Second, New Labour has failed to address this dispersion of productivity and has failed to significantly close the "productivity gap" with the rest of the developed world. Brown is more than happy to push for the 48-hour opt-out because to do so in an open economy maintains Britain's relative international competitiveness. It is (some) British workers who pay the price for this.

There are two obvious solutions. The first, and clearest, is to defend employees from suffering exceptional working hours. The best form of defence is trade unionism - the report linked to earlier refers to the correlation between union recognition and shorter working hours in the UK. The second is to push for a serious programme of government-led investment to modernise the low-productivity, backward elements of the economy into line. New Labour's preferred option is to minimise government intervention and establish the smoothest possible terrain for the financial markets; the hope is that such conditions will promote invetsment. They haven't. Capital invesment has flatlined, whilst R&D expenditure remains in the doldrums.

Simultaneously, the promotion and maintenance of capital market liberalisation has led to unsustainable private borrowing alongside an growing current account deficit. For as long as the financial winds are blowing in Britain's favour, this uneasy combination can continue. New Labour's failure to address long-term underlying weaknesses, however, leave the UK economy potentially very exposed.