Workers (Economic Affairs Committee Report)
Lord Skidelsky Excerpts(2 months, 2 weeks ago)
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Lord Skidelsky (CB)
My Lords, I add my thanks to the noble Lord, Lord Bridges, for his consummate chairmanship of the committee that produced this report, and on which I had the privilege of serving.
We are faced with a great British mystery: The Case of the Missing Workers. It is an especially British mystery. In all developed countries, workers were furloughed during 2020-21 as industry was locked down, and when it reopened, they went back to work—except in the UK. There were 560,000 people who stayed at home—“excess retirees”. There is a striking table on page 13 of our report which shows how the UK was simply out of line with what happened in similar countries. Today, the excess inactivity number is still over 400,000, and is mainly people in their 50s.
Why is this a problem? A reduction in labour supply limits growth and produces inflation through higher unit costs. It puts us in the slow lane for economic recovery. However, there is a sub-mystery within the mystery: a shortage of labour is normally associated with a booming economy. You can hardly call our economy in the last couple of years a booming one. It has not exactly been shrinking, but it has certainly been stagnant. That is another issue that needs attention; I will come back to it.
The inquiry was about why the inactivity rate shot up post Covid. I cannot say that we made decisive progress in unravelling this mystery, and there are a couple of reasons why. The first, as the noble Lord, Lord Bridges, pointed out, is the inadequacy of the statistics. The statistical basis to come to firm conclusions was simply not there. More important was the complexity of the causes—what doctors call the comorbidities. There are so many comorbidities here that it is very difficult to say what causes what.
We learned a number of distressing facts, chief of which is that Britain is the sickest nation in Europe, with life expectancy now falling and with the worst access to healthcare of any European country. Deteriorating health and health provision pre-dated Covid and could not have been the main driver of the spurt in inactivity rates that we experienced after the lockdown ended.
We also have more flexible pension provision than other developed countries, allowing earlier retirement, but until the pandemic we had a lower inactivity rate than countries like us; we worked more hours, days and weeks of our lives than our European counterparts. So better pensions cannot be the explanation for the spurt in inactivity. Similarly, population ageing cannot explain short-run effects and Brexit has not reduced the net flow of immigrants, so it cannot explain overall labour shortage, although it can explain shortages in particular sectors such as hospitality and agriculture.
So we are left with unexplained lifestyle choices. I quote from paragraph 81 of the report:
“It is possible that people got used to different habits and ways of working during the COVID-19 pandemic, which prompted them to reflect on their careers”.
Indeed that is possible, but the unanswered question is why we should have been so much more reflective than the Germans, French or Americans.
There is also the question that we skirted around: how many premature retirees would like to return to work if they could? Our report took the view that retirement was a positive, not reluctant, choice and would not be reversed by increasing the aggregate demand for labour, but I am quite sceptical about this. It is plausible that people choose not to work because they are discouraged by persistent insufficient demand for their services and just leave the labour market. Retirement, for those who can afford it, is an alternative to unemployment benefit. Labour supply cannot be separated from labour demand; in other words, it is a macroeconomic and not just a microeconomic problem.
To start in another place, why should the rising inactivity rate pose a challenge for the economy? We are talking about the human activity rate. The challenge to the economy is not that there is a shortage of labour but that there is a shortage of machines to replace the jobs being evacuated. The report hints at this when it says that some sectors are destined to shrink unless they are “replacing labour through automation”. So one can say that the problem with the economy is that inactivity is growing faster than innovation or, to put it another way, people are leaving the workforce faster than they are being rebranded. This is a long-term problem, which Covid-19 might have speeded up. But one has to dig deeper.
The report cites a survey by Phoenix Insights, which suggests that British workers aged 50 to 64 dislike their jobs more than the same cohort in Germany and the United States: 58% in the UK like their jobs, compared with 74% in America and 73% in Germany. In other words, people retire early or work less not just because they are financially able to but because they do not like their jobs. This brings out a fundamental truth: we work not just because we have to but because it gives meaning to our lives. This is something that economists, who treat work as a disutility, have never understood.
The case of doctors is one of the most popular. There is an acute shortage of GPs—doctors of working age are leaving the profession faster than new doctors are entering it—because they have lost their sense of vocation. Doctors tell you this all the time.
The revelation that so many people dislike their jobs has opened up a field of inquiry beyond the scope of our short report. The question we asked was: where have all the workers gone? I suggest that the subject of a subsequent committee report should be: where have all the decent jobs gone?
Leveson Inquiry
Lord Skidelsky Excerpts(11 years, 3 months ago)
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Lord Skidelsky
My Lords, almost everything that there is to say has already been said, not least by the noble Lord, Lord Prescott, so I will just concentrate on two points. First, there is the ingenuity of Leveson, which recognises that voluntary self-regulation via the almost toothless Press Complaints Commission has run its course. Therefore, any successor system of self-regulation needs to give confidence that it will not be toothless—hence the need for legislation to guarantee the teeth. I think that is the main thrust.
The truly ingenious feature of Leveson is his proposal to secure publishers’ participation in a toughened system of self-regulation by means of incentives rather than compulsion. These incentives are cost-shifting, exemplary damages and the opportunity for a newspaper to consult the new regulatory body when faced with a difficult decision as to whether or not to publish. All these incentives hang together; it is a very coherent structure. But that structure will not work without an arbitration scheme or the necessary statutory measures to allow exemplary damages and double cost-shifting, always at the court’s discretion.
That is the Leveson alternative to giving the victim of a damaging story the legal right of prior notification. In his evidence to Leveson, Max Mosley said:
“Once information is made public, it can never ever be made private again. Therefore the only effective remedy is to stop it becoming public”.
The Joint Committee on Privacy and Injunctions found that there was,
“widespread support for prior notification becoming a requirement for editors intending to run a story which compromises an individual’s private life”,
and that this should be part of the code of practice for the new regulatory body.
Leveson does not concede the right of prior notification, which is what this group of witnesses was asking for, but he suggests a way in which it will benefit proprietors to seek advice from the regulator before publishing a potentially damaging story, with an arbitration system that, in the event of publication, will make reference to the advice that has been given. A Desmond newspaper could, if it wished, remain entirely outside the system, but if it broke the law—on defamation, privacy or harassment—it would risk exemplary damages. It would also be liable to pay the costs of both sides in a court case, whether it won or lost. In a nutshell, it would be much more expensive for a newspaper to stay outside the system, even though it would be allowed to do so.
Leveson’s aim is admirable but limited. It is an attempt to apply a legal dressing to a cultural wound. I do not accept that every country gets the press it deserves—we deserve a better press, I think—but a number of broader factors explain the press that we have got. The first is the politicians. The point has been made, but I think it needs reinforcement. I speak as an historian. The politicians have built up a partly malign press for their own political purposes. That has been the main factor in the rise of Rupert Murdoch and News International. As the noble Lord, Lord Donoughue, pointed out, it was Margaret Thatcher who allowed the Murdoch build-up, because she knew that his titles would support her. I suggest to the noble Lord, Lord Prescott, that Murdoch was equally ardently pursued by Tony Blair for exactly the same reason.
Lord Skidelsky
In his memoirs, which I quote chapter and verse, Blair admits that he made a “Faustian pact” with Murdoch—could anything be more transparent than that?—but he does not reveal what Faust’s obligations were in this pact. Later he complained that the press was a “feral beast”. Did he not understand that if you dine with the devil you should use a very long spoon? Perhaps he did not care.
That is one source of the malaise that we have all been complaining about. The point there is that a proper enforcement of anti-monopoly legislation would have prevented the extensive Murdoch takeover. That is why I believe that no one company or individual should be allowed to own more than 20% of newspaper titles.
But that is not the only thing. We now live in a culture that is much more interested in the personalities of our leaders than in policies, possibly because the public have a well founded suspicion that a great deal of political debate is phoney. The demand to expose corruption in dark places has turned into an insatiable desire to know more and more about the private lives and griefs of public figures—and even non-public figures. We all enjoy a bit of prying, but we are the first civilisation to have turned enjoyment of prying into a right to know—that is, to raise it to the status of a political principle. That is the real ethical Rubicon that we have crossed. There is no easy solution to it. I do not think that there is any purely legal remedy for such ethical confusions. Leveson has done everything that he can to protect privacy, so his report deserves our strong support. We should be especially vigilant to ensure that the recommendations are carried out in their full integrity because, as I have said, they all hang together.