Saturday, February 23, 2008

I have felt quite sorry for Gordon Brown since he came to power. I don't think he's really ever had the chance to introduce the legislative agenda he may have wanted to for a variety of predominantly exogenous reasons. Floods, terrorist attacks, financial crisis, funding scandals and administrative blunders have all conspired to distract the government away from any meaningful reform - I'm struggling to think of one. There has been incompetence along the way, granted, but bad luck has definitely played its part.

However, I will quickly lose my sympathy if he continues to stall on the issue of introducing equal employment rights for agency workers. Here there is a clear opportunity to introduce a reform not only straight out of the Labour manifesto, but also straight out of the progressive politics textbook.

The idea that two people doing the same job should be differently compensated in clearly unfair. It's unfair if we're talking men vs. women, or a whites vs. blacks, and its unfair when the only distinguishing difference is entry route.

More interestingly, the argument from industry that the law would damage competitiveness is misleading - it's a false competetiveness. It would be the same loss of competitiveness that occured when slavery was abolished - true, costs would rise, but they should never have been that low in the first place. Moreover, flexible labour markets are beneficial, and short-term contracts have a useful role to play. But when an agency works stays at a firm past the short-term, not only do these arguments enter less ethical grounds, but the benefits of lower-paid agency work may diminish.

As with the debate over the effects on industry and productivity of minimum wage laws (and unions, for that matter), the actual effects may be a lot more ambigious. So wages go up. But so do motivating factors, such as the psychological effects of receiving a just reward and belonging to a team. Could these outweigh the increase in labour costs? Presumably the non-agency workers are being better paid and better treated for a reason. Remember also, firms make investments in workers that are costly, such as training and experience. Losing a skilful, experienced worker is bad for the firm. But inadequate compensation for their time and effort may result in exactly this. That it doesn't is likely a testament to an absence of other options - the reason people sign up with agencies in the first place - but then clearly this is a form of exploitation.

I think it's often a good idea to be wary of obviously populist economic policies. But in this case, the populist view is also the right one.

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