The Search for Jobs
Politicians, trade unions, the media and the public at large are calling for more jobs. Their inability to find more jobs has resulted in

• our borders being restricted to immigrants with calls for greater restrictions despite this harming business
• the expenditure on welfare to rise to non-sustainable levels
• crime and public disorder to flourish
• the mental health of both the unemployed and employed to worsen
• our young feeling disenfranchised, under valued and angry at the lack of opportunity to do something worthwhile
• public and individual finances to sink to a precarious position

With the number of unemployed set to rise and the hardship of those who are unemployed going to deepen. There is a hope that existing employers will expand faster than others contract and new employers will come into being faster than current employer stop trading. 

CLaMR has identified the cause of unemployment to be the distortion of the Labour Market over many years and that the current lack of jobs has been both predictable and inevitable.

The Assetisation of Jobs
The distortion was caused by politicians allowing jobs to be turned into assets. From this perspective, lots of jobs means great wealth and jobs, like all assets, should be protected. Following lobbying by both Employers and Trade Unions, appeasement legislation has been enacted to do just that.

When an employer gives a person a job, they cannot take it away without paying compensation. Conversely an employee is not regarded as an asset because with reasonable notice they can leave at any time.

Why would an employer give away an asset to only get a liability in return? Clearly they do and this is because they hope to extract surplus value from their workers.

A job is not and should not be seen as an asset. It is a task. When the task is done the job no longer exists and another task must be looked for. Generally this is not a problem as a business will have lots of different and repeating tasks enabling them to offer continuous employment. However they need the flexibility to be able change the employment as the flow of tasks changes so the importance of the basic, discrete task must not be overlooked.

The fundamental value of each task is what someone will pay to have it done. This will depend on the extent to which they see it as improving their lives in relation to other tasks they may wish to see done. This is the true labour market.

When we say we want more jobs, what we mean is that as a society we want more worthwhile things to do. If we have unemployment, does this mean there is shortage of things worth doing? Clearly this is not the case. With certainty we can conclude that the entrepreneurs who might organise the doings of these tasks feel the complexity and personal financial risk to themselves is unacceptable, or if they don’t, their potential financial backers do. To get more worthwhile tasks under way these risks must be reduced.

Employing People is a Risk
Given that employees are a liability rather than an asset, Businesses will quite reasonably try to reduce investment in employment as the economy heads into recession and this will speed up the onset and depth of the recession.

A further problem is that employer have been put-upon by the State to perform function which have nothing to do with their core business activities and have the effect of forcing them into performing an expensive parental role for their employees. These functions include:

•  Collecting Taxes
•  Paying National Insurance
•  Paying Holiday Pay
•  Paying Sick Pay
•  Paying Maternity & Paternity Pay
•  Administering Student Loans
•  Administering Pension Schemes
•  Employment Protection
•  Anti-Discrimination Procedures
•  Providing Facilities for the Disabled

In addition, some employers have taken on extra voluntary parental activities in a bid to boost staff retention and prevent investments in training and specialist knowledge being lost to competitors. Examples include:

•  Trade & Professional Memberships
•  Extra Paid Holidays
•  Bonus Payments
•  Private Health Schemes
•  Private Schooling
•  Gym Membership
•  Social Events
•  Food and Drink

It is a passing observation that those employers that embrace the parental role with extra staff benefits do well when the economy is expanding and can recruit all the staff they need. In recession they are seen as fat and bloated, they are contractually unable to cancel benefits to cut costs and become victims of takeover by cost cutting companies that offer only statutory benefits. With the more generous employers being destroyed by market competition, over multiple business cycles our economy will favour those employers who do the barest minimum and poach the trained staff they need. The requirement to pay redundancy payments can be the final straw for a weakened business that might otherwise be able to survive. In bankruptcy, the paying of remaining capital as priority to former staff also means the trade creditors lose out and other business will be destroyed by the bankruptcy domino effect.

CLaMR recognises the social and fiscal importance of these non-core functions so at the same time as calling for liberation of the labour market and the unburdening of business enterprises, it also call for reform of the tax collection and welfare regimes.

Protect People not Employees
This can best be achieved by combing the current roles provided by employer and the state into a single expanded role for Agencies. Similar to the combined Job Centre and Benefits Office, these agencies will be privately owned companies or Friendly Societies competing to retain the best staff and provide quality labour at the lowest price.

Initially businesses would have exactly the same staff at the same cost as they would transfer their staff to the Agencies the staff chose.  They would then pay the Agency a fee equivalent to the gross monthly wage plus employer National Insurance plus an overhead representing their savings in payroll and HR costs.

The employee would receive the same take-home pay and holidays and would go to work at the same place as before.

The unemployed could then choose to join an Agency of their wish and no further state benefits would be payable to them.  The Agency would now pay them a minimum wage adjusted according to their specific situation guided by their previous benefits.  The agency would fund this from its profit margin which would initially be equal to the PAYE and NI contribution currently paid.  The Agency would then be able to train then and place them into work experience until profitable employment could be found for them.

The state may need to move funds from wealthy agencies to poor agencies during the early years but over the longer term larger agencies would be required to split and weaker agencies would be allowed to fail with their staff having a free pass to select another agency.

The Reformed Labour Market
Following reform of the Labour Market, the following rules would apply:

1. A business would not be allowed to employ any staff directly. All labour would be sourced through an Agency. The business would pay the fees of the Employment Agency in accordance with a freely negotiated contract but would have no involvement in the tax and welfare of the individuals concerned. They would not pay for holidays, career breaks or sickness and there would be no statutory severance pay.

2. Everybody would be employed by an Agency. There would be no one unemployed. An agency, with consent or on request, would transfer an employee to another agency and a reasonable fee to compensate for investment in training may be payable; we see something similar with Football Players already. An employee could not leave without another agency to go to and both agencies agreeing the terms of the transfer.

3. An employee would not retire. They would remain with their agency on retirement pay until death. There would be no state pensions to administer.  It is likely they would be eased into retirement with a period of part-time working.

4. All employees would receive a minimum welfare wage. If an agency had no work for an individual they could be assigned to training, work shadowing, marketing, internal administration or entrepreneurial activities.

5. In a recession it would even pay for the Agency to provide labour at below cost to start-up and expanding business enterprises. This help for business would serve to lessen the depth and duration of any recession.

6. There would be no self-employed and the illegal economy would have little room in which to operate. Trades people would concentrate on their trade leaving the marketing and debt collecting to their Agency. The Agency would not allow incompetent, dishonest or immoral trades’ people to operate as it is the Agency that would be liable to face legal proceedings.

7. Social cohesion within the Agency would ensure all felt valued and had the opportunity to contribute to the maximum of their ability. Malingerers would be spotted and social pressures, before financial ones, brought to bear.

8. Optionally the agency could provide private schooling, private healthcare and social housing; reducing significantly the size of the State and the amount of tax to be paid. Children leaving school would then join the Agency that educated them and any further education would reflect the known abilities of the child and the likely return on investment without reference to parental wealth or social class.

The Reformed State
There would be no personal income tax.  The Government would raise funds for administration, regulation, defence, law enforcement, transportation, healthcare and education though a profit tax on the agencies and indirect taxation (VAT).  Taxes could be removed from Business and other Investments.

Over time it may be possible for the Agencies to provide Private Healthcare and Private Education for everyone and this would allow proper competition to operate in these sectors and reduce further the burden on central government. 

Where agencies need staff to relocate they may find it more efficient to provide housing and this would serve to reduce homelessness and regulate the housing market.