Labour Market

The Scotland story


Economic Theory
Monetary Policy
The papers and airwaves are full of Baroness Scotland’s difficulties over her Tongan housekeeper. I have no strong feelings about what her political fate should be, but I do think, as Oscar Wilde might have said, that it would take a heart of stone not to laugh over a minister falling foul of one of her own ill-thought-out laws.

There are suspected to be around 400,000 illegal residents in London alone and it is understandable that the public are concerned. But as usual a sledgehammer is used to crack a nut which is probably much smaller than the headline figures suggest. Many of these people are visa overstayers who are likely ultimately to return home, particularly as jobs dry up.

If as sophisticated a woman as Baroness Scotland can fall foul of the law, what does this suggest for the rest of us? As so often, a perverse outcome is likely. Many middle-class households will be tempted to continue to employ cleaners on a cash-in-hand basis rather than get involved with paying tax and national insurance as the Baroness, to her credit, seems to have done. With no records at all – and like many people, I admit my own incompetence in keeping personal records –  the deniability factor is greater.

I’m more worried about small businesses, many of which are run by people with little or no knowledge of employment and immigration law. Owner-run cafés and shops, for example. A fine of £5000 may be peanuts to our Attorney General, but could tip the scales against a little business like the café I go to up the road. Assuming that the proprietor even knew about this law before this week, she would not find it easy to take photocopies of passports (possibly forged, but how would she know?). She’d probably have to queue up at the post office half a mile up the road. For what? Who would ever check unless she became star of a reality show and nosy neighbours then tipped off The Sun?

The process of copying passports and documents is tedious and aggravates people. And there is “mission creep” as risk-averse HR departments over-interpret their responsibilities. At my University we now expect people to bring in passports when we interview them. Inevitably some people forget, so we have time-consuming follow-ups. Many people in their fifties who are as English as Yorkshire Pudding resent this process of having to prove anew their eligibility to hold a job in their own country, when they’ve already been employed here for thirty years. And we end up with ten lots of photocopies when only one person, and sometimes not even one, is appointed. Then we get government “advice” which is now telling us that all jobs should be advertised for a minimum of four weeks, to allow sufficient domestic applicants and thus minimise the chances of our employing someone from outside the EU. The delay to filling posts is no concern of government, of course. Nor are the continuing long delays in getting work permits sorted out, which have meant that two lecturers we appointed in June cannot start teaching next week.

So it goes, as more and more regulations tie up enterprise, make it difficult to employ people who want to work, and generally add to the hassles of business life. Meanwhile, of course, government seems magically free of such constraints: it creates peers like Baroness Scotland or Lord Mandelson without advertisement for even one day, let alone four weeks, and gives them well-paid jobs for which they are not particularly qualified on the whim of the prime minister.

Finally, I wonder what will happen to the unfortunate lady housekeeper? Now her status has been discovered, she is unemployed. No doubt desultory moves will be made to deport her, but they may not succeed or may take years even if they do so. She may get legal aid to appeal and social security benefits: if we do deport her, she’ll cost us for her detention and get a free flight. Having been a productive contributor to the country she will become a cost to us all and, just as important, will have had a traumatic and unhappy time for the ”crime” of wanting to work in this supposedly business-friendly country.

Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.