1 thought on “How the labour market can recover from the Covid-19 crisis”

  1. Posted 14/06/2020 at 10:21 | Permalink

    The public sector is a big problem and has not performed well in the current crisis, in my experience some sectors taking the opportunity of the lock- down to do less than they could otherwise have done. It has to be recognised that public sector employees are in a priviledged position (as current circumstances illustrate). They have job security, worth a lot at the moment, they have been on full pay (correct me if I am wrong) and, of course, they enjoy an entitlement to final salary pension schemes, which is a very valuable perk and I believe one source of the nation’s poor productivity performance. This is because those unhappy and unproductive at work are less incentivised to move- on (so, overall, there is poorer worker/job matching); they cling on for the maximum gold-plated pension. So my rebooting plan would be to phase-out/abolish final salary schemes (including those private sector ones that persist) through legislation. And to help to ease the current fiscal strain, the TUC should be asked to acknowledge said privaleges and agree to all public sector workers (excepting NHS front-line staff) taking a 10 per cent wage cut!
    Second, politicians always rush to boost infrastructure spending at the first opportunity. But the long-term economic benefit of a great deal of such spending is close to zero (wrong schemes, cost blow-outs etc). As the Eddington Committee pointed out (quickly overlooked) it is the small schemes that are better value for money. (I am therefore glad to see that Len did not list more infrastructure in his wish-list). Yes, hard infrastructure can be over-crowded at times but this is because of poor price structures; pricing is never seen as a (part) solution. In fact, we subsidise peak hour travel in the form of allowing ‘freedom pass’ over 60’s free travel in the rush hour. That has been suspended in London (elsewhere?); my second rebooting suggestion, it should be made permanent (disclosure, the writer is over 60!)

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