Why we shouldn’t clamp down on zero-hour contracts

The Office for National Statistics has revealed that 697,000 people (about 2.26% of employees) are on zero-hours contracts in their main job, up more than 100,000 on a year ago. Such contracts make life uncertain for the employees concerned, who may not know from week to week, or even from day to day, whether they have paying work. Some 33% of those on zero-hours contracts say they would like to work more.

So should we be clamping down on zero-hours contracts? No, we should not.

First, it is absolutely correct that zero-hours contracts have become far more common in the last two or three years. They hovered at about 0.5% for most of the period since 2000. They rose in use quite slowly between 2005 and 2012, then shot up to just under 2% in 2013 and to that 2.26% figure in 2014.

However, the unemployment rate has also come down in the last two or three years as well. In 2011 it stood at over 8%. Now it is less than 6%, and seemingly headed steadily down. Even though zero-hours contracts represent only a very small part of the labour force, it seems reasonable to argue that the two trends are related. The economic outlook is brighter, but is still uncertain; businesses remain unsure about the future, unsure about their markets, unsure of how much they should invest, unsure of how many workers they can justify taking on. A bust-up in the eurozone, for example, or a general election that delivers an unfavourable or unworkable government. might change the outlook completely for many UK businesses. So the only way that they can rationally expand their production, and be ready if things really do boom, it so cut their employment risk. Hence zero-hours contracts.

Remember too that even though the ONS talks about people’s ‘main’ job, they might not be the only income earners in a household. The same is true of those on the minimum wage: many of them will be secondary earners. In fact, 34% of those on zero-hours contracts are aged 16-24 and half of those are in full time education. To them, a minimum wage job or a zero-hours contract, while frustrating, is not a disaster, and the extra income, however low or intermittent, is welcome.

Critics – you know who – say that the government has allowed a ‘low-pay culture’ to go ‘unchecked’. So what would be their solution? Ban zero-hours contracts? Raise the minimum wage yet further? The inevitable result would be that employers would no longer be willing to take the risk of employing so many people. And first to go would be young people, with fewer skills and less understanding of workplace culture than more experienced employees, and secondary earners, often women. There would be fewer ‘starter’ jobs through which young and unskilled people could gain experience, more young people trapped in benefits, and a rise in unemployment more generally.

What will do in zero-hours contracts, of course, is continuing economic growth. As unemployment falls, businesses will find it harder to attract employees, and workers and potential workers can become more choosy about the jobs they take. Zero-hours contracts will once again become a very small part of the employment market. Growth, employment, greater security. Job done, and not a politician in sight.

The Lord’s Digital Agenda

On Tuesday the House of Lords Select Committee on Digital Skills released the 144-page report ‘Make or Break: The UK’s Digital Future’. It’s a typical government report, calling for ‘immediate and extensive action’ in something or other — and in this case, unifying government’s current, disjointed digital initiatives with the launch of a grand ‘Digital Agenda’. (This masterplan includes such fabulous ideas as the middle-aged men in central government ‘future-proofing our young people’ through things like bolting-on a digital element to all apprenticeship schemes.)

One of the report’s most newsworthy findings was London’s poor broadband speed, comparative to other European capitals. In a ranking of their average download speed London came 26th — nestled between Warsaw & Minsk —whilst the likes of Bucharest, Paris and Stockholm topped the chart. London also came 38th in a rating of the UK’s cities’ speeds (although it’s worth noting that Bolton, the UK’s fastest city, would make the European capital ranking’s Top 10). The Lord’s report is also concerned with the persistence of internet ‘not spots’ in urban areas, universal internet coverage and the rollout of superfast broadband. In response, it calls on the government to classify the internet as a utility service, with the desirable goal of universal online access.

It goes without saying how vital digital connectivity is to the modern economy, as well as the importance of staying internationally competitive. However, a new, centrally-dictated ‘Digital Agenda’ is probably quite an ineffectual and expensive way of boosting the digital economy.

Despite the House of Lords’ fears about the speed of superfast broadband rollout, coverage has increased from 55-60% of the UK in 2013, to 70-75% in 2014. And, whilst the report holds up Cape Town as an example of a city providing universal broadband, this won’t be ready until 2030. In the time it takes for the state to roll out the chosen digital infrastructure, it may already be out of date. Whilst many are still choosing between regular or fibre optic broadband,  landline-free 4G home broadband is the latest offering to hit London. At the same time, eyes are already on  5G, and the new capabilities it can bring.

Treating the internet as a public utility is also problematic from a free-market standpoint. Doing so could, for example, lead to calls for more government involvement in the deployment and update of internet infrastructure. However, a study by the Mercatus Centre looked at American municipal government investment in broadband networks across 80 cities, and found that for the billions of dollars of public money spent, there was little community or economic benefit.

It’s also the type of thinking which has led to America’s ‘Net Neutrality’ debate, where, on the behest of Obama, the Federal Communications Commission has proposed to regulate internet service providers as ‘common carriers’, and in doing so, subject the net to a 20th century public utility law originally devised to deal with the telephone monopoly. Ostensibly designed to protect consumers from the creation of ‘anti-competitive’ internet fast lanes for big content producers, Net Neutrality legislation threatens not only the speed, price and quality of internet provision, but the autonomy of ISPs and investment at the core of the net.

Whilst the Lord’s proposed ‘Digital Agenda’ might seem far-removed from such heavy-handed state activity, a government who considers it their duty to take online and ‘digitally educate’ every single citizen risks heading down an increasingly interventionist and expensive path.

Enemy of the steak: what’s wrong with government diet guidelines

As an amateur chef I have become increasingly interested in the government’s guidelines and regulations around food. For something so central to our lives, the advice and rules the government makes to do with what we eat are usually overlooked. Two developments this week suggest that this is a mistake.

I have previously argued that government regulation is often bad because, if it turns out to be bad regulation, it imposes a single error across an entire group of people or firms. That view may explain the financial crisis, where banks were required to hold lots of mortgage debt by regulators who thought they were forcing banks to be sensible.

Now, it looks as if it might also apply to diet guidelines. This week a new paper has been published that argues quite convincingly that, not only does modern evidence show that government guidelines to reduce dietary fat intake were a bad idea, they were even against the bulk of the evidence available at the time.

Today, it’s being reported that the US will stop advising people to avoid dietary cholesterol, because of a change in nutritionists’ view of how our diet affects our bodily cholesterol levels.

The Verge says that ‘The DGAC is more concerned about the chronic under-consumption of good nutrients, noting that Vitamin D, Vitamin E, potassium, calcium, and fiber are under-consumed across the entire US population.’ Interestingly, high-cholesterol foods like eggs, offal and seafood are very high in some of those vitamins.

It’s tempting to suggest a connection there – that vitamin deficiencies may be a direct cause of misguided government diet advice. And this may be the case. But, having looked around and spoken to the British Nutrition Foundation, I can’t find any work by either the government or independent academics on how much impact these guidelines have on what we eat, let alone on our health. (The exception is the five-a-day campaign, which has been fairly successful.)

If it turns out that diet guidelines have been wrong on things like fat and cholesterol, and maybe things like salt as well, what are the costs? I see there being two potential downsides to bad advice. The first is that the advice is actually dead wrong and drives people to eat in ways that ends up being worse for their health. Perhaps this is true of the cholesterol advice.

The second, which is more ambiguous, is the welfare cost. We eat not just for sustenance but because it gives us pleasure – a steak done well is much better for me than a well-done steak, because, even though the nutritional content is basically the same, it makes me happier. If government guidelines have been mistakenly putting people off eating foods they enjoy then they have been costly in welfare terms even if the health impact is not significant.

Of course people may need to get advice from somewhere, and I don’t see any reason to believe that government advice is worse than, say, the stuff you get in the Femail section of the Mail Online website. But if government diet regulations are still likely to be mistaken, and they influence people much more than any single bit of diet advice from an independent source, then they may end up holding back a process of private trial and error that would give us better information about what’s good to eat over time.

This picture is illegal in California

Or rather, the action being performed in that picture is illegal in California. It’s not that the lettuce is not organic or anything. It’s that it is evidence of someone working during their lunch break:

I mentioned earlier that we had struggled to comply with California meal break law. The problem was that my workers needed extra money, and so begged me to be able to work through lunch so they could earn a half-hour more pay each day. They said they would sign a paper saying they had agreed to this. Little did I know that this was a strategy devised by a local attorney who understood meal break litigation better than I. What he knew, but I didn’t, was that based on new case law, a company had to get the employee’s signature every day, not just once, to avoid the meal break penalties. The attorney advised them they could get the money for working lunch AND they could sue later for more money (which he would get a cut of). Which is exactly what they did, waiting until November to sue so they could get some extra money to pay for Christmas bills. This is why — believe it or not — it is now a firing offense at our company to work through lunch in California.

Eventually a system becomes so encrusted by such nonsense that nothing useful can ever be done and all that can be is to chase the paper around in ever decreasing circles. That is arguably what happened to the Ottoman Empire, various incarnations of the various Indian and Chinese empires and so on and on. It’s one of the reasons that we here shout so loudly about regulation and the necessity of a bonfire of much of it.

We do not say that there should not be regulation, not at all. But we do say that we need to carefully consider who is doing the regulating. There are times and circumstances when it does need to be the bureaucrat or the politician. But far more often tasks that they take upon themselves will be better regulated through what we might call simple market processes. Markets are, after all, just the interaction of voluntary behaviour and surely we can trust two adults to agree between themselves about whether someone might usefully check a spreadsheet, or not, while munching on a salad?

Rules and recipes are different things Mr. Burnham

We tend to think that there must be some special dictionary out there, one hidden from us mere mortals, that allows politicians to say whatever they damn well please and yet not use the words that we all do. Almost as if there’s some other foreign language they use to speak to us mere voters.

Take this from Andy Burnham for example:

As Burnham correctly said last week: “For change to work in a market context, all players need to be following the same rules.”

This is in the course of The Observer managing to get absolutely everything about obesity, sugar and fatty lardbuckets entirely wrong. We all consume fewer calories than our grandparents did, sugar is not addictive (we consume less of it than in the past) said fatty lardbuckets do not cost the NHS money (dying young saves the NHS money) and so on and so on throughout the entire litany. And, of course, they’re entirely wrong in the basic theory of what they are talking about for the role of government is not to tell us how to live our lives but to enable us to live our lives as we would wish.

But specifically what Burnham is talking about there is that manufacturers should be forced, whether by taxation or by regulation, to put less sugar, less salt, in our food. And no doubt to throw some organic lentils in there at some point as well.

Which is where that special dictionary comes in of course. Because that’s not “rules” that’s “recipes”.

Is it too much to hope that one who would rule the country actually speaks the language of it? Sure, Willie the Conq and George I didn’t do so well on this basis but aren’t we supposed to have moved on?