Opinion – Low wages are ‘return to pre-industrial Britain’, says Bank of England economist | Business | The Guardian

The Guardian reports that Andy Haldane, Chief Economist of the Bank of England, saying that the rise in self-employment and drop in union membership mirrors weak workforces of pre-1750 era. More critically, trade union membership in the UK is expected to continue to decline, across all age groups.

Source: Low wages are ‘return to pre-industrial Britain’, says Bank of England economist | Business | The Guardian

This is an extremely interesting article. If you’re a socialist, perhaps you would argue that the demise of organized labour is a weakness and individuals are being exploited? On the other hand, many self-employed people regard themselves as entrepreneurs – but as Haldene highlights very few of these self-employed people employ other people.

So we should argue that the growth in self-employment makes the UK more competitive, compared to country’s like France where the labour sector is completely unreformed? Well, no, unfortunately, there are too many market intermediaries that distort the market. The employment agency sector is dominated by a number of large firms that are distorting true market competition. Ideally, we need true almost zero cost based selection of the self-employed, via the web. Many large agencies profess to having expertise but it’s questionable where they add value. For example, both central and local government engage vast numbers of self-employed contractors, using these biased channels of selection – this is part of the austerity challenge.

Another area of market imperfection is in relation to multiple experts being able to compete with large firms of consultants – the latter often charge GBP5k plus for partner level expertise and will frequently deploy inexperienced consultants, sometimes just out of university.

For greater insight, look at the following highly rated blogs:

Let me ask an open question:

If the Tory party truly represented small businesses and free competition, surely they would reform the supply model and replace large agency contracts?



UK’s ‘High-Growth Small Businesses’ are rated No. 1 Story of Week per World Economic Forum

English: Official logo of the World Economic F...

English: Official logo of the World Economic Forum. (Photo credit: Wikipedia)

According to the WEF, the UK’s ‘high-growth small businesses’ are world news this week. WEF provides a curated list of some of this week’s most interesting stories on economic growth and social inclusion.

Source: 8 must-read economics stories of the week – Agenda – The World Economic Forum

Personally, I think that the UK’s small businesses could do with some serious help from Chancellor, George Osborne and his government colleagues.

Dr Alf’s Seven Point Plan

  1. The UK’s big-businesses have powerful industry lobbies and can employ tax experts to reduce their tax bills. Small businesses often don’t get the tax breaks  – So there’s an urgent need to level the playing fields. For example, I would like to see small businesses get triple tax credits for investment in research and development. Also small businesses should get triple tax credits for professional development (there’s room for a whole new industry here).

2. The UK’s banking system favors those who work in big banks and their chums in big-business. Since 2008, small businesses have often struggled with mainstream finance from banks. More government guarantees are required to help ratchet up small business finance.

3. Local authorities should be encouraged to give small businesses, a three-year holiday from local taxation. This can be recouped from big-businesses operating in the local authority area, including shops.

Remember small business are better than big businesses for creating new jobs. Graduates are tired of stacking super-market shelves!

4. All UK public services in both central and local should give priority to small businesses.

5. The Brexit  debate must major on cutting red-tape and bureaucracy for small businesses.

6. The media should be given incentives for sponsoring public appetite for small businesses. We need more people like Lord Sugar to step forward.

7. Finally, central and local government departments should get special fiscal incentives to replace big consulting firms with independent executives and consultants. This would create more competition, increase public value-for-money, enhance small business development and possibly create a new export opportunity. I know that my good friend John Gelmini has leveraged his UK public sector experience and is looking to major export opportunities.

These are a just strawman proposals. My personal brainstorm.

Why don’t you brainstorm this with your friends? Then tell George Osborne. Here’s his Twitter handle @George_Osborne

Please feel free to chip in with your own ideas below. If we get a bit of debate, perhaps we’ll share it with George!