Despite valiant efforts, I cannot resist a pop at the political twaddle poured down on the benighted British public at the start of the UK election campaign. I refer, of course, to the 'jobs tax' row that had erupted even before UK prime minister Gordon Brown triggered the campaign one month ahead of the May 6 election date.
On March 31 23 business people signed a letter in the Daily Telegraph supporting a Conservative promise that, if elected, the party would abolish the government's planned 1 per cent increase in employers' National Insurance contributions for those earning £20,000 a year or more. Further letters and more signatories joined in as the election campaign proper began. The protesters included the CBI, the British Chambers of Commerce and, equally predictably, the Institute of Directors. Interestingly, so far at least, the Engineering Employers' Federation has not been among them.
As you read this the tally has probably gone over the 100 mark, but I've been working from a list of the first 79 individual names. Amid the handbag designers and plumbers are many top bods at FTSE 100 or FTSE 250 companies who, between them, employ many thousands of people. But though they may be in big companies, only one signatory, AXA financial group chief executive Nicolas Moreau, could be described as among the UK's 'top employers'.
By that I mean only Moreau's firm is also on the list of Britain's best 46 companies to work for in 2010, a list compiled by the CRF Institute, formerly the Corporate Research Foundation (CRF), ranking employers by pay and benefits, training and development, career development, working conditions and company culture. I don't say the lack of overlap between the two lists has any scientific standing, but I'd say, nevertheless, that it tells us something.
And something else emerges when you examine what well-informed city editors and others, not in the Labour party's pocket, are saying about this employers' NI business. First, how many jobs will this NI hike cost? The Conservatives cite Federation of Small Businesses figures to say 96,000 in private-sector firms of all sizes. According to the economics editor of BBC Scotland, Douglas Fraser, this figure is an extrapolation of the numbers employed in 2021, with and without the NI increase. That means not current jobs actually lost but jobs that might not be there in 11 years' time.
What's more, the Conservatives don't intend to retrench on the whole amount. They too will impose the one per cent rise, for those earning £45,400 or more. This would 'save' only 58,000 of those jobs – so the Conservative plans for NI increases would, by their own calculations, 'cost' 38,000 jobs.
But there's another problem. You would expect the Conservative-supporting Telegraph economics editor Edmund Conway to be sympathetic to the employers' case against the rise in NI. But his blog noted last week that it was "unclear" whether the rise would increase unemployment. He quotes a Conservative briefing note as saying that cutting National Insurance would bring in higher wages, "which seems to imply that, were it to go the other way, the consequence would be lower wages, rather than higher unemployment."
He goes on to quote leading employment economist John Philpott of the Chartered Institute of Personnel and Development: “I don’t think National Insurance is a tax on jobs. My view on is that the tax actually falls on employees rather than employers, so changing it doesn’t have an effect on employment over the long term."
This week's Observer newspaper plotted NI changes against employment rates over the last 30 years and they show no discernable correlation. Further, the paper notes that the estimated £10m cost of the change to protest letter signatory Marks & Spencer should be set next to the £15m annual earning potential that lured its new CEO, Marc Bolland, from rival Morrisons.
And that brings us to the real bottom line, which is the galling hypocrisy of these signatories in giving the impression that their main objection to this change in NI rates is its effect on jobs. Not only have these people already trousered sums of money that put any NI hike in the shade, but they have shown a determination bordering on dementia to shovel as many UK jobs as they can shift to Chinese factories and Indian call centres. 'Contemptible' doesn't do it.
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