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item0053A 830, 831
830
3 October 2003
Pensions
conspiracy of silence
My hunch is that the inadequacy of old age pension
provision - both public and private - is the greatest common political
concern among our fellow-citizens. Yet Bournemouth was silent on the
matter. Very few Fringe meetings addressed it - mainly those
sponsored by the financial services industry salivating at the prospect of
further business - as "State provision" loses momentum. The vultures
are foregathering. Only Frank Field (a rare smile from him,
here...) came up with a new perception,
and a true shaft of realism.
For the problem is not
actual poverty in old
age, which Gordon Brown harps on about. And moving as they are, the
real issue is not the plight of today's pensioners. The issue is the
confidence with which today's middle-aged can look forward to the closing
of their lives, once their earning-capacity has gone, their powers waned,
or their opportunities closed-down. The problem is less one of
actual poverty than of anticipatory poverty. That is a worry for
everyone, regardless of of status, class or bank-balance.
And it can be crippling, overshadowing other plans, corroding personal
confidence, undermining family life.
And those worries are compounded by the
collapse of confidence in the "private" provision of pensions. The
Stock Market, the "financial services sector", has failed too many people
for them to become the trusted providers of pensions again - at least, for
any but the very well-off. Both Government Ministers and businessmen
conspire to pretend that is not true - they have a
common interest in pretending that State provision can properly remain
minimal, and that responsibility for additional pensions-savings can
safely be passed to the market, and to individual savings choices.
The problem is, that is not true.
It is Potemkin village of the political
imagination. Frank Field contends correctly that
there must be the foundation-rock of reliable state provision at a
reasonable level (he says 25% of average wages, so equal to c. £125 per
week at current rates), which could then be supplemented by personal
investment. Without any increase in contributions, he reckons that
such a pension could be promised at age 72.
Now - that
seems an unpalatable proposition at first. But if
true (and he promises to publish these findings soon) it would give
us the first perception of a possible new system. My own view is
that the pension should be £150 pw (at current rates) payable at 70.
Neither industry nor Government is keen to acknowledge the case for such a
"high" State pension - and that is where the conspiracy of silence comes
in.
But if that can be reliably calculated,
we can calculate the cost of bringing that age forward to 70, where I
think it should be. If each citizen, regardless of marital status,
were to receive £125 per week, and could rely on that at a given age, we
could all plan our lives accordingly - so much the more, if the figure
were £150 per week (the recommended Age
Concern level). Many middle-age worries would
be dispelled, and consumer confidence much boosted. Some would
simply save to "buy" one or two years earlier retirement, at the State
level. Others would accept the risk of the "late" starting age, but
"buy" a higher level of pension, to top up the State provision from 70
onwards. Those decisions would all depend on personal philosophy,
medical history, family position - as indeed they should.
- So I am grateful to Frank Field.
He vindicated my lottery-type choice of "which
Fringe meeting to go to", last Wednesday lunchtime.
Do you share my view of the
importance of this issue? Drop me a line
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831
3
October
2003
Unemployment
the hidden fear
Gordon Brown gave a great barn-storming speech last
Monday. He revelled in the last six-years of "economic success", and
he is entitled to do so. He is even entitled to take full credit for
his welfare-to-work drive, with all its Scottish Presbyterian overtones.
But this record obscures a key underlying systemic
weakness of the UK system, which Labour should not ignore - namely, the
woeful inadequacy of UK unemployment benefit. We should be learning
lessons from the current debate about Directors' periods of notice -
all workers should have a
decent period of notice on full pay, to enable them to adjust to the loss
of employment. That is what the bosses fix for themselves, and
what's sauce for the goose...
I advocate a new form of universal Adjustment Pay.
This would apply to all employees, regardless of firm-size, public or
private sector. Its object would be to give every employee faced
with job-loss a fair opportunity to find a new job, without disruption to
family and social life. It would be funded by a State fund to which
employers would make a substantial contribution, by way of supplement to
taxation otherwise payable. It would replace both the Redundancy
Payments system, and the concept of wrongful dismissal - both of which
have their roots in a model of the employment relationship which is not
longer appropriate.
NB Recent Court cases ,
in which two over-65 pensioners were refused the right to sue for
Redundancy Pay, as well as damages for wrongful dismissal, highlight the
close links between these ideas. An action for damages is founded on
the proposition that a "civil
wrong" has been committed
which causes damage or loss - for which compensation should be paid
(i.e. "damages"). But if the injured party is already entitled
to receive "remuneration" following the wrongful dismissal, if follows
that no compensation will ordinarily be payable - the real wrong, after
all, is the unjust loss of remuneration. Thus if you get rid of the
idea of wrongful dismissal, and revert to the earlier principal that every
employer is entitled to terminate a job contract upon proper notice, no
"wrong" is committed by the act of dismissal-with-notice, however
"unreasonable" it may be. The sole question of justice/injustice is
the length of the required notice, and whether or not the
employee has a reasonable chance of searching for a new job. To
require a long period of notice, rather than creating the concept of
"wrongful dismissal", is an
alternative way of resolving
the same injustice.
Let me pause there.
English common law has always acknowledged - in dealing with the middle
classes - that periods of notice should be sensibly related to the relative
ease of difficulty of finding alternative employment. "Middle
management", or middle-ranking professionals, are accorded six-month notice
periods (if not otherwise agreed) and top-people (Managing
Directors....) commonly get twelve-months. When it comes to the
working-classes, the English Courts have been more coy, ordinarily ruling
that the period of notice should simply reflect the periodicity of wages -
if paid weekly then one week, if paid monthly then one month. These
conventions reflect a legal context in which there was no concept of
"wrongful dismissal" (which was a late-20th century legislative
intervention").
I advocate a return to that principle, for every employee.
Effectively, every employee should be entitled to six month's notice, during
which his remuneration would be maintained at its established level
(Adjustment Pay) - permitting the
employee to search for new employment during that period and dispensing with
any obligation to "work out the notice". The employer would
continue to make Adjustment Pay payments precisely as before, with the right
to recover part of the moneys from the State fund. Employers would be
encouraged to give the employee positive assistance to find comparable
employment, for if that could be achieved in a shorter period, the
obligation to pay "Adjustment Pay" would cease. Disputes would
inevitably arise over the "suitability" of comparable employment, but that
could be resolved by local Job Centres, with appeal to an Industrial
Tribunal.
Consider the advantages.
- To the Employee - the
confidence that, at every salary level, there was no possibility of losing
ones position upon less than six-months' notice - that there would always
be a fair chance to adjust to changing circumstances, before facing the
big drop to lower benefit levels. That would constitute the most
enormous boost to consumer confidence, and workers' well-being. Yet
it is no less than the middle-classes have always engineered for
themselves - and Labour should be giving access to this support - to the
many, not just to the few.
- To the Employer - the
confidence that, in assessing the eternal tensions of hiring and firing -
the costs of firing could be precisely calculated, and that no further
obstacles could be placed in the way of corporate change. The
removal of the constraints of "wrongful dismissal" would lift an enormous
procedural burden from all employers, and give them the freedom to get on
with the difficult task of ensuring that trading firms survive, in an
increasingly competitive market-place. Industrial Tribunal
proceedings, most of which result in awards equivalent to less than six
months' wages, would be slashed.
These suggestions will initially antagonise many to the Left of me.
So let me deal with the likely objections.
Objection It is wrong to deprive long-serving workers of their
"lump-sum redundancy" payments, upon which they may have come to rely.
 Response: Fair transitional arrangements would be essential.
But the Redundancy Payments system was the brainchild of Frank Cousins in
the 1960s: he saw workers' as acquiring a long-term quasi-property right in
"the job", and a lump-sum service-related payment was therefore appropriate.
We now realise that employment is not like that,
and that it is a continuing process, in which all workers have to find their
way, from year to year, finding new ways of earning a living - we live in a
dynamic, mobile system, and the task to equip workers to deal with that
mobility.
Objection Workers need to protection of the "wrongful dismissal" laws -
employers will otherwise be give free rein to behave unjustly, and badly.
Response: All legal proceedings, in respect of wrongful dismissal,
are effectively actions for damages - no use has been made, in the UK, of
the power to order the reinstatement of a wrongfully dismissed employee.
We understand the practical difficulties of that jurisdiction, and no use
has been made of it. And damages rarely exceed six months' wages.
If every worker were automatically entitled to full-wage support for up to
six months, in order to obtain alternative employment, the foundation of any
damages claim would in practice fall away.
Objection But that would "lose" all those cases where wrongful dismissal
has been on race, or gender, or disability grounds - you cannot eliminate
those!
Response: I would not. Discrimination would remain actionable
- it is a separate legal wrong, quite apart from "wrongful dismissal".
So that is a misunderstanding: such cases would remain actionable.
Objection You would simply remove all constraints on employers -
they would sack employees at the drop of a hat!
Response:
Employers can do that already - and in terms of the working on the
economy, it is right that they should be able to do so. The TUC is
wrong to press for "European" constraints. Continental systems which
place legal restrictions upon the right-to-fire are unwise, systemically
flawed. The real wrong - the real injustice - lies not in the
dismissal, but the lack of resources and support available to the worker to
find a new adjustment to the labour market. Adjustment Pay would
address that great underlying wrong, extending a legal device which the
English middle-classes had long worked out for themselves...
This measure, coupled with the payment of a decent State pension, would
bring peace of mind to millions upon millions of our fellow citizens - and
would bother be sound socialist solutions.
What do you think? Drop me a
line
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