Has the welfare system distorted our economy?

[Cirrus]

BA, BT and Royal Mail are examples of screwed up large companies.

Unfortunate choice of companies - they were all previously Public Sector.

[xoggoth]

BA, BT and Royal Mail are examples of screwed up large companies

Not sure what's screwed up about those in particular, though I don't disagree that large companies in general do have more in common with the public sector in terms of efficiency. Unionisation of the workforce is one aspect of that. The big unions are a problem in general. We might still have a British, non-foreign owned car industry if not for all the strikes back in the 60s.

They are the major problem with the railways today. Renationalising would not solve the problem unless just giving into to all their demands is a solution. We hear that train drivers may soon be earning 70k. Most graduates, after a 3 year course, get about 30k but train drivers on completing their 1 year course get £47k. Absurd considering the low skill levels involved and the range of automated safety devices in use. We could largely replace them by technology if not for opposition by the unions.

Driverless Tube trains: Unions vow 'war' over plan - BBC News

2nd millennium Luddites!

[northernladyuk]

The Grenfell tragedy has again highlighted the fact that many are being subsidised via social housing and welfare in areas that most of us could not afford to live in. Yet the subsidy clearly isn't enough to provide basic safety. An area like London needs many low skilled workers, it could not function without street cleaners, café workers etc. but is the social system the right answer?

A basic fact. If we are going to provide an adequate quality of life for them it is going to cost at least the same, however you do it.

A much better solution than social housing and welfare would be a return to market economics. Let employers offer whatever it takes to get people to work in their areas. You may say they couldn't afford that but they are paying for it anyway via colossal business rates. If councils were not paying huge costs for social housing and welfare those could be enormously reduced.

The saving could actually be greater because we would not have all the huge administration costs. Many of those unnecessary public sector workers could be got rid of and maybe end up doing something more useful that really helps the economy.

Another advantage would be that people would feel they had more worth if they were paid in accordance with market needs and were in control of their own lives rather than having to resort to the state.

Employers will continue to pay what they do and workers will respond by living in overcrowded housing.

[SueEllen]

Unfortunate choice of companies - they were all previously Public Sector.

They were privatised so should have been better managed but they weren't.

I suppose I could have used IT companies like IBM.

[SueEllen]

Not sure what's screwed up about those in particular, though I don't disagree that large companies in general do have more in common with the public sector in terms of efficiency. Unionisation of the workforce is one aspect of that. The big unions are a problem in general. We might still have a British, non-foreign owned car industry if not for all the strikes back in the 60s.

I would argue the crap management mainly due to the class system plus the British government also contributed to the this and you can't simply blame the unions.

They are the major problem with the railways today. Renationalising would not solve the problem unless just giving into to all their demands is a solution. We hear that train drivers may soon be earning 70k. Most graduates, after a 3 year course, get about 30k but train drivers on completing their 1 year course get £47k. Absurd considering the low skill levels involved and the range of automated safety devices in use. We could largely replace them by technology if not for opposition by the unions.

Driverless Tube trains: Unions vow 'war' over plan - BBC News

2nd millennium Luddites!

Not all train drivers make that amount and the unions are clever - you can't become a train or tube driver earning the high wages unless you jump through some experience hoops.

Plus the terrorist attacks and other tragedies plus the age of the infrastructure make it easier for the unions to argue there needs to be a human being driving the trains.

[edison]

Public sector workers, for example, generally have more security, are better paid and have better pensions that many in the private sector and this is all supported by those "leftist" big public sector unions.

If that were true, there should be hordes of private sector workers wanting to switch to the public sector. There would be lots of younger professionals and graduates preferring to enter the public sector too. That just doesn't happen.

I've worked for several FTSE100 and global multi-nationals as well as five years in public sector and not for profit organisations. In my experience, the popular perception that public sector is wasteful and inefficient and the private sector is efficient is a simplistic and inaccurate comparison.

If the UK private sector is so efficient, how come UK productivity is so far behind most of our international peers e.g. G7 countries?

USA 22% more efficient
France 23% more efficient
Germany 27% more efficient

Not only that but UK productivity growth has been almost flat for the last 10 years since the financial crash in 2007.

There are a lot of very inefficient private sector companies in the UK, especially small to medium sized ones who typically have poor management and low investment levels such as new technology.

[SueEllen]

There are a lot of very inefficient private sector companies in the UK, especially small to medium sized ones who typically have poor management and low investment levels such as new technology.

Sports Direct perhaps?

[xoggoth]

Thing on productivity here with some other links to reasons:

It means the UK has lower unemployment and a bigger workforce, with fewer people economically inactive than France – but lower productivity and lower pay.

In France, and to a lesser extent Germany, restrictions on working hours are other factors at play. For instance, widespread industrial pay bargaining and limits on redundancies make hiring workers a more costly proposition than in the UK. This encourages French and German firms to invest in the latest machinery and limit employment.

Bill Martin, a former City economist who is now at Cambridge University’s Judge business school, has argued that the UK’s poor productivity is “more plausibly interpreted as a symptom of a largely demand-constrained, cheaper-labour economy”.

He is not alone in saying that companies would invest in new equipment and be more productive if only there was higher demand for British goods and services from its domestic businesses, consumers and the international community.

https://www.theguardian.com/business...ajor-economies

Interesting second sentence. Suggests more regulation on employment can improve productivity but for a rather converse reason - because employers are less likely to take people on. As I said on the trains thing, we need to move to technology where possible and stop relying on unnecessary labour.

I don't want to turn this thread into yet another thing about immigration but cheap labour is a factor in low productivity. One minor example is the absurd abundance of car washes, there's four within easy drive of me that I know of. The automated car washes that local garages invested a lot of money in are little used. If you are adding 200k+ to the population each year and many of those are in low skilled jobs, productivity will drop, it's basic maths. We need to take in only the high performers.

[xoggoth]

One link from that link:

But one striking feature of the modern economy is how few skilled people are needed to drive crucial areas of economic activity. Facebook has a market value of $374 billion but only 14,500 employees. Microsoft, with a market value of $400 billion, employs just 114,000. GlaxoSmithKline, valued at over $100 billion, has a headcount of just 96,000.

The workforces of these three companies are but a drop in the ocean of the global labor market. And yet they deliver consumer services enjoyed by billions of people, create software that supports economy-wide productivity improvements, or develop drugs that can deliver enormous health benefits to hundreds of millions of people.

This disconnect between employment and value added reflects the role of information and communications technology (ICT), which is distinctive in two crucial respects.

https://www.project-syndicate.org/co...turner-2016-10

This recent news is therefore rather worrying:

THE total number of students taking science and technology programmes at institutions of higher learning (IPT) in the country is dropping drastically compared to the target of the government to raise the ratio from 20:80 to 40:60.

Deputy Science, Technology and Innovation Minister Datuk Dr Abu Bakar Mohamad Diah said according to the “Science and Technology Human Capital Roadmap: Towards 2020” report, the situation was worrying as the fields concerned are important elements in driving economic growth, especially in terms of skilled manpower in the country.

Read more at Fewer studying science, technology subjects - Education | The Star Online

Fewer studying science, technology subjects - Education | The Star Online

A TV news item today, can't seem to find it online, says there is a big drop in students studying IT.

[edison]

Sports Direct perhaps?

AFAIK, until two years ago, Sports Direct was actually quite an efficient company (perhaps ruthless would be a better description).