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‘Burnham's plan to publish salaries will kill jobs’
Andy Burnham wants salaries to be published in all job adverts. But the last thing businesses need is more burdensome regulation, says Matthew Lynn
When it comes to salaries, we all want to know what the person at the next desk is earning, whether we might have missed out on a pay rise, or how we might be able to wangle a promotion. That's office politics. Very soon, it might also be a legal right. The government is planning to force employers to publish the exact salary in every job advertisement.
PM Andy Burnham is good at coming up with small wheezes that grab the headlines. But it will not stop here. Last month, the Equality and Human Rights Commission – exactly the kind of body Labour can't say no to – recommended complete transparency on pay, with employees given a legal right to know what their colleagues earn.
Putting salaries in job ads: nice idea that won't work
In theory, it may sound only right and fair to put salaries in job ads. But it is not going to work out in practice. First, it will reduce flexibility. Employers, for perfectly good reasons, often vary the salary according to what they think of a particular candidate. If they can't do that, they may not end up with the best person. It may even reduce overall wages. If you have to publish the salary alongside the vacancy, you will probably go for the lowest number possible just to be on the safe side.
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Second, publishing salaries in ads will mean more regulation. If you have a law, then you need someone to enforce it. We will see yet another quango created, with hundreds of staff checking vacancy listings to make sure they are complying with the new law and sending out letters and issuing fines to anyone they judge has broken the rules. That all costs money and someone will have to pay for it. way regulatory agencies work. Once they get started, they grow and grow.
Third, all other kinds of objectives will be bolted on to the law. Very soon employers will also have to disclose how much holiday is allowed, how much maternity leave, the policy on sick days, whether there are free snacks at lunchtime, and then have to disclose targets for gender and racial equality, and anything else politicians think might make a good headline. That is the way regulatory agencies work. Once they get started, they grow and grow.
Life in the real world
Finally, in the real world, what difference will it make anyway? It has not received as much attention as it should have done, but most people in Britain now earn the living wage, and that is set by the chancellor once a year. A report earlier this year from the Centre for Cities found that in cities such as Doncaster the living wage is now up to 82% of the median salary and it is at similar levels in two-thirds of cities across the UK.
Likewise, wage compression means there is relatively little difference to what you might make from, for example, managing a fast-food restaurant and just frying the chips. In effect, we are moving towards a single, standardised wage controlled by the government. So what is the point in publishing extra information? Everyone knows what they will be earning. It will be the living wage, the same as everyone else.
The best way to improve rights for workers remains a buoyant labour market. Then, if you don't like your employer, you can simply walk out and work for someone else. Instead, we are introducing more and more rules and making the market more and more complex – one day companies may well decide that the only solution is not to employ anyone at all.
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Matthew Lynn is a columnist for Bloomberg and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
