Employment in the Lean Years: Policy and Prospects for the Next Decade

Employment in the Lean Years: Policy and Prospects for the Next Decade

Employment in the Lean Years: Policy and Prospects for the Next Decade

Employment in the Lean Years: Policy and Prospects for the Next Decade


Over the last fifteen years, the deregulation of Britain's labour market has led to economic growth, employment opportunities, and a more diverse workforce: the 'fat years'. However, now as Britain faces its lean years with job cuts, rising unemployment, income insecurity, and related social strains, how can and should the government and key labour market policy makers ensure the labour market provides job opportunities and reasonable levels of social justice? The fundamental changes that have occurred in labour market institutions mean that 'solutions' of previous decades no longer work. This volume sets out to address the major challenges faced: - Unemployment, immigration, housing and job subsidies- Key institutional changes, such as the decline of collective regulation and the rise of occupational licensing- Pay inequality and minimum wages- Pay and subsidies in the private and public sector Contributions from leading experts in the field employ the latest theory and empirical research to examine a different set of problems and the policies that could help to resolve them.


It is an enormous pleasure to reflect on David Metcalf’s life as an economist, public figure, colleague, and friend. His influence has been enormous. David, more than anyone in Britain, brought economics into the study of the workplace. He wanted to know how laws, unions, and payment systems actually affect outcomes—how they influence productivity, pay, and morale. Before his research, it was the conventional wisdom that trade union legislation could have no effect on what actually happened. David proved that the opposite was true. Using the first Workplace Industrial Relations Survey, he had shown that in 1980 unions reduced both productivity and profit; but as the Thatcher reforms began to bite, those effects disappeared. David showed this statistically, but he also checked how the closed shop worked in practice, getting up early day after day to study the Smithfield meat market.

He also forecast the decline of unions long before most other people. This came from applying multivariate methods, rather than univariate methods as was normal practice before then. From looking at the impact of legislation, industrial composition, and the birth and death of firms, David’s analysis made clear that for private sector unions the writing was on the wall.

In recent decades, incentive pay has become increasingly common. David showed how well-designed incentive pay can have powerful effects on performance. If each worker’s output can be measured, as with jockeys, this is not surprising. Equally, incentives can work wonders when they are based on team performance, as in the call centres he studied. But inappropriate pay systems have more ambiguous results. David did, however, show that worker participation in planning work organization has good effects on worker morale even if its effects on productivity are often neutral.

Looking to the labour market as a whole, David has made important contributions on pay—including one of the first studies of the rate of return to education. His work on regional Phillips curves showed the powerful national effects of labour market tightness in the South East of England — this greatly reinforced the case for active regional policy.

David also did significant work on unemployment. On local area unemployment rates, he showed the huge effects of individual factors and not just local labour market conditions. He also showed the value of special employment measures, like Short Time Working Compensation Schemes, similar to those successfully used in the current European recession. And he offered good cost–benefit arguments for slowing the rate of pit closures.

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