Magazine article Management Today

Cutting Room

Magazine article Management Today

Cutting Room

Article excerpt

Toynbee shows why low pay is no way to profits; my slow-motion euro cheque: how to hedge in the property market; mein hosts in Berlin ... Evan Davis at large.

I'm told that we're meant to get more right-wing as we get older.

I must be peculiarly counter-cyclical, because I find myself concurring more and more with that supposed ultra-liberal, Polly Toynbee, Guardian columnist and author of the recent social documentary, Hard Work: Life in Low Pay Britain.

The book is one of those simple but ingenious journalistic ideas that you wish you'd thought of yourself. Toynbee tried working in a selection of minimum-wage jobs and documented her experiences. It leaves one feeling that we've all been so preoccupied with getting people into work and out of unemployment that we've forgotten how challenging life can be on low pay.

Toynbee tried the same thing 30 years ago - and she points out that she was paid more in real terms then than now. Of course, part of the low-pay trend is a result of the huge increase in labour supply over recent decades, much of it from women coming into the jobs market.

But there's more to it than that. In an overreaction to the '70s, management have somehow got the idea that the only skill they need is to pay people as little as possible (except themselves), to hire all their low-grade staff from agencies, and to ignore issues of staff turnover, productivity and motivation.

I am deeply sceptical that this is a sustained way to profits. Management will ultimately find that this lazy style of personnel management runs counter to the interests of their shareholders - after all, Railtrack managed to bankrupt itself by pursuing these policies, and at last Network Rail inclines to the view that employing a few staff who understand the rail network is probably a good idea.

But why should Toynbee be the one to remind us of this? Shouldn't a few of us trained in mainstream economics have been a bit more on the ball with pay trends? She insults orthodox economics in her book. She should get an honorary economics degree for her efforts.

Last month, I promised to update you on my small experiment to pay a EUR500 cheque to the Inland Revenue. Gordon Brown had promised the Treasury select committee in February 1998 that he would 'create a legislative framework' to help British business pay British tax in euros. …

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