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How little are you worth? Pay, the economy and a living wage

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It is very rare that I hear something on the radio in the morning that makes my blood boil. Mainly because it is normally so early that I’m still half asleep and more interested on getting to the train on time than getting aggrieved at an inanimate object.  I made an exception this morning to the views being expressed by Mark Littlewood from the Institute of Economic Affairs on the National Minimum Wage.

The argument goes, and I should add that it isn’t only Mr. Littlewood that makes this argument; the minimum wage is stifling job creation. Put simply if it was lowered then people would hire more, there are bosses out there who have work that needs doing but don’t think it is worth £6.08 per hour to get it done.  It is, in his mind and many others, a simple economic argument: business will pay the least for labour that it can.  He even went on in the interview to connect the level of the minimum wage with the youth unemployment figures.

The argument is infuriating in its simplicity and appeal. It is also completely facile and ill-conceived.

So what is the problem with this?

Before we deal with the moral arguments (which are a matter of opinion) let us have a look at the more practical business arguments.  First the argument assumes a homogeneity of skills and ability, that labour is universally transferable therefore the only market determinant is price. And of course this just isn’t true.  There isn’t one labour market, there are several interlinking labour markets and massive differentials in skills and abilities.  Companies compete with one another for labour and that is why there are wage differentials.  John Lewis will pay vastly different wage rates to the likes of Argos for example, but they are both employing retail workers.  If businesses only employed at the lowest possible level, then this simply wouldn’t happen, they would all pay at the £6.08 level.

Next let us look at the youth unemployment argument.  Unless I am massively mistaken and there has been emergency legislation over night, the 16-17 year old rate and the 18-20 year old rate of the National Minimum wage are lower (at £3.68 and £4.98). So IF businesses have all of these jobs that need doing but don’t think that they are worth £6.08 an hour and IF the labour market is purely financially driven, then surely we should be seeing unemployment in these age groups dropping? Of course a flick through the recent unemployment statistics shows that not to be the case.  Tuition fees, education and skills gaps? No. The reason these guys are unemployed is the adult  national minimum wage rate being set too high.

I worked in the business services sector before the National Minimum Wage.  We employed a lot of people in very labour intensive low skilled roles for a variety of clients from big private sector names to government departments.  I can tell you that the hourly rates that were paid by some of these businesses were shocking (less than a pound an hour in some cases).  And this is where we come to the root of Littlewood’s argument, because in this labour market there is a homogeneity of skills and transferability of labour and very often there is greater supply than demand.  This is where wage rates can be pushed down.

But this is also exactly why the National Minimum Wage was introduced back in 1999, to protect the most vulnerable and to afford everyone the right to a living wage.  We’re talking about £6 per hour here – for a forty hour week that would equate to less than £12,500 before tax and National Insurance. Does that sound too much to pay someone to clean your floors, to pick your fruit, to bring you your Caramel Macchiato?

We are living in difficult times, every time we switch on the television, turn on the radio, open a newspaper or flip the cover on our iPad, there are forecasts of doom and gloom. And in these times there are people who will push ideological messages under the cover of economic messages. Littlewood has his views and I have mine, that is the wonderful thing about a democracy. But when you hear people talking about the removal of this right or that right, the reform of this or that and basing it on an economic imperative, take a moment to look under the surface of the argument and examine whether it really is as simple as it seems, or whether there is something else lurking within.

UPDATE: In the UK, you can now listen to the original interview here (the interview starts at 28m 15s in).

The mutuality of networks

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Relationships have to be two-way to be meaningful, otherwise they aren’t a relationship. We need to both give and receive for the connection to be real, for the connection to be purposeful. I’m wary of posting anything that might sound like a diatribe on social media, there other people better qualified in diatribes than I am, but there seems to me to be a disconnect developing between the online and offline approaches to people’s networks.

I’m very lucky to have a close group of neighbours and if one of us is away, another will step in to check the mail, feed an animal or just make sure that everything is ok.  But it is a shared commitment that we all have, unspoken, unrequested, bit critically important to the living breathing community that we have become.  If one neighbour were to constantly be asking for help, but never providing then unless they had some specific reason I’m certain that after a period of time it would become awkward.

Likewise, the business  people who I know in and out of my business also have this mutuality of commitment at the base of their relationships with me.  If I need something, I can call on my network and they will, if they can, come to my assistance.  And of course, I will come to their’s too if it is within my power.  The phrase “you scratch my back and I’ll scratch yours” is often seen in a dim light, but in reality this is at the basis of everything that we do.  It doesn’t have to be now, it doesn’t have to be tomorrow but I’d like to believe that people are there for me.

I had a conversation with Jon Ingham last week about a subject not a million miles away from this.  We don’t hold the same views on influence and connectivity, but we share a lot of overlapping thoughts, opinions and beliefs.  In an online world it is easy to confuse “connections” with connection.  We can have a gazillion followers, or a bazillion “friends” (ok so I made that word up) but the quality of this interface is something that is a lot harder to get at, to measure, to understand. I’m quite happy to connect on LinkedIn with people who I know, know of, or have met.  Likewise I am happy to recommend people who I genuinely WOULD recommend.  Less so those people who wish to do so because I work in HR and they feel that there might be some benefit for them.

But isn’t that a bit…..selfish? If I can help someone, then shouldn’t I try to do so?

Well yes, and no.  I’d like to think that over time, I’ve been helpful to people who I’ve met online. Can I write this? Can I speak at that? Would I have a look at this and tell them what I think? Of course.  The difference is that these people have interacted with me beforehand and I have a belief that if I were to need something in the future, they would reciprocate.  I haven’t “got” anything from them, other than the time of day and a bit of a chat about XY and Z, but the intention in approaching wasn’t about what they could get, that came later.

But giving can be more than acts, it can be content and thought, it can be support and advice.  I’m open to friend requests on Facebook or follower on Twitter (haven’t quite got my head around Google+ yet which seems a bit of a free for all) but at the same time as I hope I contribute to a conversation, I look to others to do so too.  If you follow 11 people and have a thousand followers, you are going to be in transmit mode constantly (I saw a senior Head of Resourcing with this sort of profile the other day and thought…no thank you).

I guess where I’m getting to, what I’m starting to think is that there needs to be some level of value. And value isn’t a number, but more a sense, a feeling an emotion. It isn’t about frequency, I have some great friends and contacts that I speak to only time to time, but I know that should I ever need anything, they would be there.  Networks, relationships, communities are all about mutuality, not just of purpose, but of contribution.

Offline and online should be no different in that respect.

How not to engage with customers

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I don’t profess to be any sort of marketing or customer service guru. That said, having spent the best part of a decade working in retail, I know a little about managing customer relationships and expectations. 

At the weekend my daughter fell in love with a certain pair of Converse shoes (for those of you that care, they’re the waterfall blue, double tongued variety).  The thing is, the shop that we were in didn’t have her size and so when we got home we went on the internet and eventually found a pair at a shop called Ozzy’s & Archive. Click, click, credit card. Job done.

Until Monday evening when I received an email saying,

“Hi Neil,

Thanks for your recent order of the Converse shoes!

Some bad news im afraid. We have just gone out of stock with this shoe!

We are changing our stock system and some so we are having to manually change stock levels on the site for now, unfortunately you placed an order before we had chance to change your items stock levels online.

Its upto you what you would like to do. Whether you want to choose another item to replace the shoes, or just have your order cancelled. Whatever you want, just let me know!

Again, sorry for the hassle,

Something about the tone really got to me (maybe the excessive use of exclamation marks).  As a customer, I don’t really care what your systems issues are, that is the rational explanation that YOU have for YOUR service failure, it isn’t the emotional attachment that I had with the product that (in my mind) I had already bought. And to compound this, there was there was no recognition of the disappointment – just a choose something else or get your money back standard response.

On the bottom of the email, however I noticed a Facebook page. So I thought I’d check it out. I “liked” the page (which felt somewhat counter intuitive…but hey!) and saw that there was a post about not winning a Retailer of the Year award. At this point you’ll understand I felt obliged to post something, so I wrote a comment on their wall:

Sadly rubbish customer service from Ozzy’s and Archive. You are a long way from Retailer of the Year if you can’t show your stock levels correctly on the site, take an order and then respond with a “choose a different product or have your money back” routine. One lost customer.

I checked back a little while later and lo and behold……my comment had disappeared.  Censorship? Well hang on a minute….so I wrote another comment:

Hi there, I wrote some feedback on here about the poor customer service that I received from Ozzy’s and Archive but it seems to have disappeared. Surely you haven’t deleted it?

And then things just got worse……within 10 minutes that comment was taken down too and my ability to post anything on that page was revoked.

Clearly someone didn’t want people to see any bad comments about their service. Which is what brings me here to write about this today.  The world with social media is a conversation, you might be able to constrain what people see or hear (to a certain extent) but you can’t control what they say.  And ignoring a negative situation, surely doesn’t change how people feel.

Engaging with customers that are disappointed and upset is as, if not more, important than engaging with customers that are advocates.  You can try to control the message, but somehow it will always get out. So wouldn’t it be better in the first place to engage?

Ozzy’s and Archive gave me bad customer service. It wasn’t abysmal, but it was pretty ropey. Through the way that they’ve handled it, however, they have turned a disgruntled customer into someone who wants to write about it and tell the world what a rubbish company he thinks they are. They had a choice how they reacted and treated me and they chose to try to make the problem go away.

Sadly for them, it didn’t.

As a side note, Ozzy’s emailed me again last night elaborating on their justification for their failure, but sadly I can’t reply as their Mailbox quota has been exceeded (how many more customer service crimes can one company commit?). If you want to see the screen prints of the various comments then you can see them below (I don’t normally take screen prints – as you can tell from the other tab open on the first one! – but funnily I had a hunch about this. Oh and I no longer like their page……but Maddy does have a new pair of Converse on the way to her……just from a different shop.

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We can’t work it out

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Another Government, another job creation scheme, another waste of time and money.

Last Friday saw the launch of the latest employment white elephant, “The Work Programme” charmingly described by Employment Minister Chris Grayling as,

“a giant employment dating agency”

The concept is to use private companies to find employment for unemployed people and incentivise them to do so with the payments for success ranging depending on how unemployable the placed people are.  There are a number of serious faults with the scheme, many of which have more than adequately been highlighted by my friends at the Work Foundation:

  • Unemployment has huge regionality – if you’re unemployed in an area of high unemployment then incentives to contractors to find you work are not going to help one iota
  • Unemployment has huge emotional, social and psychological implications. Trying to solve it through a commissioned based system is a recipe for disaster – expect to hear stories of vulnerable people being ill-advised and placed in roles that are unsuitable
  • Private enterprise will focus on where it can achieve a return, not where it can be most socially useful
  • The scheme is focussed on demand side, not supply side

And this last point is the real issue, the real area where this and other job schemes come crashing down.  Employers don’t (generally) create jobs because of Government schemes.  There may be some headline grabbing stories – generally from retailers creating part-time, low paid jobs. But that hardly deals with the issues that are driving the unemployment figures – such as tens of thousands of public sector workers losing their jobs.

If we are serious about creating meaningful sustainable employment, we need investment in the key market sectors that Britain can be strong in. We need to invest in the knowledge economy, in creative industries, in R&D. We need to learn the lessons from the financial crisis and incentivise the development of a mixed economy. But perhaps most importantly we need to understand that the burden of tax on businesses needs to be reduced.  Business creates jobs when they are growing and investing in their future, not when they are holding their own or at worst contracting.

There is no genuine, long-lasting value behind “job creation” schemes or incentives, they don’t lead to a step change in the labour market, they are political window dressing that hide the main issues of economic frailty. Within the UK, if we are serious about solving the current unemployment situation (and we should be as it is a 17 year high) then we  need to create an environment that supports business growth, entrepreneurialism and innovation.

At the same time, we need to address long-term skills shortages, through significant investment in retraining and finally to support business development in those communities that have been devastated through long-term unemployment and public sector cuts.

The “Work Programme” does nothing to tackle the crux of our unemployment problem. It is time to grow up and start discussing the real issues that lie at the heart of the matter, only then will we take any meaningful steps forward.