Britain’s chamber of commerce says corporations should share their new prosperity with line workers. Wait, what?

December 30, 2013

John Cridland is not a redistributionist. As director-general of Britain's biggest business lobby group, the Confederation of British Industry, he's lately railed against the Labor party's regulatory agenda, and, around this time of year, usually issues a new year's address condemning new taxes and rules that restrict free enterprise.

But this year, the message was somewhat different: British companies, which are finally returning to health, ought to share their newfound prosperity with the lowest on the totem pole.

“As the financial situation of many firms begins to turn a corner, one of the biggest challenges facing businesses is to deliver growth that will mean better pay and more opportunities for all their employees after a prolonged squeeze," Cridland said, in an speech titled "We need balanced growth that benefits everyone." "The good news is that wages will pick up in the year ahead as growth beds down and productivity improves. But there are still far too many people stuck in Minimum Wage jobs without routes to progression – and that’s a serious challenge that businesses and the Government must address.”

Now, Cridland doesn't support raising the minimum wage, as Labor leader Ed Miliband has proposed. And Cridland's message includes paeans to "flexibility" that allow for hiring at many different salary levels. Still, it's a considered response to evidence that Britain's improving economy hasn't quite reached the lowest levels of the workforce. According to the country's largest labor union, real earnings have declined by 13.8 percent since 2008, while executive pay has increased. Salaries are rebounding slightly, but are still growing slower than the cost of living:


Annual percentage change in median full-time gross weekly earnings and the Consumer Prices Index (CPI) from Britain's Office of National Statistics

There's also solid economic reasoning behind Cridland's advice that companies pay their workers more. With more money in their pockets, they'll be able to  buy the stuff that keeps businesses in business, creating a virtuous cycle of growth (though of course, it's difficult to establish a direct causal link).

Contrast the CBI's borderline populist approach to that of its American equivalent, the U.S. Chamber of Commerce. As liberals have picked up increasing the minimum wage as a central campaign issue, the business coalition has predictably dug in its heels against it -- but with no parallel message that companies fed by a booming stock market ought to voluntarily offer a hand up to their lowest-paid employees. And while the CBI issues reports about creating a system that helps people avoid the "benefits trap" by making work more attractive, the U.S. chamber advises its members to chaperone their low-wage employees onto public assistance programs like housing vouchers and food stamps, as a cost-free way of addressing the business problem of high turnover.

Given that the United States faces similar issues with the bifurcation of its workforce into low-wage earners and the wealthy, the difference in business attitudes is striking.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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Evan Soltas · December 30, 2013