Jim Armitage: Employers hold the cards on pay — and it hurts the UK

JIM ARMITAGE
When the employment market is strong, the number of workers moving jobs rises: PA Archive/PA Images

We’ve all been there. A rival asks if you fancy working for them. You don’t, but it’s ages since your last pay rise.

Pretending to be interested, you breeze through the interviews, get a firm offer, including a big salary bump, then threaten your boss to quit unless he beats it.

It’s the oldest trick in the book and, in these days of paltry wage rises (2.1% in today’s official data), one many of us fancy deploying.

But it’s only an option if the job offer’s there in the first place. And, despite the view peddled by ministers that employment’s booming, for most people, it’s not.

We know this because when the market is strong, the number of workers moving jobs rises.

That “churn” fell sharply after the financial crisis and has not recovered since. According to Resolution Foundation data today, the number of workers moving geographically for a better job has tumbled too, from 0.8% of the population in 2000 to 0.6% last year.

Young graduates, always the most mobile, are half as likely to move now as in the 1990s.

That has two effects: first, it keeps wage rises in the UK low. The average pay rise from moving jobs last year was 7.8%, or 9% if you moved to another part of the country. The fewer of those, the lower the pressure on employers to up wages for everyone else.

Second, it shows that companies are still not confident enough to pay extra for the most talented. They’d rather have cheaper, average staff than shell out for the best.

Just like employers’ reluctance to invest in new, efficient equipment, that is terrible for productivity. Worse still, it equates to a huge waste of talent, a country where the best people are in the wrong jobs in the wrong regions.

Employers may hold all the cards when it comes to pay bargaining, but Britain is the worse for it.

Keep taking the pills

Donald Trump’s red-mist attack on Merck’s chief executive this week will not have gone down well with Republican high-ups.

Kenneth Frazier was the first of a list of tycoons to quit Trump’s manufacturing panel over his tepid condemnation of white supremacists. Cue the President tweeting an attack on Frazier’s “RIPOFF DRUG PRICES”.

The thing is, Merck’s a fairly decent, innovative US employer and doesn’t have a particularly bad name for pricing.

But worse for Republicans, it and its peers are among the biggest contributors to the party. Merck gifted more than $900,000 since 2015. Last year, the industry gave it $15 million.

Yet Trump demonises pharma firms at every turn. They’re far from perfect, there or here, but they don’t deserve this.

Republican leaders must think the President’s off his meds.

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