Every silver lining has a cloud

In economics, there's nothing fully good.

From the department of counterintuitive findings come two findings showing the downsides of good news.

First up, the Washington Post reports on a new explanation for why it is that people start to die when the economy gets better. For every percentage point decrease in the unemployment rate, there is a 0.004 per cent increase in the number of deaths (a low, but statistically significant amount), which corresponds to about 6,700 dead people.

Suzy Khimm writes:

In a new paper, researchers argue that economic boom times create a scarcity of caregivers in nursing homes, raising the mortality rate through a disproportionately high numbers of deaths among the elderly.

The Center for Retirement Research explains that a strong job market creates “greater scarcity in front-line caregivers in nursing homes, which may cause more deaths among the elderly.” When the overall unemployment rate goes down, for instance, employment declines are particularly noticeable among certified aides and nurses in these facilities.

Meanwhile, in Investors Chronicle, Chris Dillow addresses the upside of a downside (so to speak).

Since 2007, labour productivity has fallen in the UK, meaning that the one hour of work now produces less output than it did five years ago – 3.4 per cent less, to be specific. This is pretty bad news. Historically, a lot of growth has come from population growth. A more populous country can make more stuff than a smaller one, after all. But now that much of the west appears to have a stable population, we need productivity to grow if we are to have any growth at all. If we can't have more people making stuff, we need to have each person making more stuff.

But this prductivity slump isn't entirely bad news:

If the relationship between GDP and employment in the last four years had been the same as it was in the previous 20, there would now (mathematically speaking) be 3.1 million fewer people in work. If all these had registered as unemployed, there'd be 5.8 million out of work - an unemployment rate of 18.2 per cent. Imagine the political effects of that.

On his personal blog, Dillow elaborates:

You might think that the very fact that workers are more productive in this alternative universe would cause firms to hire more of them. But things aren’t so simple. Firms only hire if they anticipate sufficient demand for the additional output. And where would this demand come from? The tendency for higher unemploymentwould depress consumer spending. On the other hand, it’s likely that business investment would be higher - not least because a world of growing productivity is a world in which there are more investment opportunities and easier access to finance.  But as business investment is only 8.3% of GDP, it’s unlikely that it would be so much higher as to create three million jobs.

Sometimes, good news can be bad news, and bad news can be good.

We may not be getting more productive, but there's an upside to that. (Getty)

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Getty
Show Hide image

How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.