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Hermes’ investment in the United Kingdom is a story of opportunities and challenges

The delivery firm’s creation of 10,000 jobs is a story both about the benefits of the post-coronavirus economy and its pitfallls.

By Stephen Bush

The delivery company Hermes will create more than 10,000 new jobs in the United Kingdom in an announcement that reveals the opportunities and dangers of the coronavirus economy.

The opportunities are clear: despite some of the more excitable commentary, a shift to greater levels of homeworking does not have to mean higher levels of unemployment in the future. In normal times, people who work from home are not hermits – they go out for lunch, or work in a coffee shop, and stimulate their local economy, just as they do in an office. They also stimulate demand for delivery services of all stripes, of which Hermes – whose expansion will increase their workforce by more than a third – is one.

It doesn’t mean that the shift to hybrid modes of working will be costless – the reality is that most chains which have arisen to service the needs of office workers aren’t that good, because their killer app is convenience, not quality. In the short-term, greater levels of homeworking will cause a temporary rise in unemployment. This is one reason why the government ought to increase the generosity and remove the punitive elements from Universal Credit – because what will cause serious economic difficulties is the hit to incomes that unemployment would create overnight. In the long term, we ought to treat the furlough scheme as a model for unemployment schemes – I’ve laid out some of what I think we ought to aim for here, whether as a basic income or with a generous safety net – but in the short term, all that really matters is avoiding a double whammy of mass destitution and a further hit to demand when the furlough scheme ends in October.

But in the long term, there is no reason to believe that new jobs and industries won’t emerge, and plenty of evidence to suggest this is happening already, even while the fear of the novel coronavirus heavily suppresses demand.

The challenge, however, is to make sure that new jobs that are created are at least as secure and well-paying as the ones they displace: to avoid a situation where stable jobs in city centres give way to insecure work below the minimum wage without proper pay and conditions. 9,000 of the new jobs are as couriers, the majority of whom are classed as self-employed, so will not be eligible for sick pay, pension contributions or the national minimum wage.

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Of course, the reality is that there is a large degree of wilful self-delusion about jobs in cafes, restaurants and bars: many of which also are deprived of proper pay and conditions.

There’s a danger here whenever people talk about certain jobs as being “low-paid” or “insecure” that we tend to treat those as qualities that are innate to the role itself, rather than the product of specific political and economic choices that have made them so. A cleaner can be paid a living wage and given proper working conditions: it’s just that a lot of households and businesses choose not to.

Similarly, there is nothing intrinsic to the role of delivering a parcel to your door that means the person doing it has to be badly paid and have poor working conditions. In fact, it’s in your interests for the person delivering a parcel to your door to be well-paid and to have good working conditions.

Higher trade union density, better labour market regulation and enforcement are three things that could improve pay and conditions.

There’s a “fewer, but better” calculation at work here: 4,500 couriers earning more, with proper holiday entitlement and better pay and conditions will create more jobs thanks to their own superior disposable income and leisure time than 9,000 just scraping by will. The “gig” economy is fantastic when it creates jobs doing well-paid commissions and more leisure time: it is economically disastrous when it creates jobs paying poverty pay held by people working multiple jobs just to survive.

That’s the real challenge for economic policy both during the pandemic and after: to create better and high-paying jobs, rather than to spend public money encouraging people and businesses to make spending decisions they don’t want to, whether that be eating in restaurants or working from offices.