Private sector wages should not be the business of Government

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2 days ago

For far too long, British politicians have created laws and systems that outsource decisions to the courts. All of this has been done with the best intentions, but too little consideration has been given to the unintended consequences, and the outcomes have been perverse.
Thanks to a spate of absurd rulings, including the Albanian criminal allowed to stay in the UK partly because his son will not eat foreign chicken nuggets, many are aware of the impact on efforts to control our borders. But the problem is much broader, impacting everything from planning to energy. Increasingly, tribunal judgments are even telling businesses what they should pay their workers.
If that sounds crazy, it's because it is.
All jobs are different; all people are different too. In theory, setting pay is hard, because the pros and cons of different roles depend on individual preferences. In practice it's easy. You don't have to sit down and work out a weighted aggregate of a job's different pros and cons to different people; the market does that for you. You can start hiring, and you'll find out pretty quickly how much you need to pay to fill a role.
This is so obvious that it almost isn't worth saying. But it's not what our laws say. The Equality Act, passed in 2010, mandates 'equal pay for equal work', doubling down on the Equal Pay Act of 1970. But what is 'equal work'? According to the Equality Act, it isn't where two people do the same job. It's not even where two people do similar jobs.
In fact, the Equality Act says, the only way to tell if two jobs are 'equal' is to conduct a 'job evaluation study'. Rather than letting the job market determine fair pay, bureaucrats and judges use a host of arbitrary criteria to decide what a role is worth.
What does that look like in practice? Last August, a six-year case concluded against the retailer Next. The company was sued by three women, current and former workers, who insisted that store staff (mostly women) should be paid as much as warehouse workers (slight majority male).
Any of the store staff could have moved to the warehouse if they wanted more money. In fact, Next were desperate for them to – the company had a recruitment drive for the warehouse among store employees.
But very few people wanted those roles because working on the shop floor was pleasant and working in the warehouse was not. One of the women who brought the case admitted that she would only have considered moving to the warehouse for 'a lot more money.'
Incredibly, Next lost. The court decided the two roles should be paid the same. The same thing is happening to Asda. And Birmingham council was effectively bankrupted by an equal pay claim brought by (mostly female) cleaners complaining they weren't paid as much as the (mostly male) binmen.
We should be grateful anyone is willing to do work that's backbreaking, dirty or dangerous. They deserve to be paid fairly; often more than people who don't want to do that. But now bureaucrats have come in to fix what isn't broken and insist that what is fair is actually unfair. This undermines our economy and it needs to stop.
Katie Lam is the Conservative MP for Weald of Kent
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