At last, some news of an industry in Britain that is flourishing. Unfortunately, it is one that is helping to suppress growth in every other sector of the economy. I am sure that the lawyers who have brought a case involving 60,000 female workers at Asda think they have won a famous victory after an employment tribunal ruled that most of them were victims of sex discrimination for being paid up to £3.74 per hour less than the company’s warehouse staff. But all they have really achieved, other than lining their own pockets and those of their backers, is to impose vast bills on hard-pressed retailers which, in some cases, could lead to their extinction, destroying jobs along the way. The cost to Asda of the ruling has been put at £1.2 billion, but it is feared that such cases could cost the retail industry as a whole up to £8 billion. The clothing chain Next has already lost a similar case at an employment tribunal.
The Asda and Next cases are very similar to the case which led to the bankruptcy of Birmingham City Council. They do not involve different rates of pay for men and women working alongside each other in the same jobs. They revolve around the concept of work of ‘equal value’. Shop staff working on the checkouts and stacking the shelves at Asda were ruled to be worthy of the same earnings as warehouse staff because their jobs are similar – sort of. But female-dominated shop staff were for many years paid less than male-dominated warehouse staff. Therefore, ruled the tribunal, there was sex discrimination, even if it was inadvertent. There is no suggestion, by the way, that female shop staff were prevented from improving their lot by applying to work in a warehouse.
‘Work of equal value’ is one of those vague concepts which lawyers love because it creates uncertainty which can only be resolved in long court cases which – for them – are highly lucrative. The Asda case has been dragging on since 2014. But what is ‘work of equal value’ supposed to mean? Does it mean that both sets of employees are helping to earn the company the same amount of money, or does it mean that they employ the same level of skills? Employers are told they can avert these sorts of claims by carrying out ‘job evaluations’ – except that these won’t really prevent claims because whether one job is of equal value to another is purely subjective. No one can ever be sure what conclusion an employment tribunal is going to reach.
The real world works in a rather different way. How much one set of workers is paid really comes down to a matter of supply and demand. If you have a shortage of warehouse workers you have to pay more in order to attract more recruits. Simultaneously, you might be bombarded with applications from people wanting to work in your shops, so you wouldn’t want to raise their wages for fear of attracting job applicants away from warehouses. Indeed, there is a good reason why retailers might find it harder to recruit warehouse staff: such jobs tend to be located in isolated industrial parks, whereas shops tend to be located much closer to where large numbers of people live. Moreover, warehouses tend to operate around the clock, and so involve more antisocial hours.
That is how the Labour market works – or rather should work. But it is completely undermined by these equal pay claims. The result will be less efficient businesses, fewer jobs and – overall – lower pay rises. The lawyers bringing these cases represent a sector of the economy which is feeding off the wealth-creating sector. If we are to have a healthy jobs market, the concept of ‘work of equal value’ needs to be struck out of equal pay legislation. But of course, with a government that is in hock to the unions, and which is led by a human rights lawyer, this is not going to happen.
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