Productivity is the problem, not EU regulation
Before we heard the Prime Minister’s Amsterdam speech was cancelled (the decision was too late for the lobby correspondents, too – they’d already filed their copy), we issued a press release on what we expected to see in it about the Working Time Directive. The extracts from the speech that I’ve seen so far don’t specifically refer to it, although they do say Europe must become more competitive, and they suggest he was going to repeat calls for elements of the European social model to be repatriated. Clearly code for allowing Britain to scrap the Directive the coalition most loves to hate.
We wanted to draw attention to the irony of delivering that speech in the country which more than any other demonstrates that cutting working hours doesn’t make a country uncompetitive. Indeed, the Netherlands suggests that the opposite is the case.
The average Dutch worker can knock off an hour earlier every day than their British equivalent, and still produce more for the country’s GDP figures. Dutch productivity per working hour is nearly 30% higher than in Britain (thanks to the TUC’s Paul Sellers for digging these facts out of the OECD statistics.)
It isn’t the Working Time Directive that is holding Britain’s workers back (it’s actually very flexible, as my former boss Lord Monks pointed out yesterday), it’s the lack of training, infrastructure and investment. And indeed it may even be the long working hours themselves that are the problem. Investment can be a bit expensive, especially up front, so if your workforce is low paid and insecure, it may pay to just make them work longer hours. But insist those hours come down without loss of pay, and suddenly that investment looks more attractive. One economist recently argued that it was comparatively higher pay in the UK that led to the industrial revolution happening here first, where mechanisation was the cheaper option, rather than in poverty-stricken China where working the population harder was the cheap option.