Conclusion and Further Reading

Conclusion

When people think of jobs, they think of offices, workshops, buildings, equipment, and so on. But to really understand jobs, and how and why they exist, you need to understand the forces in the economy that encourage or discourage job creation or even cause jobs to be destroyed.

First, entrepreneurs anticipate and satisfy consumer demand, using employees with the right personal qualities and training. This force encourages job creation.

Then, remember from our "typical job", the total cost of the job to the company is over £31,000 while the net amount that Derek the employee gets after tax is just over £14,000. One effect of this is clear. Because the government is spending so much of his money for him, Derek does not have as much to spend as he would like on food, housing, clothing and education. But Derek is lucky -- at least he has a job. We don't know how many unemployed Dereks there are in the European Union, who lost their jobs because, given all the government-imposed costs their employers have to bear, their jobs could not pay them a wage that made it worth their while to work. And this problem is getting worse. These forces discourage job creation or can even destroy jobs.

Finally, there is all the busy administration work that surrounds each job, dealing with taxes, permits, red tape and regulation, all of which takes up so much time and energy that businesses are distracted from creating other new jobs and developing new and better products and services. Again, job creation is discouraged.

You'd sometimes wonder how any jobs exist at all.

What you can do

If you care about this issue, make clear to your elected representative that talk of increasing taxes and regulation is a sure way to lose your vote. Support one of the campaigns on the issue of taxes, for example, The Taxpayers Alliance, whose website is a source of additional information and news on tax campaigning.

Further reading

education.guardian.co.uk/students/finance/story/0,,1875040,00.html: The Guardian, September 18, 2006, "Quite apart from the ignominy of being known as the iPod generation - because they are insecure, pressurised, over-taxed and debt ridden - it seems unlikely that the under 35s will even be in a position to afford their electronic namesakes. They are facing a bleak financial future in which they will hand over almost half their salary to the taxman, according to a new study. The report, by the thinktank Reform, claims that millions of young people face a combination of rising debts, higher costs of living and low earnings growth. It also predicts that the average 20-35 year old graduate will face a tax burden of around 48%..."

www.timesonline.co.uk/article/0,,6-2385285,00.html: The Times, October 3, 2006, "Trussed up with Red Tape". "The British Chambers of Commerce calculates that, since Mr Brown became Chancellor, new regulations have cost businesses more than £50 billion. And counting. Black October means companies being socked with a rise in the minimum wage, an extension of maternity rights, age discrimination laws and new rules on fire safety..."

www.chamberonline.co.uk/czP1NeJohOhB8A.html: British Chambers of Commerce : "Our Burdens Barometer is compiled in partnership with academics from the London and Manchester Business Schools. The 'Burdens Barometer ' calculates the compliance cost to business since 1998 of new regulations. It is calculated using the Government's own Regulatory Impact Assessment (RIA) figures which means it reflects the Government's own generally conservatively estimated costs. It has been calculated at £10 billion in 2001; £15 billion in 2002; £20.6 billion in 2003; £30 billion in 2004 and £38.9bn in 2005. The report is the most reliable of its kind and receives widespread coverage in the media each year. The Government cannot (and does not) challenge the figures. Our RIA Report in 2005 found that despite some progress the Government is still failing to prevent unnecessary regulation and cut burdens on business. Our report shows that the rules are not followed rigorously, few proposals quantify the benefits and, in particular, that in the latest year the costs of regulations far outweigh the quantified benefits. The BCC welcomes the announcements by the Chancellor in his Budget, including incorporating the sophisticated Dutch measurement system, reducing the number of inspections and introducing a risk based approach..."

tinyurl.com/tf3xy: If we trade with a developing country where wage levels are far lower than they are here, will this drag down wage levels here, damaging our own economy in the process? Paul Krugman and Robin Wells explain why not, and what actually happens, in this chapter from their textbook Economics (written for an American readership).

www.statistics.gov.uk/articles/economic_trends/ET_May_Francis_Jones.pdf: The UK Office for National Statistics' Economic Trends bulletin, May 2006, contains official data about the effects of taxes and benefits on household income for 2004/05, including information used on this website.

tinyurl.com/yn7fms: A speech by Günter Verheugen, Vice-President of the European Commission responsible for Enterprise and Industry, on 10 October 2006. The administrative costs relating to compliance with information requirements across the EU are estimated at 600 billion Euros. Hence as Commissioner Verheugen explains: "The economic benefits of reducing administrative costs by 25% in the EU25 are estimated at about 1.5% of GDP: that means more than 150 billion to gain. These administrative costs reflect activities directly related to the compliance with information requirements contained in legislation, such as the time and effort in filling out forms. These costs therefore cover information obligations, NOT compliance costs as such (e.g. changes in technology mandated by legislation)."

www.iea.org.uk/record.jsp?type=article&ID=106: the essay that suggested the idea behind this website.