Jo Swinson and the exploitation of interns

Jo Swinson MP has written a short article in PR Week, promising to end the exploitation of interns in public relations. But the problem with interns in the PR industry is less the exploitation of interns than the exploitation of the PR industry.

Most PR interns come from wealthy families and are privately educated. Their parents subsidise them by providing housing and income. Anyone without that sort of support would find it difficult to survive unpaid anywhere, let alone in central London where the PR industry is concentrated.

This is the main reason why the PR industry (especially the big agencies) is dominated by the products of public schools, and young people from more modest backgrounds find it so difficult to break in. (Interestingly, the people from more modest backgrounds who do break into PR tend to do so later in life at a more senior level, having first done a proper job).

The main benefit of tackling the problem of interns will therefore not be to end ‘exploitation’. It will be to force the PR industry to conduct entry-level recruitment more on the basis of merit than privilege.

Postscript: I should apologise for using the rather ridiculous term ‘PR industry’. It conjures up improbable images of manual labourers slaving away in the press release foundry or working long shifts underground in the spin mines.

Another myth busted: ‘strivers v skivers’

nef (the new economics foundation) has produced another mythbuster, this time debunking fallacies about welfare expenditure.

Only 2.6% of Britain’s social expenditure is received by able-bodied unemployed people. And the situation is dynamic; these people are not permanently unemployed:

In reality, people slip between employment and unemployment, often within the space of a few months, as the economy relies increasingly on short-term, low pay, insecure contracts. This happens even more in areas where the economy is especially weak. In Teesside, one of the UK’s struggling economic regions, research has found that, for many people, ‘shuttling between benefits and jobs’ has become their predominant experience of working life.

People in full-time work but whose pay is too little to live on receive a much greater share of benefits:

A far greater proportion of social expenditure is spent on people in paid work, through working tax credits, than is spent on the fit and able-bodied unemployed. Last year expenditure on Income Support and Working Tax Credits amounted to £13.8bn, more than double the £4.9bn paid out to JSA [Job Seeker’s Allowance] claimants. Taking into account all the different benefits available, and distinguishing between different groups by their primary benefit, 20.8 per cent of the total benefits bill is spent on employed people on low incomes, while only 2.6 per cent is actually spent on the able-bodied unemployed.

For the first time ever, in-work poverty has overtaken workless poverty, with 6.1 million people in working households living in poverty. Instead of tackling the problem of low income, the government is subsidising employers offering poor quality employment through working tax credits. Taxpayers are picking up the bill by topping up wages so that paid workers can feed and house themselves and their families.

The ‘strivers v skivers’ argument suggests there are two distinct groups in society and tries to pit them against one another. In reality, this caricature is a complete myth, and certainly no serious basis for devising any reform.

Postscript: Some sense on this subject from Chris Dillow (with thanks to Nick Barlow for spotting it).

Next up: the minimum wage

Unlike our report on electoral reform yesterday, this is no joke. The government’s Department of Business, Innovation and Skills (which I seem to recall has two Liberal Democrat ministers in it) is worried the minimum wage may be too high.

Well, let’s have a look at the minimum wage. The rate for people aged 21 or over is currently £6.19 per hour. Does that sound too high to you? How would you know? You are probably middle class and think in terms of an annual salary, so let’s convert it into terms you will understand. Assuming a 40-hour week and paid holidays, £6.19 X 40 X 52 = £12,875. For people aged 18 to 20, the minimum wage is £4.98 per hour. £4.98 X 40 X 52 = £10,358. But these annual amounts are a best-case scenario since, for many low-paid people, work is often casual and holidays not always paid.

There is an argument that the minimum wage harms the economy and here is Jo Swinson (who ought to know better) making it:

Employment minister Jo Swinson said in February: “The level of employment is now above its pre-recession peak, but the employment rate is below the pre-recession peak.

“This means that we believe that caution is required – particularly as the minimum wage rate is now at its highest ever level relative to average earnings for adults, and remains high for young people.”

She is motivated by a fear that the minimum wage acts as a disincentive to job creation, but that is only the case if your job creation strategy is a race to the bottom on wages. Taken to its logical extreme, the government could eliminate unemployment tomorrow if it eliminated pay altogether.

Meanwhile, depressing pay levels can only harm the economy. First, low-paid people must spend what they have – they don’t have a surplus to save – so their income goes straight into the local economy to buy goods and services, which helps the economy. Second, the lower pay levels are, the more the government has to subsidise stingy employers in the form of Income Support. Leaving aside the arguments about unemployment benefits, surely anyone in full-time work should be paid enough to live on?

But then these arguments will cut little ice with those for whom austerity is more of a religion than a rational policy.

Postscript: The Living Wage Foundation has calculated the living wage for both London and the rest of the UK. For London, it is £8.55 per hour and for the rest of the UK £7.45. Converted to annual salary equivalents, that is (£8.55 X 40 X 52 =) £17,784 and (£7.45 X 40 X 52 =) £15,496 respectively, in both cases more than the statutory minimum wage. So, Jo Swinson, still worried that the minimum wage is “high”?