I had intended that this blog was going to be topical and up to the minute. However, following the disappointment of last week’s non-Budget, I thought I would take some time to reflect on what actually needs to happen in the economy.
It is clear that the current government doesn’t have a clue what to do, but I wouldn’t be so sure that the opposition would do any better if they were in charge. If you remember, they were once led by a man who had prided himself on being the UK’s most prudent Chancellor, whereas he was actually the man holding the reins of a runaway cart, thinking he was in control but hoping desperately that a wheel didn’t come off. I don’t think either that the government’s lack of ideas is anything to do with it being a coalition, although the three best economists in government have no influence over the budget or economic policy, by dint of being either from the wrong party or too old.
The problem is that the government refuses to listen to what needs to happen, to take on board what business leaders are saying and asking for. Instead, they have decided that a policy of major capital projects is the way forward. There are a couple of problems with this – one is that none of these projects is ready to begin immediately, they all need to go through consultation, committees, public enquiries etc and so the quickest that we can expect these to begin and start filtering work down to smaller subcontractors and suppliers is at least a couple of years. Furthermore, the government hasn’t got the money to fund these projects, so the chances are that they will never leave the drawing board. Has any work started on HS2? No, and it won’t for years to come.
The only economy that has really used major civil works to rescue them from a hole is Germany of the 1930s. In those days projects could be started quickly, were desperately needed – there were no autobahns before Hitler started, although in hindsight it was clear he had them built to provide quicker access for his armies – and the workforce was more compliant, happy to work for a pittance because it was better than no work at all. As Lord Heseltine quite rightly pointed out, life is rather comfortable for a lot of people in the UK, and this comfort is not reliant on the UK economy, either because they are employed by overseas companies in the UK, or what they can get for not working stops them finding a job.
There has also begun a worrying trend in recent months. Business leaders moan about the need to invest in their companies, but seem to overlook the fact that one area of investment that is often neglected is their staff. Contrary to popular belief, there is still a recruitment market out there, and not all the people looking for jobs are out of work. If you want to keep your best staff, or if you want to attract the best candidates to come and work for your company, you have to be prepared to at least pay market rate salaries. A perception seems to have crept in over the last year that you can get people on the cheap because they will be grateful for a job.
If you try and get people on the cheap, you will get cheap people, not the best people for you business. Candidates know their market worth and, regardless of whether they are in a job or not, they will hold out until they land a job that pays them what they want to earn. As a recruiter, you might have a budget for a role, but within that figure there will surely be ways to offer candidates the basic salary package they want. If you are planning to pay a bonus, why not convert that to salary? Presumably you are expecting the person you are recruiting to achieve the targets that would earn them the bonus. If not, why are you recruiting them? The same goes for packages that offer a salary increase after a probation period, or achievement of targets. How about changing your commission structures to offer higher basics and lower commission?
If you do not invest in your staff and bring in the best people for your business, your company won’t be around to see the shiny new railways/roads/buildings this current government is promising us.