Forcing up company costs has consequences
Johnathan Pearce (London) Globalization/economics • UK affairs
Nichola Pease, a top City executive, caused a stir last week when she said that state-enforced maternity leave "rights" for women - and for that matter, paternity leave - was a cost that had a bad consequence. If you tell a company that it must pay a woman her full salary for a year while she is not working and raising her child, say, then, other things being equal, fewer women will be employed in the first place, however hard one tries to enforce so-called equal opportunity hiring practices.
This is a simple fact. If you raise the cost to a company of employing a person or increase the risk that employing a woman will be more expensive than employing a man, say, then fewer women will be employed. It is a fact as undeniable as a the laws of gravity. Unfortunately, one of the driving characteristics of many politicians down the ages is a petulant hatred of such facts, and a desire that 2+2 could equal five rather than four. Consider this reaction to Ms Pease's comments by a Labour MP. It is not so much an argument as a tantrum:
"I am absolutely horrified to hear such an old-fashioned view expressed by someone who should know better."
In other words, a City executive has said something that this MP considers to be unsayable. There is no argument given, no attempt to explain how driving up costs will not have an adverse result. End of discussion.
What needs to be pointed out is that every time the government creates some new "right" to such things, such as paid long holidays, long periods of paid leave for child-rearing, or whatever, there is a cost of some kind, that is borne by someone, often those more vulnerable than the group intended for the original benefit. The honest answer is for such MPs to openly admit as much rather than to pretend otherwise. For example, it would be refreshing if defenders of minimum wage laws could state that they prefer a bit more unemployment to the sight of people working on very low wages. Of course the argument is still bad and involves coercively arranging affairs to benefit some groups at the expense of others, but it would at least be preferable to what we usually get.
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