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Hurrah for labour shortages
Sep 6th 2007
From Economist.com


To keep farm workers, pay them better

“LABOUR shortage” is one of the most nonsensical phrases ever coined. Real shortages happen outside the market economy: armies run short of ammunition; sailing ships may lack wind. But with six billion people on the planet, labour is not in short supply. What “labour shortage” means is that employers can’t find workers with the right skills at a price they like. Similar shortages are reported of Rembrandts, lobsters and nice houses in London.

Nonetheless, the news that British farmers are complaining of a “labour shortage” is excellent news. For the past five years, eastern European workers have been pouring into Britain—perhaps as many as a million Poles, and hundreds of thousands of other nationalities, legal and illegal. The result has been a triumph of European integration. The diligent new arrivals have boosted economic growth in Britain, and many have gained money and know-how to help rebuild home countries ruined by communism.

That supply seemed inexhaustible. But it wasn’t. Most economies of eastern Europe are now booming, so pay and conditions at home are improving. The “discount” on staying put and the premium on going abroad have both shrunk.

Secondly, the new Europeans are realising that tedious and monotonous agricultural work is not the only way into life in Britain. Waitressing at a country pub is a better job than picking strawberries in the surrounding fields: you improve your English, don’t get dirty, and meet nicer people. Figures published last month showed 41% of registered workers from the eight eastern European countries that joined the EU in 2004 applying to work in administration, business or management, compared with 25% three years ago. The hospitality industry accounted for 19% and agriculture only 11%.

The solution for British farmers is simple: compete. They need to offer their seasonal workers better pay, living accommodation and other treatment. As Marina Lewycka’s new novel “Two Caravans” illustrates so poignantly and amusingly, the bottom end of the agricultural labour market is a cesspit of scams, abuse and squalor. Workers are paid below the minimum wage, overcharged for cramped and dirty accommodation, ripped off for bogus “agency fees” and transport costs.

The farmers are not the worst culprits. The “gangmasters”—as the small employment agencies specialising in casual work for foreigners are known—have an even worse reputation. A Cornish gangmaster, Baltic Work Team, lost its licence last month after it left 40 Bulgarian workers unpaid for more than a month, threatened to send them home if they did not pay a £100 “deposit” and threatened them if they complained.

Such sharp practice may indeed shave a couple of pennies off the cost of a punnet of strawberries. But if the result is that workers simply stay away, the market is sending a useful signal: the rip-off merchants’ business model is unsustainable.

The farming lobby wants the government to ease the “shortage” next year by bringing in thousands more workers from Ukraine under a special scheme in which a temporary work visa comes tied to a particular job. That, the farmers explain, gives them “certainty” that their workers won’t bunk off half way through the harvest.

That is an odd argument: the best way of encouraging workers to stay put and work hard is to treat them properly, not to use schemes more reminiscent of the imperial days of bonded labour and coolies. Britain and other EU countries should allow Ukrainians to compete in the western labour markets—but as full-fledged participants, not as a reservoir of uncomplaining low-paid workers for a noisy, influential but actually peripheral bit of the economy.