May 2006 – Working at happiness

The Conservative Party gave its blessing to more flexible forms of working this week when its leader, David Cameron, underlined the direction of the party’s future employment policy in a wide ranging speech that emphasised the need to improve the well being of people at work.

In what amounts to a backlash against long-hours working and the kind of working practices that have encouraged hastily consumed snack lunches in front of computer screens, the Conservatives are to concentrate on a series of policies that emphasise effective, purposeful work.

It is significant that Mr Cameron used the language of economics, stressing something he called General Well Being (GWB) beyond wealth-producing metrics such as Gross Domestic Product.

Measures of happiness would seem to make much more sense if we are to gauge fulfilment in life in terms of how we feel about ourselves rather than by how much money we have made or how many cars or houses we posses.

Lord Layard, whose book, Happiness, Lessons from a New Science, has become required reading for those who want to understand the rationale behind this stream of political and economic thinking, has written about what he calls the Hedonic Treadmill. This refers to the insatiable appetite for material possessions in order to “keep up with the Joneses”.

“When I get a new home or a new car, I am excited at first. But then I get used to it, and my mood tends to revert back to what it was before,” he writes. “Now I feel I need the bigger house and the better car. If I went back to the old house and car I would be much less happy than I was before I had experienced something better.”

In another comparison, to which I can relate directly, he mentions growing up without central heating. “It was fine,” he says. Now, having experienced the alternative, he admits “I have grown addicted to central heating.”

Lord Layard has pulled together various studies of happiness pointing to what he calls the “big seven” factors that influence well being: family relationships, financial situation, work, community and friends, health, personal freedom, and personal values.

The influence of these factors has been measured in the World Values Survey carried out by the University of British Columbia, covering 90,000 people in 46 countries. The survey, run four times since 1981, asks people to rate their happiness on a scale of one to 10 against various factors. The two biggest single ratings (each rated at 6) are apportioned to work and health.

It cannot be co-incidence that both of these issues are related. Overwork, particularly without maintaining compensating fitness levels and a sensible diet, creates stress and, in some cases, a poor physical condition.

How could politicians address these conflicts? One intervention could be levelled at the taxation assumptions adopted by the HM Customs & Revenue. For example, corporate membership of a gym for employees is regarded by the revenue as a taxable perk. This is akin to a tax on health. No such investment in human well being should be taxed. Healthy employees are likely to be more productive and less of a drain on the economy through work absence and use of the National Health Service.

Employers in the UK are beginning to see reductions in absence rates, according to the annual absence survey carried out by the Confederation of British Industry and AXA PPP healthcare, the medical insurance company. The latest survey, published last week, found that the average absence per employee had fallen to 6.6 days a year in 2005 from 6.8 days in 2004. Public sector absences, however, continue to outstrip those in the private sector by about two-and-a-half days a year.

The rates are coming down as a result of various interventions. Better monitoring by human resources departments is making a difference since absence levels are lowest where HR departments take responsibility for managing absence. Health insurance and attendance bonuses are also making a difference too, but companies could and should do more in actively helping employees to stay fit.

For some this will mean overcoming the attitude among managers that equates the constant occupation of workstations with productivity. If people are happy to spend lunchtimes sitting in front of a screen, eating packets of crisps and sandwiches, that may be fine, but if they are doing so in order to meet their deadlines, or for fear of breaking ranks, and if this practice becomes consolidated in daily routines, they and their employers could be storing up health problems for the future.

People have been willing to make compromises because their careers are important to them. As Lord Layard stresses, work provides both income and meaning in life. “That is why unemployment is such a disaster: it reduces income but it also reduces happiness directly by destroying the self-respect and social relationships created by work. When people become unemployed their happiness falls much less because of the loss of income but because of the loss of work itself,” he writes.

While I broadly agree with his analysis of the issues, there is one strand of his thinking that I believe remains at odds with the kind of policies needed to create a new sense of balance in society between work, health and leisure. This revolves around his views on job security and flexibility.

Lord Layard is right to emphasise decentralised pay agreements that reflect regional performance levels. Some European countries such as Spain and Germany face strong trade union pressure to have mean national pay levels. These policies, he argues, will fail to create new jobs in the regions where they are needed.

On the freedom of employees to hire and fire - the US model against more secure European arrangements – he concedes there are competing arguments. While people seem to value job security, without the ability to fire people, employers may be less willing to take on new recruits.

In practice he believes that rules discouraging firing people and their influence on recruiting practice do not affect overall levels of unemployment. While they result in more long-term unemployment there is less short-term unemployment. He concludes that “if Europeans value their job security, let them have it.”

It could be argued, however, that American-style flexibility, allowing more fluidity in the workplace, creates more temporary or project work that can be appealing to those with the right kind of skills. Too many workplaces have become tied to rigidities embedded in 20th century attitudes to jobs and employment whereas in the emerging second generation internet industries people are collaborating and learning new skills beyond the boundaries imposed by their existing employer, if indeed they have one.

Organisational or brand identity still matters but it need not be expressed any longer solely through the job. Jobs will continue to define working relationships for the vast majority of people for some time. This is because, as Mr Cameron acknowledged, they underpin an important sense of commitment on both sides of the contract.

But jobs do not suit every working arrangement. Employment policy therefore should not be focused on the right way to package work but on creating the skills and opportunities to undertake meaningful work. The economy of well being depends on good work producing good products, services and earnings invested in personal relationships, health and those values that emphasise the things that matter in life. Building such a virtuous circle is a job for all.