Stickers are just hanging in while twisters get ahead in pay stakes

Are you a twister or a sticker?

No, this isn’t a question about Chubby Checker or some obscure new dance wave that the “kids of today” seem to enjoy.

It goes to whether your employer is treating you as badly as a bank or insurer treats their regular customers.

One of the biggest issues across the developed world is the lack of significant pay rises for most workers.

Not just here in Australia but just about everywhere, one of the defining characteristics of the post-GFC world has been the sluggishness in wages.

Productivity levels, especially in Australia, have increased over the past 10 years but wages have not kept pace with that improvement.

Chief economist at the Bank of England, Andy Haldane, has been one of the world’s leading lights in trying to tease out what’s going on.

Last week he outlined some of what he’s found — and twisters and stickers are part of the story.

According to Haldane, twisters are those who move jobs. Stickers are those who do the right thing by their employer and stay put.

Haldane revealed that twisters are doing far better when it comes to wage rises than stickers.

Ordinarily, the actions of twisters has a broader effect on companies.

Rather than lose more staff they tend to lift the wages of all their remaining workers.

That was the experience pre-GFC. But since then there’s been a change.

Unemployment rose in the wake of the global financial crisis, job insecurity increased and the number of twisters fell.

As the economy has improved there’s been a lift in twisters. They’ve moved and got a bit more kanga in their back pocket.

But the stickers are not benefiting.

Wage growth for stickers has flat-lined at around 2 per cent.

Despite a tightening labour market, companies have not felt compelled to pay up to any significant degree to retain workers, Haldane said.

“The indirect, or behavioural, channel for pay pressures has largely been missing during the recent jobs recovery,” he said.

It’s more than passing strange that firms would treat their loyal staff poorly compared with those prepared to move.

The costs incurred by a business to find a replacement staff member are high. Some studies have found it can be up to six months salary of the person who is departing.

That includes the time taken finding the replacement, the training of a new staff member and the effect on remaining staff forced to pick up any slack in the office or on the work site.

What Haldane didn’t mention is the striking similarity between how employers are treating staff who stick tough and how some of our better-known businesses treat their loyal customers.

Put it this way.

One of the easiest ways to get a better interest rate on your mortgage, for instance, is to tell your lender that you’re going to a competitor.

Again and again, that threat to walk will get the bank to offer you a special discount rate or improved service. Don’t threaten to walk, however, and you’re just a number in a database, left to rot and pay higher interest rates or fees.

In the insurance sector, many have found that a threat to leave sees a remarkable reduction in premiums even though their circumstances have not changed.

It’s an issue that has come up in the banking royal commission where the competition for new clients, in banking or insurance has seen existing customers shunted to one side.

Haldane also went to another point. There appears to be more “structurally higher job insecurity” across the British workforce, a direct reaction to the events that started back in 2008.

“Although the cyclical degree of job insecurity has fallen as people have become less fearful of losing their job, there may have been a compensating rise in structural job insecurity as people have become more uncertain about their hours and income in a job,” he noted.

“One of the side-effects of structurally higher job insecurity is a reduced willingness to add to that uncertainty by moving job.

“In short, job insecurity reduces workers’ pay power and weakens upward pressure on pay.”

Job automation — people being replaced with computers — is also an issue at play in terms of wages while Haldane made clear his belief that the shrinkage in the number of people in unions was also keeping a lid on wages.

According to the Bank of England’s research, the demise of unions will cost British workers about a quarter percentage point of wages growth a year out to 2030.

For those fearing the old Commodore 64 becoming something akin to Skynet, a report out of the US last week should also give you pause for concern.

News agency Reuters revealed Amazon ditched an artificial intelligence approach to employing staff after the company found it was discriminating against women.

In a bid to allow AI to sort hundreds of CVs into the best couple of candidates, Amazon’s computer program worked through 10 years worth of resumes to get a baseline on what constituted the ideal candidate.

Given the number of men to begin with in the computing and coding area, this “education” actually created a bias towards men.

More alarming, graduates from two all-women colleges were downgraded as were candidates who included the word “women’s”.

Despite attempts to fix the system, Amazon eventually gave up.

Haldane also noted that increasing concentration of market power, an issue definitely at play in this country, hits the wages of workers.

Even if you’re a twister, if the choice of companies is limited then the chance of moving for better pay is reduced.

All of these examples go to the issue of power in the workplace and the treatment of people within those workplaces.

Most of us have sat in anger as the financial sector royal commission has revealed the way bankers and insurers have treated customers little better than an insect squashed on the car windscreen.

Yet if Haldane’s research is correct, the advent of the GFC has enabled employers more generally to treat plenty of staff in a similar manner.

That’s not something to twist and shout to.