A blow to the Nanny State
It's all about the UK government's drive to get us all saving for retirement. A good start, they figured, would be to make employers set up pension schemes, so employees at least had a plan to pay in to. Workplace pensions used to be hugely successful – with the UK boasting more private pension savings than the rest of Europe put together – until Chancellor Gordon Brown killed it with stealth taxes and regulations.
So it seemed like a good idea at the time. Unfortunately, it's based on an outdated concept of 'employment' – a hangover from the mass-production age. People still think of employers as factory owners employing hundreds of people. But today's businesses are smaller, less structured, and less permanent: they are not based on fixed capital, but on mobile talent.
Gone are the days of entering the factory at 16 and retiring from the same place, with a cheap watch, at 65. People shift jobs much more, drift from employment to self-employment to entrepreneurship and back again, and work in different sectors through their lives. For many, their retirement nest egg is not their pension but their home, their investments, their business: forcing them to contribute to an outdated pension concept leaves them less able to invest in these other ways.
And Treasury rule-makers kill any good idea. They are petrified of losing revenue because of the tax breaks on pensions. And they like things neat. So now, even if you are only employing someone part time – and not necessarily as an employee for your business, but as a home help, say, or gardener or indeed nanny – you have to register the fact. And that's true even if the person is part time and you are not paying them enough to oblige you to pay into their pension plan anyway.
Daft, of course: it will make people reluctant to hire others, including part-time home helps and the rest. So less well off people will find it harder to get one of those starter jobs that give them the first step on the jobs ladder.