Pay and display initiatives must start at the top

Working for no money seems to make no sense, but the old relationships between work and leisure, and money and no money, are breaking down

WOULD YOU rather be crushed by a snake, eaten by a crocodile or sat on by a rhinoceros? And would you rather have supper in a castle, breakfast in a balloon or tea on the river?

These tricky questions are posed in my favourite book for three- to six-year-olds, Would you Rather by John Burningham.

In each case, I find you need to deliberate quite hard to discover which is the least nasty of the three nasty things or the nicest of the three nice ones.

Last week, British Airways (BA) came up with its own would-you-rather dilemma. It asked its employees if they would rather work for a month on full pay, work for a month on no pay at all, or take a month off on no pay.

Unlike Burningham’s questions, this one doesn’t seem to require much deliberation. BA is asking staff the equivalent of whether they would rather be sat on by a rhinoceros or have tea on the river.

If I were an air hostess I would not need to think very hard about whether I’d rather earn nothing pushing a trolley up and down the aisles of an aircraft saying “tea or coffee sir?” or sitting in the back garden reading a book.

The BA offer seems to make no sense at all. Working for money makes sense. Not working for no money also makes sense.

But working for no money seems to make no sense at all.

Yet in the past few months the old relationships between work and leisure, and money and no money, have started to break down.

BA is leading the field in begging workers to volunteer to work for zilch, while other employers are begging their workers to stay at home and loaf about and is paying them pocket money for the privilege.

In January, KPMG offered its staff three- month sabbaticals on 30 per cent of their salary, and Spanish bank BBVA is offering to pay its staff a similar amount for up to five years if they promise not to come to work.

To understand what is going on, you need to forget all the economics you ever learnt. (Actually I’ve forgotten this already – as I wrote last week – and so I had to relearn it in order to forget it all over again.)

Microeconomics tells you that each person has a labour supply curve and, at no wage, no labour is supplied. As the wage rises, the worker supplies more labour.

Macroeconomics assumes that wages are inflexible downwards. If you want wages to fall, then the only way that will happen is by making inflation go up.

But what has been happening in the past few months shows that neither is true. The recession is proving that our preferences for leisure versus money cannot be traced on simple graphs.

It is also showing that wages are not inflexible downwards. Companies are putting forward novel ways of making wages fall, and workers are mostly taking it like lambs – more than a quarter of UK workers have already swallowed what is in effect a pay cut.

The new reality has two good side-effects. The first is that it may be weaning us off our workaholic ways. In most companies, the traditional way to win favour was to be seen to be slogging your guts out. Now companies are so desperate to save on the wage bill that they are instructing senior people to set a good example and stay at home. The new message: to advance, stop working.

In some companies, the workforce is responding enthusiastically. In others, it is more suspicious. Some organisations are having trouble in getting their workaholics to comply as they fear that signing up for such a scheme would be the equivalent of sticking a large sign around their necks that says: “I’m dispensable. Please fire me.”

To get round this, some companies are having to bully their senior people into volunteering to take sabbaticals by sending memos instructing them to lead from the front and stay away – or else. The penny may drop, eventually.

The other good effect is a Blitz spirit. At the moment, most people are prepared to take pay cuts – or work for nothing for a bit – out of fear that, if they don’t, they will lose their jobs.

A recent survey by pressure group Keep Britain Working said that 95 per cent of workers would be prepared to change working arrangements if they thought it would protect them from the dole queues.

But I wonder if companies are not missing an opportunity in trying to get employees to accept less money out of a kind of altruism rather than fear for themselves.

This type of thing is so outrageously out of fashion that I feel slightly sheepish in even suggesting it. However, I do think there is a tiny chance that in some organisations it might be possible to convince people to be paid less because they put a value on the survival of their company. A sort of we-are-all-in-this-together, let’s-pull-together sort of way.

There is one big fat problem with such a scheme. It is almost impossible to persuade people to pull together when the gap in pay has got so wide. When a pay cut hurts the lower paid, but has no effect on the higher paid, it does not feel like pulling together at all.

If I were an air hostess at BA, I might be persuaded that I’d rather push my trolley for nothing for a few days than collect my normal salary.

But what would help me do that would be if my boss decided that he would rather forgo his giant salary for an awful lot longer. – (Copyright The Financial Times Limited 2009)