Author: Ashley Seager & Mark
Meadows
Publication: The Economic Times
Date: November 14, 2003
URL: http://economictimes.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=282671&Curpg=1
Countries like India and China will
eat Britain and the rest of Europe for "breakfast, lunch and dinner" if
they fail to stay competitive, Confederation of British Industry chief
Digby Jones warned on Friday.
Speaking before the CBI's annual
conference which starts in Birmingham on Sunday, Jones told Reuters the
main theme of the meeting would be to show the UK was a good place to do
business because in his view it had the most successful economy in the
developed world. ( Can India become an economic superpower in the next
decade? )
But he said: "We are very worried
about what is coming down the track in the erosion of competitiveness.
"We are very worried that labour
market flexibility will be further eroded in the next couple of years.
Coupled to that is the growing militancy of some trade unions," he said.
"India and China will eat Europe
for lunch, dinner and breakfast if we are not careful."
The issue of jobs migrating to India
is becoming an increasingly hot topic in Britain as company after company
announces it is moving a call centre or back-room activities to the subcontinent
where labour is much cheaper. And China is increasingly taking manufacturing
jobs from Europe and the US.
Jones pointed particularly to the
European Union's working time directive which outlaws a working week longer
than 48 hours, although Britain currently has a limited opt-out which allows
people to voluntarily exceed 48 hours. Trade unions say, however, that
the system is abused by many employers.
"What does it say about the 21st
century world of choice when someone is trying to pass a law that says
you can't work more than 48 hours a week even if you want to? India must
think it is their birthday," he said.
"They (the EU) said they wanted
to see a Europe that by 2010 was the best place in the world to do business,
but I do not see directives coming from Brussels saying that."
Business taxes too high
He also again criticised rises in
business taxes under Prime Minister Tony Blair's government which he said
amounted to an extra £57 billion over the past six years.
"Yes, we are still ahead of Germany,
France and Holland in terms of the percentage of tax-take paid by business.
But we are not as ahead as we used to be and Germany is catching us up.
I don't want the competitive edge eroded."
Blair and Chancellor of the Exchequer
Gordon Brown will both address the CBI conference. Jones said he applauded
the economic stability of recent years in Britain and Brown's enterprise
agenda but wanted more.
"The problem is that the enterprise
agenda should not stop with small businesses. I am keen we create an enterprise
environment for big business. The Treasury has got work to do," he said.
Jones believes the government must
address the issues of stamp duty on shares and commercial leases and allow
more investment in research and development to help big business.
He also said the country desperately
needed a more skilled workforce and an improved planning regime that would
allow businesses to develop and expand more easily.
"At the moment our planning regime
is the best friend Germany and France have," he said.
But he acknowledged it was not only
government that had to change things. British business also had to clean
up its image.
Business needs the confidence and
respect of the general public. I am very, very keen that business works
very hard to polish its image," he said, referring in particular to large
pay-offs to executives who leave failing companies.
US Treasury Secretary John Snow
will also be attending the conference and Jones said although the US economy
was a good model for Britain, current policies were not helpful.
"The US economy has no fear of failure,
a greater mobility in the workforce, a greater espousal of IT and they
put entrepreneurism higher up the agenda, " he said.
"But the US has entered a periodic
bout of protectionism. This 'buy America first' policy is hurting British
companies."
