The country knuckling down as Britain’s work ethic fades

Britain’s worklessness crisis might appear to be a long convalescence from the pandemic.

One could easily argue that Covid left a once-healthy nation struggling, with millions reeling from infection and unable to get back to the jobs employers desperately need them to do.

Yet the pandemic swept the globe and plenty of similar nations have come roaring back with employment firmly above pre-2020 levels.

Jeremy Hunt thinks the UK could learn a thing or two from our neighbours when it comes to knuckling down.

“Our inactivity rate is 21.9pc. In Iceland it is 13pc and in the Netherlands it is 14pc,” the Chancellor said last week, referring to the share of working age adults who are neither in work nor looking for a job.

“If you look at the policies that other countries that are not completely dissimilar to us have, there are big things you can do there.”

Cheaper childcare is one.

For a couple on average incomes with two children, aged two and three, full-time childcare costs the equivalent of one-quarter of the parents’ incomes in the UK.

In Iceland, it is just 5pc.

“This is hugely important,” says Jens Magnusson, chief economist at SEB Bank. “It is hard to have very high female work participation if you don’t provide affordable childcare.”

Mr Hunt has plans to cut costs for parents, extending the number of subsidised hours at nurseries children are entitled to from April and then again from September. This should help keep more working parents in jobs rather than dropping out to care for their children.

The Netherlands, meanwhile, has greater levels of flexible work than the UK.

More than one in three Dutch workers are part-timers, compared to around one-quarter of British workers.

“In healthcare and education, which are sectors where a lot of women work, full-time contracts are not necessarily the norm – it is part time,” says Marcel Klok, economist at ING. “This could be two days, or three days, or five days but where you only work half-days.”

The result is a high participation rate – more people work in the Netherlands – but they do fewer hours on average.

It is not just policies that matter.

Crucially, a strong work ethic has also taken hold in Iceland, yet has faded in Britain.

“Sixteen to 24-year-olds are quite active, either through summer jobs or part-time work with school,” says Robert Farestveit at the Icelandic Confederation of Labour. “The work culture is part of the reason.”

Iceland’s schools have long summer holidays, traditionally so children could work at the peak fishing season.

More than three-quarters of young Icelanders are active in the jobs market. Three decades ago, the same was true of Britain but now the rate in the UK is down below 60pc.

Working life also ends late in Iceland, encouraged by tradition and pension rules.

Thor Gylfason, professor of economics at the University of Iceland, says people “work well beyond the age of mandatory retirement in other countries, easily into their 70s.”

This is encouraged by a pension system that becomes more generous for those who hold off claiming beyond the starting age of 67.

However, it is also the result of tradition. For many years Icelanders had to work long hours to “keep up with the Joneses” – Denmark and Sweden, in their case – and the habit stuck, says Gylfason.

“It is simply part of the Icelandic way of being, to work.”

Not many would say the same of Britain today.