Britain's effort problem is a reward problem, and both employers and ministers can fix it

Britons have not fallen out of love with work. They have become less willing to give more than the job requires because the deal on offer rewards extra effort poorly and leaves them little say over how they do their work. We think this is the more convincing reading of the evidence, and it points to remedies that employers and ministers can act on now.

Start with money. The case rests on the claim that pay has lagged behind productivity, so that employees are asked to be more productive each year while their real incomes stagnate or shrink and the gains flow to owners and senior managers. We cannot verify the size of that gap from what is in front of us, and the argument deserves harder numbers than it usually gets. But the logic of the behavioural response is plain: when the reward for going further is doubtful, fewer people go further.

The tax and benefits system sharpens the problem at specific points. Critics describe a steep penalty on earnings around £100,000, and a childcare cliff that makes a promotion or longer hours hard to justify until children reach school age. If those descriptions are right, the state is paying parents to pause careers at the moment they might otherwise advance. That is not a cultural shift in attitudes to work. It is a price signal, and people are responding to it sensibly.

Then there is control. Workers describe jobs hollowed out by compliance routines, repeated reporting, scripted customer service that denies staff the power to settle a problem, and performance systems that force a set share of employees into the bottom ranks whatever their results. Measuring everything, the argument goes, has squeezed out discretion, and discretion is where commitment lives. Someone who cannot decide anything has little reason to care about the outcome.

The strongest counter-argument runs the other way. It says Britons are working less because they are able to: high earners can drop to four days without a serious hit to their living standards given high marginal rates, while lower earners can lean on top-ups, so the system compresses incomes towards the middle and blunts the reward for extra contribution. There is something in this, and we do not dismiss it. Some people will choose leisure when the cost of choosing it is low.

But notice what the objection concedes. If the tax and welfare structure leaves little to gain from additional effort, then the problem is still the return on effort, which is the point at issue. It also explains less than it claims. It does not account for workers who say they would gladly do more if they had authority over their tasks, or for employers who ration discretion and then wonder why enthusiasm fades. Both explanations lead to the same place: a deal in which working harder pays too little, in money and in autonomy.

So what should happen? The Treasury should publish an assessment of the combined effect of the £100,000 threshold and childcare support on the incentive to take on more work, and then reform whichever cliffs it finds most distorting. Employers should scrap forced distribution ratings, return decisions to the staff closest to the customer, and tie pay rises more visibly to the productivity gains their workforce delivers. Boards that cannot show such a link should expect their staff to draw the obvious conclusion.

None of this requires new theories about the British character. It requires making extra effort worth the trouble.