‘What is that?’ you might say. Fair question as I do not believe any courses under this title are given at any university. The reason for this is that I invented the term years ago to describe what seems to dictate our economy nowadays.
The phenomenon of the economy of cheap started long ago and seems to have developed in phases. First phase: the supermarket.
Anyone in my age group will remember the introduction of the first supermarkets which consisted of larger-than-usual stores featuring under one roof a bakery, a grocery, a butcher, and all other stores that you could think of. One of them popped up in each village that until then had all of these but as separate shops. For a while they existed in parallel; the small stores stayed on, as did the supermarket. But of course, this coexistence could only be temporary as eventually, the supermarkets ‘won’ the customers that preferred the lower prices and the everything under one roof policy. While some small shops managed to survive because they were able to deliver a quality a supermarket could only dream of, the average small shop disappeared. Alas, the birth of the economy of cheap.
Then the EU became the lawmaker of us all living within it. Laws agreed upon by the EU parliament in faraway Brussels were to be ratified and implemented in each member country. This led to a long list of hilarious laws on the curve of a cucumber and the size and shape of a strawberry, but also warning text on each package of cigarettes sold. Some of them were certainly good, but there were also a lot of not-so-good laws that had to be abided by.
Another EU directive was open bidding on government contracts: any contract at any government on any level and in any EU member country was open for bidding by anyone. This was to ensure that prices would be forced down to an acceptable level due to the competitive element of offering to a government. I assume the origin of this law was to avoid the company already having a contract and abusing it by lifting the price to a too high level without anyone being able to do something about it.
Great, right? Not so much I’m afraid.
The direct result of this is that the cheapest supplier gets to deliver. This may seem like a good idea if you buy fuel for your car, but as the product you want to buy gets more complicated than buying a standardized product, the offers may actually differ per supplier.
This is where the specifications start to play a big role. What if you’re not buying a physical product, the fuel for your car, but a service? ‘What’s a service?’ you may ask. The most commonly bought service is probably where someone promises to do a certain thing for you and both parties agree on what price may be invoiced for this. The service may be as simple as cutting the grass in your lawn or as complicated as nursing a person that is in need of care. For the first service the parameters are limited: how often does it need cutting, and how short do you want the grass to be? The second one is not as easy as there are too many parameters to sum up in this article and the requirements will be totally different for each person requiring care.
In Sweden it has become popular lately to outsource care. What is that, outsource?’ you may ask? Simple, that’s hiring someone to do the work that needs to be done. Not employing but hiring – big difference – and only for that particular job. Like cutting the grass, or giving care to a person. Combine this outsourcing phenomenon and setting the definitions of care with the above-mentioned EU laws on public funding and you’ll get where this is going. And it ain’t pretty.
Today, the worst example of the implementation of the economy of cheap that I have ever heard of, found its way to my mailbox.
A colleague working in Finland has a severely challenged child that needs a lot of care. So far his child went to school like any other kid. The school was aware of, and had the competencies and capacity to take care of children with this level of special needs. Small groups, specialized teachers, the works. Still, they made it possible to go to school like any other kid. Yeah school!
Enter the Western Uusimaa Wellbeing Services County… During the school years, they had hired a bunch of folks to help with the required care and everything worked fine.
But, due to the age of my colleague’s child, he needs to move on from primary to secondary school. The law about mandatory education still applies until he is 18. The services county is required by law to provide the necessary support for this to be possible despite his disabilities. Secondary schools themselves don’t have the required capacity, and in his case, he would need daycare services from the county in order for the mandatory education to take place.
And with that, all support for my colleague’s child will be handled by companies hired by the region to do their thing in taking over the caregiving. Sounds good so far, don’t you think?
But here’s where it gets weird. The companies hired by the region that get to provide the care can decide who they’ll take on as a client and who they’ll not accept. And the economy of cheap clearly dictates to only provide care for those who do not require too much of it. Those who require much care would be too expensive so they have been allowed to make an easy choice – let’s avoid these! Surely this cannot have been even close to the intention of the law designed to provide care for each and every individual in need of such care!
Unlike in the economy of cheap, the parents can’t and won’t abandon their child. My colleague will need to stop coming to work unless the situation improves.
The above is a typical, yet extreme example of a region being obedient to the economy of cheap and the laws carefully crafted in the EU. The cheapest companies get the contract while the region managed to allow these companies to reject any customer that is deemed to be too expensive! Unfortunately, this model will invite some lesser serious actors to see easy money and motivate them to join the business of care. While the price set for the services may or may not be acceptable, the rule to allow the company to refuse clients should never have been allowed.
My colleague is kicking up a storm in social media, and he has been carpet-bombing the chain of command of the services county. Time is very limited as the solution would need to be in place when school starts, and usually nothing happens over the holidays. My colleague believes they are now finally working on a solution, but none has been promised and no signs of progress are noticeable yet.
If ever an EU law was abused locally and implemented badly, the economy of cheap was applied to perfection in this case.
The care company shares its view on what they can contribute with on their internet site:
”Rohkeus on meille tinkimätöntä ihmisoikeuksien puolustamista. Meillä jokainen työntekijä tekee työtä ihmisarvon puolesta. Etsimme, löydämme ja tuemme heitä, joiden tilanne on yhteiskunnassa kaikkein vaikein.”
Which translates to:
“For us, courage is an uncompromising defense of human rights. With us, every employee works for human dignity. We look for, find and support those whose situation in society is the most difficult.“
To set this in perspective, it is this view that attracts regional and local councils to buy their services, while in reality they only pick the clients they can profit from.
As the readers of my books may know, if a situation upsets me enough, I’ll write about it. In this case, the story would be too mean to publish so I will limit my writing to the above in the hope that it reaches those that can do something about it and you, the reader, who hopefully can share it. Below you’ll find some links to the above story, please like, share, and/or comment.
Like, share, comment, or all of the above.