Full Employment – sounds good, but where, for how much, and for how long?

Liam-Byrne-with-job-centre-background

Tory ministers’ frothy mouthed calls for Labour to finally unveil some new policies were answered a couple of weeks ago when shadow DWP Minister Liam Byrne made a speech at the offices of IPPR North, in which he outlined Labour’s grand plan for a return to full employment. In a wide-ranging speech taking in Beveridge, Attlee and the building of the welfare state, Byrne outlined how the old truism, that full and meaningful employment is key to social and economic prosperity, is still relevant today.

Full employment, claimed Byrne, would not just benefit those returned to work, but also those unlucky enough to be temporarily cast out of it. A strong labour market would reduce the pressures on the benefit system, up £24bn since the financial crash, and reaffirm its purpose intended by the postwar Labour government – “social insurance for a rainy day”. It would help pay down the debt. It would be a moral mission to rid people of the scourge of worklessness.

It’s bad enough being in work at the moment. The austerity policies of the current government necessitate living standards being squeezed, but for those already all wrung out, the effects have been devastating. Homelessness is up, and a new report claims that up to half a million people are now turning to food banks to feed themselves and their families. Figures show that one in five people have been looking for work for over two years. Getting these people into work seems to be more important now than ever before. The TUC have been leading the charge, as they led thousands on a march through London in October 2011 to call for a “future that works”; for the government to invest in jobs to spur growth.

But, just as Byrne’s speech begins to sound like a much-needed clarion call for a return to the post-war settlement; its sweeping historical trajectory begins to take in the realities of globalisation. The last thirty years have seen the previously unimaginable global growth of markets, interconnecting most of the world’s population. It will be remembered as the time when capital went mobile and threw off the shackles of closed economies, much to the detriment of British workers, as jobs were transferred overseas. Or, as Byrne put it, “giant firms often richer than nations now have the power to move jobs to wherever the skills are greatest or the wages lowest.”

So, Byrne is clear, there cannot be a return to low-skilled, low pay employment here in the UK. Instead, as they do in Germany, we must ‘skill up’ local workforces to face the requirements of local businesses.  Here the speech dips in detail, but Byrne was able to point to the great swathes of people who were thrown out of the work by the great Thatcher monetarist experiment, destroying whole communities, and their potential for generating local growth.

It is a noble goal, and evidence of fresh thinking. But it cannot be a continuation of the dreadful work programme, back to work assessments and zero hour contracts. If the Labour front bench is unable or unwilling to imagine that an alternative to these schemes is possible, then that is cause for alarm. Byrne identifies the transformative impact of globalisation as the principal cause of stubbornly high levels of unemployment, and yet thinks a Labour government could somehow mitigate its effects. Byrne is known to be one of the shadow ministerial team who believes that Labour can only win in 2015 if they commit to Tory spending plans, and it is even less clear how this plan, so mighty in its ambition, could stand a chance with such meagre resources.

This is the longest and most prolonged slump in our economic history. As TUC economist Duncan Weldon illustrates on his blog, we have now experienced a ‘lost decade’ of GDP per capita growth, and wages have fallen in real terms over the last three years. James Plunkett from the Resolution Foundation’s closer look at last week’s ONS release showed a significant drop in levels of business investment and exports. Despite cut after cut in the rate of corporation tax, there has been no discernible impact on reinvestment, and businesses are now sitting on any money they do have. Byrne identified this problem in his speech, describing how “the cash is simply stacking up in corporate bank accounts. Our new Bank governor Mark Carney will recognise the phenomenon from Canada where he has attacked the curse of ‘dead money’.” Keynes’ economic theories are back in fashion and this inevitability was central to them; that it would inevitably sharpen wealth inequality and increase unemployment.  How can Labour reverse this historical trend?

As too did Byrne mention how globalisation has changed the economic landscape. As this superb Robert Skidelsky analysis in the New Statesman illustrates, it was this which resolved the issue of capital’s declining profitability, as it became free-moving, able to exploit the new productive abilities of emerging markets. Byrne is right to say Britain cannot undercut these low-pay, low-skill economies, which themselves are transforming rapidly.

But the elephant in the room in this discussion remains. ‘A future that works’, that of full employment, was a concept attainable in an era of fixed national economies, but the economic stress such policies caused created the conditions whereby capital reasserted its dominance over labour. Whenever Keynes is deployed as the rationale for such policies, it is worth reminding ourselves, as Skidelsky does, of his overall ambition, for us to enjoy a “golden age” of abundance, and a 15 hour working week. Simply working to earn and consume was never a long-term policy goal. Why, when rapid technological advances are enabling wide-scale automation in our factories and shops, are we so afraid of its potential to put us all out of work? This is surely the golden age which Keynes foresaw.

It is understandable that Labour see unemployment, low growth and under-consumption as central to our economic woes. Tackling these issues have rightly been the historical duty of the centre-left, but as centre-left governments and parties struggle all across Europe in the midst of an unparalleled crisis, the time has surely come for an alternative which is innovative and sustainable. Labour and the representatives of labour should not simply call for employment at all costs, or work itself as the answer, but to promote a new, equitable type of work. The New Economics Foundation champion a 21 hour working week, and ideas like the citizens wage and the community allowance would be a welcome start to moving away from the fear of unemployment. Let’s start treating this crisis with the respect it deserves.

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