Restructuring work in the UK: The Beecroft Report is just a symptom

Restructuring work in the UK: The Beecroft Report is just a symptom

The Beecroft Report, commissioned by Cameron from one of his venture-capitalist pals and recommending the implementation of “compensated no-fault dismissal” has been released, and has caused more embarrassment than anything else for the government. But it's part of a bigger picture, with vast implications for workers.

The proposal is essentially to allow employers to make staff redundant even if the position continues to exist, in effect getting rid of the concept of unfair dismissal. There's a lot of discussion over what this would mean in practice here. Needless to say, it's pretty complicated. Bosses have the basis to sack workers for incompetence etc now, but are required to give warnings and follow a fair procedure. Beecroft implies this should be part of the new procedure, so it's unclear exactly how different what he is proposing is. Moreover, he doesn't say what the point would be other than stopping “coasting”, and some vagaries about making it easier to hire staff. Whether this is the case, and whether it affects overall employment is extremely contentious (see below).

The real significance is this proposal (which will not be implemented, and has been a PR disaster) has obscured the real erosions of employment rights which have taken place. It is now impossible to make an unfair dismissal claim within the first two years of an employment period. Given the amount of work which is temporary, seasonal, casual etc (especially new jobs), a huge section of the workforce has no protection whatsoever.

It's also worth asking where the legal enshrinement of unfair dismissal came from. It was hardly part of a Social Democratic plot, but part of the 1971 industrial relations act brought in by the Conservative Heath government. This was the same act that led to a national, TUC-backed “kill the bill” campaign involving a strike of 1.5 million people. The reason a right-wing government felt compelled to introduce the clause was due to the fact that blanket use of sackings was leading to numerous wildcat and official strikes on a local level and harming productivity. This “red tape” was a Tory creation to deal with onerous levels of strike action.

Nonetheless, underlying the whole discussion is the idea that “red tape” such as employment protection is a burden that makes it more difficult to hire. Anyone who watched the recent Newsnight or Question Time on the issue will have seen as much. The converse, that low employment protection would make it easier to fire, is rarely discussed. But it's worth looking at.

There's little evidence that lower employment protection translates into more jobs. The OECD say “There appears to be little or no association between employment protection legislation strictness and overall unemployment”, and their report on it is available here. Amongst the current European countries with the highest and lowest levels of unemployment are countries with high employment protection. Spain and Italy at one end, Germany, Austria and some of the Nordics at the other. Obviously, unemployment has increased significantly in the last few years in the UK despite labour market regulation remaining the same. The UK already has some of the lowest employment protection in the western world, and this hasn't translated into low unemployment so far.


UK employment protection is already well below the OECD average.

The only evidence supposedly supporting Beecroft's proposals coming from the right is an “IMF report”, which was referenced by Minette Marrin on the most recent Question Time, and held up by the Thatcherite Centre for Policy Studies. However, it's not an IMF report, but a working paper that explicitly says on the cover that it doesn't represent the views of the IMF (leaving aside whether we should care what the IMF thinks anyway), and doesn't look specifically at developed economies but all sorts of economies at once. It also doesn't support the Beecroft report specifically as it explicitly says that relaxation of employment protection should be combined with measures to reduce inequality, something the founder of Wonga.com and his Thatcherite cheerleaders are unsurprisingly silent on. It's a complex statistical analysis, and I'm not going to pretend to be a statistician, but it's conclusion is that flexibility can have a negative effect on unemployment. Regardless, the overall expert consensus remains that the evidence isn't there.

(Moreover we can make the point that this isn't something communists should spend lots of time worrying about: a) high unemployment is an unchanging part of capitalist crises, which are inevitable, the minutia is maybe irrelevent and b) the proletarian condition is a matter of degrees of misery, both when being exploited in the workplace and when looking for a buyer for your labour time.)

Despite the lack of conclusive evidence on whether it affects unemployment, we're likely to see significant erosion of employment protections in the UK over coming years. Those currently taking place, combined with the imminent extension of workfare are part of a project of wage depression and increasing precarity in the UK. This is taking place over three fronts1:

1)Workfare – making people work full time for dole money – is rendering the state the employer of last resort and subsidising companies with essentially free labour, with the bill being picked up by the taxpayer. Of course, this is likely to have significant effects on wage expectations and pay for the grades of jobs that can be replaced with workfare. It is essentially a supply-side fix for growth revolving around forces labour being packed off to work in supermarkets and the Arcadia group. 850,000 people are expected to pass through the work program this year.
2)Minimum wage freeze, the mooted exemption of young people from the minimum wage by think tanks close to the government. Given that the head of an influential Thatcherite thinktank are fuming that public sector workers are only taking real-term pay cuts, rather than absolute pay cuts like their private sector counterparts, we can see the objectives of the current political class. Increased inequality will be the corollary, despite noises from political parties about reducing it.
3)Unemployment increasing. Austerity, unsurprisingly, has not translated into a willingness to hire. A large reserve pool of labour has classically been used to depress wages. The government can commit to abolishing employment protections probably knowing it will not have any significant immediate effect on employment, but politically can claim it is doing something.

This is government policy – depress wage levels in an increasing multipolar world, attract global investment, and promote “growth” - the proceeds of which will not reach a workforce whose wages will have to remain flat. In other words, the systematic and orchestrated erosion of living standards is the current project for capital in the UK.

With an increasingly precarious, short-term and unprotected labour market becoming the norm in the future in the UK, it raises questions for what organisational responses should be. The organisational left and much of class-struggle anarchism has a praxis of supporting and “intervening” in strikes and demonstrations largely organised by unions. With the public sector being eroded, it's a sad fact that the traditional workers movement, it's history and organisational forms will only be relevant to a shrinking minority of the class. It seems to me, given where we are the focus should be on developing a capacity for practical, winnable solidarity work as the immediate basis for organising, something which only Solfed, the IWCA to a degree and some local groups have attempted.

Posted By

Django
May 29 2012 08:26

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  • This is government policy – depress wage levels and promote “growth” - the proceeds of which will not reach a workforce whose wages will have to remain flat. In other words, the systematic and orchestrated erosion of living standards is the current project for capital in the UK.

    Django

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Comments

Mike Harman
May 29 2012 10:58
Quote:
. Increased inequality will be the corollary, despite noises from political parties about reducing it.

Is there really much talk about reducing inequality? There's lots of bollocks about increasing social mobility floated around at the moment, but that's a bit different IMO - i.e. increased social mobility doesn't actually decrease class inequality at all, it just means a larger number of people are able to move out of it.

Nate
May 29 2012 20:30

Great post. Ignorant American question on your final paragraph - you talk about declining relevance tied to a shrinking minority. That population that the traditional working class left was relevant to in Britain, how big was it at its peak? And do you know anything about its racial/immigration make up? I ask because that part of the population in the US peaked at about 30% of the workforce and was tilted toward whites and citizens. For the US, that speaks to the limits of that traditional politics even when it was at its height (as do loads of other criticisms of course). Just curious how the UK compares/contrasts with that.

Joseph Kay
May 30 2012 11:05

Iirc UK trade union membership peaked at about 12 million (population 56m, labour force about 25m at a guess) in 1979 after Labour called in the IMF and workers responded with a wave of rank-and-file militancy, usually beginning as unofficial action and sometimes being made official retrospectively (culminating in the 'winter of discontent'). I was making some charts on this but don't have them to hand so this is from memory. Trade union membership had risen up to that point and has declined ever since to under 7m today in a labour force of ~29m (pop 62m).

the button
May 30 2012 12:35

Here are some interesting charts on union membership/days lost to industrial action in the UK. (From the website of Coutts Bank of all places grin )

http://www.coutts.com/investments/market-perspective/daily-themes/2011/1-july-2011/

jolasmo
May 30 2012 13:13

This says TU membership peaked around 50% in the late 70s.

This pdf of a report from the Department of Business, Innovation and Skills has various statistics on the demographics of contemporary UK trade unionism. According to BIS union density is significantly higher among UK nationals than non-UK nationals (24.3% vs. 11.8%); the highest union density is among professionals (45.4%); women have a higher union density than men (28.7% compared to 23.4%); "Black or Black British" workers had the highest union density of any ethnic group (27.7%) followed by "White", then "Asian or Asian British" and "Mixed" and finally "Chinese and Other" (at 16.6%).

~J.

Django
May 30 2012 20:15

European countries looking to Germany and especially Austria, which has technical full employment, for answers to joblessness problems. Surprise, surprise, Austria has twice the amount of employment protection than the UK according to the OECD(see the graph in the main article).