Where next for the Labour Party on Welfare?

In recent weeks, the Labour Party leader Ed Miliband has been subject to repeat attacks from senior party colleagues including John Prescott, David Blunkett, Andy Burnham and Maurice Glasman, (see here). Criticisms have been mainly due to a perceived lack of “rock hard defence” (against the government) and a failure to “shout loud enough” on important policy issues. Unsurprisingly, welfare has been top of the list of policy areas where Miliband is accused of lacking clarity and substance (see here). Below I sketch out how a new progressive welfare policy might look, considering some key elements that I believe the party have not been ‘shouting loudly’ enough about.

First, the strongest dividing line between a Miliband and Blairite welfare policy must lie in its approach to the economy. New Labour welfare policy stood in the shadow of a neoliberal supply-side approach towards unemployment. As is noted elsewhere, policymakers adamantly denied that regional variations in unemployment were a result of demand-side deficiencies, despite strong evidence to the contrary (cf. Beatty and Fothergill, 2002 and 2005; Theodore, 2007). Miliband’s Labour Party ought to demonstrate its commitment to new job-creation projects in areas of high unemployment. They must think creatively of ways to develop an inclusive, green economy which brings much needed work opportunities to areas of high unemployment. As argued before, the ‘right to work’ must be advocated as a central tenet of a coherent welfare policy.

Second, the Labour Party ought to invest more heavily in training programmes for the unemployed – so-called ‘active labour market policies’ (ALMPS). The difference in spending between the UK and other OECD countries is well illustrated by Daniel Sage (see here). He notes that the UK spends just 0.4 per cent of GDP on ALMPS. Perhaps unsurprisingly, this is well behind the Scandinavian countries e.g. Sweden at 1.1 per cent and Denmark at 2 per cent. A greater shock however is the difference between us and our more Liberal brothers, the Germans and French, who spend 0.9 and 1.2 per cent, respectively. No welfare contract between the state and the unemployed can be genuine if it does not include real resources to help people obtain sustained work.

The two points above thus cover the state’s obligations on the ‘supply’ and ‘demand’ side of unemployment. Decent and realistically attainable work must be in place and people must be equipped with the necessary tools to be able to get it. Looking more specifically at the welfare system, Labour must outline plans for simplifications. Irrational cost-saving mechanisms such as the immediate withdrawal of payments upon somebody obtaining work are counter-productive, causing people to fall back on crisis loans which are far more costly in the longer term. The Labour Party must welcome the principle of simplification behind the Coalition’s Universal Credit and propose its own changes which take this further.

Once promises have been made on these fronts then the Labour Party can state its position on the most politically sensitive issue – conditionality – the expectations upon welfare recipients in return for state support. This is an uncomfortable area for Labour leaders and it is one in which they know that they are consistently behind the Conservatives in opinion polls. It is thus something on which they must offer greater clarity.

The scale of ‘benefit fraud’ is notoriously difficult to measure. Left-wing commentators’ often use recent estimates from the Department for Work and Pensions which state that only 0.6 to 0.8 per cent of total expenditure is lost to fraud (DWP, 2009). My personal opinion is that this is probably wrong for the following reasons:

1)      It’s inevitably difficult to measure something that people are likely to lie about

2)      From working with benefit claimants in London, it seemed likely that a higher amount than that did cheat the system for all sorts of reasons, (e.g. they were moving from JSA to work and were waiting for their first pay cheque to come through so that they could be sure they could meet that month’s rent)

In spite of this, the fact is that two-thirds of working-age benefit claimants are now in work (see here) and many of the other one-third are too sick to work. Thus, there must be a sense of perspective on the issue of benefit fraud. Labour Party leaders must avoid, at all costs, the tabloid frenzy of ‘scroungerphobia’. Nonetheless, if the state genuinely does meet its obligations – unlike the current and previous administrations – then a fair degree of conditionality can and arguably, should be a part of the welfare system. 

Zero Hour Contracts and Labour Market Precarity

Since the Guardian uncovered that Sports Direct and, prior to that, Buckingham Palace, were employing many of their staff on ‘zero hour contracts’ the shocking truth of the precarity of the UK labour market has been increasingly brought to light. Today the newspaper also revealed that McDonalds employs 90% of its staff (83,000 people) on such contracts (Guardian, 2013).

A spokesperson for the fast food giant defends the company’s practice by arguing that "(m)any of our employees are parents or students who are looking to fit flexible, paid work around childcare, study and other commitments.” (ibid.). Perhaps unsurprisingly, she offers no substance for this assertion when, in fact, the evidence shows that precarious work has a variety of negative consequences for most workers.

Below I present some of this research and end with a wider discussion of the issue. Following the broader theme of this blog, I reflect on the injustice of zero-hour contracts and discuss how they are indicative of the wider moral deficiency of the current form of capitalism.

First, here is a flavour of some of the vast quantity of literature on the relation between precarious work and health and well-being:

·         A cross-national study of casual and non-casual workers in OECD countries found that the former reported more health complaints and a poorer work-life balance than the latter (Bohle et al. 2004)

·         In a comparison between six labour market groups, Virtanen et al (2003) found that those on ‘atypical’ contracts (characterized by insecurity) were second only to the unemployed in terms of poor self-rated health, disease and depression.

·         In other instances, it has been shown that poor quality/precarious work can actually be worse for health and well-being than unemployment (Bambra 2011, Butterworth et al., 2011)

The following studies reveal something about the nature of the relationship between precarious work and family and social life:

·         Bohle et al. (2004) show that disruption to family and social life is markedly higher amongst casual workers.

·         More specifically, Artazcoz et al. (2005) find that precarious employment affects whether men and women decide to remain single, cohabit or even have children.

·         Le Bihan and Martin (2004) find that unpredictable and non-negotiable working hours typically lead parents to depend on informal childcare arrangements, i.e. grandparents and friends (contrary to claims by the spokesperson from McDonalds that zero-hour contracts are helpful for parents in arranging childcare).

·         Lastly, the qualitative effects that casual working conditions have on family life can be seen quite poignantly in the following interview with a mother working under such circumstances:

"We do not have such a thing as a typical day. This week has been the first one when we have had some regularity at work. Actually, after the birth of my son, we haven’t had any routine . . . I have normally three different shifts and I haven’t had a permanent contract. This has meant that I never know when they call me for work. I can’t, for example, tell my son in the morning whether he will have to go to the day-care centre that day or not.” (ibid).

Employees on zero hour contracts lose out in two ways. Not only are their hours unpredictable, they are also often non-negotiable. Thus, as one contract from the fast food retailer Subway shows, employees are ‘in debt’ to their employer:

"The company has no duty to provide you with work. Your hours of work are not predetermined and will be notified to you on a weekly basis as soon as is reasonably practicable in advance by your store manager. The company has the right to require you to work varied or extended hours from time to time." (Guardian, 2013, emphasis added)

Noting the sections in bold above, it is clear that the company is dictating an employment contract which is beneficial to them from the perspective of maximising efficiency and profit-making (through keeping staff costs low/in line with managerial preferences). Read in this way, the language of the ‘zero hours employer’ is symbolic of the uncompromising nature of modern capitalism. It is assumed that efficiency trumps all, regardless of social or environmental costs. Calls for an end to zero hour contracts must therefore be welcomed as they pose a fundamental challenge to the value base of our current economic system.