If your pockets are feeling lighter these days, it isn’t a one-off. Wages have fallen in real terms by 7% over the last two years, with the slide more rapid in the last nine months, as the UK economy has lurched into the second recession in five years.
Nor is it an accident. Consider the meaning of recent government policies, encouraging the spread of free or low-wage labour. This week, it was reported that a call centre is making use of prison labour for the bargain price of £3 a day per worker. The arrangement, part of a government work experience scheme, meant that workers on the normal pay scale were sacked.
Likewise, the government’s back-to-work schemes have led to unemployed workers being put to do jobs. The high court has ruled that this scheme does not amount to forced labour. However, the letters sent by the Department of Work and Pensions clearly led unemployed workers to believe the scheme was mandatory. As a result, not only have many people been forced off the welfare rolls, but many others have been forced into work for which the company pays nothing. Once again, part of the controversy about this scheme is that workers on the normal pay scale have tended to lose their jobs.
The pattern is for the government to offer already low-paying employers the opportunity to jack up their profit rate. Earlier this year, it was revealed that jobseekers were being forced to carry out unpaid cleaning work for the government contractor Avanta. The government claimed it was for “community benefit”, but it was disclosed that “under government rules, this can be defined as increasing the profit of organisations where the unemployed are sent to work without pay”.
Obviously, this has nothing to do with boosting employment. As a number of trade union leaders have pointed out, this does nothing to incentivise recruitment at normal pay and conditions. One of the intended effects of workfare is to reduce the number of people claiming jobseeker’s allowance.
Iain Duncan Smith has been explicit about his desire to cut the numbers claiming benefits. He has already gloated that workfare and other cuts are driving people off the benefit rolls. He would like to give the impression that they are returning to employment, but we know from the statistics that this is unlikely to be the case.
Insofar as there is any increase in employment lately, it has been in the number of self-employed people. This is always a sure sign of an increasingly precarious existence. Just as the unemployed in the Victorian era spent their time desperately seeking errands to run, traders to serve, sundry items to sell, so today the self-employed can be found patching together a living from the flotsam of urban capitalism.
The effects of such policies are much wider, however, than those immediately affected. A key theme of Tory ideology is the market, and its disciplines. Precarity is, from a certain perspective, a wonderful whip to hold over labour, to maintain its compliance and keep its demands to a minimum. This effect is peculiarly acute for those who are already low paid and insecure.
Taken together with the cuts to public sector pay and welfare, the overall effect of government policy is a sustained assault on income and living standards.
George Osborne explained the logic in a parliamentary speech in May: The government has a free hand to attack uncompetitive labour markets and welfare systems, as it can rely on quantitative easing and other monetary solutions to sustain UK demand while wages fall. The Tories believe that if they further hammer the cost of labour, businesses will start to invest again. Meanwhile, demand for British goods would be found overseas – the fabled “export-led recovery”.
If this is unlikely to restore growth, it will accentuate the marked tendency of labour’s share of income to decline over the years and increase profit margins. However, the scale of what the government would like to accomplish is likely to far exceed what it can accomplish. Despite the high court’s ruling, most visible brand name businesses in the UK have already dropped the Tories and their scheme under pressure from a relatively small coalition of campaigners.
The major problem for the Tories, though, is that targeting prisoners and jobseekers is a poor substitute for the main goal of weakening trade union organisation. In the public sector, and in private sector areas such as transport and energy, unions retain some strength. Thatcher began the job of dismantling union power, but she did not complete it. This is the major counter-tendency to falling wages in the economy and potentially the major obstacle to the Tories’ radical structural adjustment plans. As is often the case, the fate of the most vulnerable workers depends on the actions of those who are best organised.