Preventing poverty in the labour market

Adrian Sinfield, University of Edinburgh

Preventing poverty more effectively requires lower unemployment and decent jobs, fair wages and greater security.  This means a ‘career first’ rather than a ‘work first’ approach, with jobs worth having and benefits to the individual, their family and the wider society.

Reducing poverty nowadays is discussed as if it were all a matter of getting ‘them the poor’ to behave better. But preventing poverty requires closer attention to its political economy and so the ways in which the workings of society, polity and economy allow and encourage the creation of poverty.  Tackling prevention in addition to lifting people out of poverty leads to greater and closer scrutiny of the processes that fail to protect people.

A crucial part of this requires a fairer and better working labour market. The objectives were clearly set out by William Beveridge 71 years ago in Full Employment in a Free Society. Full employment ‘means having always more vacant jobs than unemployed, not slightly fewer jobs. It means that the jobs are at fair wages, of such a kind, and so located that the unemployed can reasonably be expected to take them; it means, by consequence, that the normal lag between losing one job and finding another will be very short’ (Beveridge, 1944, p 18).  The aim, he stressed, should always be a seller’s market, not a buyer’s market. ‘A person who cannot sell his labour is in effect told that he is of no use.’ This is ‘a personal catastrophe’ rather than ‘the annoyance or loss’ suffered by the employer who cannot fill a job.

I have quoted Beveridge at such length to bring home the contrast with today’s policy assumptions for the labour market. Throughout his career Beveridge recognised the ways in which the balance of the power in the labour market shifted with changes in unemployment. The higher the unemployment, the more the balance tilts in favour of the employer. This was brought out by classic studies in the past. ‘Hiring requirements tend to rise – the definition of an “acceptable” worker is tightened up’, as Lloyd Reynolds, a pioneer of labour market analysis, pointed out (Reynolds, 1951, p.73). In consequence, those with least bargaining power in the labour market, whether suffering particular disabilities, lacking skills and/or belonging to ethnic, religious and other minorities, become even more vulnerable to exclusion and deprivation.  The risk of low pay and poor working conditions is increased.

By contrast, with lower unemployment employers have to recruit more widely, invest more in training and recruitment, make more adjustments to promote flexible working that allows a ‘family-friendly’ and better ‘work-life’ balance for their employees.

Many basic social policies are more likely to be successful when unemployment is kept low. ‘Maintenance of a high general level of economic activity has priority over improved labor market organisation … because it is a structural prerequisite to the latter’ (Reynolds, 1951, p 75). This was also stressed by Beatrice Reubens when she carried out a detailed, comparative review of European programmes to help the ‘hard-to-employ’, personally visiting and analysing experience in country after country. Low unemployment was a prerequisite for successful rehabilitation and re-employment (Reubens, 1970).

I am aware of no research since that challenges the need to keep overall unemployment low to tackle poverty in the labour market and to better support those caught on its margins. Reducing unemployment is a central part of what needs to be done to reduce inequality and poverty (Atkinson, 2015, ch. 5).

But stigmatizing and mythmaking about ‘shirkers, not workers’ weaken public support for tackling the labour market, rather than the ‘out of work’. Policies of ‘what works’ in keeping voters on side include the opportunistic exploitation of long-term prejudices of ‘we the people’, the taxpayers and contributors, and them, the takers who ‘rest on their benefits’.  But the changing trends in long-term unemployment, David Webster demonstrates, are to be explained by the overall state of the labour market, not by the behaviour or characteristics of those suffering long periods out of work (eg, Webster, 2005).

Politicians and others who should know better – and very often do – continue to nourish the myths despite their careful refutation (Shildrick et al., 2012b). They do not mention that over the last half century basic benefit rates for people unemployed or sick have fallen by one-half compared to average earnings (by the DWP’s own analyses until they were cut as an economy, Sinfield, 2013).  Inadequate ‘welfare to work’ and tougher sanctions policies are feeding the growth of poor jobs that diminishes people’s lives, not helping to preventing them.

By contrast treating people with dignity in the labour market means ensuring that they are offered a job worth having – the ‘career first’ rather than ‘work first’ thinking set out by Ron McQuaid and Vanesa Fuertes (2014). Making bad jobs better is a major theme of the concluding chapter to the 2012 award-winning study by Tracy Shildrick, Rob MacDonald and others, Poverty and Insecurity. The study is ‘about the lives of individuals and families living in or near poverty – despite (or, as this book will show, because of) their enduring commitment to work and repeated engagement with jobs’ (Shildrick et al, 2012a, p. 1).  It reveals the problems of the labour market experienced by the many people caught in the no-pay low-pay cycle.

‘Poor work is the big story’ in a world of greater inequality, insecurity and Social Exclusion (Byrne, 1999, p 69; Lansley & Mack, 2015). Policies to support the Living Wage are valuable, but they have to be accompanied by decent child benefit. The Chancellor of the Exchequer’s ‘misappropriated’ usage of a ‘national living wage’ (Veit-Wilson, 2015; Scottish Government, 2015) provides a fine example of ‘words that succeed and policies that fail’, the subtitle Murray Edelman chose for his book on Political Language (1977) – especially when it is combined with reduced tax credits.

Instead we need a broad policy approach that encourages and supports making bad work better, creating decent, good quality jobs for all (Findlay et al., 2013). As Michael Marmot argues, this will bring benefits that reduce the health gap (Marmot, 2015, ch. 6). This should also include more attention to the practices of poor employers and to the ways that employers providing the poorer jobs are themselves often caught in contracting arrangements with supermarkets or other larger employers.

One enterprising initiative is the Scottish Fair Work Convention tasked with developing the ‘fair employment and workplace framework for Scotland … that articulates a practical blueprint for implementing fair work’. ‘People must feel valued, rewarded, engaged in their work and be allowed to feel they have a stake in the success of their workplace, their community and their country’  (Roseanna Cunningham, Cabinet Secretary for Fair Work, Skills and Training, ‘Scotland: A Fair Work Nation’, 17 April 2015). Now this ambition has to be translated into strong policies in an area that has in the past been much neglected. It could make a valuable contribution to reducing poverty and inequality in the labour market.

Adrian Sinfield is Emeritus Professor of Social Policy and University Fellow at University of Edinburgh.

References:

Atkinson, A. B. (2015) Inequality: What Can Be Done?, Boston: Harvard University Press.

Beveridge, W. H. (1944) Full Employment in a Free Society, London: Allen and Unwin.

Byrne, D. (1999) Social Exclusion, Buckingham: Open University Press.

Cunningham, R. (2015) ‘Scotland: A Fair Work Nation’, http://news.scotland.gov.uk/News/Scotland-a-fair-work-nation-1851.aspx

Edelman, M. (1977)  Political Language: Words that Succeed and Policies that Fail, New York: Academic Press.

Findlay, P., Kalleberg, A. L. & Warhurst, C. (2013) ‘The challenge of job quality’, Human Relations, vol 66:4, pp 441-451.­

Lansley, S. & Mack, J. (2015) Breadline Britain: The Rise of Mass Poverty, London: One World.

Marmot, M. (2015) The Health Gap: the challenge of an unequal world, London: Bloomsbury.

McQuaid. R. & Fuertes, V. (2014) ‘Sustainable integration of the long term unemployed: From Work First to Career First’ in Larsen C., Rand, S., Schmid, J. & JR. Keil (eds), Sustainable Economy and Sustainable Employment, Muenchen: Rainer Hampp Verlag, pp 359-373.

Reubens, B. (1970) The Hard-to-Employ: European Programs, New York: Columbia University Press.

Reynolds, L. (1951) The Structure of Labor Markets: Wages and Labor Mobility in Theory and Practice, Westport, Conn.: Greenwood.

Scottish Government (2015) UK wage plan ‘not a Living Wage’ http://news.scotland.gov.uk/News/UK-wage-plan-not-a-Living-Wage-1dd6.aspx

Shildrick, T., MacDonald, R. , Webster, C. & Garthwaite, K. (2012a), Poverty and Insecurity: Life in Low-Pay, No-Pay Britain. Bristol: Policy Press.

Shildrick, T., MacDonald, R., Furlong, A., Roden, J. & Crow, R. (2012b), Are ‘Cultures ofWorklessness’ Passed Down the Generations? York: Joseph Rowntree.

Sinfield, A. (2013) ‘What unemployment means three decades and two recessions later’, Social Policy Review 25, pp 205-223.

TUC Commission on Vulnerable Employment (2008) Hard Work Hidden Lives, London: TUC.

Veit-Wilson, J. (2015) Stealing a good name: the national living wage http://www.cost-ofliving.net/stealing-a-good-name/

Webster, D. (2005) ‘Long-Term Unemployment, the Invention of “Hysteresis” and the Misdiagnosis of Structural Unemployment in the UK’, Cambridge Journal of Economics, vol 29: 6, November, pp 975-95.

 

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