Saturday, 18 February 2012

Unemployment, the economy and the new slave labour

"Look after unemployment and the Budget will look after itself" - John Maynard Keynes, 1933

Unemployment rose by 48,000 in the past three months to 2.67 million, the economy managed only 0.3% growth in the past year, and Osborne is having to borrow far more than he planned - not to invest in the economy, but just to service debt.

Keynes made that statement in the 1930s when politicians were heading in completely the wrong direction under Ramsay MacDonald's national government. Reducing unemployment is the key to closing the deficit and reducing Britain's mounting debts. More people in work means more taxes coming to Treasury coffers, and less being paid out in benefits (not just the pitifully low jobseeker's allowance, but in housing benefit and other reliefs).

More people in work means more disposable income in the economy to help sustain jobs in the service and retail sectors. This will keep more people in work in those areas and would give businesses the confident to invest; creating more jobs. There's also the added bonus of extra VAT revenues too (a virtuous circle you might say).

The right will be quick to jump on the Keynesian analysis - and ask how will all these new jobs be funded? The simple answer is by borrowing. The knuckle-dragging morons of the right will then glibly quip 'oh so your solution to a debt crisis is to borrow more'. This is your chance to quip back 'yes, like George Osborne is - an extra £46bn in fact, because your stupid way doesn't work'. What would £46bn fund? Well crudely over 1.8m jobs paying £25,000 (which would in turn give back billions in tax revenue).

Instead of this Keynesian approach, Osborne is following the Thatcherite monetarist approach. Osborne also recognises that welfare costs will rise when unemployment is high, but his solution is cutting £20bn from welfare over four years. This is attacking the victims of the economic crisis.

Workfare is a particularly vile element of this 'welfare reform', in which claimants are offered, or forced onto, placements in large corporations to work near full-time hours for free. This benefits the profit margins of the companies, but does not create jobs. In fact given there are to be at least 250,000 of these placements then it is fair to assume that some job substitution will go on, and that it will have some effect in suppressing wages.

While 2.67 million people are unemployed, there are only 476,000 vacancies in the economy. The TUC has done valuable work showing that actually there are as many as 6.3 million people looking for work, by applying the US U6 model to the UK - and those just wanting to change jobs.

Are workfare placements included in the vacancies figures?

More worrying still is that some of the 476,000 vacancies, the ONS cites, might actually be unpaid work placements. Following the emergence of a Tesco ad for night shift workers on 'JSA+Expenses', LEAP asked the ONS 'do the 476,000 vacancies in the Labour Market Survey data include unpaid work placements through DWP work experience schemes?' The reply was underwhelming: 'It is unlikely to be included as businesses are asked how many people they are looking to recruit from outside their business'. 'unlikely' is not the reassurance we wanted, but the rest of the message is worse - workfare placements are recruited from outside the business as the numerous workfare ads now emerging in Jobcentres prove.

Ineffective and immoral

The DWP's own research has found that "workfare is least effective in getting people into jobs in weak labour markets where unemployment is high" (so like now then), and further adds "schemes that pay a wage can be more effective in raising employment than 'work for benefit' programmes".

For 16-24 year olds - 22.2% of whom are unemployed and who make up around 40% of all the unemployed - the Work Experience Programme offers the opportunity to experience slave labour in a modern setting. Now, some people have criticised groups for calling workfare, 'slave labour', and they're right: slave labour was often provided with food and tied housing.

Many of us point to the 1930s and Keynes because he was arguing against a political consensus of idiots who were wrecking the economy and with it millions of lives. Many of us have argued that this government is winding back the clock to the same period - ripping up the post-war welfare state. Now with the reintroduction of slave labour, it is clear the Tories and Liberals want to go back even further to the early 19th century - a time when slavery had only relatively recently been made illegal. But even then the Tories didn't argue for its restoration.


  1. >>Workfare is a particularly vile element of this 'welfare reform',

    "Workfare" has nothing to do with the current government's welfare reforms.

    It was introduced by Labour before the last election.

    Where were all the complaings from the left then?

  2. Workfare as implemented by this government (legislated for under New Labour) is a key part of the reforms the Tories are introducing.

    As for us not criticising the Labour government, see this blog in 2008 when Purnell's plans were first introduced:

    Or this by the LRC in 2009:

    We've been consistent critics of attempts to rip up the welfare state whether by this Tory government or by Tories like Purnell in the last government

  3. The claim in the above article that the Work Programme amounts to “slave labour” is just emotive, and populist nonsense. If you want to see where a really large dose of populist nonsense gets a country, look at Greece.

    A slave is someone who is FORCED to work. No one FORCES the unemployed to work: if they’ve got relatives to support them or some other source of money, they are free to do nothing.
    A slave has no choice as to WHERE they work. Work Progrmme people do have a choice.

    And if one able bodied person is NOT forced to work, another will inevitably have to make sacrifices to support the former. Who is the slave?

  4. @Ralph - it was 'populist nonsense' that got Greece in trouble ... not systematic tax avoidance and evasion then?

    Not forced? it's called 'Mandatory Work Activity' - work for free or have no income instead.

    Most of us don't want to live in your brutal world.

  5. thanks for share.