“Either you guarantee employment, or you guarantee there will be unemployment.” – Pavlina Tcherneva

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Unemployed men wearing hats waiting in employment benefit linePhoto by The New York Public Library on Unsplash. 1938 – Unemployment benefits aid begins. Line of men inside a division office of the State Employment Service office at San Francisco, California, waiting to register for benefits on one of the first days the office was open. Photographer – Dorothea Lange

This week the Learning and Work Institute published its July briefing on employment. Stephen Evans, its chief executive, made it clear that there were signs of an employment crisis ahead with payroll employment down 650,000 and the claimant count over double the level seen in March with the biggest rises in areas where unemployment is already high.

According to its analysis, the number of hours worked have plummeted 17% since the start of the crisis – the lowest level since 1997. It also noted the OBR projections that 15% of furloughed workers (1.4 million people) will not be able to return to their previous jobs.

Pointing to the current 2.6 million claimant unemployment, which is almost at the levels of the 1980s, it said that that could rise further with the withdrawal of the Coronavirus Job Retention Scheme at the end of October, risking a second wave of unemployment and adding to the redundancies already announced in recent weeks.  Modelling by the Learning and Work Institute has also warned that without adequate government intervention unemployment could be on track to exceed four million, which would be an unemployment rate higher than at any point since 1938, following the Great Depression.

According to the Learning and Work Institute and very worryingly the youth claimant count has already exceeded the peak of the last recession reaching 508,000 in June. The Resolution Foundation suggested in its ‘Class of 2020’ report, published in May, that the pandemic could push youth unemployment over one million.  It also found that education leavers were most exposed to the increase in unemployment and that they are likely to face reduced pay and employment prospects even after the economy has recovered.

Prior to the pandemic, the consequences of 10 years of cuts to public spending and government policies had already left people in precarious employment and on low wages – in poverty. The future is now even more uncertain for many of those people who will be joined by many others fearing equally for their prospects. ‘Can I get a job?’Will I still have a job to go to?’ And for young people ‘What sort of future will I have?’  Those fears are translating into falling consumer confidence and spending.  Andy Haldane’s ‘V-shaped recovery’ is looking less and less likely as people worry about the prospect of redundancy and decide instead to save what they can (and if they can) just in case the worst happens.

Jonathan Haskell, who sits on the Central Bank’s interest rate-setting committee, was clear in his analysis ‘The path of recovery crucially depends on the fear of infection, which in turn depends on the mix of public (track and trace) and private (screens in shops) health measures… It also depends on the fear, or realisation, of unemployment, as weak activity and capacity constraints on the operation of surviving businesses, and insolvencies, translate into a fall in the demand for labour’.

With the slowdown in economic activity across the world and the prospect of a deep global recession, the steep fall in household consumption and businesses which have closed, the already massive response from the government in the initial stages of the pandemic has now translated into the job creation programme announced a few weeks ago by Rishi Sunak to mitigate the worst consequences of the economic slowdown as we emerge from lockdown.

Sunak announced increased capital funding and plans for better infrastructure from roads to schools and hospitals as well as the creation of green jobs along with a youth employment programme.  Whilst they are welcome, such plans will not be ‘shovel ready’ or provide an immediate solution to the expected rise in numbers of unemployment. Furthermore, the Kickstart scheme for young people may not be workfare but leaves many questions unanswered: Will these jobs be mandatory with the threat of Universal Credit being stopped if they opt-out? Will they lead to permanent jobs? And could they undermine existing employees if employers choose to replace them with government-funded labour?

As Ellen Clifford (a disabled activist and author of The War on Disabled People: Capitalism, Welfare and the Making of a Human Catastrophe’) notes in her article in Novara Media ‘Throughout the pandemic, the Conservatives’ primary economic concern has been how to support business with little to no regard for public well-being.’

This phenomenon is not new. It has been the modus operandi of successive governments and reflects ‘free market’ ideology which places businesses as wealth makers, forgetting the role of workers in that wealth creation.  At the same time, it has been allowing vast sums of public money to be poured into private profit. As has already been noted by GIMMS in previous MMT Lens blogs, under cover of Covid-19 this process has speeded up.

As reported recently by the RMT, the privatised rail companies have been handed hundreds of millions in extra subsidies to run trains during the lockdown and they are now demanding even more. Add to this the state contracts worth over £1bn that over the last few months have already landed in the laps of private companies without a tender process or accountability. Companies such as Deloitte, PriceWaterhouseCoopers and Ernst & Young have all been beneficiaries of public money under fast-track rules. In other words, just more of the same corporate welfare which has been a key feature of successive governments over decades.

At the same time as our public services have been starved of funds on the grounds of unaffordability, the private sector has done very well indeed from the public money tap.  Whilst public money has been poured into private healthcare organisations the UK, according to recent research by the Nuffield Trust the NHS is near the bottom of the league for health resources – short of staff, beds, equipment and buildings. The commercialisation of our public service sector means that private profit trumps public well-being whether it’s the NHS or social care. Even our education system has been reduced to serving the god of the market.

And as Rishi Sunak bigs up his generosity by praising the role of public sector workers and rewarding some, he is at the same time playing a nasty, divisive game by increasing the pay of teachers, police and prison officers, the judiciary, civil servants, doctors and dentists and the armed forces whilst ignoring other frontline workers including nurses, midwives, hospital porters and other NHS staff who will not be included in this pay round. The very people who were instrumental in saving thousands of lives whilst putting their own at risk. The same people who despite a three-year wage settlement still have not made up for the lost incomes which occurred during the previous public sector pay freeze.

The settlement did not include either the many thousands of brave and committed employees working for private care companies on low pay and with poor working conditions during the pandemic. This is a direct result of the brutal cuts to local government budgets which has left them between a rock and a hard place and having to drive hard bargains to buy care which in turn has a knock-on effect on workers’ pay. As an aside, isn’t it time for social care to be brought back into the public sphere rather than being open to abuse by big private companies obsessed with profit?

It is risible then that at the same time as recognising the ‘vital contribution’ made by our key workers, Rishi Sunak is now talking about the need to get the public finances back in shape and the possibility of further cuts to spending. This week he warned that public sector workers should expect further pay squeezes and has ordered government departments to find cost savings.  Suggesting that the money for the proposed public sector pay increases will have to come from existing budgets is likely smoke and mirrors code for the prospect of more cuts to public spending at some point in the future.

After a huge fiscal stimulus to keep the economy from tanking, which yet again has benefited businesses, the government is now rowing back and preparing us for the bad but false news that it will have to be paid for. And the media and economically illiterate journalists reinforce the household budget narrative to keep the public in line and compliant – ‘Covid-19 provoked a surge in borrowing’,…‘the UK public finances are on an ‘unsustainable path’‘tax rises are inevitable’ are dished out daily to subvert the truth about monetary reality. The desired response will be that the public accepts more austerity as the price to pay for government spending during the pandemic.

It’s time for the public to get ahead of the curve and stop bowing to the deficit hawks who spread misinformation which will deprive them of a better life.

Quite simply, such a strategy would further depress the economy at a time when it needs more spending, not less. Robbing Peter’s department to pay Paul’s is, in short, more austerity and more cuts to public spending based on the lie that there is a finite pot of public money. We should be clear here that it has nothing to do with the state of the public finances or modern monetary realities and is more to do with political choice and fulfilment of ideological narratives about the superiority of the market rather than the government recognising its role in serving the interests of the nation as a whole. The message of trickle-down has proved a lie, but they still try to promote it as a wealth equaliser.

If the Conservatives were really interested in really levelling up Britain and tackling poverty and inequality, then they would have to embark on a radical strategy which would include;

  • a central government paid for Job Guarantee serving the needs of local communities by providing useful, paid public sector work both to maintain economic activity in the real economy and mitigate the worse effects of the coming recession.
  • a permanent expansion of the public sector for education, healthcare and social care for the well-being of both the economy and its citizens.
  • Targeted government investment in training, education and re-skilling for the future and to transition towards a just green economy.

A Job Guarantee may not be a magic bullet in itself to solve all the problems we face but it is an essential framework upon which we can build a better society for all.  In the words of Pavlina Tcherneva, academic and author of The Case for a Job Guarantee:

“The guarantee part of the proposal is the promise, the assurance, that a basic job offer will always be available to those who seek it. The job part deals with another paradox, namely that while paid work in the modern world is life-defining and indispensable, it has, for many, become elusive, onerous, and punitive. The job component in the Job Guarantee aims to change all that by establishing a decent, living-wage job as a standard for all jobs in the economy, while paving the way for the transformation of public policy, the nature of the work experience, and the meaning of work itself.”

Hands up who doesn’t want a better life for themselves and their families?

 

 

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The post “Either you guarantee employment, or you guarantee there will be unemployment.” – Pavlina Tcherneva appeared first on The Gower Initiative for Modern Money Studies.