Mark Carney’s speech to the TUC Congress yesterday was interesting, and it was right for the unions to invite him. As major civil society institutions with mass membership, the trade unions can and should seek to influence the parameters of democratic debate unmediated by political parties, alongside of course the different strategies for engagement through political parties that some unions engage in.
Carney spelt out that both the American economy, and the Euro zone have their own problems:
German driven austerity in Euroland has been catastrophic:
The results have been dire. Euro-area unemployment has risen sharply over two successive recessions to its current rate of over 11%. It stands at over 14% in Portugal, 20% in Spain, and 25% in Greece. Over 6% of the euro-area labour force is now long-term unemployed and in danger of becoming detached from the labour market.6 And despite high unemployment, there is evidence of labour shortages.
However, The US economy suffers from lack of investment, leading to a drop in the umber of people economically active.
The number of Americans in work has only just returned to where it was before Lehman failed, even though there are now 14 million more people of working age. Much of the fall in the unemployment rate is the result of workers in their prime leaving the labour force. Far more vacancies remain unfilled than usual, indicating big mismatches in the labour market. And fewer people than normal are switching jobs, suggesting an ongoing reluctance to take risks.
Interestingly, Carney observes that lack of capital investment is also a feature of the UK economy
There are now one million more people in work in the UK than at the start of the crisis. But … that exceptional employment performance has come at a cost. Wage growth has been very weak; in fact adjusted for inflation wages have fallen by a tenth since the onset of the crisis. And in order to find such a fall in the past, you would have to go back to the early 1920s.
Carney acknowledges that this expansion of employment, has not led to wage growth:
wage pressures based on past relationships are as low today as if the unemployment rate were 10%, not the 6.4% rate it currently is.
In fact, the Other Resolution Foundation has found that while real weekly wages have fallen by 6% since 2007, the drop in real income for the self employed has been 20%, leaving a self employed person paying 40% less than someone in employment.
Although Carney dicusses the structural change in the UK workforce polarizing towards high skill and low skill sectors; he fails to factor in the shift towards casualisation, which has been a major paradigm shift in employment practices over the last 5 years.
According to a new pamphlet published by LRD, public sector outsourcing alone has seen a 168% year on year increase in the first quarter of 2014, for example, seven out of ten home care providers now only offer zero hours contracts. The office of National Statistics (ONS) published figures in April this year which shows that 1.4 million workers have contracts that fail to guarantee a minimum of working hours, and 1.3 million workers were provided with no work in their 2 week reference period.
The workforce in stable, standard employment is stagnant outside London; so the biggest growth areas have been those on zero hours contracts, or fixed contracts for only a set number of short hours.
The apparent shift towards self employment is also illusory, although it makes up for a full 40% of the rise in the number of people working since 2010; as this includes a variety of odd-jobbers, those getting sparse work at very low income; and those in industries like construction and airlines forced into false self-employment; or personal services contracts; such practices facilitated by payroll companies and sharp practices by employment agencies.
Carney is deluded in stating that any economic recovery based upon the growth of such casualised and precarious employment can lead to stability:
… although this adjustment has been painful, trading off lower productivity and lower wages for much higher – and it is much, much higher – employment, on balance that trade – that trade-off provides a solid foundation for a durable expansion. By staying in work individuals retain and learn new skills, and they are better placed to participate in the expansion as it gathers force.
This is over-optimistic. Firstly, much of the casualised workforce systematically underpays tax and national insurance, and also represents a ticking timebomb of underfunded pensions, which hardly helps with the government’s deficit; but secondly, all the evidence suggests that workers in precarious employment are less likely to have access to training, and are likely to be working in less safe condition, and the terms of their contracts either seek to exclude them from employment rights, or make them too scared to enforce their rights.
The British economy has founded its recent apparent recovery on a return to the precarious employment practices of the Victorian era. I have had GMB union members explain the practices of unethical employment agencies and payroll companies who offer workers contracts of 7 or 9 hours, and then call them in by text message only hours before their shift is due to start; and who give workers “rest days” when they are ill, to avoid paying sick pay.
One payroll company I have locked horns with employs a supervisor who has put 5 or 6 agency workers into an aisle in a warehouse, and then the one who gets the lowest pick rate has their hours reduced. When I approached the company, they claimed that this practice could not be happening because no one had complained to them using their grievance process! Of course they hadn’t complained, because workers who raise grievances get their hours reduced. The client is a household name retail chain.
The next Labour government has already committed to several welcome reforms of employment law, but there are grounds for concern that the original suggestion, made at last year’s TUC, that people on zero hours contracts would have a right to regular hours after 12 weeks, has been watered down to 12 months.
Precarious employment is one of the greatest problems facing millions of working people, and the Labour Party needs to be seen as their champion. As Ed Miliband correctly said during his speech at last year’s party conference, Britain cannot succeed in a race to the bottom, we can be better than that.