Unemployment as the Whip

At the end of the Second World War there was obviously a concern not to return to the mass unemployment of the 1930s, partly this was because it was blamed for aiding the rise of Nazism in Germany that had led to the war breaking out. In addition right across Europe by 1938 there were very few democracies left and even if they had not become as extreme as Nazi Germany, most Europeans were under the rule of a dictator in a society that was authoritarian and discriminatory on grounds of race and religion. There was also a fear in 1945 of a repeat of what had happened 1919-21 with the end of the war and the return of demobilised troops leading to unemployment that was hard to decrease before the really bad levels that followed in the wake of the Wall Street Crash in 1929.

In the UK in 1945, under a Labour Government, and even before then when civil servants had started thinking about the post-war economy, one issue was how far the UK could get to full employment. It was believed that Keynesian economics which had begun to be experimented with in the UK from the 1941 budget onwards could get the UK in a better shape in terms of unemployment. There was a great deal of debate about how high unemployment should be kept at, because it was feared that if everyone had a job then there would be no incentive for workers to work hard and they could effectively blackmail employers for higher wages. So it was believed that to achieve flexibility in the economy that unemployment should be somewhere between 3%-8% of the working population with left-wingers favouring the lower figure and the right-wingers the higher level.

In fact as it turned out, injections of US capital through Marshall Aid from 1948 onwards and the demands of reconstruction and then the various wars of the Cold War, combined with cheap oil kept unemployment low right until the mid-1970s and really there was no need for Keynesian economics. By the time they were tried in 1976, the world had become so used to not using deficit finance, and to a more stable budget pattern that such an approach was seen as unacceptable and the UK began to go into its highest levels of unemployment since the 1930s. This was not helped by the Thatcher government's privatisation of nationalised industries which then cut cost and the strict monetarist policies which exacerbated the shift from manufacturing to service dominance of the UK policy. There was also an increasing maldistribution of wealth as salaries of the richest pulled away further from the bulk of the working population. This in fact reduced consumption in the economy and millions of poor people actually consume a great deal more than a few rich people and so even the service sector did not prosper. The vigorous encouragement for people to buy rather than rent property also increased frictional unemployment as it made it far harder to move to a new area to find work, especially with the sharp disparaties between (not only in terms of housing but also food and other essentials) prices in different parts of the UK. Official OECD figures put UK unemployment in the mid 1980s at around 3.6 million, it was probably in fact over 4 million out of a working population of somewhere around 22-25 million. It also concealed all of those in part-time, insecure low paid jobs.

Unemployment now in the UK is around 1.65 million people out of a working population of 29 million, so 5.7%. We use ILO figures much more these days than simply counting the people who are claiming benefit was was the case in the 1980s and which actually excluded lots of people seeking work (such as married women whose husband worked, people between the ages of 55-65, etc.). The right-wing press, notably 'The Daily Mail' still complains that there are too many economically inactive people, they claim 7.95 million who they seem to condemn as being unwilling to contribute to the economy and thus should be chasitised. In fact of these 1.89 million are students, the bulk of whom work to pay their way through university and college given the high costs of study. They often take the low paid casual jobs that anyone supporting a family could not live on. Also it is still the case that the more someone studies the more they rise their income. Universities also generate a lot of wealth and in some areas are now the main industry of the town, often employing 3-5000 staff who contribute. Portsmouth claims that even just visits by parents of students who are studying in the city, bring £26 million per year into the economy, let alone what the students and university staff spend themselves. So I would hardly call students economically inactive. These days may go on placements into companies as part of their studies and so form an educated free labour force for part of the year.

Of the economically inactive, 2.35 million are either caring for elderly relatives or for children. Mothers are now condemned as 'stay-at-home' mothers. The thing is the policy of the Blair government and the Conservative ones that preceded it was that having mothers at home was a good thing to be encouraged but at the same time they should also go out to work. This contradictory policy has never been reconciled in the past 30 years in the UK so mothers are attacked from both directions. It is seen as alright for them to stay at home as long as they do not claim benefits. Women in the workplace still earn 17% less than a man in the same post, so where is the incentive to go out and be criticised for not looking after your child when you are going to get paid less. Mothers at home save the state millions of pounds. Private childcare is beyond the reach of most parents in terms of cost so to bring more mothers into the workforce would need a huge increase in cheap nursery places probably supplied by the state. The same goes for carers of the elderly and the disabled. The Thatcher government ran down many long-term care institutions to save money and forced 'care in the community' on the population. Scotland has reintroduced some of the provision for elderly people, England has not. Again, then, these carers might not be economically active, but they are effectively saving the state millions of pounds in the care it would be obliged to provide.

Apparently 619,000 people have retired early. Now, given that unemployment is 1.65 million, if these people were still in the workforce you would actually raise unemployment by 36%. These people tend not to be a burden on society and they are consumers so stimulating the economy. It seems perverse to want them back in the workforce in the place of younger people. By definition people who have retired early do not need to work to earn an income, so why should they not yield their place to those who need a job to support their family? It seems ridiculous to concern ourselves about the early retired they are a benefit not a burden to the economy. We were all encouraged during the 1980s to make millions and retire at 30, so is it any surprise that many people have done that? Again it seems like a contradictory policy. Conservatives want it both ways, it is a very old-fashioned attitude that is reminiscent of the 19th century attitudes of Non-Conformist denominations, that somehow it is sinful not to be working and those who do not work are guilty of committing an offence. We are long passed such attitudes and also to cling on to them suggests we put no value on study or caring.

There are people in the economy who do not want to work, these are the 34,000 termed 'discouraged workers'. Interestingly this figure is almost exactly the same as the number in the 1960s despite the increase in the size of the population. The question is would you want to employ such a person anyway? It is clear that such people are a smaller percentage of the population than they were, say, in 1968 and the number does not necessarily mean it is the same 34,000 people as some will drift in and out of this category as economic pressures dictate. If you think of the homeless people in the UK, of those with mental conditions who have been pushed out from institutions and so on, then this figure actually seems quite low, representing 0.12% of the total working population, actually probably lower than those people who are economically active but making their income from crime and probably scooped up in the 3.75 million people described as self-employed and lionised by the right-wing press!

The other neglected sector is the under-employed, those people who want a full-time permanent job but can only get temporary or seasonal work with very little security or rights. When I lived in East London, this characterised the employment of literally hundreds of people in any given street. When the minimum wage came in many doubled or tripled their weekly income though they had no access to the employment rights that should be taken for granted and in many cases their employers were scooping back their wages through introducing various charges and most often through not paying the national insurance contributions. In some parts of the UK, this grey economy which has legitimate businesses behaving in illegitimate ways is terribly common as the bulk of the employees have no other option bar crime or going back on state benefits. Contrary to the portrayal of the bulk of the population, the large majority of people hate to subsist on handouts and will go out of their way to get a scummy job with no rights, long hours and low pay rather than stay on benefits. However, such jobs do not pay enough and you are at risk of losing them on the whim of the employer. Tax credits have helped for those in such situations with families, but if you lose the job they stop too and you are back to benefits, constantly flickering between the two states.

Why have I got on to unemployment today? It is not because new figures are out, it was stimulated by a report (reported in 'The Guardian' on Saturday) that employers are complaining that people under the age of 40 lack the experience of mass unemployment (you could argue those under 34 as if you are 34 now, you were 16 in 1990) and so do not work hard enough as they have insufficient fear of losing their jobs. This goes back to the thoughts at the end of the Second World War about how much unemployment was needed to prick people into accepting low-paid work. No-one seems to realise that a worker who is in fear of unemployment is not an efficient worker. I am in this situation at the moment. I am likely to be unemployed from August 2009 onwards and yet I am already in fear that I will lose my house and other things despite their being a year to go. I am 40 so maybe I have that fear of the Thatcherite years still lodged in my brain. The effect is though that the fear of unemployment is causing sleepless nights and utter despair. I feel there is little point in putting in any effort to a job I will not see out. I am refusing to start projects that I know I will not see the end of. It causes arguments with my housemate and my family. Is this the kind of situation we want for younger people to be in terror all the time?

The thing about being threatened with unemployment is that it breaks any common interest between you and your employer. I have seen this happen so many times. In the past year two women who knew they were going to be layed off at my work (by a very bullying very misogynistic boss) simply stopped working, minutes were not typed up, things were not filed, they left everything in a mess because they no longer felt any obligation to the boss who had treated them so shabbily. Such fear stunts initiative. I have no incentive to start new things or even make suggestions on how to improve them. There is no point in me receiving training; there is no point going for promotion to work for the employer I will be parting company with so very soon. Fear of unemployment does not make people work harder, it instead quickly leads them to draw in and work less effectively. The hardest workers are those who are valued and feel they have a future in the company they are working in. Employers tend to see their workers simply as a resource like they electricity or raw materials, they forget that workers engage emotionally in their workplace as often the spend more time there awake than they do with their families.

One thing that the employers overlooked about people under the age of 40 is that they tend to view their life as much more changeable. They tend not to have mortgages or families, especially these days when people are leaving (or being forced by the economy) to leave buying a house or raising children until much later in their life. In addition, the age at which it is seen right to do certain things has shifted greatly. In my youth, you were deemed to be entering middle age at the age of 40. These days people in their early 40s carry out the kinds of activities that would have been done by 25-year olds in my youth. A colleague of mine in her 50s water-skiied for the first time last week and another who is in her mid-40s regularly goes scuba diving in tropical waters. Back in the 1970s these women would not think of doing such thing. Despite British people being pretty unadventurous when compared say to their French or Australian counterparts we are all constantly encouraged to get 'out there' travel and experience life. Given this context it is unsurprising that people under 40 are not keen to keep their heads down and work solidly at a job particularly when (in contrast to in the 1950s and 1960s) there is no guarantee that they will not be dropped with minimal notice and minimal redundancy pay. Commitment is two-way and employers cannot whine that their employers make no commitment to the business when the employers make it clear they are making no commitment to the workers.

This leads on to the other complaint from employers that workers under 40 see going to work as an extension of their social life. If employers have suddenly discovered this then they have been blind about employee behaviour for decades. In terms of marriages in the UK, 40% are between people who met at work and this figure has continued to be the case for decades even if the level of marriages (climbing again) has fluctuated. This does not take into account the other relationships and friendships established at work and often promoted by employers through 'team building'. Again employers' expectations are unrealistic if they think they can have their employees working as a team and not for social contact to develop. The shift has been in terms of the media used for the contact. People do not stand around the 'water cooler' as they used to and far fewer gather in the smoking room and many workplaces no longer have a canteen where people socialise. A decade ago people complained that employees used the telephone to talk to friends and relatives now of course they email or text or instant message. This makes it more visible to some employers and in fact more in their control as many now block the usage of such websites through work machines. Another factor is now that we are all service sector workers it is much easier than if you are bellowing across to your colleague standing the other side of a production line. However, I bet if you measured how much time spend socialising at work now and compare it to 1958 or 1978 or 1998 you would find the time would be pretty much the same.

Thus, unemployment is still seen as the necessary whip in the UK to get a higher level of work out of employees. The fact that we work longer hours and have fewer holidays than our European colleagues is not factored into this at all. Fear, despite what employers think, does not make people work harder, it makes them work less efficiently. Society has changed and so have our expectations but people who feel happy and above all secure in their job work hard and make sacrifices for their employer. People who feel they are simply a disposable commodity and are threatened to make them work harder are not going to do. To get a good return on people you have to invest in them as you invest in the other aspects of your business. Of course as in so many facets of British business there is under-investment in this aspect as well as many others and so companies see the consequences of their policies.