The economy has undoubtedly gone global.
What does this mean for the average British person at work? As long ago as 1997 economists like Adrian Wood described the impact of globalisation on the labour market. Since then a consensus has grown that labour market insecurity was, at least in part, a consequence of decreased trade barriers.
My constituents do not need a Cambridge professor to tell them this. Local factory sites that used to employ a small town’s worth of people no longer need to. Global companies like General Motors, Unilever, and Airbus now employ fewer, more highly skilled people. We have witnessed the number of permanent employees in such companies decline in line with productivity improvements. And those heading into Job Centre Plus are more likely to find opportunities in lower-paid care sectors than in these global multinationals that scour international job markets, and not always local markets.
And these days it is not enough to compete against other companies for business; employees also compete internally within global companies to keep work in the UK. Winning requires investment. To secure investment, employees must demonstrate flexibility. For some, this means added insecurity.
Today, a regressive UK government is trying to undermine the UK’s social protection system by advocating a race to the bottom. Falling living standards are exacerbated by cuts to social security that make the less well-off, less well-off.
This simply will not help tackle the central challenge the UK faces: insecurity. The answer to global insecurity, I believe, is the building of social capital.
Social capital describes our shared values and expectations that help us to feel good about ourselves, our community and our life. The opposite of this is insecurity: worry and fear about the future on offer. Clearly workplace insecurity, as As Pat McFadden described last year in his paper, Making Things, impacts severely on shared understanding and the sense of purpose a person has. Now while there may be much work to do to build global economic consensus for coordinated growth policies, at home in the UK I conclude that we need three plans to build social capital in the workplace.
First, we need a plan to help with childcare, as Nick Pearce and Graeme Cooke discuss in their contribution to The Politics of Solutions.
Second, we need to consider rates of pay, and the calculations people make about working. That is why living wage campaigns are certainly an important part of the work the labour movement does to build social capital. Kevin Rowan’s piece in The Politics of Solutions discusses the role of trade unions in the modern economy.
However, there is a third problem in the labour market caused by recessions.
There is more than one type of unemployment. The labour market is ‘sticky’ and the unemployment rate is usually thought to lag behind growth in the rest of the economy. There is both ‘cyclical’ unemployment that arises from the ebb and flow of the business cycle in normal times, and ‘frictional’ unemployment that occurs when demand shifts from one sector to another in a changing economy. This friction causes some to lose their jobs and be unable to find another one in the medium term, and has been exacerbated by the processes of globalisation.
It can be very hard for those affected to know what is going on. Getting information about how to retrain and get appropriate skills for a changing labour market can involve significant risks for an individual, and no small impact on their feelings of security and self-respect.
Britain currently faces twin problems of hysteresis. We still carry with us the echo of economic change that deskilled whole communities in the 1980s. And when Ed Miliband walks through the door to No 10 in 2015, he will face the legacy of five years of drift between 2010 and 2015.
Is there an answer to these twin problems of historic and recent periods of recession? I believe the practical solution might be to reshape the part of the government that intervenes in the labour market: Job Centre Plus.
I suggest we need to look at five areas of improvement: localisation; what goes on inside Job Centre Plus itself; young people and graduates; older people; and finding a response to underemployment.
Some parts of the UK are better than others in analysing labour market clusters in their locality. Take, for example, the Newham council. It worked to analyse the borough’s worklessness and found, ‘a number of complex and often interlinked barriers to work that affect Newham residents.On Merseyside, the Knowsley Resilience Monitor provides detailed geographical information on where worklessness is clustered and specifically points out the difference between its borough and other parts of the country: there being currently 16,900 working-age residents without any qualifications in Knowsley, around one in five of the population aged 16-64 – almost twice the national level. In doing so they are tracking the areas of low social capital. This makes the authority much better placed to target resources to address problems.
These are just two examples of local authorities seeking to own the employment challenges they face. What makes them different is the detailed, specific information on the employment clusters located within their area. The current work programme regions, by contrast, are very large, and they do not focus on specific economic clusters. Yet back in 2008, Department for Work and Pensions research demonstrated that working intensively in neighbourhoods that demonstrate very high levels of worklessness yields results better than a blanket approach.
So the starting point for Labour has to be to allow localities to analyse then intervene appropriately in their labour market.
One view that I often hear from my constituents’ experience of Job Centre Plus is that, at a time when they are already dealing with the knock to confidence of job loss, the job centre itself can make people feel worse. Confidence and self-respect can be reduced by both the process that DWP sets out, but also by the attitude of a minority of public servants, which is not to say that many DWP staff are not talented and committed; rather, that they face challenges for which we can skill staff better than we presently do. There may be informational barriers, where people do not have full knowledge of the possibilities for earning in their area. Work opportunities are changing all the time, and Job Centre Plus staff could be both in-house experts on local labour markets, and able to commission high-quality tailored help for individuals.
The challenge then is how we improve the quality of intervention within the job centre. With the reduction of specialist advisers – lone parent advisers, for example – there is more of a tick-box approach and less personalised help. The work programme has exacerbated this. The country is segmented into large, unwieldy regions that do not necessarily reflect economic clusters. The best job centres truly reflect local needs and are expert on the local economy. Getting a better skilled, more motivated team, focused on each individual that walks through the door is the place to start.
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Alison McGovern MP is co-editor of The Politics of Solutions, of which this article is an abridged version of the chapter One nation at work: Building security and social capital at work