Unsocial Europe: Social Protection Or Flexploitation?

by Anne Gray

Overview

How and why are European welfare systems and the labour market changing? How do they affect the daily lives of those facing unemployment or precarious work?

Anne Gray shows how the idea of unemployment benefits as a right is evolving into a regime closer to American 'workfare'. She explains how this policy forces the unemployed into low paid, temporary or part-time jobs associated with the new 'flexible' labour market. Drawing on unemployed people's own accounts of their experiences - in the UK, Germany, France and Belgium - Gray illustrates the job market as seen from the dole queue. Exploring the changing nature of work in Europe, Gray reveals why is there a shortage of full-time permanent jobs, what is to be done, and what the future holds for labour market regulation in Europe.

Providing clear explanations about shifts in welfare policy, this book is ideal for trade unionists, activists and students, and makes an important contribution to wider debates on globalisation and the future of work.

Product Details

ISBN-13:	9780745320311
Publisher:	Pluto Press
Publication date:	12/20/2004
Edition description:	First Edition
Pages:	256
Product dimensions:	5.32(w) x 8.46(h) x 0.70(d)

About the Author

Anne Gray is a Senior Research Fellow in the Families and Social Capital Research Group at London's South Bank University. In 2002 she completed a three year research project on benefits and welfare to work schemes in the European Union. A researcher in the field of labour market policy since the late 1980s, her writing has included a number of academic papers and popular pamphlets on labour issues, developing critical responses to workfare and casualisation.

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CHAPTER 1

Introduction

WELFARE, WORK AND GLOBALISATION

This book attempts to address two gaps in the literature about international comparison of welfare systems. Firstly, the way in which benefits systems, changing forms of work and labour regulation interact with each other, especially in the context of globalisation and the progress of European integration. Secondly, the testimony of unwaged people themselves on how welfare systems and labour market policies affect their daily lives, as they struggle with employers and benefit rules, living on a pittance or in and out of short-term jobs. The dry bureaucratic language of 'active labour market measures', 'availability for work testing' and 'wage flexibility' is transformed by their accounts from the front line into a human reality; the 10 per cent of Europe's citizens whose voices are too rarely heard.

Globalisation, the merging of national economies towards one giant playing field for large companies, is distinctively different from the 'internationalisation of capital' through investment flows that has been going on for over 150 years. Globalisation involves greater opportunities for companies to shift production anywhere, so that European bank customers can be served by call centres in India, and car plants can move to cheap-labour countries. This process is assisted by the breaking down of trade and investment barriers, and by technological change especially in communications and transport. Globalisation has had a profound impact on Europe's economies and social policies. Companies who can move or outsource production across the world have far less interest in preserving and nurturing a particular national labour force than the Krupps or Rowntrees of the nineteenth century. 'Regime shopping' for the most business-friendly tax and regulatory environments becomes common. Taxing profits to provide a 'social wage' whether in cash or in services is no longer so easy. But nor is it so difficult as often maintained; widely differing levels of business taxes persist between countries. The tendency towards international equalisation of rates of profit, which supplies the apparent constraint on tax policies, is expressed only in imperfect capital markets, leaving considerable differences in rates of return and business investment horizons. Globalisation has also impeded freedom of manoeuvre in macro-economic management, through the greater scale and unpredictability of international capital movements. Keynesianism in one country becomes more difficult than ever. But Keynesianism in a large bloc, such as the European Union, should surely have some prospects. The current policies of the EU, with very tight limits on public spending and borrowing, seem to be a missed opportunity. The Maastricht framework has put an international seal of approval on the pessimism with which many European governments had begun to regard Keynesian policy instruments, pushing them further towards neo-liberal supply side policies to deal with unemployment that throw the responsibility more on to unemployed people themselves than their governments. This is perhaps an example of a third impact of globalisation: the emergence of a supranational level of economic policy coordination, which is beyond democratic control and susceptible more to the influence of the right than the left. But this supranational level goes much further than a presumption against Keynesianism. There is a similarity between the policy prescriptions of the OECD and those of the European Commission that can barely be accounted for by mere consensus among technical experts; it is the consensus of those whose brief it is to maintain, without reference to the shifting class forces of national politics, the foundations of the capitalist system. Hence a profound fatalism in these institutions that the rate of profit and the apparent 'needs' of employers can rarely be challenged

Since the recession of the 1980s, the quality of jobs in Europe appears to be declining for the unskilled and most of all for those struggling to find employment. Some experience a brutal downgrading of their careers owing to the impossibility of finding jobs as good as those they lost. The rise in the share of temporary and part-time jobs, and the disappearance of reasonably paid positions for the unskilled, results from pressures in each of the economy's three main sectors. In manufacturing, employers' response to stiffer international competition both within the 'developed' countries and from newly industrialised economies has been to shrink operations, to replace people with machinery, and to a quest for 'throwaway labour' in the form of under-unionised casual workers who can be sacked easily when times are hard. In many private sector services, which now account for the bulk of employment growth in Europe, labour requirements have always contained a high share of temporary, part-time or low-paid work. In the public sector, budget constraints have led to an increasing share of temporary jobs, and privatisation has transferred many posts into an arena of keen, sometimes internationalised, competition between contractors eager to minimise and casualise their labour force. Temporary and part-time jobs are less unionised and lower-paid. All of these changes lead towards a two-tier labour market, with the less fortunate facing a shrunken stock of quality jobs for lower-skilled people, and likely to be trapped in a cycle of alternating short-term work and unemployment.

A demand for freedom to hire short term has been driven both by privatisation and by increased uncertainty for many private employers in the face of intensified international competition. Their response has often been to reduce long-term payroll commitments, relying more on fixed-term contract employees and agency workers. Labour is wanted by many modern companies in a form more like water, a resource to be turned on and off at will. The policies of European governments have been largely to 'go with the flow' of employers' pressure to change the nature of jobs, drawing their labour laws closer to the American model of near-complete employer freedom to hire and fire. In the 1980s and 1990s, most European states have encouraged 'flexibilisation' of labour contract forms in the hope of promoting more jobs – removing regulatory barriers to temporary and part-time hirings – as well as 'flexibilisation' of working time patterns (removing barriers to shift-working, night work, variable or annualised working hours). Restrictions on employers' freedom to dismiss workers have often been eased. Collective bargaining arrangements have often been 'flexibilised' too – decentralising to permit flexibility at local or company level, sometimes making wide exceptions to normal wage rates for newly hired unemployed (as in Germany), and in extreme cases, like Thatcher's Britain, making savage attacks on trade union rights. The 'flexibilisation' of labour markets impacts most on those with least bargaining power as individuals – the low-paid, less well-educated and less experienced workers. Flexibilisation, for them, means an intensification of exploitation – flexploitation, to coin a term that is central to this book.

While flexploitation is in part a direct result of globalisation, privatisation and the shift of European economies from manufacturing to services, it also results from deliberate deregulation of labour markets and from the decline of union power. Casualisation is made easier where unions are weak, and makes them weaker still. In pressing for greater flexibility of labour markets, the European Commission argues that flexibility can and should be balanced with security; Denmark, where workers change jobs frequently but do not appear to feel insecure, is upheld as a model. It is rarely recognised that a high degree of unionisation, and a strong trade union presence in all aspects of labour market governance, is at the heart not only of the Danish model but of the concept of 'social dialogue' on which EU-level regulation of labour markets has been built. Consequently a downward spiral of casualisation and reduced union power threaten the basis of the 'social dialogue' model.

The evidence on the benefits of flexibilisation for employment growth is in any case contested. One view is that some erosion of rights for workers – in terms of lower job security and greater employer-driven flexibility of working hours, is inevitable as a way of enabling national economies to compete in global markets. Another is that the constraints are exaggerated and that, in practice, neither deregulation of labour contracts nor erosion of minimum wage levels have much positive impact on employment growth. If so, the fatalism of current economic orthodoxy is misplaced, even within a capitalist framework. There are choices to be made between policies that increase inequality, power and wealth towards employers, and those that uphold high labour standards and quality opportunities for all.

Running contrary to the theme of flexibilisation is a degree of reregulation of labour contracts. Several national governments in the 1990s have introduced new laws affecting temporary work agencies, some relaxing old restrictions, others introducing new ones to equalise conditions of agency workers with those of others. Likewise some of the European Union labour directives are intended to control and limit the outcomes of flexibilisation, by securing equality of certain conditions across different types of labour contract, and providing for cross-national workers' representation in multinational companies. They try to prevent deregulation from being used to gain a cost advantage for particular national economies within the single European market. But while the EU labour directives have made important gains in certain areas, like the rights of women, they fall short of aiming for upward harmonisation of minimum wage levels, rights to time off and fringe benefits, or trade union rights. This invites the question, what is the future of labour market regulation in Europe? A new concern with 'job quality' has emerged in meetings of the European Council since the Lisbon summit of 2000. This may offer a platform to push for new workers' rights, or it may fade under pressure from employers' lobbying groups and those governments that listen to them most.

WHITHER 'SOCIAL EUROPE'?

'Social Europe', the project of a common policy framework across the EU to address poverty and promote 'social dialogue' between employers and trade unions, emerged in the early 1990s as the expression of a social-democratic vision for a form of European integration that was rather more than an integrated market. Uncomfortably grafted on to an essentially capitalist project that was under increasing influence from powerful multinational companies, it has taken back stage in the later 1990s as EU policies have increasingly responded to employers' needs. The macro-economic policy framework established by the Maastricht Treaty tended to shrink the state sector and severely limited state spending as a source of job creation. Those member states that might have chosen such a solution were pushed instead towards policies that tried to 'clear' the labour market by making labour cheaper. This meant flexibilisation of labour markets, making labour easier to hire and fire on employers' terms and giving free rein to employers' increasing preference for temporary labour in certain situations. It also involved flexibilisation of the unemployed, by recasting benefit systems to induce less resistance to offers of casual work or jobs well below the claimants' former status. Thus 'social protection' – the ensemble of benefit rights and rights at work – has come under increasing pressure in many countries from neoliberal policies to mobilise a low-cost labour supply and reduce wage pressure. The shift from the idea of unemployment benefits as a right to a regime closer to American 'workfare' in many variants is taking place across Europe. Workfare and stricter benefit regimes are used to chase unemployed people into low-paid, temporary or part-time jobs associated with the new 'flexible' labour market. 'Active' labour market policies are encouraged by the European Commission as part of a neo-liberal approach to the management of the labour market, as a complement to greater flexibility of working conditions and of 'hire and fire' rules. In this state strategy for 'flexploitation' of the labour force, obligations for unemployed people are increased, while those of employers are often reduced.

Where trade unions have had a strong role in the management of social insurance (in France, Belgium, Sweden, and Denmark, but not Germany or the UK) they have tended to place unemployed benefits relatively high on their bargaining agenda in tripartite 'deals' with the state and with employers at national level. An exception may be Spain, probably because having the highest level of unemployment in Europe keeps benefits at the forefront of workers' demands despite the state management of the benefit system. But a key factor in raising the profile of unwaged people's needs in the late 1990s was the development of unemployed people's own social movements, coordinated internationally through the Euromarches and with a strong presence in the series of 'counter-summit' meetings and marches that have pursued successive meetings of the European Council from 1997 onwards.

Trade unions' attitudes to active labour market programmes are often cautious; likewise to wage subsidies intended to assist the reintegration of the unemployed. They fear 'cheap labour', ever mindful of the ways in which such programmes may be used to provide a labour supply that undercuts established wages and conditions. This is part of a wider issue about the way in which the 'reserve army of labour', as Marx described it, influences the price of labour power. 'Cheap labour' is not merely an issue about subsidised or 'scheme' workers taking away jobs from those for whom the employer pays a full normal wage. There is a continuity of purpose between workfare and benefit rules that channel jobseekers into low-paid or otherwise unattractive work, often forming a planned sequence of interventions in the individual's job search that are intensified as unemployment lengthens. 'Workfarism' or 'work first' is the name given here, following Peck and Theodore (2000), to the ensemble of benefit rules and employment service practices that are designed to mould jobseekers' aspirations to available jobs. Strict rules apply about what level of wage unemployed people must accept help to slot ex-miners into hotel kitchens, ex-car workers into the cash desks of supermarkets, young graduates who have fallen out of a professional ladder into call centres and casual farm work. Those who used to earn good money suffer 'the cost of losing a job' – in many cases a substantial drop in living standards.

Unemployed people need not only more jobs but better jobs. However, improving job quality requires a break with the 'deregulation' agenda and the mobilisation of the 'reserve army' to drive down labour costs. Within the limited arena of labour market policy, the challenge for Europe in the twenty-first century is how to avoid the flexploitation of the dual labour market and break with the workfarist policies for managing unemployment that tend to intensify and encourage it. Unemployed people demand better training, not just for mere 'employability' in the lowest-level jobs, which is all they tend to be offered in some national systems, but training for new careers to break out of the 'flexploited' layer of jobs. But in the nature of the globalised economy, with short horizons for attachment to any local labour force or local market for subcontracted labour, employers are more reluctant than ever to invest in training.

Some unemployed people, however, are beyond the reach of mere skills training or an increase in the number and quality of vacancies; there are other problems to be addressed. The need for childcare for working mothers is the easiest, already much better tackled in Sweden, Denmark and France than in Britain and itself a source of job creation, but still requiring extensive public funds. More intractable is racial discrimination, which requires a significant change in employer attitudes. The most difficult is the issue of disability, affecting a significant minority of jobseekers, not infrequently because of mental health rather than physical health issues. If they get jobs at all, it may be the worst jobs, which increase stress and barely improve their income. The challenge is how to integrate them into quality employment in a non-stigmatising way.

All of this requires a regrowth of state investment in education and training, and in collective services (if not provided by the state, at least and perhaps preferably by NGOs). This in turn requires redistribution of wealth and income to turn private profit into collective funds. Here we confront the limits of capitalism – particularly in its latter-day, globalised form.

(Continues…)

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Copyright © 2004 Anne Gray.
Excerpted by permission of Pluto Press.
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Table of Contents

Tables, Boxes and Figures, vi,
Acknowledgements, vii,
Abbreviations, ix,
1 Introduction, 1,
2 The Welfare State and the Unwaged: Past, Present and Future, 16,
3 Globalisation, Welfare and Labour, 34,
4 The Role of the European Union, 54,
5 Benefits Enforcing Work, 81,
6 Flexploitation and the Unemployed, 112,
7 Labour Market Deregulation: Debates and Struggles, 136,
8 The Drift Towards Workfare in Europe, 160,
9 Conclusion: Alternatives to Workfare and Flexploitation, 189,
Notes, 201,
Bibliography, 210,
Web Sites, 226,
Index, 227,