Sunday, 19 June 2016

The EU and the permanent over-supply of labour

Regardless of the result of Thursday’s EU Referendum, I would suggest that politics in the UK and Europe won’t be able to drag itself out of the racist and murderous cesspool it is descending deeper into until one issue is honestly faced – the now permanent over-supply of labour.

As is obvious, the vast majority of people require a paid job or jobs to physically survive and make sure their retirement is barely tolerable. Government policy has in the last two decades, and especially since the Great Recession, made entering the labour market under any terms inescapable. Sanctions, workfare, the compulsion applied to sick and disabled people to seek work and the new “in-work conditionality” of Universal Credit, represent an iron cage of labour coercion from it is impossible to escape. All that is impeding an utterly Dickensian race to the bottom is minimum wage legislation.

Meanwhile, retirement ages have been increased across Europe, increasing the ‘pool’ of available labour, and ‘structural reforms’ hawked by economic ‘experts’, like the OECD and the IMF, advocate increasing labour market ‘participation’ by reducing ‘generous’ welfare benefits, and thus, theoretically, trimming government deficits.

At the same technological change will make, and is making, labour far more dispensable and insecure. Research from the US indicates that for the bottom fifth of society a greater than 30% month on month change in total income is already the norm. In the UK, the charity Citizens Advice estimates that 4.5 million workers are in insecure work, defined as zero hours, variable hours and temporary or agency work. This figures does not include the 15% of the UK workforce in self-employment, by nature an insecure form of work, and whose income has plummeted by a quarter since 2008. The self-employed are not the digital whizz-kids of folklore but more likely to be freelance dog walkers and gardeners – pseudo-jobs whose owners are living with income precarity and poverty.

This structural over-supply of labour has been aggravated by the EU’s single market. The proportion of foreign-born workers in the UK working age population is now around 20%, compared to a steady 8% between 1984 and 1995.

The effects of an over-supply of labour has exacerbated by other changes in UK society. The secure tenancies and controlled rents of council housing have become a utopian dream for most people. The private rented sector, with tenancies that can be ended at a moments’ notice and rents that may eat up 60% of pay, has become the only alternative for millions, while lifetime tenancies for new council house tenants are being abolished.

“Human beings do not thrive in an atmosphere of relentless change over which they have little control,” says Anthony Painter of the RSA.

Internationally, the over-supply of labour has been a boon for multi-national corporations who scour the globe looking for the cheapest source of labour (a process misleading called ‘globalisation’). Between 1980 and 2007, the global labour force (people whose livelihood depends on working for pay) increased by 63%, from 1.9 billion to 3.1 billion.

“Not only has the growth of the global capitalist labour force (including the available reserve army) radically altered the position of third world labour, it has also had an effect on labour in the rich economies, where wage levels and stagnant or declining for this and other reasons,” say the Marxist economists, John Bellamy Foster and Robert W. McChesney. “Everywhere multinational corporations have been able to apply a divide-and-rule policy, altering the relative positions of capital and labour worldwide.”

The effect of this process on countries like the US, has been devastating. According to the behavioural economist Daniel Kahneman, US manufacturing and middle class jobs have been decimated in recent decades. “There are places where real incomes have dropped 30% over the last thirty years,” he told the Daily Telegraph. “There used to be a concept that if you do your job, and live your life properly, things will be fine. People don't think that anymore.” These places provide Donald Trump with his core constituency.

But the political consensus, the centre-left as well as the Right, is in purposeful denial about these developments. The resolution of governments has been to push people into any kind of work, while eulogising the benefits of free trade, immigration, deregulation and lower tax for corporations. “Public institutions should push against a dangerous tide rather than accentuate it,” says Painter. “We’ve done precisely the opposite.

The question is, if the ‘relative positions of capital and labour’ have been altered, how do you redress the balance in favour of labour? As Painter and many others have pointed out, Basic Income could imbue labour with a measure of bargaining power that it currently sorely lacks. People who now can’t say no because anything is better than nothing, would be empowered to refuse low paid, insecure work. This change would also give a shot in the arm to automation if armies of desperate people were no longer available on tap. It would spell the end for an economy feeding off cheap labour.

An expansion, not a contraction, of social housing, together with secure tenancies, would also take some of the bite out of the structural over-supply of labour.

This, however, is only half the equation. Do you need a global basic income to really make a difference to the over-supply of labour? Is that remotely feasible? In its absence, there are things you can do, such as reducing low-wage EU migration into private sector jobs. The danger is that countries lapse into isolated, regulated national economies, or worse. But forgetting the fact that you live in an exploitative, capitalist economy, and that an international free market in labour is no more conducive to human welfare than a free market in capital is, is not a safe haven. Neoliberalism, inside or outside the EU, does not work.


  1. All very true, but people need to understand that if all the exploitative atrocities - wages, pensions, housing etc - were reversed, profits, capital markets, indeed capitalism itself would enter terminal collapse.

    This is of course what the mainstream Left - unions as well as the Labour Party and their counterparts in Europe and elsewhere - still don't want to confront, whether because they still have too much vested interest in the status quo or because they're too lazy or frightened to make the effort to advocate the need for a new, functional model for the post-capitalist era.

    1. The house of cards that is the typical stock market is a permanently running ponzi scheme anyway. Periodical collapse is part of the setup. To take the collapse of capital markets as a counter argument to changes of policy is self defeating.
      It's like living together with a bipolar person. He WILL collapse sooner or later, you bet. To resort to tip-toeing around him forever is just end in making you insane yourself.