Why Doesn't The UK Guarantee Employment?

One of the problems that have arisen during the pandemic is that of unemployment. Businesses are no longer able to retain employees, and many have folded altogether. Although the government's furlough scheme has helped retain jobs, it has clearly not been a total success and hence unemployment has risen by 1.2%, according to official figures.

The official figures are questionable at best though, they don't truly reflect the scale of unemployment. The Office for National Statistics puts unemployment at 5% as of Sept - Nov 2020, up from around 3.7% a year earlier. Because of the way unemployment has been defined, unemployment is suspected to be much higher. In other words, the government have fudged the figures. According to some sources, it could be as high as 13.2%!

For those of us familiar with the corrupt whims of the Tory government, the fudging of data doesn't really come as a shock.

There are really two types of unemployed people - people who are out of work and people who cannot work. Obviously, we want a welfare state that works best for people who cannot work, the elderly, disabled and infirm, we all agree on that. But what of those who are simply out of work? People who have been made redundant in one way or another? In fact, why does unemployment exist in the first place?

The Reserve Army of Labour

Marx and Engels theorised that the unemployed workers in any society constitute a reserve army of labour, a surplus of workers in other words. These workers are brought into the workforce when times are good and expelled when times are bad without regard for their welfare.

Because human labour has been commodified, turned into a thing bought and sold through labour markets, it has become subject to the laws of supply and demand, market forces. Like all commodities, prices are driven down when supply is in surplus and pushed up when demand is in surplus. A surplus of any given commodity is, therefore, a necessity for markets to keep prices down. Since workers are a commodity, that means people like you and me. 

To workers who are still capable of working, to become unemployed is to be transferred into surplus stock. 

Those who are in the surplus stock are in direct competition with those who are employed. This reinforces the bargaining position of employers at the expense of employees. The threat of unemployment is therefore used to diminish the bargaining position of all workers. 

In other words, it creates an environment where employees have to take whatever job is available to them with little scope for negotiating wages and working conditions. If they don't, they risk being cast back into the reserve where they'll be in competition with other workers and subject to the whim of the welfare state.

Governments the world over use unemployment as a fiscal tool to reduce inflation by decreasing government spending. Even though governments can only target sectors that they're directly spending in, it has a knock-on effect. The thinking is the more people that are unemployed, the less bargaining power they have for wages which in turn reduces aggregate demand.

So unemployment really exists as a means to control inflation, in certain circumstances to stabilise the economy, and to reinforce the bargaining power of businesses. Businesses need to make a profit as an imperative in a capitalist economy and that will always be at the expense of the workers, their position has to be inferior by necessity.

Where does this leave workers who are cast into the reserve army of labour? At the whim of the bureaucratic nightmare that is the welfare state. Anyone who has had to experience it will tell you how absolutely ball-busting and contrived it is. It's like squeezing blood out of a stone and it's still possible to fall through the cracks.

But what's the alternative?

A Job Guarantee Scheme

It's a simple and elegant solution that has been proposed by the TUC and other trade unions and socialist organisations. 

The general idea is that the state becomes the employer in a "last resort" scenario when private sector activity declines, as is frequently the case in a capitalist economy. By doing this, the state temporarily takes the burden of employment until economic activity increases again. It would effectively be a way to subsidise businesses and still guarantee people the right to work. When businesses lose employees, they also lose a source of labour and hence productivity and when productivity is down, it becomes more difficult for a business to return to their previous levels of income and regain what they have lost. 

This avoids the typical actions that private businesses take in a downturn - fire and rehire policies, where employees are rehired on a lower wage or redundancies, for example. 

In terms of cost, it is generally thought that it'd be much cheaper to run a job guarantee scheme than it would to continue with the administrative bureaucracy of a welfare state. It also reduces the costs associated with the fluxes of capitalism.

Consider what I pointed out in the last section, that unemployment is used as a means to control inflation and aggregate demand. A job guarantee scheme would also do exactly that but without any of the detrimental effects. In a recession, the public sector payroll would increase which of course means an increase in public spending. An increase in public spending, in turn, stimulates aggregate economic demand and hence economic activity. In other words, because everyone still has an income, the economy recovers quickly and in a stable manner. 

My thinking is the state would offer a standard 35 hour work week with an appropriate living wage. There are two ways that this scheme could work:

1. Simply transferring the employee to the state. This way, the employee still works for the same company or in the same sector until economic activity has recovered at which point the employee is transferred back to the private sector.
2. Giving the employee a similar or completely different role within the public sector. This might require retraining the employee but gives them the option of retaining their new job or transferring back to the private sector at some point.

With a job guarantee scheme, the reserve army of labour still exists. The difference is that it now acts as a buffer stock of already trained and employed people that now have better control of the bargaining environment. They can negotiate better wages more easily because there is no longer the threat of unemployment. It creates price stability and full employment without any of the social costs of unemployment such as poverty, social exclusion and mental health issues.

What's not to like? It gives us a place to start from, at least.

Alternatives?

The alternative to a job guarantee scheme is universal basic income. The problem is that this does not give people the right to work, it does not alleviate any of the economic issues mentioned nor does it give workers much better control of the wage-bargaining environment; workers can still be cast into the reserve army of labour and control of labour markets will still belong to the capitalist class. 

Consider this: If the economy hit a recession and thousands of workers, who have UBI, were dumped into unemployment, we'd suddenly have a lot of workers with a lot of time and money on their hands. This would inevitably lead to an increase in aggregate demand. Because many industries and sectors now have fewer employees, supply would not be able to increase to match it. This would potentially cause an inflationary crisis. The entire point of unemployment as contractionary fiscal government policy, as I said earlier, is to curb inflation by making sure people have less money. UBI without a job guarantee reproduces that undesired effect.

Furthermore, if the class system of capitalism remains intact, UBI becomes yet another way for wealth to filter upward.

But here's a thought: What if we combined UBI with a job guarantee scheme? Better yet, what if we combined it with workplace democracy and ownership schemes?

Imagine a world where every citizen is given a basic income but still has a right to a minimum wage and the right to a job. As per Yanis Varoufakis, the basic income could be derived from the profits of tech-giants who commodify our data, a data tax. The value extracted from the commodification of our own data by tech giants should at least in part belong to us. If we cannot own our data, then we should have some modicum of access to the wealth that is derived from it. 

The job guarantee ensures that we are guaranteed employment but it does not imply that employment is mandatory. UBI could give us access to capital should we wish to start our own endeavours if we don't find the work in the private or public sector meaningful. Workplace democracy ultimately ensures that all workers have control over their place of work. All three of these in combination ensures overall economic stability with little to no possibility of economic crisis. 

Trials are ongoing for UBI and it may just be utopian to think that we can distribute any significant amount of money universally. It ultimately relies on economic growth which can only be achieved by job guarantees and meaningful, permanent work.

The point is not to create meaningless, non-socially useful jobs for people but to release them from the shackles that the capitalist mode of production has attached to them. The point is to help people in one way or another reach their full potential by keeping doors open rather than allowing them to get stuck in the constantly revolving doors of unemployment and re-employment. 

But if the UK were to make such a thing national policy, it'd need to be enshrined constitutionally along with the right to work. For example, the USSR in 1936 (and many other socialist states) did just this:

"ARTICLE 118. Citizens of the U.S.S.R. have the right to work, that is, are guaranteed the right to employment and payment for their work in accordance with its quantity and quality.

The right to work is ensured by the socialist organization of the national economy, the steady growth of the productive forces of Soviet society, the elimination of the possibility of economic crises, and the abolition of unemployment."

Regardless of what you think of the USSR, the citizens of the UK also have a right to work, they have a right to earn their own wages and spend them per their own needs and wants. 

If a low-income nation like the USSR was in 1936 can do this, then why can't the UK? 

What's stopping us?

In the wake of the Covid-19 pandemic, is this not the right thing to do?

Updated 30/07/21

The question is rhetorical, of course...