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The Blair government: two views from Britain

Jon Cruddas & John Monks

Return of the working class

Jon Cruddas

A truly shocking acknowledgement of the realities of contracting-out was contained in last week's leaked Cabinet Office memo on the two-tier workforce. While contracting-out has led to a reduction in staff numbers, white-collar workers have become better off. Their blue-collar counterparts have been given worse pay and conditions.

The document goes on to consider the evidence around the conditions of new recruits in contracted-out jobs. Their new terms and conditions depend on the local labour market: "This has led to new recruits being offered lower rates of pay, in particular where jobs are low-skilled and where unemployment rates are high". (Remember a memo was drafted specifically to unwrap a commitment to extend TUPE - the Transfer of Undertakings for Public Employees - provision) that protects privatised workforces.

This all means that the civil servants who wrote the documents accept that the effects of contracting-out are worse in more deprived areas, and worse for lower-skilled, lower-paid workers. The government has refused to introduce either a fair wages resolution or a robust system of contract compliance to put a floor underneath these vulnerable workers. At best, it tacitly supports the growing inequality, At worst, it is culpable in a strategy that actively intensifies the exploitation of big parts of the working class.

How are we to understand this? Why are elements in the government so hostile to labour market regulation? And why is it that every single labour market initiative has to be fought line by line, almost street by street? Why are we now seeking to rewrite, or de-write, earlier commitments made to protect people at work?

This ideological hostility to regulation is not simply the product of deference to corporate wealth and power. Its basis lies in the conception of the 'new economy' that underpins much government language and action. According to advocates of the 'new economy', paid work is in decline. The jobs that provided employment for millions of workers are said to be disappearing. According to these pundits, the future does not lie in manufacturing industries or in manual occupations in intangible assets services. It lies in the exploitation of knowledge, know-how and entrepeneurship. One of the new orthodoxy's leading proponents is Charles Leadbeater. In his book Living on Thin Air: The New Economy, Leadbeater argues that "smart" technologies and globalisation are the midwives of the new, knowledge-driven economy.

The influence of Leadbeater's work in the Downing Street policy dynamic and among think-tank wonderkids cannot be overstated. The simple dualism that comes out in this work between 'old' and 'new' economies parallels the dualism within the Labour Party between 'old' and 'new'. The 'new' (high-tech) economy is counterposed to the 'old' (industrial) economy.

The way this literature has conditioned a hostility to labour market intervention needs to be explained a little. To start with, the 'new economy' is meant to be a Very Good Thing, with benefits reaching beyond mere increase of wealth. For one thing, it is claimed that the new economy is linked to new, democratic forms of work organisation. According to Leadbeater, 'networks' of independent, small scale companies will increasingly rely on cellular, self-managed teams. This shift towards more networked forms of work organisation will have far-reaching consequences for how we work, and for how organisations are managed and owned: As such, the distinction between the worker and the employer is withering away. The wage-labour system is consigned to history. As such, the institutions that shaped the organisation of work throughout the 20th century are overtaken by emerging networks of public and private-sector entrenpreneurs".

Politically, there remains a distinct anti-productionist slant to the argument. Leadbeater literally writes off manufacturing industry. For him, "the real wealth-creating economy is de-materialising. The private and public sectors are increasingly using the same sorts of intangible inputs - people, knowledge, ideas, information - to generate intangible outputs, services and know-how." In effect, the working class is withering away. We will see the rapid growth of scientific, technical, managerial and professional occupations and a corresponding decline of 'traditional' service work. The trend to decline in manufacturing will continue. New service-sector employment based on e-commerce will expand. Self-employment will grow as more and more individuals take advantage of the new technologies to free themselves from traditional forms of work.

This growth in temporary, part-time, portfolio working means that policy debate should focus on how individuals can be assisted to develop portable skills. It is all about education, education, education. Given this 'new' economics, the obvious political strategy is to free people to ride the information super-highway. Emancipate the working classes by giving them a laptop. Talk of intervention to help manufacturing is thus a political sideshow, if not an outright distraction. Rights for people at work are seen as a policy hangover relevant in a previous epoch of industrial work organisation. Unions are a particular product of this 'old' economy, and their relevance in current political structures simply reflects how institutions such as the Labour Party have not been modernised enough.

This 'new economics' remains the intellectual glue for the deregulatory agenda operating within the government. Any concessions to labour market regulation are seen as a residual trade-off to appease 'old' Labour, an outdated grouping that does not understand the realities of the brave new world.

But there is a problem with all this ideology: evidence. When we empirically test for evidence of the 'new economy' we run into trouble. Many of the claims made simply do not add up. New analysis of Labour Force Survey data by Professor Peter Nolan, the director of the Economic and Social Science Research Council's (ESRC) Future of Work Program, permits an assessment of the assumption underpinning the New Economy.

Among Nolan's findings is that permanent work accounts for the work of four in every five paid employees. In addition, length of time with an employer - 'job tenure' - has remained almost constant over the past 20 years. Roughly one third of the workforce has been with the same employer for more than ten years. For women, average job tenure rates have increased. Further, there has been no growth in self-employment over the past 10 years. Temporary work accounted for 5 per cent of the workforce in the 1980's; it now stands at around 7 per cent. People who carry out more than one job account for approximately 5 per cent of employees. Most of this work is in exploitative catering and cleaning positions.

So much for the 'new economy'. But the situation is even more troublesome for these blue-sky thinkers. First, consider the three general classifications used in the Labour Force Survey: "white collar". "traditional services", and "manual, manufacturing and construction". Between 1992 and 1999, white collar professionals accounted for 1.5 million of the 2.3 million increase in employment. Yet, traditional services covering clerical and secretarial, personal and protective, sales, postal and cleaning, together with manual, manufacturing and constructive workers, still account for nearly two out of three jobs. Closer analysis suggests the fastest-growing occupations have been: first were the four long-established services of sales assistants, data input clerks, storekeepers and receptionists; second have been state dominated education and National Health Service workers; third are the caring occupations: assistants, welfare and community workers and nurses. The fastest-growing occupation in the 1990's has been hairdressing. These occupations could scarcely be judged to be the cutting edge of the 'new economy'.The fastest growing manual occupation since 1992 is housekeeping - a rise of 368 per cent.

In short, key areas of growth through the 1990's in terms of the demand for labour have been precisely in traditional, low-paid, unskilled and routine employment. Much of this is carried out by women, and much of it in occupations that are as significant today as they were more than 50 years ago.

The danger for politicians lies in developing a strategy based on a stylised version of the world of work. A group of ideas might be appealing because they have the word 'new', attached to them - they help in the presentation of a 'new' political party, The danger comes when you develop your political program on the basis of these ideas when the realities of the labour market demand an alternative set of policy options. The long term structural problems of the British economy centre around our weak comparative productivity record. The deregulation of Margaret Thatcher's years in power consolidated moves towards a low-wage,low-skilled economy.

The 'new economics' intellectually props up elements within the government hostile to labour market regulation. This offers no economic solution. The new evidence of the Labour Force Survey demonstrates that the long-established problem for the British economy low-wage, low-value-added production is reflected in the contemporary structure of the labour force and in many of its growth sectors. At the same time, this new ideology translates itself into a failure to develop a systematic strategy for manufacturing.

An alternative agenda of regulation, investment and manufacturing must be developed while we clear the decks of this 'new economics'. If we do not, we will be saddled with policies which split the Labour Party and further de-industrialise Britian. And all because of the ideological forces of conservatism.

Cocktail to shake rather than stir

John Monks

There are two ways unions get onto the front pages of the newspapers: strikes and rows with the Labour leadership. There are plenty of both around at the moment.

On strikes, I regard these as inevitable in a democratic society. More than that, they are a hallmark of a democratic society. But they represent a failure of relationships, a breakdown in the processes of negotiation, conciliation and arbitration. The fact is that, despite the recent strikes, in rail and the civil service in particular, there are few strikes by all historical or international standards. We must keep things in proportion.

On relations with 'New Labour', I wish I could be just as sanguine. There is an explosive cocktail of issues around. Here are some of those issues The decline of manufacturing and a sense that the government, with some brave exceptions, is resigned to it; the involvement of the private sector in the delivery of public services, including the government's apparent reluctance to tackle the two tier workforce; the future of pensions and the 'work until you are 72' messages; the government's seeming admiration for the business world; a raft of difficult transport issues, including the railways, air traffic control and the London underground; the uncertain future of the Post Office; and the government's opposition to the European social model and to new employment legislation.

Each of these is a problem, but so long as the government gives the appearance of undue respect for business lobbyists, relations with the TUC will worsen. The Confederation of British Industry has gone to war with us on the two-tier workforce. The only pensions that seem viable are those for the board of directors, which are shamelessly munificent compared to the rest of the workforce. On the government's review of employment law, we expect battles on the status of workers and information and consultation.

Despite this, I do not support breaking the link or holding back on financial support to the Labour Party. Under our political system, that way risks divorce. But even more seriously, I warn the government of the risk of haemorrhaging trade union support, especially at the polling booths.

If the Conservative Party leadership had the wit to move to the centre and embrace a strong defence of good pensions and rail nationalisation, it could occupy space to the Left of Labour and gain huge advantage. These are middle-Britain issues, as well as ours. On all the issues I mentioned earlier, Labour is leaving space to its Left for one or other of the mainstream parties to occupy.

There have been, and continue to be, real advances won under the Labour government that must be generously acknowledged: big spending on public services has just begun; legal rights for people at work have improved; there would be no prospect of Britain joining the euro without a Labour government. The list could go on. Our concern should not obscure genuine advances, but we must not be taken for granted. Much of the current impetus to leave Labour comes not from those advocating a European and pluralist approach to union engagement with politics, but from those arguing for unions to engage with the small socialist groups. The best they could claim at the last general election was that they had got as many votes as the Communist Party of Great Britain did in the 1951 general election. In other words, bugger-all.

The real danger is, as ever, in the mainstream - and especially from a One-Nation Conservative Party with some radical confidence and some scepticism about the virtues of the extremists in the business world. Such an outcome would not be in trade unions interests. What must be our interest is for Labour to address our genuine concerns with confidence and conviction. The TUC is not affiliated to the Labour Party, but I have been a member of the party for nearly 40 years. I stuck with it when if was dangerously out to the Left and through more than a few defeats. I deeply relished the triumph in 1997. I am not a quitter.

But the trade union world must have relationships wider than the Labour Party. We have had a good relationship with the Liberal Democrats on Europe and public services. We will talk to anyone about manufacturing, pensions and public services.

We have high hopes for this government. We know it is not just a trade union government. It must govern in the national interest. It must get on with the best of British business. We are up for deals, for social partnership with employers, and for change in public services. But let's not have to repeat a variation on the famous Neil Kinnock charge at Derek Hutton: that a Labour government - "a Labour Government" - let us down in applying the values of genuine social democracy.


Jon Cruddas is Labour MP for Dagenham and a former Downing Street adviser. His article was originally published in Tribune on 15 March 2002. John Monks is the General Secretary of the British Trade Unions' Council, and this is an edited version of his speech to the Unions 21 Conference in the UK on 8 March. After 10 years, Monks has announced that he is to stand down from his position, and is being touted as the next leader of the European Trade Union Confederation. Read the story at Workers Online. Image courtesy of Workers Online.


Suggested citation

Monks, Jon Cruddas & John, 'The Blair government: two views from Britain', Evatt Journal, Vol.2, No. 3, April 2002.<>


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