Trade unions: No room for romance

Economists don't dominate British politics. In fact, they aren't listened to enough.

Whatever happened to the passion of post-war British politics?

What became of: "U-turn if you want to"?; of "The only limits of power are the bounds of belief"?; of Arthur Scargill and Jimmy Reid? Of the drys and the wets? Of volatile picket lines and rousing demos? And beyond our shores, where are the Mitterands, Kohls, Gorbachevs and de Klerks of today? The Occupy movement swept loudly across the globe – and there’s not a soundbite to show for it.

Perhaps 24-hour news channels and social media make it easier to communicate policy without using impassioned oratory to create a memorable message. But it is more fundamental than that: mainstream politics itself has moved to the centre. Blair and Cameron dragged their respective parties kicking and screaming into the centre ground, because it is where the votes are. For Blair’s New Labour, this meant shaking off the stereotypes of socialism; for Cameron, the "nasty party" image. And recently, there is a more potent force at work:

Economics.

When times are good, economists are seen as tweed-wearing philosophers, their Nobel prizes viewed alongside those for Literature and Peace. When confident, efficient markets are creating growth, there is no need for academic theorists.

But as soon as recession looms, they are dusted off and brought out as scientific advisers, their theories and models no less venerated than those that uncovered the Higgs boson. Radical party ideologies take a back seat to the rational, value-free, scientific rigour of the dismal science. Already, Greece and Italy have surrendered their governments to economic technocrats.

Ironically, the economics profession itself is growing healthily. In the 1930s, following the Great Depression, enrollments in economics degrees shot up, and a recent paper shows that this trend has been replicated after the latest global financial crisis (the author is a guilty passenger on this bandwagon). Both The Economist and the Financial Times have reported record circulation figures this year.

So if the science of economics reigns in Westminster today, what kind of policies should we expect?

The central tenet of economics is the efficient allocation of resources. Therefore we might expect Government to become a vehicle for cost-benefit analyses and utilitarian policies. But Britain still has a fully elected government – shouldn’t it govern according to the ideology those who elected it expected? Economics tries to be value free. But governments are supposed to make value judgements; to select policies that their voters have given them a mandate to enact – and the vast majority of voters are not economists.

However, for the time being, polls continue to show that fixing the economy is by far the most important issue to voters. This gives both sides of the political spectrum a unique opportunity.

Just as the nationalistic protectionism of the 1930s plunged the world economy into a depression, so the ideological policies of the last 30 years are to blame for much of the recent global crisis. The Euro project ignored decades of economic theory in order to pursue a political utopia. Freddie Mac and Fannie Mae were lent on by politicians to provide mortgages for poor people who clearly couldn’t afford them. And the banks were allowed to dish out leveraged loans and investments like punch at a party. A rational government would and should have made the unpopular decision to take the punchbowl away, but as Professor Brian Cox said this week on, well, This Week: "you might make it that you have to base your policies on evidence… but that would make it very hard to get elected".

Never has the time been better to change that. Just as businesses have recently had to make efficiency savings, so political parties should prune ideological policies that fly in the face of economic rationale. Joseph Schumpeter’s mantra of "creative destruction" should be applied to beliefs.

For the Tory party, this might mean ditching the Euroscepticism; the single market- and the immigration that comes with it- is an asset to this country. But far more pertinently, the time is right for Labour to renegotiate its relationship with the trade unions.

Try a Google search of the following terms: "economic benefits of immigration" – over 50,000 results; "economic benefits of the euro" – almost 3 million results; "economic benefits of trade unions" – just one result.

Trade unions force up wages meaning that employers can employ less people – they increase unemployment. This might seem against the grain of socialism but when viewed from a rational economic perspective it makes perfect sense: as long as the workers that have paid their Union fees get a better deal, why should Union bosses care about the wider economy?

This is especially important for one economist in particular: Ed Miliband. His speech at last Saturday’s Fabian conference was preceded by a Q&A with Jon Cruddas who spoke of the two sides of the Labour Party; the rational, pragmatic side of Progress and the Fabians and the "romantic" socialist side of the Trade unions.

As the dull, calculated rationale of economics continues to proliferate, there is little room in politics for romance or passion. And that is no bad thing. Most of us mere mortals are more concerned with employment and cheque-writing than empowerment and speech-writing.

For Ed Miliband, his love may long have been a red, red rose, but the time has come for that rose to be pruned.

Jon Cruddas launching his deputy leadership bid in 2007. Photograph: Getty Images

Dom Boyle is a British economist.

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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.