Crisis? What crisis?

The Tories are playing on unfounded fears about the Budget deficit

Yesterday the Conservatives marked the launch of their election campaign by plastering locations around Britain with huge pictures of David Cameron's head. In the posters, the head appears concerned but resolute; next to it floats the legend, "We can't go on like this. I'll cut the deficit, not the NHS", as if in some way these two things were direct alternatives to one another.

Meanwhile, the Financial Times asked 79 economists what they considered to be the three biggest risks to the economy. Thirty-seven of them warned that the Budget deficit puts the UK at risk of a fiscal crisis.

So, for the other 42 economists, the risk of fiscal crisis didn't even make it into their top three. But even when its use is unjustified, the word "crisis" has a headline-generating resonance that "slow recovery in world trade" or "risk of an inexperienced new chancellor" (both worries that also came up in the FT's poll) just can't match. Robert Skidelsky made the point in an interview with the NS's culture editor, Jonathan Derbyshire, back in November:

Has the bailout shifted the problem from a banking crisis to a fiscal crisis?
I don't think there is a fiscal crisis. I think it's an invention.

By politicians?
Yes. Someone like George Osborne gets away with leaving out assumptions behind his arguments because he's not confronted with them. He's interviewed a lot, but people haven't really nailed him. There hasn't been enough debate about the stimulus and national debt.

Asked about the FT's poll in an email exchange this morning, Lord Skidelsky made the same point again: "Talk of a looming fiscal crisis is greatly exaggerated. There is no risk to government solvency in the short run."

There's no question that £178bn, the current deficit, is a very big number. But that doesn't mean that reducing it should be the government's top priority. Part of it "will disappear automatically as the economy starts to grow, and extra revenues come in" -- something that whoever is in charge next year will no doubt take credit for anyway. As for the rest, action will have to be taken in the long run. As Lord Skidelsky says: "No one wants a sick patient to stay on antibiotics too long. But to withdraw the treatment too soon risks a serious relapse."

 

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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.