The left-wing case for a flexible labour market

Labour market flexibility, if harnessed properly, can be a force for individual and collective good, says Gillian Econopouly.

The economic tumult of the last several years has profoundly shaken the UK and its workforce. The public has witnessed bailouts of major banks, the disappearance of much-loved brands from the British high street and what feels like an unending string of financial collapses and high-level resignations in major organisations, from the media to professional services to public sector bodies like the police. 

Headlines aside, on an individual level, thousands of UK workers have faced redundancy, seen household incomes squeezed by several years of pay freezes or even cuts, or simply held onto jobs they would prefer to move on from but are too nervous to leave, given the economic climate.  

It is no wonder that parties on all sides of the debate are desperately seeking growth wherever it can be found.

But however grim the latest GDP figures, this troubling state of affairs does create an opportunity – and an imperative – to look closely at what we are already good at, and develop this further to the benefit of the entire country. 

And something we should recognise more explicitly as a strength is our flexibility. 

Although as a country we feel pretty battered and bruised in economic terms, the UK’s labour market has actually fared much better than most of our European counterparts in recent years. One reason is because we have a wider variety of ways for people to access work and remain active in the labour market, rather than becoming inactive and losing their skills and confidence in the process. 

There are also more options for employers to take people on and maintain those jobs. According to the CBI, some 83 per cent of employers believe the UK’s labour market flexibility helped stem job losses in the recession, and more than a third of employers used flexible options to keep their firms going. In fact, the OECD employment outlook also showed that UK employment fell much less than expected given the drop in GDP.

So there are advantages to flexibility, but the left has often been hesitant to discuss the subject candidly due to fears of creating a race to the bottom or the erosion of hard-won workers’ rights. These are important concerns and require careful consideration. But we must engage productively with the flexibility debate so it can be properly managed to yield benefits at both the individual and macro level. 

The left’s vision of a successful labour market has traditionally focused around employment – permanent jobs and a fixed workforce. And unless it occurs inside of an employment relationship, we have shied away from talking too much about flexibility, as it has sometimes become almost synonymous with insecurity or worse, the exploitation of vulnerable workers. There is a similar habit when it comes to people working for themselves. Often we associate the words "false" or "forced" with the term "self-employment", thus casting the entire concept into a negative light. 

What has been missing from the debate until now is a willingness to take apart the wider concept of flexibility: to consider its component parts and understand which of those offers the best combination of benefits for the individual and wider economic growth. We need a more nuanced understanding of what labour market flexibility can and does mean.

There is clearly a world of difference between the types of flexibility at different ends of the labour market. It makes little sense to compartmentalise highly-skilled freelancers who actively choose self-employment with low-skilled workers who are, for example, instructed to set up as "self-employed" yet do the same job as their full-time, employed and unionised colleagues. The two share only the same label – not the same labour market profile or characteristics. 

There is no room for exploitation of individuals in a modern, well-functioning UK labour market, through forced self-employment or any other means. And whilst there will unfortunately always be some companies who attempt to take advantage of the system, the answer to this is robust enforcement, not doing away with other types of flexibility. 

Labour market flexibility, if harnessed properly, can be a force for individual and collective good. We must use it to help those who want a permanent job to secure one; and understand that particularly among higher-skilled workers, self-employment can be a positive choice which helps businesses to grow. 

And we must recognise that whilst many do, it’s no longer every worker that wants a full-time, permanent job: the labour market has moved on, and so must we. 

This piece was originally published in the Fabians pamphlet New Forms of Work, available today.

Self-empolyment is more than just blogging in your pants and eating lots of biscuits. Photograph: Getty Images

Gillian Econopouly is the former Head of Policy at the Recruitment & Employment Confederation.

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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