Focus on a "triple dip" misses the point

The economy is stuck and without a change in government policy the slump is set to continue, writes the TUC's Duncan Weldon.

Will the UK economy experience a triple dip recession?

The simple answer is that I simply don’t know. The more honest answer is that I don’t really think it matters. Today’s industrial production figures certainly point towards one, but last week’s PMI surveys’ suggest growth of 0.1 per cent.

In reality whilst a triple dip would no doubt generate many headlines, the difference between a Q1 GDP figure -0.1 per cent and one of +0.1 per cent is pretty unimportant, especially as the figures are subject to revision for years afterwards.

The bigger picture is that the UK’s recent economic performance has been disastrous.

Whether compared to the original forecasts (on which fiscal policy is still based), to our international peers or to our own historical experience, this has been an extremely weak recovery.

The much-hoped for rebalancing has simply not occurred. Today’s industrial production statistics tell us that industrial output is now back to 1992 levels. Business investment grew by 0.4% last year against an original forecast of 10.0%.  Net trade subtracted from growth.

The government expected growth of 2.3% in 2011 and 2.8% in 2012, with two thirds of that coming from an increase in business investment and an improvement in net trade. Instead we got neither the growth nor the rebalancing.

The result has been missed fiscal targets and a downgraded credit rating.

Real wage falls, coupled with changes to the tax credit and social security system, have given us the longest squeeze in living standards in modern British economic history.

The labour market is hailed as ‘good news; but as important research from the Resolution Foundation today demonstrates, we still face a job gap of 850,000 to get back to pre-crisis levels of employment.

Productivity growth has collapsed, risking a longer term impact on living standards and growth.

And despite all of the government’s rhetoric on the UK being in a ‘global race’ – whether you measure it by growth, exports, manufacturing output or living standards, the UK is falling behind the other leading economies.

Against a backdrop of terrible growth, no rebalancing, a living standards squeeze, a weak labour market and productivity falls, the difference between a small  contraction in Q1 and some small growth in Q1 doesn’t seem very important.

The economy is stuck and without a change in government policy the slump is set to continue.

This piece was originally published at ToUChstone, and is republished here with permission.

Cars roll off the production line, but fewer than before. Photograph: Getty Images

Duncan Weldon is a senior policy officer at the Trades Union Congress. He blogs for them at Touchstone.

Getty
Show Hide image

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.