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How safe is your job?

This has been a year of financial panic, but 2009 will be dominated by unemployment. In a flexible l

The poster that won the 1979 general election was a fake. The "Labour isn't working" dole queue was ac tually composed of 20 fully employed Hendon Conservatives, photo graphed by Saatchi & Saatchi. But there was nothing synthetic about the impact that the poster had on the Labour government of James Callaghan. Never again, Labour resolved, could the party afford to go to the country when the country was out of work. Yet that is what Gordon Brown risks doing, if you believe the spin about him delaying the next general election until 2010.

This was a year of financial panic as oil prices spiked, banks collapsed and stock markets tumbled. But it is likely that 2009 will be the year of the dole. Unemployment, already higher than at any time since Labour came to office in 1997, is expected to climb to almost three million by 2010, according to the Confederation of British Industry. The turnaround in the UK employment market has been astonishing. The pace of job losses, led by the shake-out in the banking sector, has astounded analysts: the Centre for Economic and Business Research (CEBR) has forecast that 300,000 private-sector jobs will have been lost in the six months to the end of this year alone. The CBI's forecast, made only a few days ago, is almost certainly an underestimate, because it is based on Britain's GDP declining by 1.7 per cent in 2009. The Bank of England is now talking about the economy shrinking by 2 per cent next year, as Britain enters the worst recession since the 1980s. Capital Economics has forecast that unemployment will peak at 3.3 million in 2010.

The situation is already worse than the formal statistics suggest. Stephen King, of HSBC, argues that the official International Labour Organisation unemployment figures exclude two million people who are economically inactive but would like a job.

What is undeniable is that British firms are taking advantage of the "flexible" labour market to fire first and think later. Unusually, the region hardest hit is likely to be the one most able to cope: the south-east. The London area alone could lose 650,000 jobs, according to the Local Government Association. This is one of the wealthiest areas on the planet thanks to the financial services sector based in the City. Redundant middle-class professionals might find life a little different on £60-a-week Jobseeker's Allowance, but most can probably look after themselves. The people who will have their lives destroyed first are the legion of temporary and casual workers, many of whom do not figure in the unemployment statistics because of their age or country of origin.

Many of the new redundancies are unavoidable, but there are signs, too, that some firms are reducing their workforce as a message to shareholders, hoping to bolster their equity prices. When BT announced 10,000 redundancies on 13 November it made no attempt to play down the human cost and, according to some analysts, even exaggerated the job losses for effect.

After three decades of losing industries, the UK desperately needs to protect the skills it has left, not allow them to dissipate in the lengthening dole queues

Firms such as Virgin Media, Rolls-Royce, Yell, Wolseley and Citigroup have all announced thousand-plus job cuts in the past few weeks alone. The flexible labour market, inspired by the Tories and realised by new Labour, has allowed contraction to be a first, rather than a last, resort. It is the quickest way for a management in trouble to show that it is doing something.

The problem is that these job losses, rather like the banks' refusal to lend to small business, are enormously destructive to the broader economy. After nearly three decades of losing productive in dustries, the UK desperately needs to protect those skills it has, not allow them to dissipate in the dole queues. But with trade unions weak, employment law liberal and the government compliant, firms are being allowed to throw out the seedcorn of the future.

Only the state would be able to counter the effects of this attrition. In the pre-Budget report, the Chancellor's measures on benefits, pensions and VAT were intended to boost pre-Christmas demand in the high streets. However, the government is severely limited in its ability directly to fill the jobs gap. Yes, the public sector is still hiring, and will have put on 50,000 jobs in the six months to the end of the year, according to the CEBR. But, with public borrowing likely to reach at least £118bn next year, there will have to be a retrenchment in the labour-intensive public sector to get the public finances into some kind of order in the medium term. Make no mistake - the price of this year's fiscal stimulus is likely to be public-sector job losses, even with the Chancellor's heroic, and unrealistic, assumptions about an economic recovery in 2010.

In this instance, the weakness of the pound is unlikely to boost employment in export industries. This is a global recession, perhaps a global depression, and Britain cannot rely on international markets to replace lost domestic demand. There is also likely to be a wave of protectionism, starting in the US, as countries seek to save their own core industries with state subsidies and other anti-competitive tools. The world market may be a tougher place in which to sell in future. Anyway, Britain has lost most of its manufacturing base - down to 14 per cent of GDP.

In recent years, most of our "exports" have been in financial services - "invisibles", the demand for which will be slight for the duration of the credit crunch.

We can be thankful at least that the right man is in the White House at the right time. Alistair Darling has moved some way towards matching Barack Obama’s plan to create 2.5 million jobs over the next two years through public work projects and alternative energy investment. Yet this will not happen quickly and will do little to alter job losses already in train. And, in America, which is 12 to 18 months further advanced into the recession than Britain, life is already desperate for people on the margin.

The US department of agriculture reported on 17 November that the number of children who went hungry in 2007 - the first year of the credit crunch - jumped by 50 per cent to almost 700,000. It said that, overall, 12.2 per cent of Americans, 36.2 million people, "do not have the money or assistance to get enough food to maintain active, healthy lives". It could happen here.

At the very least Britain faces a return to a period of sustained joblessness, and to the destructive psychology that accompanied it. There will be dole queues, of course, but the social composition of the new jobless - led by financial services, property, retail - will be very different from what we saw in the early 1980s. As a recent report from the Chartered Institute of Personnel and Development argued, those at most risk in the coming "redundancy torrent" will be managers, professionals and skilled non-manual workers.

Tens of thousands of jobs are about to eva porate from British banks. Multiply that by all the professional jobs which depended on those middle-class incomes, such as estate agents and lawyers. Certainly, the first to be hit will be those at the bottom. But they are likely to be joined by large numbers of articulate, middle-class individuals shaken out of the financial, media and peripheral service occupations - from aroma therapy to management consultancy - which have grown up during the long boom.

Middle-class workers are not ready for this and it will be a shock to their self-confidence and self-esteem – a social and cultural transformation that could have profound political implications.

In the 1980s, the middle classes were still relatively secure in their career structures in management and the professions. They had homes, occupational pensions, clear employment paths. Certainly, they were a world away from the trade unionists fighting for their jobs in the old industrial heartlands of Britain. Margaret Thatcher relied on the middle classes to support her war on the militants with their braziers - and to blame them for the recession of the 1980s. The braziers are gone and the industrial working class has largely been dismantled. So, too, have the secure middle-class career structures.

Those who will suffer are the children of the baby boomers, who graduate with high debts and higher expectations

In the 1980s, professional and other white- collar jobs were, by and large, jobs for life, with annual pay increments, annual promotion, pension rights and a predictable future. Not any longer. The modern media, for example, are a shifting sea of freelance and contract workers for subcontractors to the large institutions. Even at the BBC, where I started out, there may be a crust of well-paid performers and anonymous executives who earn more than the Prime Minister, but below that is a huge army of irregulars, often on low salaries, coming in and out of the corporation's revolving doors. The commercial sector has been relying on large numbers of underpaid or unpaid "interns" desperate for work. This is the flexible labour market at its most pernicious. Such practices are widespread throughout the British economy.

Deregulation and leveraged buyouts by private equity over the past two decades have left many firms with flattened management structures, often relying on outside consultants to get them through busy periods. Occupational pensions have become a rarity. Promotion has become intensely meritocratic. Companies increasingly "offshore" white-collar functions to countries such as India, where an educated middle class is willing to work for much lower wages. Most of the job losses at BT are among self-employed contract workers in the UK; the firm has not cut any of the jobs it has outsourced to India.

The group hit hardest is the under-35s, sons and daughters of the postwar baby boomers, who have emerged from university with high debts and even higher expectations. These are the young people who have little experience of recession and none of mass unemployment. Neither have many of their parents, who lived through the 1970s and 1980s largely untouched by unemployment or debt. If there is to be a political response to the new depression, it is likely to emerge from this group of déclassé graduates, many of whom face a future without the security they have been brought up to expect. They will not be able to afford houses or establish careers. Indeed, the under-35s have so much personal debt that their net wealth is actually negative. Three-quarters of the under-35s are in the red, according to the Skipton Building Society, owing more than £9,000 on average. They will look to the state for security, but the state will not be able to deliver.

This time there is no trade union menace to blame for economic distress

A Ministry of Defence think tank has made a remarkable forecast about political militancy. The Development, Concepts and Doctrine Centre published a report in April 2007 in which it speculated that in coming years “the world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest”. “The middle classes could become a revolutionary class taking the role envisaged for the proletariat by Marx . . . the growing gap between themselves and a small number of highly visible super-rich might fuel disillusion,” the report said.

The idea of a revolution sweeping suburbia is faintly risible, though it was a subject of a recent J G Ballard novel, Kingdom Come. But the MoD may have grasped an important truth about the nature of politics in the new global economy. It is beginning to erode class differentiation and has left many middle-income earners exposed to the kind of insecurities that formerly afflicted only lower-class workers. Clearly, the economic circumstances of management consultants cannot be compared directly with those of retail workers. But when they lose their jobs, they face very similar challenges: mortgage and credit-card debt, catastrophic loss of earnings and the need for retraining.

Part of the difficulty experienced by the Conservative leader, David Cameron, in developing a coherent political response to Gordon Brown's neo-Keynesianism, is that the party of capital has lost its "class enemy": the industrial working class. There is no trade union menace to blame for economic distress and the Conservatives have had to fall back on "fiscal conservatism" - or reduced public spending. This is simply not a priority for an electorate that is looking to the state to protect it from the predations of the market. Equally, new Labour under Brown has been forced almost against its will to become more critical of the plutocracy running the banks, to accept nationalisation and greatly increased government spending. Brown's government has even had to abandon one of the founding principles of new Labour by proposing higher taxes on the rich.

The Conservatives, who have not entirely lost their Thatcherite reflexes, are looking to the middle classes to react against the new profligacy - but they will find it difficult to do so. As un employment mounts among the middle classes, especially among the under-35s, there is going to be a much stronger demand for policies which promote jobs and growth even at the cost of public borrowing. The Tories cannot afford to be on the wrong side in this battle.

As Martin Hutchinson, author of Great Conservatives, has expressed it: "A world in which few if any have security in their livelihood is not conservative, it is anarchist. It is also deeply repugnant to the average voter."

If Labour isn't working, neither are the Conservatives.

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?

Photo: Getty
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Does the working class need to ask for its Labour Party back?

The more working class voters there were in a constituency in 2017, the more it tended to swing to the Tories.

When Theresa May called the general election nearly two months ago, all the evidence – opinion polls and local election results especially – pointed to the expectation that the Labour Party would be crushed, with many of its MPs losing their seats.

The assumption was that Labour under Jeremy Corbyn would be unable to win over Conservative voters, because he was too left-wing to appeal to those close to the political centre ground.

Some commentators, myself included, took this a little further, arguing that Corbyn was left-wing in a way that would alienate the very people he claimed to speak for, ie working class people, while appealing primarily to virtue-signalling middle class romantics like Corbyn himself, who have no more interest than he does in the business of parliament but love a good rally or social media spat.

The local elections that took place in May appeared to confirm the above expectation and analysis, with hundreds of Labour councillors losing their seats. However, opinion polls began to shift, and while different polling companies’ methodologies led to different estimates of support for the two main parties, all showed Labour on the rise – with YouGov predicting two days before the election that the Conservatives would win a mere 305 out of 650 seats, while Labour would win 266.

Despite a miserable campaign in support of a depressing manifesto, enlivened only by the promised revival of an anachronistic bloodsport beloved of the rural elite – indeed, a campaign so bad that political historian Glen O’Hara joked about having ‘watched and wondered whether Mrs May was a Corbynite sleeper agent’ – the Conservatives actually did slightly better than this prediction, winning their highest share of the vote since 1983 and coming to hold 317 seats to the Labour Party’s 262.

This left them only 55 seats ahead of their historic rival: a gap only very slightly wider than the 48-seat lead that they had after the 2010 general election, when David Cameron defeated the supposedly very unpopular Gordon Brown. The 2017 result would have been impossible without the activists who have stuck with the Labour Party regardless of their feelings about the leader, some of whom are now publicly expressing shame at the part they played in what is widely seen as Corbyn’s triumph.

Does the Labour Party’s unexpectedly narrow defeat refute the diagnosis of Corbynism as a middle class politics that alienates the party’s traditionally working class base, but doesn’t really care? Constituency-by-constituency analysis of the 2017 results by Paula Surridge, of the University of Bristol, suggests that it does not.

The Leave vote

We should perhaps begin with a pattern that was already apparent on election night. Parts of the country that voted strongly to quit the European Union appeared to show a swing away from Labour towards the Conservative Party, while areas that voted strongly for Remain appeared to show a swing in the opposite direction.* 

Surridge’s analysis confirms that this was indeed a trend: the higher the estimated Leave vote, the more the Labour vote share fell between 2010 and 2017, and the more the Conservative vote share rose during the same period. Blue dots represent actual constituencies; the red line represents the trend.

On the face of it, this is baffling. Both the Labour Party and the Conservative Party are officially committed to leaving the EU, and Jeremy Corbyn famously used a three-line whip to force his MPs to support the Tory Brexit bill in February.

The anti-Brexit parties were the Liberal Democrats, the Scottish National Party, and the Greens. There was therefore no sense in which a vote for Labour could have been a vote against leaving the EU. Why, then, should a constituency’s support or opposition to Brexit have made any difference?

This brings us to the paradox that the Labour MP John Mann has called the ‘Bolsover question’: why the second-largest Labour-to-Conservative swing in the country should have occurred in the constituency of Dennis Skinner.

Skinner is not only – as Mann observed – one of Jeremy Corbyn’s staunchest supporters in the Commons, but also  – although Mann did not draw attention to this fact  – one of the Labour Party’s staunchest advocates of Brexit. Why should a constituency that voted for Brexit by 29,730 votes to 12,242 have swung so heavily against a strongly pro-Brexit candidate for a pro-Brexit party?

Here’s a thought: maybe constituencies swung away from Corbyn’s Labour Party for the same sorts of reasons that they voted Leave, and swung towards it for the same sorts of reasons that they voted Remain? Or to put it another way: what if Corbynism appeals to the kinds of people to whom EU membership seems advantageous, and repels the kinds of people to whom it seems an encumbrance, regardless of the fact that Corbyn – as a disciple of Tony Benn  – is resolutely anti-EU?

Let’s take a look at some of the other things that Surridge found.

Educational level

Exit polling after last year’s EU referendum found that the more educated a person was, the more likely they were to have voted Remain. While some Remainers might like to dismiss this as ignorance on the part of Leavers, it can also be interpreted as an expression of anger at being left behind in Britain’s ever-more highly globalised economy.

So we should take note of Surridge’s finding that the higher the percentage of university degree holders in a constituency, the more it would tend to swing towards Labour from 2010 to 2017, and the lower the percentage of degree holders, the more it would tend to swing towards the Conservatives.

Ethnicity

While a bare majority of white voters opted for Leave last year, large majorities of black and Asian voters chose Remain. The reasons for this are complex – but it is notable that Surridge finds that the lower the percentage of white British voters in a constituency, the more it would tend to swing towards Labour, and the higher the percentage of white British voters, the more it would tend to swing towards the Conservatives.

While it is certainly good news for Labour that it is winning votes in more diverse communities, it should think carefully about why this is not happening in less ethnically diverse parts of the country – particularly as these are often economically struggling areas unattractive to immigrants.

Class

Now the biggest question of all. The Labour Party was set up to provide parliamentary representation for working class people, and the far left trumpeted Corbyn’s leadership as a triumph for "working class politics". But opinion polls showed something very different: under Corbyn, working class support for Labour rapidly fell to its lowest point ever.

Moreover, by-election results in the strongly working class constituencies of Stoke-on-Trent Central and Copeland showed swings from Labour to the Conservatives, as indeed they had during the Labour Party’s last flirtation with Bennism in 1983. Did the general election see working class voters change their minds and flock back to Corbyn’s "socialist" party?

My goodness. Surridge’s analysis shows that the more working class voters there are in a constituency, the more it tended to swing Conservative, and the fewer there are, the more it tended to swing Labour. To put some figures on that, she found that for every 10 per cent more working class voters in a constituency, there tended to have been a fall of about 3 per cent in the Labour vote and a rise of about 5 per cent in the Tory vote between 2010 and 2017.

Think about that for a moment. This is Corbyn bringing the party back to its "working class, socialist roots"?

Correlations, 2010-2017 and 2015-2017

I sense an objection: these figures show the swing from 2010 to 2017, and Corbyn’s only been in charge since 2015. Maybe it’s all Ed Miliband’s fault?

Apparently not. Surridge calculated the correlations between all the above variables and the change in the Conservative and Labour vote, both for the period of 2010-2017, and for the period of 2015-2017. And here they are:

While it is true that many correlations are weaker for the period 2015-2017 than for 2010-2017, the positive correlations remain positive and the negative correlations remain negative.

In other words, working class voters, voters not educated to college level, and voters in ethnically homogeneous areas love Corbyn’s Labour Party even less than they loved Miliband’s. Meanwhile middle class voters, those educated to college level or higher, and voters in ethnically diverse areas love it even more.

It should also be noted that the positive correlation between the percentage of working class voters and the change in the Conservative vote, and the negative correlation between the percentage of voters with degrees and the change in the Conservative vote, are both stronger for the period 2015-2017 than they are for 2010-2017, indicating a rapid growth of support for the Conservative Party among the very social groups that Labour traditionally represented.

This should worry Labour politicians with ambitions to be in government, because there is simply no way that a Labour leader can become prime minister without persuading Conservative voters in Tory seats to switch to Labour. Corbyn may have put together an unexpectedly large anti-Tory coalition of voters, but it’s largely concentrated in areas that already vote Labour – and traditional Labour voters are being driven faster than ever into the Tories’ arms.

The triumph of the "socialism fan"

In recent decades, Labour has become the party of anti-racism. It can be proud of the fact that its vote share has risen in ethnically diverse constituencies – although it seems to me that the racism many Labour supporters (and in some cases, activists and even politicians) have shown towards the Jewish community ought to be treated with rather more alarm than it apparently is.

But whatever the positives in this mixed achievement, it should be hard indeed for the party to find cause for celebration in the fact that the Conservatives are so rapidly becoming the party of the "left behind".

In the post-New Labour era – and even more so under Corbyn than under Miliband – Labour has become a party of highly educated middle class people, "socialism fans" especially. I said it before the election, and it remains the case today.

Indeed, the Labour leadership’s understanding of this point seems the most likely explanation for their manifesto pledge to end student fees (a policy that would benefit only higher-earning graduates, since people who do not go to university do not incur student fees, and people who do but end up in lower-paying jobs don’t have to repay their loans) while maintaining the Conservative "benefit cap", which negatively affects low earners, disabled people and the unemployed.

To what extent Labour’s new middle class voters will continue to back the party in the future seems unclear. After all, Corbyn can’t really do anything about their student fees, since he is not prime minister, and while he could do something about Brexit (since Labour, the anti-Brexit parties, and pro-EU Tories such as Ken Clarke now collectively hold a majority of seats in the Commons), he’s promised not to (good Bennite that he is).

Then again, he might publicly change his lifelong position on Europe just as he has publicly changed his lifelong positions on terrorism, nuclear weapons and Nato. He wouldn’t be the first leader to decide that Paris was worth a mass.

Fair play to him, though. In losing the election by only slightly more seats than Gordon Brown, he won the anticipated leadership contest in advance. So if the working class asks for its Labour Party back, he can confidently tell it to get lost.


* Canterbury is a notable exception here, having narrowly voted Leave in 2016 but swung to Labour in 2017. A very small city with two well-known universities, it hosts a very big student population during term time (when the general election took place), a large proportion of whom would typically have been expected to be resident elsewhere during the holidays when the EU referendum took place.

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