Ed Balls can't ignore the growing ranks of people working for themselves. Photo: Getty
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Labour need to address the self-employment problem

Of all workers in the UK, over one in every seven is self-employed. Labour should account for this in its economic proposals.

In the early years of the coalition government, Labour had an easy argument to trot out. The route to economic recovery was painfully slow, and all the talk was of double dips and possible triple dips. When the recovery (and some happy revisions to the economic statistics) finally happened, Labour had to start talking about living standards instead. This was a risky strategy – there was a fair chance that the cost of living problem could have evaporated by now.

Unluckily for the rest for us, but luckily for Labour strategists, the argument still holds. The recovery hasn’t yet been strong enough to raise GDP per capita to what it was before the crisis. Wages grew by 0.7 per cent in the past year. Over the same period, prices rose by over double that – 1.6 per cent. Prices have been going up faster than regular wages in every quarter of every year since 2009. Around 1 in 5 working people are in low pay. Labour say we can’t carry on like this.

This has felt like safe territory for Labour – a policy without a big spending commitment price tag. Ed Balls has already talked about increasing the minimum wage, ending zero-hours contracts, and encouraging more firms to pay a Living Wage – a wage level that allows workers to meet basic living costs. The logical next step now, eight months before the election, is to set out some specifics. Ahead of the start of the Labour party conference this week, Ed Miliband has been busily doing interviews talking about a new pledge to raise the minimum wage to £8 per hour by 2020.

The lack of growth in wages is a real one, and needs to be addressed. But – should Labour find itself in government in 2015 – it will need to tackle the underlying cause, and not the superficial symptom. Getting strong, sustainable growth from businesses will mean that businesses will be able to afford to pay more. That will take investment in skills, infrastructure and innovation.

But there is an even bigger problem than this. The debate about policies like the minimum wage seem to take place in a nice neat world where most people neatly fit into a box labelled “employee”, and most firms are of a reasonable size. It’s neat, because it means that government can help workers by leaning on employers to improve conditions or raise wages – whether by regulation or through tax incentives. But it is becoming harder and harder to believe that this reflects the reality of the new world we are in.

Of all workers in the UK, over one in every seven is self-employed. Among men in work, the figure is even higher – almost one in five men in work are self-employed. In the last year, the numbers in self-employment grew around five times faster compared to the numbers working as employees.

These people will not be touched by increases in the minimum wage – the minimum wage does not apply to the self-employed. And if the minimum wage rises at a rate that businesses cannot afford, we may find that it isn’t the unemployment figures that go up: more people may effectively be pushed into working at what is effectively a lower hourly wage rate in self-employment instead. Almost a quarter of those living in in-work poverty are in households where at least one person is self-employed. To ignore these people would leave a gaping hole in any strategy for tackling low pay.

This is not to say that self-employment should be discouraged. Among the ranks of the self-employed are many success stories. For some, it may well be a route to greater freedom and higher income, and that is a good thing. More self-employment may well help create a more flexible, productive economy. But if Labour is serious about tackling low pay and increasing economic growth, it can’t carry on ignoring the growing ranks of people working for themselves. Politicians need to reflect the new reality of the working population. 

Nida Broughton is chief economist at the Social Market Foundation

Nida Broughton is Senior Economist at the Social Market Foundation.

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Four times Owen Smith has made sexist comments

The Labour MP for Pontypridd and Jeremy Corbyn’s Labour leadership rival has been accused of misogynist remarks. Again.

2016

Wanting to “smash” Theresa May “back on her heels”

During a speech at a campaign event, Owen Smith blithely deployed some aggressive imagery about attacking the new Prime Minister. In doing so, he included the tired sexist trope beloved of the right wing press about Theresa May’s shoes – her “kitten heels” have long been a fascination of certain tabloids:

“I’ll be honest with you, it pained me that we didn’t have the strength and the power and the vitality to smash her back on her heels and argue that these our values, these are our people, this is our language that they are seeking to steal.”

When called out on his comments by Sky’s Sophy Ridge, Smith doubled down:

“They love a bit of rhetoric, don’t they? We need a bit more robust rhetoric in our politics, I’m very much in favour of that. You’ll be getting that from me, and I absolutely stand by those comments. It’s rhetoric, of course. I don’t literally want to smash Theresa May back, just to be clear. I’m not advocating violence in any way, shape or form.”

Your mole dug around to see whether this is a common phrase, but all it could find was “set back on one’s heels”, which simply means to be shocked by something. Nothing to do with “smashing”, and anyway, Smith, or somebody on his team, should be aware that invoking May’s “heels” is lazy sexism at best, and calling on your party to “smash” a woman (particularly when you’ve been in trouble for comments about violence against women before – see below) is more than casual misogyny.

Arguing that misogyny in Labour didn’t exist before Jeremy Corbyn

Smith recently told BBC News that the party’s nastier side only appeared nine months ago:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.”

Luckily for Smith, he had never experienced misogyny in his party until the moment it became politically useful to him… Or perhaps, not being the prime target, he simply wasn’t paying enough attention before then?

2015

Telling Leanne Wood she was only invited on TV because of her “gender”

Before a general election TV debate for ITV Wales last year, Smith was caught on camera telling the Plaid Cymru leader that she only appeared on Question Time because she is a woman:

Wood: “Have you ever done Question Time, Owen?”

Smith: “Nope, they keep putting you on instead.”

Wood: “I think with party balance there’d be other people they’d be putting on instead of you, wouldn’t they, rather than me?”

Smith: “I think it helps. I think your gender helps as well.”

Wood: “Yeah.”

2010

Comparing the Lib Dems’ experience of coalition to domestic violence

In a tasteless analogy, Smith wrote this for WalesHome in the first year of the Tory/Lib Dem coalition:

“The Lib Dem dowry of a maybe-referendum on AV [the alternative vote system] will seem neither adequate reward nor sufficient defence when the Tories confess their taste for domestic violence on our schools, hospitals and welfare provision.

“Surely, the Liberals will file for divorce as soon as the bruises start to show through the make-up?”

But never fear! He did eventually issue a non-apology for his offensive comments, with the classic use of “if”:

“I apologise if anyone has been offended by the metaphorical reference in this article, which I will now be editing. The reference was in a phrase describing today's Tory and Liberal cuts to domestic spending on schools and welfare as metaphorical ‘domestic violence’.”

***

A one-off sexist gaffe is bad enough in a wannabe future Labour leader. But your mole sniffs a worrying pattern in this list that suggests Smith doesn’t have a huge amount of respect for women, when it comes to political rhetoric at least. And it won’t do him any electoral favours either – it makes his condemnation of Corbynite nastiness ring rather hollow.

I'm a mole, innit.