Towards a new Labour State

John McDonnell’s recent address to the TUC demonstrates Labour’s commitment to challenging neo-liberal ideas about the labour market.

jmFor the last three decades both conservative and social democratic governments across the globe have deregulated labour markets, arguing that increasing the ‘flexibility’ of workers will make them more productive, increase economic growth and bring greater prosperity. But even some the keenest supporters of unfettered globalisation now accept this hasn’t happened. The share of national income going to workers has continued to slide, inequality has increased as incomes have plunged for many workers and barely remained static for far more.

These developments are not just the result of the ‘austerity’ imposed after the crash, though the Institute for Fiscal Studies has calculated average pay is still £760 lower than 2008. The imposition of anti-trade union legislation has also impeded workers ability to defend themselves, but the rise of the gig economy and the expansion of low-paid, low-skilled employment, towards the bottom end of the service sector are as much to do with disappearance of many ‘steady’ or ‘middle’ jobs through automation, changes in the structure of the working population, new consumption patterns and 24/7 life-styles replacing 9 to 5.

Many of the new ‘white van’ delivery and zero-hours retail workers couldn’t join unions even if they wanted to. So, while McDonnell correctly recognises the need to restore trade union rights, effective industrial relations in the 21st century will also need a strong ‘Labour State’ to supplement collective bargaining. The regulatory and statutory framework he promises should be the first step to this.

Unlike the 1970s when Labour governments tried to persuade trade unions to accept wage restraint through a ‘social contract’, these days, when employers increasingly dictate the terms, a social contract could be introduced to ensure that pay keeps up with inflation and productivity. Finally, a labour government should at least consider introducing a universal basic income (UBI) not as an alternative to wage labour, (there’s no evidence that people don’t want to work) but to give workers more options about how and when they do.

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