A new social security system for a new world of work

Although we may have seen national employment rates increase, there are still real failures in the labour market which are not being addressed through the Conservative government’s punitive approach to social security or through their incoherent industrial strategy.

Over the past 30 years, the labour market that offered a “job for life” has slipped away to be replaced by increasing flexibility associated with a rise in precarious work, temporary and short-term contracts, low pay and poor work environments. According to the Trades Union Congress, precarious employment is at epidemic levels with up to ten million workers on insecure contracts across Britain.

There are significant costs associated with this flexibility. Evidence of the negative impact on the health and wellbeing of people in precarious work is amassing. We may have seen a fall in deaths and serious injuries in the workplace but self-reported worker health levels have plateaued since 2011.

Flexible labour markets by their very nature have a disproportional negative effect on low-skilled jobs with workers stuck in an endless “low pay, no pay” cycle. The Tories’ social security policies have failed to respond to this. Universal credit can take anything from six to 12 weeks to process an initial claim. Government cuts to this credit and other support is a key factor contributing to the use of food banks, personal debt and even homelessness.

And we mustn’t forget our near-five million self-employed workers. The Resolution Foundation says self-employment has accounted for 45 per cent of all UK employment growth since 2008 yet almost half of self-employed people pay themselves less than the living wage, and have far less support through the social security system.

Under this government we have seen economic growth concentrated in London and the southeast, with regional employment rates reflecting this. There is a 10 per cent employment gap between the southeast and Northern Ireland.

Employment inequalities also exist between population groups, including higher unemployment among young people, and wide employment gaps for disabled people (31%), and people from black, Asian and minority ethnic (BAME) communities (10%). Women also still face barriers to work because of the high costs of childcare.

Report after report has highlighted these inequalities, but in seven years nothing has been done by this government. According to the Social Market Foundation cutting the disability employment gap by a million people would generate £13 billion a year for the economy.

Income inequality and, more specifically, pay inequality is another sign of how dysfunctional our labour market has become under the Tories.

Real-terms pay is still lower than before the global financial crash. In reality, most working people today are earning less, after inflation, than they did ten years ago. Britain is the only major developed economy where earnings have fallen as growth has increased.

Resolution Foundation analysis on the public sector pay cap has estimated that by 2020 the average public sector workers’ pay will be lower than 2004 levels, with an average real terms cut of £1,700 since 2010. This isn’t just morally wrong, it is a false economy; the NHS and schools increasingly have to use expensive agency workers to replace teachers and nurses as they are leaving in droves.

The recent Joseph Rowntree Foundation report highlighted the difficulties that struggling households face with rising inflation; they estimate that many face a shortfall of between £500 and £900 a year. The freeze in social security payments and other cuts are making it increasingly difficult for them to be able to make ends meet. We would end these.

Meanwhile the pay of Britain’s top bosses has increased by 47 per cent. On average they earn 312 times more than a care worker, 165 times more than a nurse, 140 times more than a teacher and 132 times more than a police officer. Instead of addressing these inequalities, this government’s tax and spending policies reinforce them.

Labour believes in different choices, choices where those with the biggest shoulders pay their fair share. At 19 per cent corporation tax is already the lowest in the G7; claims by the government that lowering it will help investment have been dispelled by a recent PWC report.

We would lift the public sector pay cap and give people on low incomes a real living wage of £10 an hour. By introducing equal pay audits for large employers, Labour would close the pay gap faced by BAME workers and women. We would also compel employers with more than 250 employees to publish the numbers of disabled people they employ and give disabled people a new right to flexible working. In addition to tackling the fundamental design flaws of universal credit, we would sort out the delivery issues.

Labour would transform our social security system. We believe that, like the NHS, it should be there for all of us in our time of need, providing the basics in life should we become sick, disabled or fall on hard times, and guaranteeing dignity and security in retirement. Crucially, it must be fit for the 21st century world of work.

*This is a copy of an article I have written today for the Times.

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