Over the last 30 years, a significant section of Britain’s workforce has been coerced into a miserable existence, overlooked except by those who endure the wretchedness of zero hour and forced self-employment contracts.
A hundred years after the labour movement’s herculean fight to achieve basic humane working conditions for ordinary people, we appear to have regressed in a dystopian time warp back to the birth pains of the Industrial Revolution where employers were indifferent to the welfare of their workforce. Uncaring coal and ironmasters have been replaced by rapacious Global Corporations, which are in turn controlled by acquisitive shareholders. We are experiencing an extreme version of capitalism, an avaricious monster spreading its grasping tentacles around the globe, consigning ordinary workers to suffocating poverty and indebtedness. Perhaps societal attitudes, which kept the more extreme devices of capitalism in check, have lapsed as the middle class became more comfortable. Apathy to the malign practices of national and global corporations is widespread. News of workers having to tolerate the obscenity of timed toilet breaks and working intolerable hours appears to be accepted with indifference.
Isn’t it ironic that the words of hope expressed by post-war Labour politicians have been forgotten so soon after the conditions which nurtured them were overcome?
When did this apathy take hold of society? Simply stated the pivotal point at which post-war liberal aspirations were crushed was the Thatcher Administration, 1979 to 1990. Put simply, this government ripped up Attlee’s Social Contract in the name of Monetarism.
Neglected capital investment and social change bore their bitter fruit during the Conservative Administration (1979 to 1990). Thatcher was an acolyte of Milton Friedman and Alan Walters’ American theory of Monetarism. After the ‘Winter of Discontent’ 1978-1979, Thatcher was an enthusiastic supporter of deregulation, adopting a laisse-faire attitude toward business, following Friedman’s hypothesis that, left to their own devices, markets were self-regulating. This coupled with Thatcher’s determination to teach the Trade Unions a lesson after they brought down Edward Heath’s Conservative Government, led to significant confrontations with the country’s Trade Union leadership, most notably the Miner’s Union and Steelworker’s Union. Thatcher’s austere Methodist upbringing instilled in her a belief of self-reliance, of an individual’s responsibility to look after themselves. This ethos was at odds with the collective-based moral belief of mutual support prevalent in communities with a coal mine or steel works at its heart. Once the mail employer in the community was closed, small businesses also failed as unemployment gripped its former customers. The result was a devastating psychological blow to these close-knit communities, which is keenly felt to this day.
Thatcher’s subsequent Privatisation policies completed the death knell of traditional working class communities in the Midlands, the North and Scotland. After the 1983 election, the Privatisation of public utilities raised £29 Billion. Certain industries, such as water, gas and electricity were natural monopolies, privatising them bore little competitive advantage, apart from making generous profits for the bankers handling the privatisation process. British Steel made significant progress in terms of profitability as well as efficiency, but still suffered significant job losses and plant closures. Years later the pitiful remnants of Britain’s once mighty Iron and Steel industry, the cornerstone of its historic industrial hegemony was sold off to Dutch steel maker Corus.
So here is the rub, these Global Corporations are subject to the whims and moods of their shareholders. These are quite often faceless investment funds. These funds’ only preoccupation is the value of their investments, how much of a return can they expect and for how long. This is how they stay in business. Nowadays fund managers demand year-on-year increase in either dividend or share value, if possible both. If this growth is not forthcoming, they will either vote at the company’s Annual General Meeting for a change of Directors or senior management, or possibly sell their shares to the market (which if not done correctly will result in significant price drop in the value of the shares to the detriment of themselves and the company.)
Consequently, these investors exert an extraordinary level of control over the running of the Corporation. Additionally, the Director’s fees and bonuses depend on the share performance of the company. It is therefore in their interests to produce an annually increasing profit. An easy way to accomplish this is to maintain rigid control over the company’s costs, and so as labour costs are amongst the most significant of the company’s outgoings, this will experience significant examination by the Financial Director. Likewise not only will the FD examine the direct payroll cost of labour, he will also examine the indirect costs of National Insurance contributions and pension contributions. Long gone are the days of company pension schemes, these pots of gold were too tempting to be left under the auspices of a cash strapped Financial Director, anyone remember the accusations levelled at the Daily Mirror’s owner, Robert Maxwell?
How do companies respond to pressure to minimise costs? Quite simply the labour pool is simply treated as another resource, like raw materials, packing materials or transport. At one time enlightened firms looked after their workforce, based on the understanding that a healthy, happy workforce was more productive; at the very least firms did not treat their employees with complete contempt. Now many companies simply view labour as a resource, to be used as and when needed much like one might order a new batch of paper clips. If extra manpower is required to fulfil a surge in demand, then an order goes out to the company’s labour pool to turn up to work as instructed.
This change in the complexion of the labour market, moving away from traditional procedures to ad-hoc employment benefits employers much more than people in the labour market. Company direct labour costs are significantly reduced, indirect labour costs have been eliminated completely (National Insurance Contributions, pension contributions, sick pay, annual leave, etc). Wonderfully profitable news for shareholders and investors. Not so good for the labour force, who bizarrely, in the wider sense, the company needs to buy its products to remain commercially viable. By handicapping the consumer pool, i.e., the country’s labour force, companies are reducing potential sales (if enough companies follow the trend for Zero Hour Contracts), the economy must suffer significant contraction as the velocity of money slows.
There are other hidden social costs to the economy. Anxiety and depression caused by insecure or irregular income (ACAS Study) causes increased pressure on Social Services whose budgets are already stretched. Some ZHCs prevent workers from looking for work elsewhere. Workers are afraid to turn down work for fear they may be punished. Lack of income causes indebtedness, use of payday loans further complicates debts. Reduced social mobility where families are unable to afford a mortgage, those who rent may be at the mercy of unscrupulous landlords forcing high rental costs. In the worst cases workers may not be able to rent at all if they do not have proof of continuous employment. Access to ethical credit may be difficult if no employment proof available.
These are the wider costs to the Country’s economy. Workers in this predicament are a drag on the economy, they have less confidence to spend than those with a more stable employment. This affects the velocity of money, where a slowdown in spending or the amount of money in the system slows the general economic cycle causing a recessionary tendencies.
Therefore in the long term, it is in a Company’s best interest to build a loyal, well paid workforce to grow a sustainable business and avoid treating their employees as a commodity.
The TUC needs to raise awareness of the economic benefits of long term, stable employment. Whilst raising awareness of social consequences of insecure and irregular employment.
Abolition of “Too big to fail corporations”.
Breakup of monopolistic cartels which restrict competition and exclude smaller businesses.
TUC or ACAS should raise awareness of companies using self-employment contracts to hire their workforce. These companies avoid many employment regulations/legislation designed to safeguard workers’ rights and benefits. ZHC/SEC also allows the company to minimise its costs and internal payroll administration. Long term self-employment contracts for labour suppliers, indicate a company flouting its workforce obligations as well as an immoral approach to the people it uses.