welfare reform and employment relations are interlinked.
Financialisation has increased its role in the development of the employment relationship, of which work-first policies play a pivotal role. Many firms have chosen to financialise their operations by investing in derivatives and credit markets for a quick return on investment. Managers prioritise the distribution of dividends for the shareholders at the cost of squeezing production, cutting wages and ‘downsizing’. The result is the maximisation of bonuses and profits in the short term at the expense of the wage bill. Top earners have improved their position. For example, on average the wage income share of the top 1% of income earners rose by 20% over the last two decades, while the wage share of the lowest educated slumped (Mercille and Murphy, 2015: 15). Deregulation of labour markets, labour flexibility, capital mobility and global finance are key sources of wage stagnation. Several writers suggest that welfare conditionality and the offensive against employment rights are closely interlinked. Work-first policies adapt people to low-waged employment and, when combined with deregulation of labour rights, succeed in strengthening capital control over the labour process (Grady, 2017: 282).
Work-first policies undermine wage bargaining and reinforce insecure work. This is intended to have the double effect of undercutting wage demands but to serve the low-wage economy with ‘compliant’ labour (Raffass, 2017). In the UK, Universal Credit (UC, launched in 2013) is the major Conservative government welfare reform launched on the back of ‘making work pay’. The stated aim of UC is to ‘simplify’ the benefit system, as it merges a number of different benefits into one benefit. UC also involves an in-work benefit (work allowance) to replace working tax credits. Access to both in-work and out-of-work elements of UC are subject to demanding work search and progression requirements reflecting the way the welfare reform agenda has involved a stricter conditionality regime as a way of moving people into work (see Chapter 3). In this way the attack on employment rights works in tandem with work-first policies: the two are mutually reinforcing processes.
The financialisation of household debt is due to easy access to credit and mortgages during the housing boom reinforced by the trend towards wage stagnation since the 2008 crisis. Consequently, households are more and more pushed towards private indebtedness and credit consumption. This has been compounded by the cuts in welfare support and the social safety net. Rubery (2015a) refers to this as the shrinkage of the social state in relation to all its four main roles: as a source of income support; as a provider of free or subsidised public services; as a direct employer; and as a defence against marketisation of society. The new ‘welfare regime’ is downgrading or even phasing out benefits as a safety net. Women, according to Rubery, are disproportionately impacted by these changes. Reproduction services have become financialised, particularly in relation to pensions, care packages, insurance and mortgages, and this has had the impact of fuelling household debt, exacerbated by the cuts in welfare. Given that the public sector is a major source of employment for women, austerity cuts have led to greater instability and uncertainty in terms of employment, career routes and pay (Himmelweit, 2016: 11).
Geography plays an important role in the political economy of welfare and work. Localities (cities and city regions) are important sites for the delivery of welfare-to-work and the reproduction of labour via local welfare services and in turn they shape the contours of labour markets and precarious work. There is also plenty of evidence to show that cities and regions are bearing the brunt of austerity (see Etherington and Jones, 2018; Gray and Barford, 2018). While the rise of insecure and precarious work is an international as well as national phenomenon, there are distinct geographical outcomes and processes at work particularly within deindustrialised cities (see Chapter 5 on Greater Manchester and Chapter 6 on Sheffield Needs a Pay Rise Campaign). Employment restructuring in ‘traditional’ industries has given rise to a high concentration of new jobs in the service sector, which tend to be low paid and require little vocational training. Polarisation and segmentation of the labour market has resulted, and this has been exploited by industry with support through state infrastructure investment and welfare-to-work policies. The ‘de-unionisation’ of cities and regions involving lower union densities and collective bargaining coverage has led to gaps in employment protection (or its enforcement), reinforcing and accelerating labour market insecurity and inequalities. From the perspective of labour, the processes for negotiating around employment rights and social protection are highly constrained. However, as discussed in Chapter 4, this needs to be viewed as continually subject to negotiation, struggle and contestation (Cumbers et al, 2010).
Class and agency in welfare and employment relations
The role of agency – how neoliberal politics are offset, modified and resisted by trade unions and other social actors – is of crucial importance in our understanding of the implementation of welfare policies. Central to this is an understanding of class and class relations. I have argued in this Chapter that central to the politics of austerity are the changes to the capital/labour relationship. Within a Marxist approach, capital (the capitalist class who own the means of production) are solely concerned with extracting surplus value and maximising profit; for labour (the working class defined as wage labour) the primary interest is to wages to secure survival and attain a standard of living. This will include ‘the social wage’ and welfare services essential to maintaining or attaining the reproduction of labour power. It is not difficult to see how these interests can be and are fundamentally in conflict, and how wages and welfare are a terrain of struggle between classes. Inequalities in wealth and income are important measures of the nature of class relations and struggle. In the current period, austerity has underpinned and driven the increasing power of dominant classes as observed by Callinicos, cited earlier (see Umney, 2018).
While there is not a rich vein of work in social policy with respect to the role of agency, there is a body of work in Marxist tradition which has posed the question of struggle and mobilisation in terms of class and collective politics (Ginsburg, 1979; Lavalette and Mooney, 2000). The post-war UK welfare state was forged from a longstanding struggle by the trade unions and Labour Party for more redistributive employment and social policies, including social benefits, education and the National Health Service (NHS). There should be no return to the poverty and blight that prevailed in the 1930s. At the same time, the settlement or ‘class compromise’ contained some weaknesses, particularly the ideological belief in women’s primary responsibility for the home. This assumption regarding gender roles was generally accepted within the Labour Party and some sections of the trade union movement (Blackford, 1993: 220).
This historic legacy of the construction of the UK welfare settlement is important in terms of framing the social divisions and struggles over welfare. As Williams (1994) emphasises, the link between family, work and nation must be understood in relation to a diversity of social divisions – not only gender but also ethnicity, and class (although disability, sexual orientation and age can also be included). Such struggles are influenced ‘not only by class relations but also, relatedly, by the relations of other forms of social power – racism, nationalism, male domination and so on – which influence both the demands of the working class and the response of capital and the state’ (Williams, 1994: 60). In this way, I assert that the nature of oppressions (and the ‘class struggle’) must be related to the concrete experiences of social life within capitalism (Lavalette and Mooney, 2000: 8).
Trade unions are important ‘actors’ or source of agency in the class struggle as they act as a fulcrum for solidarity within the workplace (and reduce competition within the labour market); they also articulate worker resistance and negotiation around the employment relationship (Hyman, 1989: 36). Although trade unions developed through struggles around workplace issues, they have also pursued concerns relating to social reproduction, and social and welfare policy. As Fine states, trade unions will:
… often be drawn across the nebulous and shifting boundaries connecting economic and social reproduction. The wage, after all, is only the most immediate source of revenue for sustenance of the working class family, whose capacity to provide able and skilled labour depends upon the range of services that are now commonly thought of as constituting part and parcel of the welfare state, albeit unevenly by country and type of provision (housing, education, health etc). (Fine, 2003: 91)
The debate around trade union survival has been recently focused around representing