By Ben West.
In the current circumstances, full employment may seem an almost absurdly ambitious goal (and it’s certainly a long-term project) but it’s certainly a goal that any government worth its salt should be working towards. An economy with large numbers of people on benefits is not something to aspire to or to defend; it is a symptom of a failing economic policy – something that Labour ought to be clearer on, and reminding voters of every day.
Those suspicious of Labour’s proposal today to link benefits to past contributions by reviving the ‘contributory principle’ have every right to be. The Trojan horse of ‘reform’ is often used as a means of attacking the system and the people who use it. We must be clear: irrespective of how much or how long someone has paid in for, JSA should always be enough to allow someone to live in dignity while they find a job – and that includes ensuring they’re able to cover transport to look for work and can buy decent clothes for an interview, rather than the current system of tests and box-ticking that leaves recipients infantilised, patronised and degraded.
But the idea of reciprocity is fundamental to the legitimacy of the entire system. When FDR signed the Social Security Act in the US, he remarked that,
“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program”.
By funding social security as a standalone insurance programme rather than out of general taxation, benefits become something to which everyone has a moral right, rather than a form of state charity. By eroding the link between unemployment benefit and national insurance in the UK, the whole system is vulnerable.
The way we protect the system of social insurance over the long term is by ensuring that the broadest possible range of people have a stake in it. Once a public service (see council housing, schools) becomes stigmatised or its use confined to the least influential and most marginalised, it’s only a matter of time before it comes under attack and eventually abolished.
This emphasis on universalism is one of the things that makes the systems of places like Germany and Sweden so resilient. White-collar workers on £50,000 can be confident that if they lose their job, they will be able to collect the equivalent of 70% of their average income until they find a new one. Crucially, the fact that so many do so without social stigma, or without being treated like a feckless idiot at a job centre, means that they are considerably more likely to defend the rights of those less well-off who happen to find themselves in the same boat.
Again though, we should be realistic about today’s announcement. A tax on banker’s bonuses isn’t nearly enough to get us there. To be convincing, the policy needs to be part of a wider set of policies designed to address the structural inequalities that lead to low wages and unemployment in the first place. This needs to include a commitment to gradually raising the minimum wage to a living wage, proper employment rights for agency workers, regulation of private landlords, and above all else, a coherent system of vocational training which ensures that those in the most precarious service-sector jobs are valued and respected in the employment market.
The end goal needs to be a high wage, high skill, high productivity economy, rather than one where we accept poverty wages and unemployment as facts of life. Labour needs to avoid the trap where we fetishise benefits that, while currently a necessity for many, merely paper over the structural inequalities that create poverty and unemployment in the first place. Just as high numbers of long-term recipients on JSA is a symptom, not the cause, of our economic malaise, Income Support is a public subsidy of poverty-wage employers that this country can ill-afford.
As a Labour party, we shouldn’t be scared to articulate it in those stark terms – using the principle of reciprocity to restore dignity and respect not just to the social insurance system, but to the economy as a whole.
Ben West is a Young Fabians Member.