Inequality Redux IV

Thomas Hastings  - Research Associate in the School of Management and SPERI, University of Sheffield

So, where to begin?  Undoubtedly, the context of the 2008 financial crisis has proved pivotal in establishing the ‘need’ for deficit reduction and consequent welfare adjustments.  This drive has been reflected particularly in the coalition government’s WORK programme which has intensified the welfare-to-work aspect of employment policy in Britain, primarily through the use of sanctions for ‘non-compliant’ claimants.  Outside of benefit suspension, additional compelling measures have included enforced community service for long-term jobseekers (part of the ‘Help to Work’ programme which began in April 2014) and further pressure for jobseekers to accept zero-hour contracts under threat of benefit restrictions.

There is strong evidence to suggest this turning-up of the dial disproportionately impacts the most vulnerable in society.  Although the Department of Work & Pensions points to declining rates of sanctions overall, the fact is that, for those receiving employment support allowance (the main benefit for the disabled and seriously ill), they have increased fourfold in the two year period 2012-14 (a rate of more than 3,000 sanctions per month).  Campaigning charities, such as Mind, have accordingly chastised policymakers for failing in their duty of care to the most vulnerable, particularly those suffering mental health problems and associated medical conditions.  We’ve also witnessed extended use of means-testing in relation to entitlement to child benefits.

As noted earlier, justification for this ‘sanction culture’ has typically centred on two related issues.  First, there is the perceived need to cut the deficit and the accompanying suggestion that in this context the £94 billion spent annually on working age benefits is both wasteful and ineffective.  Second, there is the purported moral dimension to the benefits issue, epitomised by attacks on claimants and the ‘something for nothing culture’ by leaders across the political spectrum.  This creates a problem of choice for the electorate, with all the major parties attacking benefits spending – in one guise or another – as inimical to renewed economic growth.  The question becomes: ‘whose benefit inequality matters least’?  Answer the elderly (vote Lib Dem), migrants (vote Conservative) or the young (vote Labour)?

Any way round, the calls for benefit reform and related austerity responses have been presented as necessary evils linked to lower deficit levels.  This need not be the case.  As shown by ETUI reports (such as Clason et al.), cross-comparison studies in the EU suggest multiple interpretations of the crisis and the necessary outcomes across different EU states.  In the case of Spain, a less prevalent narrative depicts post-crisis labour market reform devoid of major cuts to labour market policy expenditure.  Rather, Spanish administrations have focused on reducing employment protection legislation with a view to enhancing labour market flexibility on behalf of firms and, specifically, in the interests of labour market ‘outsiders’ struggling to attain work.  For its part, Italy has also put considerable effort into post-crisis reform intended to enhance employment rates (via solidarity contracts offering wage cuts/reduced social contributions) and has recently sought to strengthen social protections for groups of (non-)workers previously unprovided for.  In contrast to current conservative rebuttals of ‘inhuman inflexibility’ with respect to British benefit sanctions, it is notable too that reform in Italy has extended the coverage of social insurance to apprentices and other workers with fragmented employment histories.

A further point of comparative interest with reference to rates of lifelong learning arises with the case of Ireland, where education has been pushed as a means of lifting jobseekers out of poverty.  Contrary to the British experience, where educational funding has suffered in recent years (e.g. the abandonment of the Train to Gain programme and the axing of the educational maintenance allowance), the rules relating to Ireland’s Back to Education Allowance (BTEA) have been adjusted in a contrary direction.  In 2010 eligibility for BTEA (which provides funding for a return to full-time education for those receiving welfare payment) was expanded to allow the entry of applicants claiming benefits over a period of nine, rather than twelve, months.

In other words, different things can be done.  These various actions have received insufficient attention in Britain and have in effect been drowned out by the generalising narrative of austerity and deficit reduction which implies that the main ‘crisis states’ have little or no scope to implement progressive policies geared both to reviving the economy and tackling inequality.  That said, it’s obvious that the related issues of inequality and benefits reform are not going to disappear in the run-up to the election in May.  In fact, the polemic will only intensify.

Rather than entrenching ourselves on one side of the ‘moral argument’, we should look to steer the discussion in more useful directions that embrace a better grasp of political economy.  After all, does the crisis and the rise of sovereign debt really necessitate welfare cuts?  How have other states reacted to both debt and inequality concerns?  If this is too ambitious, we can at least spread the word that inequality is not only distasteful: it actively holds back economic growth.  We could then perhaps try to ask, as objectively as possible, if welfare policies that sanction, bully and propel people into low-paid (often zero-hour) work are likely to do much good for any of us outside of the 1%.

Thomas Hastings is a member of the Work, Organization and Employment Relations Research Centre (WOERRC) based at the Sheffield University Management School. You can follow the work of WOERRC on twitter @WOERRCsheffield.