Whoever is in charge of the Welsh Government’s economic recovery strategy after Thursday’s election faces an extraordinary set of challenges – with unemployment set to rise sharply as Covid support is withdrawn and huge differences in economic outlook between sectors.
It’s vital, however, that they’re prepared to ask tough questions about whether a narrow focus on unemployment alone has become harmful and whether there’s a need now to make sure that government interventions are targeted at job quality – and not quantity alone.
Recovery from the last recession was defined by a strong and ultimately successful drive to lower unemployment, based on a belief that being in work is always better for people (and society) than being out of work.
But in the last decade Wales has seen a sharp increase in in-work poverty. Households with at least one adult in paid work now make up over half of all households in poverty. And evidence is also emerging that some jobs are actually worse for people’s mental wellbeing than no job.
We therefore can’t approach this recovery with the same unnuanced ‘low unemployment’ measure of success, especially if we’re committed to ‘building back better’.
If a bad job could be worse for people than no job, the success of our recovery therefore depends on getting people into good jobs. Low unemployment alone is no longer a reliable headline measure to indicate people are better off.
This links to the status which workers are granted in economic policy. Government at all levels has retained a high unemployment mindset well into a period of relatively low unemployment. But we need to remember that employers are not doing people a favour by hiring us and the Welsh state does not need to be grateful to them for hiring us.
And this is especially true for those people typically held back by the labour market. Employers are lucky to have us, not the other way round. The higher risk of being in a bad job facing some of us is the fault of employers, not us. They are not our barriers; they are barriers that employers put in place which reinforce inequalities and turn discrimination into economic disadvantage.
Our recovery must abandon the dogmas around labour which have defined economic strategy over the last decade if we are serious about ‘building back better’. It needs to recognise the grim reality of parts of our labour market, how workers need to be empowered to change this, and be firmly rooted in the belief that everyone deserves a good job if they want one and it is the state’s duty to facilitate this.
Was our last recovery a success?
Unemployment has been very low for several years now, but this hasn’t corresponded with a rise in wages, job security or many of the other objective measures of good or fair work.
And it’s important to look at what impact state intervention has made. Did initiatives attempt to provide good jobs and were simply overshadowed by labour market trends? Or has public investment been fairly neutral in terms of the quality of the job outcomes and has that neutrality contributed to the growth in precarious work?
We are aware of very few employability schemes which explicitly sought to get people into a good job, rather than simply just a job. And while schemes may focus on getting people into a job, the impact isn’t neutral when we have low unemployment, low labour standards and a very weak enforcement regime. For some, a failure to distinguish between good and bad jobs did nothing to strengthen their position in the labour market beyond ensuring their income came primarily from an employer rather than the state.
More broadly, this has resulted in some employers relying on insecure, low-paid workers, driven to them by a welfare system which penalises those who turn down any paid work, and facilitated by employability programmes which invest to maximise the number of people applying for these jobs and tells them that they are lucky to have this opportunity. These employers keep unions out, and they don’t have to raise their standards to attract applicants as the state ensures there’s a supply.
This interplay has led researchers to observe that the sort of worker/employer/state relationship at the Amazon distribution centre in Swansea amounted to a compulsion to work, with migrant labourers especially vulnerable due to the threat of deportation, and employment agencies identified as another actor skimming-off a profit from this exploitative phenomenon.
If we want to ‘build back better’ we need to acknowledge the state our labour market is in and abandon the idea that job creation alone is a good measure of success.
But we must also recognise that in a devolved context employability is one of our only opportunities to get people into a better job.
Welsh Government can’t determine the benefit sanctions that effectively force people to accept a job offer, nor can it determine minimum employment conditions. But initiatives which help people into work are where Welsh and local governments have some power.
The next Welsh Government must raise awareness of labour rights, exclude employers that do not meet their standards from grant awards, and break the conveyor belt of exploited labour which some of our businesses have come to rely on.