Conservative, Labour, and their combined support for Workfare: Why and How?

by currentaffairsplus

As the great philosopher reminds us, there are known knowns, known unknowns, and unknown unknowns. Surely one of the known knowns is that, even during the best of times, citizens are ambivalent towards sacrificing their hard earned income in the form of redistributive taxation to deliver welfare. Especially during the worst of times, people are furious at the idea of their money subsidising the lives of the unemployed. For this is the most salient and controversial element of the welfare state: unemployment benefits.

Another known known is that welfare payments, more often than not, are in the form of state pensions, housing and in-work benefits. Perhaps, however, what is most frustrating is the fact that welfare has been distributed for decades, and regardless, poverty and unemployment persist. We know that the traditional Keynesian welfare state is obsolete, yet welfare capitalism still exists, despite the persistence of neo-liberal thinking.

The known unknown scenario, in this case, is that we, as a society, possess no definitive solution for the social ills that facilitated the emergence of the welfare state. We know that we cannot allow the poorest and most vulnerable to sink below minimum social requirements. Yet we have no complete solution as to how to reduce spending whilst helping the sick, the poor and the unemployed, whilst ensuring that Britain is globally competitive.

Thus, there is a simultaneous need to maintain the welfare state but to also adapt it to the needs of contemporary society, with all its debts and deficits.

The unknown unknown might just be New Labour’s welfare reforms. Despite the fury with which the Conservatives attack Labour’s record, Blair and co. took up Clinton’s call to end welfare as we know it through the transition to Workfare. Such is the triumph of propagandising in British politics, that the Tories are implementing workfare reforms all the while chastising Labour for spending too much… on Workfare.

Any academic evaluation of the period will tell you that the leadership of New Labour were workfare enthusiasts, such was their conversion to the Third Way thinking of Clinton’s New Democrats. Despite the rhetoric, the new Help to Work scheme is in keeping with a cross-party acknowledgement of the need to reform and modernise the welfare state.

Initially, I was opposed to such a settlement, on a normative and empirical level. How can one justify forcing someone who is unemployed to perform a job in exchange for benefits that is performed by others in exchange for a wage worth substantially more? At its worst, this can take the form of subsidising free labour for the private sector.

Or, what if someone were to lose their job, enter a workfare scheme, and perform a similar job they previously held, but for benefits that they would otherwise have been entitled to (and still be if they were employed and claimed in-work benefits).

And what of the complete ignorance towards travel costs when demanding claimants attend daily signing-on sessions? Or of the fact that when performing community work placements, claimants will be completely visible to the public, thus leaving space for an increased stigma of those claiming welfare as being capable of only doing basic jobs at the behest of the state?

Nevertheless, with problems of generational joblessness and other forms of social exclusion, welfare cannot simply be a cash-transfer to subsidise deliberate idleness: after all, idleness was one of the social ills identified by the Beveridge Report to be eradicated. Workfare, as in the form of New Labour’s New Deal programme for the long-term unemployed, should not become a revolving door between unemployment and temporary low-paid, low-skilled, and often demeaning, employment.

The Marxian critique of the welfare state is that it was simply a tool for the ruling classes to appease the working class by offsetting the failures of capitalism. While this may not be entirely true, welfare reform, as initiated by New Labour and the Coalition Government rarely, if ever, addresses issues of market failure. Osborne has recently pledged to achieve full employment in Britain, completely neglecting the fact that the godfathers of the neo-liberalism he practices, such as Milton Freedman, spoke of a natural rate of unemployment. With an active labour market, this might not be such a problem, for people would constantly be moving in-and-out of work as firms, free of government regulation, could hire-and-fire at will.

If the employment rate is to be set, in this case, by purely market forces, a healthy, self-correcting market would see no problem of persistent unemployment.This has clearly not happened. Without Keynesian demand management there is little reason to believe that supply-side measures, in the absence of solutions to current market failures, will lead to full employment. As Simon Jenkins demonstrates, all Prime Ministers since Thatcher have adopted and adapted her policies, and still a ‘natural rate of unemployment’ persists. This indicates that Thatcherite neo-liberalism has yet to prove the welfare state obsolete.

This is why the welfare reforms proposed by social democratic writers, such as Colin Crouch, are so appealing. Crouch proposes a ‘social investment welfare state’, long practiced in Sweden, in which the role of welfare is to train claimants for the modern market place, and also incentivise increased risk-taking. With healthy unemployment benefits, and an active labour market, workers will be increasingly willing to move between jobs, and accept decisions made by their employer to dismiss them to respond to changed market conditions.

If we accept that there will always be unemployed in our society, we must also accept that welfare will always be necessary. But it cannot incentivise generational and deliberate joblessness: it must encourage work. However, work must genuinely pay. A welfare system that subsidises free labour for the private sector, or subsidises low-pay and demeaning work, is ultimately redundant, for it will prolong the revolving door between welfare and unsustainable, low-paid work.

The response of social democratic parties to the need of welfare reform must be to recapture the dignity of labour that defined their origins. There is currently a cross-party consensus on the need for welfare reform and to do so in such a way where more emphasis is placed on training and skills to prepare the unemployed for work. Whilst this is welcome, there needs to be a greater awareness of market failures, and how, ultimately, welfare is a response to these failures; it is a recognition that the market economy cannot and will not adequately provide for all people, regardless of how ‘hard-working’ they are.

Combined with the increased global focus on inequality, championed not only by Piketty but also the IMF (of all institutions), this places the political left in a privileged position. By campaigning for a living wage, and according the state a role in increasing investment, skills and productivity, the left can offer a more compassionate, and effective alternative to workfare. Essentially borrowing its sentiment, but disregarding its often draconian and inadequate practice.

by: Jack Kelly