Work enforcement in liberal democracies
This blog by Tania Raffass of Monash University, Australia is based upon her paper in the latest issue of the Journal of Social Policy which seeks to contribute to the normative debate concerning work enforcement in liberal democracies.
Since the mid-1980s OECD countries have been reforming their systems of industrial relations and welfare provision to expand employer discretion and stimulate labour supply to the market. This was intended to facilitate reallocation of the workforce in accordance with demands of competitiveness so that to revitalise OECD economies. Freer, more efficient markets are supposed to keep more people in employment and by the same token leave fewer people in poverty. In actual fact, the reformed conditions did little to prevent massive job losses of the Great Recession. The subsequent recovery has been weak and it now looks like we may be facing secular stagnation in the coming decades – not something economists taught us to expect from the more flexible markets that we now have. On the other hand, liberalisation has enabled the expansion of underemployment, i.e. working insufficient, irregular hours in unstable jobs without benefits. Socio-economic exclusion has grown more rather than less entrenched, as wages, access to training and occupational mobility, job quality, and social protection have all diminished in the periphery of the dualised labour markets. With overall job security eroded as a result of liberalisation, full-time workers are scared into overemployment, i.e. working harder and longer. The other common reason of overwork in the core labour market is the necessity to service debts. As record high levels of household debt indicate, many have been relying on credit to plug holes in household budgets opened by falling real wages. Wage moderation was the intermediate goal of the reforms that has been achieved – in contrast to the ultimate goals, such as poverty reduction and employment growth. It is getting hard to deny the failure of the exclusive reliance on the supply-side approach to labour market policy. This is evident in the European Commission’s publication Employment Policy Beyond the Crisis (2014) that concedes the need to boost demand for labour (even though it does not seem to go far enough in terms of concrete measures).
Vacancy monitoring instruments reveal a constantly present and significant shortage of available jobs in relation to the number of registered unemployed (not even counting the discouraged ones). This means that even if all available vacancies were filled, there would still remain a large pool of surplus labour. The duty to work is enforced through activation, but there are not enough jobs, especially decent jobs, to absorb the supplied labour. Predictably, there will be a ‘constantly present and significant’ pool of jobseekers subjected to recurrent (for the precariously employed) or even perennial (for the long-term unemployed) activation. Career guidance used to be mostly about helping youngsters pick an occupational path upon finishing school. Now there is career guidance for adults of any age who have the misfortune of being out of work and out of savings. They are coached to work on their ‘employability’ in two ways. Firstly, by ensuring their skills are ‘labour market relevant’ in contrast to the traditional sustained dedication to a specific occupation with its substantive content. Secondly, by improving their attitude. After a certain period of benefit receipt, jobseekers must be prepared to take on any available job, no matter how distant from their previous occupation or how unfavourable its conditions may be. According to ‘new paternalism’ that informed the rise of welfare-to-work policies in the 1990s, jobless individuals claiming benefits and thus becoming dependants of the state relinquish their autonomy. The mission of the ‘active state’ is to galvanise them back into autonomy. Yet, the imposition of mandatory activities, which are onerous and more often than not useless, clearly entails a loss of autonomy. Activation can also diminish a jobseeker’s autonomy in a lifetime perspective when he or she is made to forgo his or her attained social/occupational status by moving into the low-wage sector.
Activated jobseekers are enjoined to be endlessly adaptable to employer needs and fanatically motivated in job hunting. A recent study has made a pioneering attempt to verify the validity of the adaptability advice dispensed by employment services providers. The analysis of recruitment practices disproves the dogma that adaptability pays off. HR personnel look for the closest match to the job requirements. It is impossible for applicants without relevant education and prior experience to make a convincing case for their suitability for the job no matter how much enthusiasm they may try to project. The other assumption on which employment services providers operate is that the chances of getting employed crucially depend on the intensity of job search. In relation to disadvantaged jobseekers, there is not much empirical validation for this second assumption either. Recruiters are guided by statistical knowledge about productivity of individuals from different population groups. Applicants that are presumed on statistical grounds to be less productive, specifically younger, older, and unemployed individuals, are simply screened out at an early stage of the selection process. This discrimination in hiring cannot be prevented unless there are slightly more vacancies than available workers (as in the classical definition of full employment). Welfare-to-work policy architects also believe that by reducing benefit amounts and by work-testing they incentivise exit to employment. Empirical research however finds that individuals in greater financial need tend to be less successful in getting hired despite greater efforts. The lack of results is demoralising and it is only so much that pep talk can do in the face of repeated setbacks. On the other hand, jobseekers have been observed to regain motivation in response to perceptions of improved employment availability. Search theory is blind to this dynamic as it treats the individual commitment to employment as a characteristic, unaffected by the socio-economic environment.
To conclude, the policy that promotes availability for work rather than availability of work is unsound because it ignores the crucial demand-side barriers to employment: employer discrimination in the context of a deficient demand for labour. It is also oppressive because it relies so much on compulsion.
Raffass’ Journal of Social Policy article can be read free of charge until the end of September 2016 here.