One step forward, one step back, one to the side – The Taylor Review into employment practices

Pierre Bourdieu once warned that television encourages ‘fast-thinking’, a form of commentary that is antithetical to the slow rigorous analyses in which academics and intellectuals should engage. Social media create an even stronger incentive to join public debates as early as possible, to avoid the risk of only contributing when attention has already shifted to another topic.

The publication today of the much awaited Taylor Review into ‘Employment Practices in the Modern Economy’ strongly illustrates this point, with a flurry of commentary published shortly after (or even before) the report has become available. These comments (including obviously this one) inevitably have a preliminary character; they ought to be confirmed, adjusted or refuted once the dust has settled and a clearer picture of the review and especially its material impact on working conditions in Britain emerges. And yet a few points already are visible, like the contours of a skyline on the horizon. It seems the Taylor Review is marked by multiple ambivalences that speak against a simplistic response of either praising or dismissing it swiftly:

First, the review is, from a political perspective, both current and dated. It is current because it rightly acknowledges and puts at the centre of public debate (at least for a moment) the crucial question of employment conditions - even if the rhetoric of the report itself attempts to mitigate against the impression of a profound change, for example by arguing that levels of full-time standard employment remain on a high level of 60% (p.24), or by stressing that the apparent rise in ‘zero hours contracts’ may be primarily due to an “improved recognition” of this employment type (p.25).

Notwithstanding, the continuous degradation of employment conditions has been one of the key pillars of neoliberal global capitalism, with its intrinsic tendency to transfer risks and exposure to the volatility of markets to individual workers and employees, in order to boost the profitability of businesses and the competitiveness of corporations as well as national economies. And while this economic model staggers on despite its apparent instability, its legitimacy has arguably been eroded substantially at latest since the ‘crisis’ of 2007 – to the point that addressing the question of employment conditions no longer is ‘only’ a matter of social justice and economic sustainability, but also of maintaining a democratic political order.

At the same time, the report is already somehow dated, as it was commissioned with political conditions in mind that failed to materialise. When Theresa May launched the review in October 2016, the aim was to underpin the Prime Minister’s first speech in office, in which tackling social divisions and injustices to help those who “just about manage” were elevated to major policy priorities. This attempt to redefine the orientation of the Conservative Party was partly built on the assumption that, due to the weakness of the Labour Party (and social democracy in general), a realignment of British politics in favour of the political right was possible. With the outcome of the latest general election, May’s ensuing weakness as Tory leader and Prime Minister, and the increased strength of Labour, the political context of the Taylor Review is largely different. It hence remains to be seen to what extent its recommendations can be implemented against the more extreme ‘small government’ faction within the Conservative Party and an emboldened Labour Party that is likely to oppose the review’s findings as ‘too little, too late’.

Secondly, the recommendations are both substantial and inconsequential. They are substantial in light of the acknowledgement that the regulatory framework for the labour market requires adjustments to restrict the ability of employers who exploit non-standard forms of employment such as ‘zero hours contracts’, agency work or bogus self-employment to act as they please - by imposing, for example, a more stringent test to determine the employment status of a person (p.35), and by strengthening the enforcement of existing rules by facilitating access to employment tribunals to assess a person’s employment status (p.62). All which is going against the trend of ever increasing ‘flexibility’ of employment. The report furthermore endorses a comprehensive understanding of ‘quality work’ (p.12-15), and underlines that ‘flexibility’ can be imposed by employers without granting reciprocal benefits (p.43).

While it can indeed be argued, like trade unions have done, that the creation of the new status of ‘dependent contractors’ to replace the current category of ‘workers’ (p. 35) simply replaces one type of employment status with restricted employment rights by another, the rights that would come with this status would nevertheless represent a small, incremental improvement in social protection of people who are currently regarded incorrectly as self-employed, for example by providing holiday and sickness pay.

This is unsurprisingly far from enough from a progressive point of view, but it seems fair to say that anyone who hoped for more radical conclusions from this review must have misunderstood its political function and remit. The report clearly embraces the current doxa, according to which low levels of labour market regulation are intrinsically positive and are seen as a sign for a dynamic economy (p.17).

However, even from a more benevolent perspective, the review’s findings are also quite inconsequential on the larger scale, as the review operates within an intellectual framework that is partially outdated and that therefore struggles to draw conclusions that can appropriately tackle the question of vulnerable employment. Its overall premise is a combination of light-touch regulation with an increased reliance on negotiations between employers and employees within companies, with a focus on giving employees a stronger ‘voice’ and improving workplace transparency (pp. 52-54). This is encapsulated neatly in Taylor’s fourth principle for fair and decent work, which stresses that “better work is not national regulation but responsible corporate governance, good management and strong employment relations within the organisation” (p.9).

This approach suffers from a fundamental flaw: Although the report recognises power imbalances as a root cause of insecure work (p.26), it ultimately assumes a generally benign balance of power between employers and employees; an equilibrium that simply does not exist for all employees, self-employed and workers, due to the structural constraints of the contemporary British labour market in which especially low-paid workers and employees of the service industry are intrinsically disadvantaged and are unable to exercise the kind of pressure on employers that would be needed to engage in meaningful and fair negotiations.

It is of course undeniable that a substantive share of the self-employed and of ‘gig economy’ workers are able to defend their interests effectively but the role of the law as expression of the general will is to establish shared standards and rules that cannot be undercut and that hence protect the weakest members of society from abuse and hardship, as expressed in the often cited saying by Lacordaire “Between the strong and the weak, between the rich and the poor, between the lord and the slave, it is freedom which oppresses and the law which sets free.” By stressing that the existing employment “works well and is flexible enough to deal with new ways of working”, and that it is merely its varied interpretation that causes problems (p.33), the review attempts to foreclose any more far-reaching and radical discussion of labour market flexibility and its social impact.

This problem is illustrated in almost farcical form by the following quote regarding agency workers, on p. 48 of the report (but other similar quotes can be found easily): “The Government should introduce a right to request a direct contract of employment for agency workers who have been placed with the same hirer for 12 months, and an obligation on the hirer to consider the request in a reasonable manner.” All employers using agency workers to cut their wage bill and transfer the volatility of demand onto workers will already shake in their boots.

Having said this, even in the current political context, the report has the potential to stimulate public debates and introduces a number of interesting proposals, notably regarding self-employment (including changes to taxation and national insurance contributions), which merit further more careful study. Despite its overall conservative and incremental orientation, it re-politicises the topic of employment conditions and thus ideally will open up a debate about wage-labour-related problems that for too long have been side-lined.

Enrico Reuter – follow me on Twitter

It’s UC and the MIF, not NICs, we should be focusing on!

Since the 2008 financial crisis, self-employment as a sector of the British labour market has increased sharply, and accounts for nearly one third of the growth in employment figures since 2010. The rate of self-employment now stands at approximately 15% of the labour force, in other words about 4.64 million individuals (BoE, 2015; ONS 2016). Self-employment has “outstripped growth in permanent employment by 3 to 1 in the last decade” (O’Leary, 2015: 9) and has “accounted for nearly half of the increase in total employment since the recession” (Deane, 2016: 7).

It is some of this group (those earning more than £16,250 pa) that were most concerned by the changes in National Insurance Contributions (NICs) for the self-employed announced by the Chancellor Phillip Hammond in the 2017 Budget in the House of Commons on 8^th March 2017.

As a relatively small change in the Budget, the Chancellor announced that Class 4 NICs for the self-employed would rise from 9% to 10% in April 2018 – and then to 11% in April 2019 – on income up to the higher rate threshold of £45,000 pa. The new rates are still lower than for employees who pay NICs at 12% on the same income levels, while both groups will continue to pay at 2% on income above the higher rate threshold.

This caused a great deal of furore in various circles, both in The Guardian and The Telegraph amongst others, and not a little traffic on my Twitter timeline with a range of people arguing for this change as well as against. What didn’t make it through the knee-jerk reactions was that only those of the self-employed earning in excess of £30,000pa would be worse off – so whilst no one likes paying more, it was in its own way progressive.

However, not only did this change to NICs fall foul of the 2015 Conservative Party election manifesto’s commitment to a 5 year lock against income tax and NI rises, but combined with the scrutiny that the Chancellor’s decision was put under, and coupled with the political capital that is being used by the Prime Minister to push through the unnecessary and damaging hard Brexit, saw the decision reversed in a matter of days.

I’d suggest that the focus of the (social) media-led outrage was misplaced. The real culprit affecting self-employed persons on low incomes is Universal Credit (UC), and specifically the Minimum Income Floor (MIF):

The most pertinent element of UC and self-employment in relation to vulnerability is the MIF, which applies to those who make a claim for UC and who have been self-employed for a minimum of twelve months. As the DWP (2016) makes clear, the “MIF is an assumed level of earnings”, based on an expectation of what a similarly gainfully employed person might be expected to earn. An individual’s MIF is calculated on the basis of:

Age applicable national minimum wage rate per hour x expected hours per week x 52 weeks = annual gross income, divided by 12 = gross monthly income

For the self-employed to claim Universal Credit, earnings must be declared to the DWP on a month by month basis, and if an individual’s earnings exceed their set MIF, self-employed claimants will receive less UC. However, if they earn less than their MIF, they will receive no increase in their UC, and in addition the MIF is only reviewed on an annual basis. Those who are self-employed are liable to earn less than employees and their income is likely to fluctuate throughout the year. In evidence given to the Work and Pensions Committee on 22/01/17, both Victoria Todd from the Low Income Tax Group and Benedict Dellot from the RSA suggested that a relatively low paid self-employed individual claiming Universal Credit will be worse off than an employee earning the same amount.

Clearly Universal Credit and the MIF disadvantages those who are self-employed, and this further increases their economic vulnerability as a result of a potentially fluctuating income and a social protection system that clearly fails to take account of this.

So although it is a clear truism that no one likes the idea of increased NICs, the real problem for the self-employed is Universal Credit and the Minimum Income Floor. It is this which the public, press and politicians should be aiming their ire towards. It is this which increases the likelihood of in-work poverty for those who, we are told, are a clear sign of success for the UK economy and are in part a driver of recovery both from the 2008 crisis and the inevitable fallout from Theresa May’s decision to pursue an ultra-hard Brexit… but that is a topic for another blog on another day.

Kevin Caraher – follow me on Twitter

Sources:

Bank Of England (2015) Self-employment: what can we learn from recent developments?, Quarterly Bulletin 2015 Q1, http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2015/q105.pdf

Deane, J. (2015) Self Employment Review: An independent report, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/505561/ind-16-2-self-employment-review.pdf

Department for Work & Pensions (2016), ‘Universal Credit and self-employment’, https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/universal-credit-and-self-employment-quick-guide

O’Leary, D. (2014) ‘Going it alone’, http://www.demos.co.uk/files/DEMOS_GoingitAlone_web.pdf?1409503024

ONS (2016). UK Labour Market: April 2016: Estimates of employment, unemployment, economic inactivity and other employment related statistics for the UK, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/april2016#employment

‘Go getters’ who go get lunch – Vulnerable self-employment and social policy

The ‘gig economy’, ‘uberisation’, ’portfolio careers’ – these are just three of the buzzwords or phrases that are used to capture a profound change in how people work, build a career (or: develop a profession, for those who baulk at the idea of having ‘a career’), develop a sense of self and personal identity, and gain the income to buy all the goods and services on which depends and appears to depend a good living standard.

Despite all differences between these and other labels, they share the assumption that the traditional form of employment, encapsulated in the idea of a long working life in the profession for which one was educated and trained, with a comfortable retirement as final phase, is bound to become a rarity, both longed for by some thanks to the stability it offers, and dreaded by others because of the ‘iron cage’ of a narrow, predetermined path through life it represents.

It matters little in this context that this ‘traditional form of employment’ (that has had its undeniable shortcomings and that should not be glorified too much as part of a general nostalgia for the so-called ‘golden age’ of the three post-war decades) is a very young invention, strongly tied to the model of industrial and post-industrial welfare capitalism that dominated the second half of the 20^th century; an invention that therefore not surprisingly runs out of steam at precisely the moment when, on the one hand, the post-war approach to social protection is more and more undermined and questioned, while on the other hand the sustainability of a globalised capitalist order appears as increasingly doubtful, not only because of the enormous social and environmental damages it causes but also because it fails to produce the gains for the many on which its legitimacy is built.

In this particular setting, enter the idealised personality type of our current period: the ‘entrepreneurial self’ (Bröckling, 2016), the person who understands that to have a ‘good life’, it takes continued individual efforts, constant mobilisation, personal investment and high flexibility, in order to deal with all the challenges and to seek all the opportunities that life offers. In other words, a person who relies primarily on themselves to succeed, ignoring the core insight from any introductory sociology course that humans are intrinsically social beings that are defined by their surroundings, and thrive most within a collective.

While this ideal serves as beacon and goal for everyone, its demands are particularly challenging for an increasing share of the working population: To juggle different (more or less paid) jobs and projects and hence manage a ‘portfolio career’, to be presentable and attractive to new clients in the ‘gig economy’, and to secure a decent income from ‘uberised’ jobs, in other words jobs that have none of the protections that ‘traditional’ full-time employment offered and still offers, being highly active in such an individualised sense is a core requirement. It no longer suffices to sell one’s labour force and to be competent, it now is essential to sell one’s entire personality, to show prospective buyers not just professional skills but also the right attitude of a proper ‘go getter’ – even if one just goes to get someone their lunch by driving around on a bike through a polluted city.

Legally, many of these ‘new’ jobs (that could also be called ‘old’ jobs, harking back to the times of day labour) fall into the realm of self-employment, even though this categorisation can be and is contested, like in the case of Deliveroo, purveyor of a fashionable form of ‘meals on wheels’ for the busy urbanite. Being self-employed conveys a sense of autonomy, but also the risk of self-exploitation and weak or non-existent social protection or benefits, such as sick pay or paid leave. In the context of a steep rise in self-employment in the UK over the last years, we can observe an increased share of those who either just get by (as indicated by the median income having fallen much steeper for the self-employed than for employees) or are bogusly self-employed (because they have only one client, often their former employer who found a neat way of liberating themselves from any responsibility of the employee’s or worker’s well-being and the reproduction of their labour force). It is these self-employed, who are living under precarious material conditions while being asked to take full personal responsibility for their fate, that my colleague Kevin Caraher and I have defined as most vulnerable.

But beyond the personal circumstances of the vulnerable self-employed, one essential question emerges: Given that all markets are inevitably social constructs, developing out of legal, cultural and political arrangements, and considering that the labour market is one of the most complex and hence most heavily regulated markets, what is the role of social policy in determining the contours of the outlined employment context? What kind of support is provided to the vulnerable self-employed, and to what extent do welfare agencies encourage or even push unemployed persons into self-employment, either by providing incentives or by creating a punitive environment (as it is so powerfully depicted in the latest masterpiece by Ken Loach ‘I, Daniel Blake’) from which the status of self-employment is seen as a viable escape route. In short, how is self-employment structured by social policy interventions and how do these interact with economic changes?

A vast research agenda, but one worth pursuing, as it will help to shed light not only onto the ‘nature’ of work in the 21^st century, but also onto how state power is used to protect, support and emancipate as well as to discipline, guide and penalise individuals.


Enrico Reuter – follow me on Twitter @ReuterEnrico

Broeckling, U. (2016). The Entrepreneurial Self: Fabricating a New Type of Subject. London: Sage.