Active labour, liberty and democracy
The labour market policies pursued by the New Labour government in the UK appear to fit well with the categories of concern identified in the European Commission’s Communication “Employment and Social Policy” (2001). Despite this apparent good fit, the concrete policies pursued by New Labour have been widely condemned by critics within the UK and elsewhere in the EU. This essay examines the validity of the main criticisms raised against New Labour’s approach to labour activation, and argues that they are largely misguided. The key thesis is that critics tend to adopt the wrong yardstick when assessing New Labour and its social policy. Rather than comparing New Labour with the 1945 social-democratic welfare state, the proper point of comparison should be with Thatcherism. By this measure, New Labour’s efforts-whilst still lacking in certain regards- represent a valuable improvement. Indeed, it is argued, they involve a return to probably the most important element of 1945 social-democratic principles: the notion of the state as an enabling force.
Keywords :New Labour, neo-liberal, enabling state, labour activation, social policy, welfare state, labour flexibility, needs, democracy
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1 Across the EU, governments have placed increasing emphasis upon the development of active labour market policies. In its current form this process began to crystallise in the mid-1990s and was solidified by the 1997 Luxembourg Jobs Summit. More recently, the EU’s own interest in active labour market policies has been given greater focus and impetus by the Commission’s Communication, Employment and Social Policy: A Framework for Investing in Quality (European Commission, 2001). These developments have been reflected in the approach to labour market policies pursued by the New Labour government of the United Kingdom. This approach appears to fit well with categories of concern identified by the Commission. The UK government emphasises the need for activation policies that encourage the development of employment skills; life long learning; gender equality; flexible labour markets; social inclusion; and achieving a proper work-life balance. Despite this apparent good fit, the concrete policies pursued by the New Labour government are widely condemned by critics within the UK, and by commentators in other EU countries. Critics include those not necessarily opposed to the labour market reform. Why is it that even those who accept the need for such reform so strongly disagree with New Labour’s approach to it?
2 In addressing this question, this essay begins by considering a general criticism made of New Labour’s approach to social policy. This maintains that this approach represents a continuation of Thatcherite “neo-liberalism” and is over reliant on initiatives originating in America. From this perspective, New Labour are condemned for having abandoned the principles underpinning the post-war UK welfare state. In assessing this general criticism, it is argued that the “neo-liberal” label is not properly applied to New Labour. The New Labour project actually involves a partial return to the principles of the 1945 welfare state. In retrieving a crucial aspect of these principles, New Labour has managed to establish a clear ideological gap between itself and Thatcherism. It is argued that this gap should be understood to lie in the notion of the enabling state—a state that seeks to enable citizens to actively pursue opportunities and, in particular, those available through the market. New Labour’s active labour market policies are then considered in this light. It is argued that—properly developed—these policies offer ways of promoting equal opportunities and individual self-governance, and of improving the democratic credentials of the UK. I then offer a critical assessment of the current state of play in the UK’s approach to labour activation. Finally, I consider whether convergence with other EU states might be expected in this policy area.
- 1 See, for example, Ivar Lodemel and Heather Trickey eds., An Offer you can’t Refuse: Workfare in In (...)
3According to most domestic critics, the general problems pervading all New Labour social policy results from the “fact” that New Labour has unashamedly continued the Thatcherite “neo-liberal” project. New Labour has pursued the increasing marketization of much of what was once purely in the public realm. This process has inserted market principles and practices into the very areas once regarded as bulwarks against the failings of economic liberalism. Virtually the whole range of government programmes and projects are run and monitored in order to contain, or reduce, the costs falling on the public purse. After almost twenty-five years of this process the principle of universal welfare, and the communal ethic it helped support, are said to have disappeared. In the realm of public policy, the UK is now often presented as having returned to the Victorian dark days of laissez-faire capitalism and the poor law.1
4This image finds support in some of the commentaries coming from France and elsewhere in the EU. Critics in France and Germany tend to refer to the current UK welfare model as “Anglo-Saxon” rather than “neo-liberal”. The “Anglo-Saxon” label links the supposed defects of the UK welfare model to a broader set of issues regarding the future of social welfare across the EU. The UK welfare model is viewed as one of a number of possible outcomes of the process of convergence that may result from the long-term development of the single market. Critics who employ the “Anglo-Saxon” label link the UK model directly to that of the United States which is widely thought to be an underdeveloped and under-funded patchwork of strictly limited—sometimes coercive—provision. On this account, the potential influence of UK/US Anglo-Saxon model is something to be strictly guarded against as the long term consequences of the single market project begin to unfold. The message here is that if free markets and common currencies do, in fact, push us towards a common denominator in the realm of social policy, we should guard against being pushed towards the lowest possible one.
- 2 See, for example, Heather Trickey and Robert Walker, “Steps to Compulsion within British Labour Ma (...)
5These criticisms do hold some water. New Labour has endorsed the supposed benefits of Thatcher’s restructuring of the British economy. They have not undone Thatcher’s eighteen years of marketization and fiscal stringency. On the contrary, one of New Labour’s key pledges—to improve the public services whilst containing costs—has generated further and ongoing marketization. Emphasis has shifted from the more traditional Labour view of state as a public provider of services, to that of the state as a regulator of private providers, and a facilitator of private investment in “public” projects. It also seems true that New Labour tends to look more towards America than continental Europe in its search for responses to the problems associated with economic internationalisation and the post-industrial economy.2
- 3 See Stuart Wood, “Labour Market Regimes under Threat? Sources of Continuity in Germany, Britain, a (...)
6Thatcherite and American influences also seem to be apparent when we look specifically at New Labour’s approach to labour activation. This approach has continued to build on labour market reforms initiated by the Conservatives.3 New Labour has reiterated the Conservative faith in the supposed value of flexible labour markets, as the central pillar in responses to the economic uncertainties of the post-industrial world. Employers are said to need the flexibility to expand and reduce workforces in response to continually changing demand for their products and services. Hence, the privileged role trade unions enjoyed under old Labour governments has not been restored. In a world where sectors of the economy can rise up or disappear within a few years, there can be few long-term guarantees for employees. In such a world, it is incumbent upon all workers to monitor and adjust to the changing opportunities available on an ongoing basis. They must develop the skills to seek and process appropriate information, be prepared to retrain at various points in their working lives, and to move to the places where the best opportunities are available. Those unable to do this risk unemployment in periods of economic downturn.
- 4 See, for example, Ivar Lodemel and Heather Trickey, “A New Contract for Social Assistance” in Lode (...)
- 5 Ibid.
7Those who become unemployed and, indeed, those who have yet to find their way into employment, are required—as they were under the Conservatives—to actively seek work. This leads some critics to condemn New Labour’s general approach to the unemployed as stigmatising. The fact that the right to benefit depends on proof of particular activity is said to indicate an approach that regards the unemployed as “morally suspect”.4 The suggestion being that New Labour has set itself the Victorian aim of separating undeserving cases from those deserving of assistance. Those considered deserving are provided with monetary benefits ranking amongst the worst in the northern Europe. Other benefits are residual and tend to be targeted towards specific groups. Most claimants are subject to increasingly paternalistic intervention as they move into the status of long-term unemployed. Eventually—at least for certain groups—this paternalism is said to slip into forms of coercion more usually associated with American “workfare” schemes.5 But is this an accurate and fair account of the UK government’s approach to labour activation?
- 6 This is suggested by the fact that, despite increasing inequality in the UK, UK poverty rates amon (...)
- 7 See Michael Freeden, The New Liberalism: An Ideology of Welfare Reform (Oxford, 1978), pp. 128-131
8 There are two obvious things to be said in response to these types of criticisms: first—for all its faults—the UK is not America; and second—for all his faults—Tony Blair is not Margaret Thatcher. In comparison to America, British attitudes and approaches entered the neo-liberal phase much further from the left. And as Britain moved to the right during the Thatcher revolution, America also moved further right under Reagan. Britain’s shift to the right seems more to have paralleled a similar shift in the United States, rather than converging towards it.6 In any event, even under Thatcher, the pursuit of so-called “neo-liberal” reform in Britain did not require the adoption of an alien American agenda. Within the British political tradition the allure of free markets, free trade, and residual social policy has long been embedded across a broad range of the political spectrum. This was at the core of the dominant ideology in the corridors of power, from the Victorian height of laissez-faire capitalism into the early years of the twentieth century. The New Liberals—who then reformed the role of the state in response to the newly discovered “social problem”—retained a fundamental faith in the general ability of markets to meet most needs and, thereby, promote welfare. For them, the key concern was to secure equal opportunities through the proper distribution of the wealth created by capitalism, not fundamental reform of the market economy.7
- 8 See Martin Hewitt, “Social Policy and Human Need,” in Nick Ellison and Chris Pierson eds., Develop (...)
- 9 See ibid., pp. 62-63.
- 10 The 1983 election - and not that of 1979 - clinched the triumph of the Thatcherite project. Faced (...)
9 Thatcherism itself played out ideas and principles which had been circulating in the Conservative Party for almost thirty years. Despite the supposed “post-war consensus,” influential elements in the Party were posing a fundamental challenge to the to the 1945 welfare state as soon as the early 1950s.8 This challenge struck to the heart of the core principles underpinning the post-war welfare state—principles that, in part, were uniquely social-democratic. The welfare state had been constructed around the priority of a universal satisfaction of basic need. In effect, this gave welfare priority over markets. Only once the basic needs of all were satisfied might the inequalities markets generate be considered potentially justifiable. The Conservative challenge in the early 1950s called for the replacement of the notion of basic need by that of residual need.9 On this view, the market was considered the best mechanism for satisfying both basic and personal needs. Accordingly, it should have priority over state welfare. The state would still bear responsibility for meeting the basic needs of those unable to function in the market—these being the residual needs. Thus, the preference for the priority of markets over state welfare was longstanding in some influential post-war Conservative circles, continuing a broader theme stretching back to the early twentieth century and beyond. It is this that makes it wrong to dismiss Thatcher’s project merely as part of a peculiarly 1980s “neo-liberal” trend. This project was informed by long-standing ideas whose time happened to come again in 1983.10
- 11 See Hewitt, “Social Policy and Human Need,” pp. 62-63.
- 12 See Nick Ellison, “The Changing Politics of Social Policy,” in Pierson, Developments in British So (...)
10The genuinely unique moment in the modern British experience was not Thatcher’s but that of the 1945 welfare state. This—with its commitments to universality, economic management and full employment—was an essentially social-democratic affair. The basic needs approach that gave priority to welfare over markets, actually demanded a dual role from the state. First, it should directly aid those unable to help themselves in the avoidance of poverty and want; and second, it should takes steps to enable those citizens potentially able to satisfy their needs in the market place to do so through education, training and labour market policy.11 Thatcher’s emphasis on the priority of markets did not negate the first of these functions. Aid to those unable to help their selves could still be provided under the rubric of residual need. But, Thatcher’s project did largely negate the second element of the post-war welfare state’s role—in both practice and principle. In the post-war welfare state, this enabling role had been linked to the state’s ability to manage the economy and promote full employment by Keynesian methods. Thatcher’s rejection of Keynesianism—and her corresponding marketization of the economy—broke the tools of the post-war enabling state, whose time may have come in any event. With the economy in a state of flux—heavy industry and manufacturing in decline; mass unemployment; unions under attack; internationalization, and the like—the practical ability of the state to manage the national economy largely disappeared. And Thatcher’s Conservatives were not ideologically committed to retrieving it.12
- 13 See Hewitt, “Social Policy and Human Need,” pp. 67-77.
- 14 See United Kingdom Employment Action Plan 1999: Executive Summary available at http://www.dwp.gov. (...)
- 15 See ibid. For a critical assessment of New Labour’s approach see D. Finn “From Full Employment to (...)
11 The fundamental changes wrought by the Thatcher revolution suggest that it is wrong to dismiss New Labour as either “Anglo-Saxon” or “neo-liberal.” New Labour actually had little real choice but to continue to give priority to markets over state welfare as the core mechanism for needs satisfaction. Domestically, this is suggested by the fact that they had to move into the Conservative economic ground to get elected. Further, growing internationalisation of the economy—including the European single market—meant there could be no return to protected home markets, subsidised industry, or the commitment to full employment. The loss of Keynesian tools meant there could be no return to the universal basic needs approach of the post-war welfare state. The industrial economy this had complemented had disappeared and—as it turned out—the provisions of the post war welfare state were not particularly universal in any event.13 Built around the model of the male breadwinner in a relatively homogenous modern industrial world, it simply was not suited to the post-industrial, multicultural society Britain now represented. In this new reality, New Labour has continued to give primacy to the market. But their approach is not exclusively tied to the purely residual notion of need central to the neo-liberal project. New Labour seems, rather, to have supplemented the residual approach by retrieving the second element of the 1945 social-democratic principle: the notion of the state as an enabling force. Under New Labour, the state is again consciously embracing the role of enabling those with the potential to do so, to meet their own needs in the market.14 It is this that distinguishes their project from Thatcher’s and marks an important ideological gap between the two. In this enabling role New Labour is seeking to secure equality of opportunity through the labour market as the key to social inclusion.15 It is in this light that we are best to consider New Labour’s approach to labour activation.
- 16 See United Kingdom Employment Action Plan 1999.
12If we do accept—as New Labour seem to—that, despite its imperfections, the market is the best tool currently available for meeting people’s diverse needs, then the state concerned with welfare should have two main socio-economic objectives. First, it should seek to pursue social policies that support—rather than drain—the economy broadly speaking. Second, it should seek to equip its citizens to be able to best satisfy their needs in the market. This second objective demands the development of new tools to replace those destroyed by the demise of Keynesianism. It is these concerns that seem to lie at the heart of New Labour’s social policy generally, and its labour activation policy in particular. Their New Deal targets groups that have been particularly disadvantaged in the UK labour market—the young; older workers; those with disabilities; and ethnic and religious minorities. Equal opportunity policy also supports these groups and is primarily designed to further the cause of women in the labour market. New Labour is working to reform the educational/vocational interface for the young and promote life-long learning, including the provision of low cost training loans. These reforms will—it is hoped—contribute to the individual’s ability to continually adapt to a constantly changing world of work.16 The overall aim being to enable all citizens to be active in a world of work that will provide the means to best satisfy their needs, and secure their personal welfare.
- 17 See Trickey, “A new Contract for Social Assistance,” pp. 26-34.
13 One of the key problems facing New Labour is that it’s far too easy to be cynical about this endeavour. Continuing to give priority to the market and focussing on residual need does—on the face of it—seem to continue Thatcher’s agenda. This sense is compounded by the compulsive elements inherent in the Job Seeker’s Allowance and immanent in the make-work-pay agenda.17 It is also true that targeted, market-friendly benefits seem too conveniently to dovetail with the downsizing of the state also central to the neo-liberal agenda. However, I tend to think that the market has become king again largely due to changes in the international economy outside the control of any British government—Conservative or New Labour. Any possibility of a retreat back to the universality of the post-war model disappeared in 1983. When New Labour finally came to power fourteen years later, the constraints of this reality were even stronger. Given this, New Labour’s apparent retrieval of the notion of the enabling state should be regarded as praiseworthy. It at least offers a partial return to the principles that informed the social-democratic project of 1945—and, probably, a return to the most important aspect of them.
- 18 See, for example, Colin Crouch, “Employability, Industrial Relations, and Social Policy: New Life (...)
14The post-war focus upon the universal satisfaction of basic need resulted in a regime offering relatively low levels of benefit universally. In practice, this approach tended to promote a tiered system of personal welfare. Those wholly dependent upon the state for social insurance and pensions did not enjoy the same level of welfare as those in superior social-economic groups. And, in reality, the only thing universal about the post-war welfare state was its guarantee of subsistence. The middle and upper orders could add on benefits through the private insurance and pensions markets. They could also buy add-ons in the form of private education and health-care.18 No doubt, the universal satisfaction of basic need was of great value in 1945 after a decade and a half of economic depression and war. This function, however, was transient and particular to its time. On the other hand, the enabling function of the state has proved not to be. Even at the zenith of post-war universality, the great bulk of people’s needs and wants were met through the market. By the end of Thatcher’s terms in office, labour market activity had become the only legitimate means by which to secure anything more than the most basic subsistence level of welfare. But the welfare vacuum she had created by dismantling the post-war settlement had not been filled by an enabling approach to the market activity of citizens. In a world where the market is supreme, this vacuum can only be filled by a state that works to enable all citizens to seek out their own best opportunities. The long-term aim of New Labour policy is to secure a more equitable distribution of the opportunities available through the world of work. Their approach supposes that people properly enabled know—at least within the restrictions of the market—what their own interests are and how best to pursue them.
- 19 See Freeden, The New Liberalism, part IV.
- 20 For an analysis of the connection between decision-making, political participation and self-govern (...)
15In this regard, a parallel can be drawn between New Labour’s activation strategy, and the early twentieth-century New Liberal emphasis on equality of opportunity. Like New Labour, the New Liberals recognised two key realities—the relative permanence and productivity of market society, and the ability of the state to provide opportunities for all to enjoy a greater degree of self-governance within it.19 There is one further echo of New Liberalism in New Labour’s approach worthy of mention. By equipping citizens with the ability to pursue their own ends in the market, the enabling state helps them develop skills and abilities with much wider potential application. Such citizens are better equipped to access and process information relevant to their needs. They can form better judgements about options and opportunities. They can formulate plans of action setting better means to their ends. These are core skills if people are to more effectively participate in the decision-making processes of their society. They are rendered better able to judge the work of those that represent them. This, it would seem, is a vital tool for improving the democratic credentials of any society.20 And New Labour has taken tentative steps to open up more aspects of government work to public scrutiny. They also seem more willing than previous governments to publish information about, and consult on, key areas of social policy.
- 21 See Gallie, “The Quality of Working Life in Welfare Strategy.”
- 22 See United Kingdom Employment Action Plan 1999.
16 If – as I have sought to suggest – New Labour’s approach to labour activation can be understood to have more noble aims than most critics allow, it is also true that its enabling strategy remains underdeveloped. Much of the work available to those on the margins of the UK labour market is low skilled, temporary and poorly paid. Most of it offers few real opportunities for skills development and meaningful decision-making.21 Accordingly, the UK has a particular need to improve its quality of working life strategy. New Labour has, in fact, taken a few small steps in this direction. It has generated tax incentives for companies to provide training and development opportunities in the workplace. It has brought temporary contract workers into the statutory framework that provides minimum standards of fairness at work.22 Nevertheless much more remains to be done. But, it is doubtful that New Labour will legislate to promote the type of permanent well paying, meaningful work critics are demanding. The emphasis will remain on regulation through minimum standards. Whether this will be enough remains open for debate. But neither New Labour, nor the Conservatives are likely to pull back from the current UK version of flexible labour markets in the foreseeable future. For them, the path to quality in working life is ultimately tied to economic growth. And growth—they believe—is best secured in a lightly regulated regime.
- 23 My apologies to William Lyon McKenzie King who made the same comment with respect to conscription (...)
17In this light, one of the core issues in European social policy—whether EU parameters will promote policy convergence—remains unresolved. New Labour’s approach to labour activation lies clearly within the parameters set by the Commission’s guidelines. Equally as clearly, it is in conflict with the approach and employment quality desired by commentators and governments in some other EU countries. The Commission’s parameters on labour activation—as in many other areas—are so practically under defined that virtually all the current models for labour activation might be said to meet them. For the foreseeable future, then, national governments will remain largely free to pursue labour activation as they see fit. And they will probably do so—like the British government—in response to their own distinctive needs. For now, the watchword seems to be: “convergence if necessary, but not necessarily convergence.”23 New Labour’s gamble is that, in the long run, competition within the single market will increasingly demand that British style labour flexibility become the norm. Only time will tell if this will prove a gamble worth taking.
18 The tendency in Britain has been to judge New Labour in comparison to the 1945 social-democratic project. By this measure, New Labour is clearly short of social-democratic principles and, in some respects, may be thought “neo-liberal”. The suggestion here has been that, perhaps, the problem lies less with New Labour itself and rather more with the yardstick currently employed to judge it. If, as has been argued, 1945 represented the unique moment in the modern British experience, we should not expect New Labour to have conjured a full-blown return to its principles—or, indeed, its practices. These principles and practices could only fully apply in the period when Keynesian management of the national economy was viable. That moment was long past by 1997. A more appropriate measure of New Labour is comparison with Thatcherism. New Labour is clearly more concerned than Thatcher with the negative social consequences that markets can promote—unregulated and poorly managed markets promote self-interest and, hence, exclusion.
19By retrieving the 1945 notion of the enabling state—a state the can grip and grapple with unfair inequalities in opportunity—New Labour has begun to take steps to address such negative consequences of economic liberalism. It is, however, perhaps wise to end on a note of caution. In the long history of economic liberalism and the internationalization of trade, the trend has tended to be towards periods of expansion followed by painful periods of contraction. It may well be that the current round will—as in the past—result in tears. In the past, periods of contraction have generated protectionism and an inward focus on national economies. It may be that in the next crisis something akin to Keynesianism will be required again, and we should not lose sight of the value of state management of the economy when appropriate. All governments—and, indeed, all citizens—have a duty to resist the temptation to believe that economic liberalism represents a cure-all.
1 See, for example, Ivar Lodemel and Heather Trickey eds., An Offer you can’t Refuse: Workfare in International Perspective (Polity, 2000), pp. 18-29.
2 See, for example, Heather Trickey and Robert Walker, “Steps to Compulsion within British Labour Market Policies” in Lodemel and Trickey, An Offer you can’t Refuse, pp. 181-191.
3 See Stuart Wood, “Labour Market Regimes under Threat? Sources of Continuity in Germany, Britain, and Sweden” in Paul Pierson ed., The New Politics of the Welfare State (Oxford, 2001), pp. 368-409.
4 See, for example, Ivar Lodemel and Heather Trickey, “A New Contract for Social Assistance” in Lodemel and Trickey, An Offer you can’t Refuse, pp. 17-29.
6 This is suggested by the fact that, despite increasing inequality in the UK, UK poverty rates among the employed are only one-third of those in the US. See Duncan Gallie, “The Quality of Working Life in Welfare Strategy,” in Gosta Esping-Andersen et. al., Why we need a New Welfare State (Oxford, 2002), p. 99.
7 See Michael Freeden, The New Liberalism: An Ideology of Welfare Reform (Oxford, 1978), pp. 128-131.
8 See Martin Hewitt, “Social Policy and Human Need,” in Nick Ellison and Chris Pierson eds., Development in British Social Policy (Palgrave, 1998), p. 63.
9 See ibid., pp. 62-63.
10 The 1983 election - and not that of 1979 - clinched the triumph of the Thatcherite project. Faced with a stark choice between Thatcherism and Labour’s offer of a return to a state managed economy, voters emphatically chose the former.
11 See Hewitt, “Social Policy and Human Need,” pp. 62-63.
12 See Nick Ellison, “The Changing Politics of Social Policy,” in Pierson, Developments in British Social Policy, pp. 32-34.
13 See Hewitt, “Social Policy and Human Need,” pp. 67-77.
14 See United Kingdom Employment Action Plan 1999: Executive Summary available at http://www.dwp.gov.uk/eap/execsum.asp
15 See ibid. For a critical assessment of New Labour’s approach see D. Finn “From Full Employment to Employability: A New Deal for the Unemployed?” in International Journal of Manpower, vol. 21 (2000), pp. 384-399.
16 See United Kingdom Employment Action Plan 1999.
17 See Trickey, “A new Contract for Social Assistance,” pp. 26-34.
18 See, for example, Colin Crouch, “Employability, Industrial Relations, and Social Policy: New Life in and old Connection,” in Nick Manning and Ian Shaw eds., New Risks, New Welfare: Signposts for Social Policy (Blackwell, 2000), pp. 100-120.
19 See Freeden, The New Liberalism, part IV.
20 For an analysis of the connection between decision-making, political participation and self-governance see Christopher John Nock, “The Welfare State: An Affront to Freedom?” in Canadian Journal of Political Science vol. XXI (1988), pp. 757-769.
21 See Gallie, “The Quality of Working Life in Welfare Strategy.”
22 See United Kingdom Employment Action Plan 1999.
23 My apologies to William Lyon McKenzie King who made the same comment with respect to conscription in Canada during the Second World War.Haut de page
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