An Incredulous Credibility

Colleagues,

When, earlier this year, the labour frontbench unequivocally adopted the Coalition’s economic policy – including the public sector pay freeze – it did so from the perverse logic of devising its own economic credibility based on this vacuous programme of default policy shadowing.

Ed Balls was adamant that, on the road to creating a ‘responsible capitalism’ (answers on a postcard to help define what that is!) Labour had to adopt an ‘inevitable’ stranglehold on public sector pay as part of a package to regain ‘economic credibility’. Much was written at the time when Balls made his move, but here is a Guardian piece, with a linked interview: http://tinyurl.com/6u74gy4

In a short piece by William Keegan in yesterday’s Observer he echoed the concern of many on the left that Labour had, in its craven adoption of what is in effect Tory fiscal policy on deficit reduction, abandoned any reasonable suggestion that, for example, public sector workers should not be penalised for an economic situation not of their making. He writes:

“Those members of the Blairite right who are urging the Labour leadership to become more credible by matching the coalition's cuts programme are doing themselves, their party and the country no good.

The crux of the matter is that the coalition's economic policy is itself not credible: as manifested in last autumn's major revisions to the economic forecasts, the policy has already been found out. Moreover the Office for Budget Responsibility's recent forecasts show that the effects on demand of George Osborne's latest venture are, as one official has conceded, 'significantly different from zero'.


There you have it: a rightwing Conservative government, with the thin disguise of a coalition partner, continues to pursue policies of austerity; it weeps crocodile tears about the problem of socially wasteful and dangerously high unemployment – especially among the under 25s – but persists with a policy of expansionary fiscal contraction (allegedly allowing the private sector to flourish by cutting public spending), which was discredited in the 1930s and is being discredited now.”

(Read the whole piece: http://tinyurl.com/cgokodd)

Keegan goes on to make many reasonable arguments for a dislocation of Labour policy from the failed and failing approach of the current government, not least for Labour to create a sufficiently credible basis on which to challenge the chronic state of the UK’s labour market and dire unemployment figures.

Two separate, but overlapping pieces of research have concentrated my mind recently on the degree of disadvantage we suffer in the absence of a coherent economic alternative from Labour, and in particular a means by which to underline the need to create a path to sustainable, skilled employment.

It is highly unlikely that the Coalition will pay anything other than lip service to the issues thrown up by the research, but I would personally expect the Labour Party to detach itself from its current economic position for sufficiently lengthy a period to acknowledge the need to address the deep faultlines discussed.
The reports (No snakes, but no ladders: Young people, employment, and the low skills trap at the bottom of the contemporary service economy - Stephen Roberts – March 2012 & The Skills Dilemma: Skills under-utilisation and low-wage work – Paul Sissons – January 2012).

The reports focus on the complementary issue of skill: first, that an historical supply-side approach to skills acquisition has created a situation where there is chronic under-investment by employers in the skills that they need. Second, and allied to this point, there is an over-concentration in poorly paid, poorly skilled workers, and in the contemporary labour market in direct competition for work with graduates.

The Sisson research introduces itself thus:

“There is a skills dilemma in the UK. Successive governments have focussed on supply-side measures to tackle the UK’s skills problems and to improve the nation’s international economic competitiveness. However, despite increased investment in skills and educational attainment, labour productivity in the UK lags behind other comparator countries.1 Lord Leitch’s review of skills found that the UK’s relatively poor skills base only accounts for around one fifth of the productivity gap with countries such as Germany and France;2 with the rest mostly attributable to our poor record of ‘investing in physical capital, R&D and infrastructure’, but commentators have also identified the importance of work organisation and job design in boosting productivity. This paper challenges the implicit assumption in much skills policy making that the skills problem lies solely on the supply-side”. (http://theworkfoundation.com/Reports/307/The-Skills-Dilemma-Skills-underutilisation-and-lowwage-work )

Roberts’ provides this summary:

“In recent years, research and policy activity has primarily been concerned with the numbers, experiences and trajectories of apprentices and university students, or with the lives of ‘spectacular’, more obviously economically marginalised groups of young people who are entrenched in issues of social exclusion and deprivation. Many young people with level two and level three qualifications, however, directly enter the labour market. This sizeable but unspectacular group remains overlooked by policymakers as well as researchers. These young people undertake new forms of employment in an increasingly polarized job market, rely on on-the-job training rather than higher education to enhance their human capital and compete more and more with graduates who cannot find jobs to match their own newly acquired high skill levels”. (http://www.resolutionfoundation.org/publications/no-snakes-no-ladders-young-people-employment-and-l/)

The current policy terrain is, to put it mildly, a mess when it comes to a sound, prescriptive approach to the development of an approach to skills which places a strong emphasis on the role of employers to fund and address the shortages they bemoan, not least as a way to providing a ladder to the high numbers of young people currently unemployed. The tragedy for Labour however, is that has very little, actually nothing, to say in response.

In its coverage of the progress, or not, of the Coalition, the ESRC’s ‘Inhouse’ magazine focused its most recent edition on the issue of apprenticeships and youth unemployment. Its outcomes were not dissimilar to the reports cited above. And, if you read the latest magazine (http://tinyurl.com/cwu4gj9) you will see that one of its conclusions is one which challenges not just the Coalition, but also Labour’s new position on cuts, which is that FE colleges should be given back the money taken from it to invest in providing good quality apprenticeships.

In bringing the two reports cited and the thrust of my post together Dr. Hilary Steedman writes in the ESRC magazine:

“The coalition needs to accept the fact, however, that not enough British employers have themselves experienced good quality training and technical education and that, as a result, their approach to workforce development continues to be inadequate. To date, however, there is little sign of real change. The starkest indication of that lies in the continued rush to expand apprenticeship numbers, but without improving the quality.”

Although I may not have constructed my argument particularly well in this post, it is essentially this: there is a failure on the part of the Coalition to address deepening levels of unemployment. An investment in skills is one way out. The Labour Party now occupies a tendentious economic territory and so too is part of the problem. If the Party wants to be seen as credible it needs to create an alternative solution.

I welcome any comments/thoughts/challenges on what has been written here.

In Solidarity

Ian