A Living Wage or a Citizens Income

Martin Allen

The introduction of a statutory Living Wage – at £7.20 an hour a 50p increase on the old minimum wage – should be a cause for celebration, particularly if it is due to be increased to £9 an hour by 2020. Instead it’s received a cautious welcome because of the huge degree of uncertainty about who it will really benefit. Though some estimates show that over 6 million workers are currently paid less it’s possible that only about 1 in 5 of these will gain directly.

Many of those who won’t, belong to the ‘cash in hand’ informal economy, some will become converted to ‘self-employed’ status though continuing to be dependent on their previous ‘employer’ for an income. Others will suffer a cut in hours, even lose their jobs completely, while workers under 25 will not benefit at all. It’s also been calculated that 2 million families could lose up to £1,600 anyway as a result of cuts to tax credits.

Some of the most ferocious opposition to the new requirement has come from employers organisations. Though it’s certainly true that many large firms continue to make ‘super profits’ at the expense of their employees, to pay big bonuses to managers and shareholders large dividends, it is also the case that, particularly in the more labour intensive parts of the service sector, there are layers of small scale operators who are dependent on low pay and an endless supply of overseas labour, to run what are basically hand to mouth businesses with low profit margins, with no desire to invest in workforce training; but at the time reminding us they are crucial in ‘providing jobs’.

In the care industry, cash strapped local authorities who are forced to rely on poor quality private sector providers, fear there may be a shortage of places as care firms cut back – it’s estimated that over one in ten care workers should be entitled to an increase in pay. A new government committed to social justice, rather than the current ‘austerity’ would want to invest heavily in social care, put provision under some form of social ownership or even make it part of an expanded NHS – upping skills and establishing a proper career structure.

But this type of intervention is much more difficult in other sectors – hotel and catering and retail are two –where low and irregular pay predominates and where the downside of further regulation could also be increased unemployment. Of course, employers could be subsidised but there would be no guarantee this would lead to higher pay for employees. So, is a greatly expanded tax credit system going well beyond anything attempted by Gordon Brown the only alternative? Rather than depending on employers, this would make the state responsible for mediating the effects of low pay. Certainly subsidised payments for people in work, is a new departure from traditional 20th century ideas about welfare where many of these payments were considered to provide a safety net for those in the latter category, while they moved back into the former.

A more radical approach would be to give serious consideration to a basic ‘citizens income’ for everybody regardless of any income received from work. Discussion about alternative sources of income will have to become integral to debate about the long term impact of automation and artificial intelligence on the future of work. Certainly as robots become less and less expensive, low paid and relatively routine jobs across the service sector could quickly be eliminated. Whereas the first round of computer technology lead to the ‘deskilling’ of much traditional office work, new developments like artificial intelligence (AI) and robotics

threatens to eliminate it. But, it is also likely that many skilled, professional and managerial jobs will disappear in the ‘race against the machine’ – though this will be a slower process.

Discussion about a citizens income has been part of a much wider debate about the future of work amongst greens. It rarely finds its way into Labour Party or trade union circles however. Many on the Labour Left continue to rely on traditional macro interventionist policies centred around new investment, particularly in the public sector for rebuilding the economy. These are traditional Keynesian policies which along with a programme of limited nationalisation formed the basis of the Bennite ‘Alternative Economic Strategy’ of the 1980s. While these can still serve as a rallying cry against austerity, it is questionable if they now provide a longer term alternative. As indicated above, new ‘high tech’ investment will certainly lead to increased productivity, but it could just as likely lead to a ‘jobless recovery’.

There are still many issues about a citizens income. For example:

How much should it be?

Unlike 20th century welfare payments were paid for out of increased taxation revenue as everybody got better off, a citizens income will need to be paid for by a redistribution policy: but what form should this take?

Should there be any social obligations attached to a citizens income? (Or should people have ‘the right to be idle’?)

There are also issues about the future of automation. For example:

Should we continue to oppose all job losses? (Or just demand ‘full automation’)

If so should these be combined with demands for a reduction in the working week?

Should there be a ‘managed approach’ to the introduction involving state intervention? How can unions be involved in this?

Further Reading

Downloads

Carl Frey and Michael Osborne: The Future of Employment: How susceptible are jobs to computerisation?

http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf

Martin Allen Hard Labour: Young people moving into difficult times- (pages 12-21 provide a summary of the negative changes in the labour market)

www.radicaledbks.com

Texts

Brynjolfsson, E & McAfee, A (2014) The Second Machine Age, Work Progress, and Prosperity in a Time of Brilliant Technologies, London: Norton

Srnicek, N. & Williams, A (2015) Inventing the Future: Postcapitalism and a World Without W London: Verso

Martin Allen taught in secondary, sixth form and more recently in higher education and is currently employed by the National Union of Teachers. The view expressed here are his own.

www.radicaled.wordpress.com