John Woodcock says Ed Miliband is wrong about flexible labour markets

As this Labour leadership contest goes on, candidates are jettisoning more and more baggage from 13 years in power in the hope that it will make their leadership balloon soar higher.

Much of this is understandable and necessary. We won three elections on the bounce, but we lost what is always the more important one – the last one. And we need to learn why we lost in order to ensure that we can win the most important election of all – the next one.

But the latest sandbag offered to the wind this week – the belief in a flexible labour market – is one that should stay firmly in its place.

In the Daily Mirror this week, Ed Miliband writes:

The party of the minimum wage somehow became the party of maximum flexibility to work. But we all know that flexibility for employers can lead to low wages and poor employment conditions. We didn’t take enough steps to offer better protection.

I think Ed is wrong to caricature the last Labour government’s approach as about ‘maximum flexibility’ – just as I know it would be wrong to caricature him as saying there should be no flexibility at all in future.

There is of course a balance to be struck between flexibility for businesses and rights for people in work.

It was essential that we were bold in the face of ridiculous claims from the Tories and businesses about the jobs cost of things like the minimum wage. We should be proud of the huge advances in conditions at work we pioneered while in office – transforming maternity and paternity pay, the right to request flexible working, better health and safety, protection against working long hours.

And we should be prepared to break consensuses where necessary in pushing for further improvements.

It is seductive but would be wrong to push the pendulum significantly in the other direction: to make our default position that businesses can always absorb the cost of a new right without laying people off or going under; that the decisions of global companies weighing up where to grow will never be affected by increased costs and employment law restrictions.

Or, worst of all would be if our attitude became that we didn’t care that those jobs didn’t come here anymore, because we thought they were not good enough for British people – despite all the protections we had put in place. That would do huge damage to the prospect of helping people trapped on benefit, where – for all the potential pitfalls – a relatively low-paid or casual job can be a crucial stepping stone to a sustained life back in work.

New Labour’s belief in a flexible labour market is not about keeping working people subservient to bad businesses. It is a recognition that the global competition for jobs is so enormous that we need an approach that boosts the chances of British people getting those jobs, rather than seeing them going abroad to countries with increasing numbers of high-skilled graduates but lower costs than the UK.

In the short term, more restrictive labour market laws can seem to safeguard jobs by making it more costly for companies to make people redundant. But ultimately an overly restrictive approach could make the exit of employment from the UK more likely and the chance of new companies coming here with new jobs all the more remote.

We must properly acknowledge and respond to the huge difficulties in some communities caused by transient migrant workers displacing established employees.

Yet for all those difficulties, it would be crazy to think that Labour’s electoral defeat was down to us being too robustly in favour of job creation, too pro-business at the expense of working people.

The right to work was an essential part of the foundation of our Labour movement. We should not fool ourselves into thinking that we are somehow out of step with working people if we sometimes say no to laudable objectives which would have the effect of damaging employment levels in the country.

Nor should we believe that a push for new rights regardless of the affect on employment levels will be a winner with a wider electorate than that which is choosing Labour’s next leader. People who are fearful for their future in the current economic climate will take a pretty dim view if they feel we are losing focus on economic recovery by agreeing things that make it significantly harder for private firms – and indeed the public sector – to safeguard jobs.

It is true that too many people currently feel trapped in low-paid, low-skilled work. We must not under-play the huge improvements made by the last government, but we must acknowledge that we haven’t done nearly enough – it is essential that we refocus our energy on in-work poverty, on genuine up-skilling and career progression.

However, our party and the people we stand up for will end up paying a high price if we come to view flexibility as part of Britain’s problems. Instead, we should see a properly-regulated flexible labour market for what it is: a necessary – if on its own insufficient – condition for giving people the chance to prosper in a global climate that isn’t going to get any easier any time soon.

John Woodcock is Labour and Co-operative MP for Barrow and Furness.

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3 Responses to “John Woodcock says Ed Miliband is wrong about flexible labour markets”

  1. Paul says:

    I disagree wholly with John on this, but it is good that he’s taken the time to set out his case here.

    John’s view is the standard New Labour view that we must compete at all costs in a ‘globalised’ economy, and that if we show less flexibility than our neighbours we’ll lose out. It sounds logical enough, but that’s because it’s all part of a self-fulfilling prophecy which has little or no fact to back it up. I may follow this up at my own blog (Though Cowards Flinch) but for now this is what Professor Colin Hay says in his must-read Why We Hate Politics:

    ‘Predictions of the hemorrhaging of invested capital from generous welfare states are almost certainly misplaced. A combinations of exit threats and concerns arising from the hyper-globalisation thesis about the likelihood of exit may well have had an independent effect on the trajectory of fiscal and labour market reform…….. Not only have the most generous welfare states consistently proved the most attractive locations for inward investors, but volumes of foreign direct investment (expressed as a share of GDP) are in fact positively correlated with levels of corporate taxation, union density, labour costs, and the degree of regulation of the labour market (2007: 131-132)’

  2. james says:

    I agree with Paul. Surely as a Co-op MP you don’t think it is the mission of our movement to bow down to multinational corporations. Should we not be focusing on supporting co-operative firms which won’t threaten to export jobs to countries without workers’ rights?

  3. Adam says:

    I strongly agree with both of the above comments. This is precisely the sort of argument which left New Labour morally adrift and unable to rally the support of its own base. Not only is there no evidence presented in support of its central claim (John studiously avoids any empirical claim, see especially: “an overly restrictive approach could make the exit of employment from the UK more likely”), but even if we accept the premise for the sake of argument, it gives no indication of where we should draw the line between “flexibility” and unacceptable business practises.

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