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The Green New Deal must wipe out precarious work and underemployment

Summary:
I was coming through the streets of inner Melbourne the other night after playing in my band. I couldn’t believe how many little scooters with those big boxes on the back were buzzing around, in and out of traffic, turning here and there, presumably, delivering food to people who preferred to stay in from the cold weather. I had sort of noticed these ad hoc cavalcades of cheap scooters before but never really assessed the extent of the proliferation. It represents an amazing and highly disturbing trend in our labour market. Okay, that sounds like something someone from another (older) generation might say. He who grew up when there was secure employment and wages and conditions were more tightly regulated. And I have seen Tweets from young people telling us ‘oldies’ to step aside. But what

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I was coming through the streets of inner Melbourne the other night after playing in my band. I couldn’t believe how many little scooters with those big boxes on the back were buzzing around, in and out of traffic, turning here and there, presumably, delivering food to people who preferred to stay in from the cold weather. I had sort of noticed these ad hoc cavalcades of cheap scooters before but never really assessed the extent of the proliferation. It represents an amazing and highly disturbing trend in our labour market. Okay, that sounds like something someone from another (older) generation might say. He who grew up when there was secure employment and wages and conditions were more tightly regulated. And I have seen Tweets from young people telling us ‘oldies’ to step aside. But what the scooter riders don’t realise is that they will get old themselves one day. And secure, well-paid work coupled with a broad spectrum of high quality public services is what makes that transformation liveable. In mapping out what I think are the essential aspects of a social transformation that we might call a Green New Deal, eliminating precarious work is one of the priorities – it is intrinsic to creating a more equitable society in harmony with nature. This aspect also calls in question the role of a Job Guarantee. Note the capitals – there is only one Job Guarantee but many jobs guarantees. I will explain today why the Job Guarantee will be an intrinsic part of the Green New Deal but by far a minor player in terms of the job opportunities that will be created by the socio-economic shift. Many commentators seem to think the Job Guarantee is sufficient for a Green New Deal. It is not and we need to understand its role in a monetary system to understand why.

Precarity

I don’t need to document the rise in precarious work around the globe. In advanced countries, this trend has been one of the characteristics of the neoliberal era, where the business model for particular sectors has been developed to transfer the risk of enterprise onto the worker rather than the entrepreneur.

The ‘free market’ gang continually talking about the need for government to get out of the way of the innovative entrepreneurs but all that has really meant is that the safeguards, security and pay arrangements that evolved over many decades as workers struggled against capital have been steadily eroded by legislative changes and deregulation.

As we explained in – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – the state is still central in a monetary system – it has not ‘gone away’ or become irrelevant.

Rather, it has been co-opted and reconfigured in this neoliberal era to more closely serve the interests of capital with the workers being the losers.

In Australia, the Australian Bureau of Statistics notes that “One of the main indicators for casual employment is whether an employee is entitled to paid leave, such as paid sick leave or paid annual leave. These entitlements are usually reserved for non-casual or permanent employment.”

The most recent data – Characteristics of Employment, Australia, August 2018 – show that:

25% of employees were not entitled to paid leave (2.6 million). Of those who work part-time in their main job, 53% were not entitled to paid leave (1.8 million).

Within that group:

– 24% have earnings that vary from one period to the next (excluding overtime payments) (2.5 million);

– 21% do not usually work the same number of hours each week (2.2 million); and

– 19% do not have a guaranteed minimum number of hours each week (2.0 million).

The youth bear the brunt of the casualisation (the ‘scooter riders’) and increasingly males are enduring these changed work arrangements.

The employers and most mainstream economists construct these trends in terms of individual choice and flexibility.

We have been berated with the work-life balance nonsense for decades now where women are meant to be happy working in precarious, low-paid jobs because it allows them a bit of flexibility to also do all the housework, run around after the kids and whatever else they might do.

They also continue to lie about the state of so-called ‘casual loadings’ where the casual worker is alleged to be paid an hourly premium commensurate with the loss of entitlements normally enjoyed by a worker (holiday pay, sick pay, etc).

The evidence is clear – the loadings are inadequate by a stretch.

While Australia law specifies that “Casual employees covered by the national minimum wage also get at least a 25% casual loading” (Source), the reality is different.

The excellent research paper by Ian Watson – Contented Workers in Inferior Jobs? Re-Assessing Casual Employment in Australia – published on December 1, 2015 in the Journal of Industrial Relations – found that:

1. “part-time casuals earn a wages premium of approximately 10% (males) and 7% (females)” – a far cry from 25 per cent.

2. “There are some wages penalties for employees working longer hours, particularly among women fixed-term contractors. For example, for those working more than 49 hours a week, the penalty is 14%.”

3. “If we wish to compare them with permanent part-time workers, on the grounds that this is a more relevant comparison, we find a wages premium of 5% for men, and either 4% or 3% … for women.”

These results have been supported by several subsequent studies.

Further, there are other costs involved in being a casual worker that other workers avoid.

First, precarious workers face a life of uncertainty. Many do not know for sure what hours they will work in a week or the pay they will receive, which makes planning and risk management impossible.

They also face being sacked without notice and are typically the first to go in an economic downturn.

Second, the capacity for personal management is further exacerbated by the fact they have no set holidays or sick leave. There is strong evidence that employers pressure casual workers who want to take time out for holidays. The ‘scooter kids’ also have to put aside their low pay into savings to fund breaks whereas for other workers the payments are entitlements.

Third, people with children often find it impossible or costly to align their casual work commitments (and demands from employers) with their family duties, particularly during school holidays when young children are involved.

Child care is typically very expensive.

Fourth, precarious workers find it hard to access credit to purchase housing. So in addition to enduring low pay they typically are unable to accumulate wealth (in the form of a house/apartment) which will make their retirement more comfortable in material terms.

Fifth, most superannuation (pension) schemes are not set up to cater for casualised workers. So the other main source of wealth accumulation over the working life is denied to these workers.

Sixth, these workers are typically denied access to career-advancing training and skills development.

Hence my concern for the ‘scooter kids’ as they age.

The other aspect of precarity is time-based underemployment.

This form of underemployment arises when workers who are classified as employed by the national statistician (that is, they are working at least 1 hour a week) desire to work longer hours.

In Australia, underemployment is 8.2 per cent (1,112.3 thousand workers) and first became a major issue after the 1991 recession.

The following graph shows the history of underemployment in Australia since January 1980.

The Green New Deal must wipe out precarious work and underemployment

The growing rate of underemployment is testament to the fact that workers are not choosing this state or find it desirable.

The ABS data release – Participation, Job Search and Mobility, Australia, Feb 2019 – compared the first underemployment survey (May 1985) with their most recent survey (February 2019).

They found that:

1. May 1985: “Underemployed part-time workers who had been looking for work with more hours and were available to start such work within four weeks reported that they would prefer to work an average of 20 extra hours. The total quantum of underemployment for these persons was 1,785,500 hours per week”.

2. February 2019: “The average number of extra hours that part-time underemployed workers were looking for was 15 more hours per week”. So around 16,684,922 hours per week.

Thus, around 9 times more working hours are being lost to underemployment now than in 1985.

A massive waste of potential and desire.

The Foundation for European Progressive Studies (FEPS) has recently been doing work on the ‘platform’ economy.

On July 24, 2019, they released a Report – Tackling social disruption in the online platform economy – written by lawyer Sacha Garben.

A summary version appeared at Social Europe (July 31, 2019) – Tackling precarity in the platform economy—and beyond.

The argument presented is that “online platforms” (Facebook, Airbnb, Uber, Deliveroo, Amazon Mechanical Turk, etc) have raised awareness of the “labour status of those working in the online-platform economy”.

The various occupations involved:

… drivers, riders, cleaners, designers, translators, technicians and others are often formally contracted as independent and their working arrangements tend to exhibit features which are difficult to square with the traditional employment relationship. These include use of their own materials (such as the driver’s car), autonomy concerning working hours (logging into work via a smartphone app), the short duration of the relationship (translation of perhaps a single sentence) and its multilateral character (the platform linking the producer and consumer).

In many cases, the “independent status”, which allows the capitalist hiring the labour to dodge statutory regulations with respect to working conditions and pay thereby pushing the risk of enterprise onto the worker – what I call ‘sham entrepreneurship’ – is questionable.

The workers exhibit many characteristics of an employee, but because lax laws and lack of regulatory oversight, the boss can construct the relationship as that between independent contractors and thus the workers:

… lack the benefit of the social, labour, health and safety protections which in most countries are connected to an employment contract — even if their precarious working conditions and socio-economic position very much require such protection.

This sort of scam hiring practice has evolved under the neoliberal era into an art form.

The point of the FEPS work is that the “challenges” of platform economy work “do not seem to be unique”.

They fall within the general trends I discussed earlier of an increased “use of non-standard forms of employment and work: casual work, on-call work, temporary agency work, informal work and dependent self-employment” as the balance of bargaining power in the labour market has shifted to capital.

This shift has been engineered through the state – the state has been coopted to facilitate it.

There is no particular technological imperative for it despite what the ‘hot deskers’ might have us believe. It is about cost cutting, risk shifting and capitalist hegemony.

Working on a computer all day is still a process and still work. Just like the old-fashioned bank teller.

With the assistance of the state, these new anti-worker business models have emerged which thrive on the precarity of work.

The FEPS Report documents moves within the EU to regulate the platform economy.

The initiatives include:

1. “directives on predictable and fair working conditions and on work-life balance”.

2. “a minimum wage and unemployment-benefit scheme, as well as a child guarantee and investment in education.”

We will wait and see what transpires in that space.

But the important point the FEPS article makes is that:

When it comes to the platform economy more specifically, a fundamental shift in narrative is in order. Instead of treating it as something precious, unique and tender — which needs to be cradled and protected from intrusive rule-making —it should be recognised as featuring (as a rule rather than the exception) harmful trends and practices which demand regulation, with minimum standards at EU level.

The labour market that has evolved (and been engineered) to make profits for operators in the platform economy is not a sign of technological innovation.

Buzzing around on a cheap scooter, exposed to massive risk of accident, poor weather and low, unpredictable pay looks more like a race-to-the-bottom than a signal of “new, innovative and better-quality services for the benefit of customers”.

If decent working conditions were enforced, proper risk assessments of these delivery workers, appropriate outlays by capital for the provision and maintenance of the scooters and related equipment, proper uniforms (rain gear, bike armour etc) then the price of a pizza delivered would rise beyond the level that would leave the consumer indifferent to shopping personally or accepting delivery.

So what can be done?

As part of Green New Deal, precarious work and underemployment has to be eliminated without qualifications.

1. All jobs should be subject to minimum standards with respect to pay, paid leave, sickness benefits, superannuation, dispute resolution, etc.

2. The scam of calling an employee and ‘independent contractor’ to evade statutory obligations has to be abolished by law. Lawyers can come up with the fine print about what constitutes a ‘dependent worker’ but the state could go a long way by forcing so-called employers of independent contractors to pay the full entitlements applicable to the task no matter what the working arrangement is.

3. There is a need to address the complexity of supply chains where the direct employer may be subject to power relations further down the chain with respect to their capacity to negotiate pay deals with workers.

In this case, the legal structure has to ensure that so-called “multi-employer agreements” are used to regulate all influences down the supply chain.

The law would thus get to the power source in the supply chain and bring them under the minimum standards rules.

4. Workers in casualised environments would have the right to permanency (and entitlements) after some short period of engagement. A worker could not be forced into a permanent casual relationship with an employer unless they chose that outcome.

5. Casual, precarious work would be banned by law where the work was performing what has been called ‘permanent functions’.

6. So-called ‘labour hire firms’ who blur the legal status of who the worker is actually working for would be obligated to ensure all protections under the law are afforded to the worker.

This would eliminate the ridiculous practice of the principle firm using labour supplied by some ‘hire firm’ (which may be a subsidiary of the principle firm, and if things go awry, the hire firm can declare bankruptcy and the workers lose out while the principle firm avoids all obligations they would incur if they employed the workers directly.

These sorts of evasion structures would become illegal.

Role of a Job Guarantee

I will write more about this topic in the future.

I last wrote about it in this blog post – The Job Guarantee is more than a Green New Deal job creation policy (December 17, 2018).

I keep reading so-called Green New Deal proposals that put the Job Guarantee at the centre of the employment considerations of the concept.

I think that is unfortunate.

We must understand that the Job Guarantee is a very specific approach to maintaining loose full employment and price stability.

At its heart it is a buffer stock mechanism rather than a job creation structure.

Sure enough, it creates jobs on demand by workers who want to work but cannot find work elsewhere.

In normal times, it might not create or sustain many jobs at all.

And, importantly, it might not be part of a fiscal ‘stimulus’ program.

As I explained in the blog post cited above, there would be times when the government was adding to the Job Guarantee pool while engaging in contractionary fiscal policy.

The Job Guarantee is about providing work to people when the non-government labour market is weak. It will certainly help wipe out precarious work and underemployment.

Private employers will have to restructure their workplaces to offer better pay and conditions or risk losing their workforces to the Job Guarantee.

The Job Guarantee will become the minimum acceptable standard – in pay, conditions, entitlements, superannuation, quality, certainty etc.

The Green New Deal will require a massive fiscal stimulus and many new job categories created and filled.

The role the Job Guarantee will play in that transformation is to ensure all workers have access to work as part of a Just Transition.

But the extra employment that the Green New Deal will spawn will be more regular public sector jobs – design, engineering, manufacturing, sales, technical support, maintenance etc – which will require a significant education and skills development investment.

As carbon-intensive sectors are closed down by regulation, the affected communities will transit into new activities and new employment opportunities.

Underpinning it all will be the Job Guarantee safety net for those workers with a need for a minimum wage job.

But the scale of the investment and skill development required will see massive shifts in workers between industries, occupations and sectors (public and private).

The Job Guarantee will only be a small part of those shifts and should not be seen as the employment solution to the disruption that the Green New Deal will generate.

I will write more about that in due course.

Conclusion

This blog post is part of an on-going series of explorations into what I think a Green New Deal will embody and require.

That is enough for today!

(c) Copyright 2019 William Mitchell. All Rights Reserved.

Bill Mitchell
Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.

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