Marx has a wonderful term for the role that unemployment plays in capitalism. He calls it “the reserve army of labour.” The point of this concept is that whilst employing people allows a capitalist to accumulate value, having unemployed people allows you to drive down the price of labour. It’s a simple supply and demand issue: when many people want jobs, then they will have to lower their price more and more.
It’s not the sort of thing that you’d think would really affect countries with a minimum wage. The guarantee of a certain minimum return on a certain amount of work stops the price of labour falling too low, and guarantees a certain (albeit low) standard of living for workers. So, in a recession such as ours, rather than seeing the price of labour falling rapidly, what you’d expect to happen would be just an increase of jobs paying minimum wage.
Unfortunately, our lovely government looks to be doing away with all that. In a speech made today, Iain Duncan-Smith has outlined plans to force jobseekers’ into working positions for no more than their benefits. This means that people will be working 30 hour weeks for £65. That’s £2.17 an hour, or 36% of the minimum wage.
He has said that if people refuse this option, they will have their benefits cut off for three months. So that’s it, work for a third of the minimum wage, or starve, lose your house, perhaps even lose your children. That’s a pleasant thought.
But above and beyond this coercion, the new system will put added pressure on all people employed in similar positions to those that will be taken on by benefit claimants. Why would a local council pay someone minimum wage to sweep streets when they can get the work done cheaper? And of course this new labour would undercut all the laws that secure workers’ rights. Being on placements without employment contracts will undermine all labour law. If you go on strike from your position you can effectively be immediately sacked by having all pay cut off. You can’t unionise either, because for all intents and purposes while working 30 hours a week the government won’t recognize you as having a job.
It is time to fight for workers rights, to demand that all benefit claimants in this position have a right to join a trade union, and to receive at the very least a minimum wage if not a living wage for any work they do. We must also ask the question of what the government expects of people who have their benefits cut off. How are they expected to live, without turning to crime? Who can live on £0 a week?
Even with the protection from massively low wages on paper, this government is returning to the economics of the reserve army of labour, side-stepping laws in order to save money by targeting the poorest of the poor.