Poverty and the Third Way

Colin C Williams, Colin C. Williams, Jan Windebank

• Publisher: Routledge
• Year: 2003
• Print ISBN: 9780415257251
• eBook ISBN: 9781134517756
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

What is poverty and how can it be tackled? Taking the Third Way out of its narrow party political context, this book argues that it is necessary to harness work beyond employment in order to pave a Third Way beyond capitalism and socialism. The outcome is a thought-provoking new approach towards combating poverty.
Poverty and the Third Way uncovers how New Labour's employment-focussed approach causes, rather than resolves, poverty. Searching for another approach, the authors find the seeds of an alternative 'Third Way' in radical European social democratic and ecological thought which seeks to transcend capitalism and socialism by developing work beyond employment. Exploring the reasons why such an approach is needed and how it can be implemented, the authors transcend the 'there is no alternative' to capitalism school of thought dominant in many advanced economies by providing a clearly marked route map of the way towards a post-capitalist economy.

Part I

Rationales for a third way approach

1 The problem of full-employment

Throughout the advanced economies, the widespread consensus is that employment is the best route out of poverty. Not only are the approaches of both the Old Left and New Right grounded in such a belief, but so too is the employment-focused third way approach of New Labour. In this book, however, our intention is to begin to explain why an alternative third way discourse has started to emerge that rejects an employment-centred approach to poverty alleviation (e.g. Beck 2000, Jordan 1998, Levitas 1998, Lister 2000). To do this, we evaluate critically first, the feasibility of achieving full-employment and second, whether this approach towards poverty alleviation is desirable.

To commence, therefore, this chapter addresses whether ‘full-employment’ is a feasible objective. This will show that, despite all of the efforts to create formal jobs, there remains a large gap between the current employment situation and a full-employment scenario. This jobs gap, moreover, is not narrowing over time. Indeed, there appears to be little hope either in the near future or even beyond, that a state of full-employment will be achieved. Following this, attention turns to the desirability of pursuing full-employment. On the one hand, we analyse how such an approach does not appear to result in a reduction in poverty by examining the prevalence of the ‘working poor’. On the other hand, the changing attitudes towards employment in contemporary society are examined. This uncovers that although it is often taken for granted in policy-making that people want a formal job, it is actually the income from the job rather than the job itself that people desire. Indeed, the trend in the advanced economies appears to be one of a centring of income but a de-centring of employment in many people’s lives.

Such findings, of course, raise many issues that will need to be addressed later in this book. If we cannot achieve full-employment, if many people entering the formal labour market are continuing to witness poverty and there is a de-centring of the importance of employment in many people’s lives, then should full-employment continue to be our prime social objective? Indeed, is it logical that a third way approach, which supposedly seeks to move beyond capitalism and socialism, should have as its focus the mass insertion of people into precisely those profit-motivated exchange relations that it is seeking to transcend? Are there any alternative routes out of poverty besides entry into formal employment? If so, what are these alternatives and is it possible to cultivate them? And what are the implications of doing so? Before answering such questions, however, it is first necessary to outline the problem of full-employment in our advanced economies. Indeed, it is only once this problem has been firmly established that the importance of seeking alternative routes out of poverty can be fully understood.

THE FEASIBILITY OF FULL-EMPLOYMENT

In recent years, many writing from positions closely linked to European radical social democratic thought and/or communitarian ecocentrism (see the introduction) have questioned whether full-employment is an achievable goal (e.g. Beck 2000, Bridges 1995, Giddens 1998, Gorz 1999, Rifkin 1995, Williams and Windebank 1999a, 1999b). Bridges (1995), for example, argues that those looking back at the end of the twenty-first century will view the current preoccupation of governments with inserting people into jobs as akin to finding deckchairs for everybody on the Titanic. Beck (2000) similarly contends that it is futile to hark back to the supposedly golden age of full-employment. Instead, he suggests that we should use the demise of a full-employment society as an opportunity to develop new ideas and models for work rather than look to previous ‘golden ages’ for our inspiration of the way forward. Gorz (1999: 58), in a cutting criticism of those seeking a return to a full-employment society, goes further:

Those who continue to see work [employment]-based society as the only possible society and who can imagine no other future than the return of the past . . . do everyone the worst service imaginable by persuading us that there is no possible future, sociality, life or self-fulfilment outside employment, by persuading us that the choice is between a job and oblivion, between inclusion through employment and exclusion, between ‘identity-giving socialization through work’ and collapse into the ‘despair’ of non-being. They persuade us it is right, normal, essential that ‘each of us should urgently desire’ what in actual fact no longer exists and will never again lie within everyone’s grasp: namely ‘paid work in a permanent job’, as the ‘means of access to both social and personal identity’, as ‘a unique opportunity to define oneself and give meaning to one’s life’.

Given the recent successes in job creation throughout the advanced economies and the significant reduction in official unemployment rates, some might question the validity of such a pessimistic view. To explain the reasons for such doubts concerning the feasibility of full-employment, therefore, this section investigates first, the size of the ‘jobs gap’ in the advanced economies between current employment participation rates and a full-employment scenario and second, whether this gap is declining or increasing over time. This will display that for all of the current hyperbole in advanced economies such as the US and UK about full-employment being within our grasp, advanced economies are far from achieving this goal.

Employment participation rates

Examining employment participation rates in the advanced economies, the principal historical lesson is that full-employment was achieved for at most thirty years or so following World War II in a handful of advanced economies (Pahl 1984). Even here, however, this was only full-employment for men, not women (Gregory and Windebank 2000). As Beveridge (1944: 18) put it, full-employment is a state in which there are ‘more vacant jobs than unemployed men’ and where there are jobs ‘at fair wages, of such a kind, and so located that the unemployed men can reasonably be expected to take them’ (our emphasis). Although this language was of course based on the widely accepted sexist prose used at the time, he was in effect quite correct in his statement when referring to the full-employment of men alone. Any talk of returning to a ‘golden age’ of full-employment is illogical if by that is meant an era of full-employment for both men and women. Such an era has never existed so to seek its return is not possible.

If seeking a return to full-employment for the entire adult population is illogical since it never existed, it is perhaps also the case that it is not possible. Take, for example, the UK. By May 2000, according to the Labour Force Survey, the number of people in jobs had reached a record level of 27.8 million and the unemployment rate, based on the claimant count, was down to a mere 3.9 per cent (5.8 per cent using the wider Labour Force Survey measure). Superficially, this appears close to what is conventionally meant by ‘full’ employment when the unemployment rate is 2–3 per cent to allow for the churning of people between jobs. However, despite the official unemployment rate being at its lowest level for decades and UK employment participation rates being amongst the highest in Europe (second only to Denmark) and at a record level, only 74.4 per cent of the working-age population were in jobs. Over one in four working-age people (25.6 per cent) did not have a job. In other words, to achieve full participation in employment of the UK working-age population, one additional job would be needed for every three in existence (a 33 per cent rise), the equivalent of some 9 million additional jobs.

Indeed, compared with the European Union as a whole, this UK data on the size of the ‘jobs gap’ that needs to be bridged is quite hopeful. In 1999, just 147 million of the 375 million inhabitants of the EU were in employment (40 per cent of the total population). Some 60 per cent of the population were thus being supported by the remaining 40 per cent and there is widespread agreement that this is due to worsen as the ‘baby-boom’ generation reach retirement age. Amongst the population of working age, meanwhile, the employment participation rate in the EU is just 61 per cent (European Commission 2000b). Nearly two in five (39 per cent) of the working-age population in the EU are thus without a job. For full participation to be achieved in the EU, two jobs are thus needed for every three that currently exist. Put another way, a 66 per cent increase in the number of jobs is required. Some EU nations, nevertheless, have a smaller bridge to cross to reach this supposed nirvana than others. In Denmark, the country with the highest employment participation rate in the EU (75.3 per cent), due in no small part of a very high participation rate of women in employment, a mere 33 per cent rise in the number of jobs would suffice. In Spain, the country with the lowest employment participation rate (49.7 per cent), however, the number of jobs would need to double (European Commission 2000b).

It might be asserted that presenting employment statistics in this manner is a distortion. For example, it ignores the considerable number of people who now engage in higher education so as to feed the new ‘knowledge economy’, the army of mothers at home supported by an employed spouse, and so forth. It might also be asserted that it is far better to investigate the trends over time so that the progress being made towards full-employment can be seen, rather than just provide a snapshot of a particular moment. Here, therefore, we examine both issues in turn, starting with the latter.

Is it the case that the inexorable long-term trend is towards full-employment? Examining the official data, this is not the case. As Table 1.1 displays, during the last forty years of the twentieth century few EU nations managed to make any progress in closing the ‘jobs gap’. Indeed, just three nations made any progress at all. Denmark managed to raise employment participation rates from 74 per cent to 76 per cent, the Netherlands increased them from 64 per cent to 71 per cent, and Portugal, starting from the low base-level of 58 per cent participation, managed to raise it to 67 per cent. These, however, are the exceptions. The majority of nations went backwards over this forty year time period. The ‘jobs gap’ widened. Some falls were quite dramatic. Employment participation rates in Finland slid from 77 per cent in 1960 to 67 per cent in 1999. In France they fell from 70 per cent to 60 per cent, in Greece from 66 per cent to 55 per cent and in Italy from 65 per cent to 53 per cent. The notion that there is a long-term trend towards full-employment, therefore, must be treated with considerable caution. It is not borne out by the evidence.

If EU nations are burdened by a ‘jobs gap’ that in most cases has widened over the past forty years, is it nevertheless the case that this is not mirrored in other First World nations, especially those where the neo-liberal project has taken a firmer hold? To answer this, let us start with the US. After all, this is the major competing trading bloc that provides the ‘baseline’ against which the EU measures its progress on employment participation rates (see European Commission 2001a). In the US, there is little doubt that the employment participation rate is higher than in the EU. However, even here it is only 73 per cent, meaning that one job needs to be created for every three that currently exist if full participation is to be achieved (European Commission 2000b). Put another way, this requires a 37 per cent increase in the number of jobs in the US economy. In Japan, similarly, the employment participation rate is 70 per cent, necessitating a 42.8 per cent growth in the number of jobs to achieve full participation (European Commission 2000b).

Table 1.1 Labour force participation rates, 1960, 1973 and 1999

Across the advanced economies, there is thus a wide gap between current employment levels and a situation of full participation. Nor is the trend narrowing over time. Between 1960 and 1995, just 13 of the 22 advanced economies improved their employment participation rates. The outcome was that by 1995, only 9 of the 22 advanced economies had managed to achieve participation rates in employment of over 75 per cent of the working-age population and none over 83 per cent (ILO 1997). Advanced economies, therefore, are far from a steady state of full-employment and many are moving ever further away from such a situation.

So too are many deprived regions and localities. In the EU, for example, the 25 EU regions with the lowest unemployment rates were much the same in the late 1990s as in the late 1980s and their unemployment rates remained steady at around 4 per cent. The 25 regions with the highest unemployment rates were again much the same in the late 1990s as in the late 1980s, but their unemployment rates had increased by, on average, 20 per cent (European Commission 1999b). Over time, in consequence, the regions with the highest and lowest unemployment rates have further polarised. Those with the widest jobs gap in the late 1980s had fallen further behind by the late 1990s. This polarisation is similarly evident within the UK. Regions with the fastest growing employment participation rates are those which already had high employment participation rates, namely the South East, South West and East Anglia. The result is a regional divergence in the size of the jobs gap (Dunford 1997).

The same applies on a micro-spatial level. In the UK, wards with relatively high employment participation rates are compounding their advantages over time, while those starting with relatively low participation rates are falling ever further behind them (Dorling and Woodward 1996, Dunford 1997, Green and Owen 1998). As Green and Owen (1998: viii) put it, the

largest increases in unemployment, and especially in inactivity and non-employment, [are] in the neighbourhoods – particularly those in inner-city areas and in concentrations of public sector housing – where the initial incidence was highest.

In consequence, despite concerted efforts to boost employment participation rates in deprived regions and localities, they are falling ever further behind. The net result is that the non-employed are becoming more spatially concentrated. In 1981, about 43 per cent of the British working-age population lived in wards where the proportion not employed varied by less than 10 per cent from the national average. This proportion had fallen to 30 per cent by 1991, indicating a divergence between areas (Dorling and Woodward 1996). People have become more likely either to live in a ward where many other adults of working age do not have a job, or to live in a ward where the large majority of adults of working age are employed.

Conventional unemployment measures, moreover, underplay not only the true extent of inactivity, non-employment and under-employment, but also the acuteness of the spatial disparities. Green and Owen (1998) show that the greater the degree of labour market disadvantage in an area, the smaller is the proportion of the inactive and non-employed who are included within conventional definitions of unemployment. As such, inactivity, unemployment and non-employment are far higher, especially in deprived neighbourhoods, than is suggested by headline unemployment statistics. So too is the gap between deprived and affluent localities wider than that suggested by data on the registered unemployed.

Examining employment participation rates, a large jobs gap can be thus identified between the current employment situation and a full-employment scenario and this jobs gap is growing in many advanced economies. Despite the strenuous efforts of public policy to bolster employment in deprived regions and localities, moreover, such areas appear to be falling ever further behind.

Such a portrait of employment participation rates paints a gloomy picture concerning the feasibility of full-employment. Although we could end our analysis at this point, it is nonetheless necessary to point out one further important trend that brings little comfort to anybody wanting to rely on insertion into employment as the principal tool for resolving poverty. So far, we have considered only whether or not people have a job. We have not considered the types of employment they undertake. When analysed, however, the gloom concerning the feasibility of full-employment turns into despair. The above statistics on employment participation rates omit to consider that, over time, an increasing proportion of those counted as ‘in employment’ are in part-time rather than full-time jobs (e.g. European Commission 2000b, Nicaise 1996, Thomas and Smith 1995, Townsend 1997). In the EU, for example, the share of part-time employment increased from 14 per cent of all employment in 1990 to 17 per cent in 1998 (European Commission 2000b). This historical shift in employment contracts from full- to part-time is prevalent across the advanced economies. The outcome is that using employment participation rates alone to analyse whether or not there is a move towards full-employment masks the extent to which underemployment is rising. The employment problem in the advanced economies is one of achieving not just full-employment but also full-time employment.

Is it the case that this interpretation is too pessimistic? Are we, for example, ignoring that a large number of the non-employed are actually engaged in higher education so as to feed the new ‘knowledge economy’, are mothers at home supported by an employed spouse and so forth?

Who are the non-employed?

Using data from the mid-1990s, Hirsch (1999) identifies the nature of the 10 million working-age jobless in the UK. He finds that about two million are in full-time further and higher education, three million are women who are married or cohabiting and not employed and five million are adults living in households without anybody in a job (which...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• TABLES
• ACKNOWLEDGEMENTS
• INTRODUCTION
• PART I: RATIONALES FOR A THIRD WAY APPROACH
• PART II: EXAMINING POVERTY: HOUSEHOLD COPING CAPABILITIES AND PRACTICES
• PART III: TACKLING POVERTY: A THIRD WAY APPROACH
• CONCLUSIONS
• BIBLIOGRAPHY