The Nationalisation of Low-Paid Jobs

This story about "Young jobseekers told to work without pay or lose unemployment benefits" has been quite a popular thing on the internet today. My thoughts on it amount to three points:-

• The state is able to withdraw unemployment benefit for those who refuse to do 'unpaid' work
• Employers being unable/unwilling to employ people who's work is worth less than the minimum wage
• This amounts to nationalisation of low-paid jobs.

Please allow be to address these points further.

Its not been that long since I was made unemployed and applied for job seekers allowance, about three years. When I lost my job I waited a few months before applying for any benefits because I'm of the mind that to do so would be to succome to being a scrouger. It was only after I was reminded that I'd been paying National Insurance for many years that I felt obliged to claim benefits.

Its an insurance thing, like my car insurance, I pay them monthly in case of an unexpected occurance. I'd expect the money due in full, not on condition that I ride a bike for a few months. That's not what I signed up for.

However, with this in mind, I'm also fully aware that you are beholden to the state, you have to jump through whatever hoops they put in your way, you have to fill in forms, attend interviews and sign off regularly in order to receive your payment equivalent to working for about £1.75 per hour. If you fail to do what the state demands of you, then you don't get your payment. Sometimes you don't get your payment anyway because someone somewhere cocks up, or they change the rules. That's what happens when you are beholden to the state.

So, if the state says you must do 30 hours of unpaid work or have your benefits withdrawn, well then, its not unpaid work, its work that you get £65 for if you do it and nothing if you don't and that just convinces me even more so that unemployment benefit is working a very poorly paid job rather than a genuine insurance process.

On my second point, I believe that one of the side effects of the minimum wage in the UK is that the young and inexperienced are priced out of the job market. Employers are forbidden from legally employing someone at a rate of less than £3.68 an hour for 16-17 year olds and £6.08 per hour for the over 20s.

Employees are broadly paid in relation to their productivity.

Take for example strawberry picking. Customers are only willing to pay for example £2 for a punnet of strawberries. Workers at the strawberry farm would have to be able to pick three punnets of strawberrys every hour to make minimum wage or their employer would be making a loss. Given the choice between employing an experienced strawberry picker with a proven level of productivity on minimum wage or an unexperienced one with lower or unproven productivity, there's nothing in it, the youngster has no chance.

Without the minimum wage, the employer could take on the inexperienced chap and pay him at a rate commensurate to his productivity, how fast he can pick those strawberries, be it one punnet an hour or two punnets, and through time and experience that chap would one day be more productive and able to pick three or four punnets an hour and make more money. But on starting out, because he's not worth the £6.08 an hour, he's not worth employing.

Thats not to say that there aren't employers out there who don't pay wage below what is commensurate to the productivity of the employee, I'm just taking employers generally on good faith. We've got one of the EU's most flexible labour markets in the UK, if people think they can get paid more doing the same job at the level of productivity for more money with another employer, they are more free to take their labour elsewhere, than in other EU countries. This generally helps to keep pay levels appropriate.
Whilst some commentators believe that removing the minimum wage laws will lead to a 'race to the bottom' in terms of pay levels, I'm more optimistic and believe it would lead to more balanced pay levels, jobs done well would get paid more than jobs done poorly.

Anyhoo, with these first two points the state has created a distorted labour market where if your labour is worth more than £1.75, but less than the minimum wage, you are unemployable.

Which brings me to my third point, elsewhere on the internet, I am part of the Occupy movement, I may not have a tent outside St Pauls, but never the less I actively contribute to the movement's google.moderator thing and their Your Priorities website, frequently trying to raise the profile of their intelligent ideas and batting down their more mental ones.

Recently there was a suggestion that the state creates a new bank that is 'fair' or something. I pointed out that the state already runs five or six of the UK's banks, (RBS, Lloyds TSB, HBOS, Northern Rock, Post Office banking etc) and I had this epiphany of what nationalisation looks like in the 21st century under the current government. Its not things like British Airways, British Leyland, British Telecom, its more like private sector things that are now owned by the state.

And so, low paid jobs, jobs that are worth less than the minimum wage, because of the youth and inexperience of the people doing them, these job are now owned by the state, they are what nationalisation looks like, and the workers employed in them will be paid by the state.