Making Work Pay

When you were younger, did you ever play with that one kid who kept changing the rules in the middle of the game? You remember how much fun it wasn’t? Well, thanks to the DWP's recent introduction of emergency legislation to retrospectively invalidate a court decision against them, we now have some indication of what that kid went on to do when he grew up.

Retroactive legislation is bad for a whole host of reasons, and this is hardly a recent development in constitutional thought: Article One, Section Nine of the Constitution of the United States, drafted in 1787, explicitly prohibits the Congress from passing ex post facto laws. We don’t, of course, have a codified constitution in the United Kingdom, nor is there any guarantee that if we did it’d contain the same kind of ban on retroactive legislation.

A moment’s thought, though, would point up the utility of having one in a society founded on the rule of law.

Although in this case Parliament’s power to fix legislation retrospectively isn’t being used to criminalize behaviour that wasn’t criminal when it occurred, which is the first and most obvious abuse of this kind of power, its intention – to “strike down a decision by three senior judges and deny benefit claimants an average payout of between £530 and £570 each”, a sum owed purely as a result of badly-drafted legislation and misleading advice given to jobseekers – can only have the effect of undermining citizens’ right to legal recourse. If you know that the Government can, and will, deny you the redress you’re entitled to (and this isn’t the kind of ‘entitlement’ attitude that gets Daily Mail readers hot under the collar – this is a legal entitlement recognised by an independent judiciary), then why even bother bringing a case against them in the first place?

The net result will be a sloppy attitude to drafting future legislation and a renewed sense on the part of jobseekers that the system’s tilted against them, which is not what you’d call a desirable outcome. As if determined to provide the textbook example of adding insult to injury, a spokesman for the DWP justified the Department’s behaviour thus: "This legislation will protect taxpayers and make sure we won't be paying back money to people who didn't do enough to find work." The general approach seems to be: when in doubt, or when in significant error, blame the guy without a job.

I’ve never met ‘the taxpayer’, but for some reason whenever I try to envision this mythical creature in my mind the image that comes to me is Goya’s Saturn Devouring His Son, some great elemental beast lurking under the Treasury and demanding blood sacrifice. Call it a quirk. I can’t speak for ‘the taxpayer’, but I can speak as a taxpayer, and as a taxpayer I’d rather my money went towards the redress of wrongs perpetrated by my government than the continuance of them. Particularly – and here is the key part – when the DWP considers corporate subsidy to Poundland and other participating businesses, enabling them to bolster their bottom line by employing workers at well below the nationally­-determined minimum wage, to be a productive use of that same money.

It does not take an economics professor to determine the likely consequences for the national economy of such a policy, putting aside the question of whether it’s acceptable to mandate that the unemployed join work programmes (just to prove that this blog isn’t written by your standard outraged lefty, my personal answer to that question would be ‘yes, in certain circumstances.’) If a business is allowed to fill unskilled labour vacancies with workers who it doesn’t have to pay; who can’t quit, because their benefits will be stopped; and to whom they have no legal obligations as an employer, then those vacancies vanish from the actual job market. It does not make you a socialist to believe that, if Poundland has shelves that need stacking, then they should advertise for a shelf-stacker and pay the expected wage: it merely requires you to have read a bit of Adam Smith.

The legislation that inspired this post addresses this issue, as well: “The new bill would also put a stop to any potential claims for the national minimum wage, which could otherwise be due to those who spent weeks working for no pay at high street chains such as Tesco, Matalan and Argos.” My position on this is actually significantly more libertarian than the Government’s. The idea that private business should receive a subsidy from the public purse in order to subvert the normal operation of the market is an astonishing state of affairs to persist in a capitalist system, and a giant middle finger to the Invisible Hand. (Don’t believe them, incidentally, when they say that these are ‘training’ schemes. It does not take multiple weeks to teach a university graduate, or indeed anyone with a functioning brain, how to put things on a shelf so’s they don’t fall off.) A thriving capitalist economy is not one in which the Government colludes with a select number of private businesses to depress wages, but that does appear to be what we have.

There’s an argument that the minimum wage itself is a distortion of the fair market price for labour, which I don’t quite buy but at least has the advantage of being intellectually consistent (more on this in a later post, after I’ve broken out my copy of The Wealth of Nations for a reread). However, if we as a democratic nation have decided that we’re going to have a minimum wage, then it’d behoove the Government to not attempt a covert end run around it. That is what workfare represents: an entitlement programme for private industry, at a time when entitlement programmes are being slashed across the board. As with the rule of law, the operations of the market must apply equally to every participant, or there isn’t a lot of point in having one.