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Image by Cathie LendrumGareth Morgan

Benefits system needs to evolve

Image by Cathie Lendrum

Image by Cathie Lendrum

On Thursday last week, the Living Wage campaign was given a very public airing at AUT University with a collection of international speakers.

While much of the focus of this campaign has been on the hourly rate paid to low-wage workers, the international guests spoke more broadly of the rapidly changing nature of work under 21st-century globalisation. These issues extend beyond low pay.

Professor Guy Standing from the University of London is perhaps most famous for his book The Precariat: The New Dangerous Class. Standing’s thesis is that the way labour markets have evolved alongside globalisation has created workers whose conditions and lives are unlike those of any previous generation.

Standing calls these the “precariat” – people whose lives are characterised by insecurity and disconnection.

Low pay can create financial insecurity but casualisation of work conditions can, too – contracts that require workers to be on call at all times but guarantee no minimum paid hours per week are one example; flexible work definitions that allow employers to redefine work as unpaid training are another.

These conditions make it necessary for workers to have multiple employers, and they must self-fund the downtime needed to travel between each job and establish the networks needed to have multiple employers.

If you think these sorts of contracts and pressures are only in the third world, think again. There are plenty of anecdotes of this in New Zealand, especially in the hospitality and retail sectors.

The Fairwork Ombudsman’s Office in Australia has recently completed an investigation into the misuse of unpaid “internships” in Australia.

Nor are these work terms confined to low-skilled workers. Standing argues tertiary training has become commodified so much so that there is a global oversupply of tertiary-educated workers.

The result is that they too face a future of precarious work. Thus, the precarious class is one that extends well past the less educated.

To Standing, precarious work creates a group of people who are insecure in all senses – financial, self and social.

It’s not rocket science to see that lack of self-esteem and social connectedness on top of financial stress is a potent and troubling mix.

Standing believes in time this group, the precariat, will be the force that drives social and political change because of its growth.

The consequences need not be negative – indeed, innovation and entrepreneurship can emerge from people seeking to overcome these limitations.

But Standing sees the precariat as potentially easy prey to the extreme right, bringing risks of fascism and violent racism. His view is it should be possible to avoid this, but first we must acknowledge that precarious work is here to stay.

Once we overcome denial of this state of permanence we can go on to identify what precarious workers need for a good quality of life.

If we anticipate what these groups need and start delivering it, rather than sit back and see what happens, we’ll have a far greater chance of avoiding negative consequences.

Among the policies recommended by Standing is the anchor of a steady income via payment of an unconditional basic income (UBI) to all of working age – a replacement to targeted welfare that switches on and off.

In addition he advocates the payment of a living wage, which is something we try to emulate currently for some in work at least, through Working for Families.

Payment of a UBI is something we have proposed for New Zealand in The Big Kahuna, published in 2010.

Standing has been active in advising governments on the UBI, and the success of a three-year experiment in India was such that India’s Prime Minister has said he is now convinced of the need for unconditional cash transfers.

The study attributed the payment of the UBI to improvements in nutrition, the status of women, school attendance and performance at school, the amount of work done and worker productivity.

Standing also spoke of plans in Brazil to roll out a national scheme, based on good results from sub-national programmes.

In The Big Kahuna we documented at length the problems with our targeted welfare system, not least its inability to cope with the widely varying circumstances of people and their families.

The administrative costs of trying to fit everyone into an increasingly irrelevant model of working and family life currently costs $800 million a year in tax revenue.

Also to be taken into account are the unpaid debts that people accumulate and the cost of dealing with those.

Plus, people fall through the system unsupported and those who have the opportunity of infrequent, multi-employer work face such high penalties from benefit abatement that it simply makes no sense for them to accept the work at all.

As Standing has shown, this is the new and permanent face of work and we have to upgrade our public support systems accordingly.

Everyone knows it’s time New Zealand started thinking smarter. That extends especially to the sacred cows like our targeted benefits system.

The policy options in front of us are not confined to those politicians and voters signed up to many decades ago.

The world has moved on; it’s time we did too.

  • David Meredith

    OK… What will it cost? How do we pay for it? How do we make such a radical change politically acceptable when no major parties are even interested in a modest increase in real benefit rates? Most NZers have no understanding of how inadequate our current benefit payment rates are. Perhaps media personalities like Gareth can help by exposing the harm done by continuing with a financial underclass, surviving (mostly) on benefits. At least with the current governments focus on benefit abuse the public have less room to write off people on benefits as undeserving bludgers.

  • Peter Wood

    Thanks for this Gareth – I missed this as I’ve just returned from India – not that I was seeking evidence of a ubi there. It ties in with what I’ve been reading in “How much is Enough?”, by Robert and Edward Skidelsky. Sub titled “The love of Money and the Case for the Good Life”, it explores Keyne’s idea that we should be working only 15 hours a week by now – if our needs had not escalated into wants, and covers a number of ethical questions worthy of consideration.

  • Robyn Morris

    Great article, but I’m picking WAY too sensible for people stuck in the old ways of thinking. I’m on the Invalid’s Benefit, coming up to my 55th birthday. I would love NOT to be stuck in the benefit system, with all the oversight and dissing that that involves, but CAN”T work a regular job, and as you say part time work is financially impossible and impractical. At the moment I have very little choice. If the typre of system you have talked about here, and in The Big Kahuna, was brought in then more of us (meaning the Undeserving Poor) would be able to be more self sufficient, and have more dignity.

  • Rodinzthinker

    “The world has moved on; it is time we did too.” This is a powerful tenet that should continue to reverberate if we are to make the paradigm shifts needed as we move forward.

  • John O’Neill

    Is there no possibility of a political party “sponsoring” a person such as Gareth into parliament with no declaration on either side of automatic support for any policy of the party or the individual. These ideas need to be aired and MPs forced to discuss them in the arena where decisions are made for our future, more often than not with vision which does not extend beyond the next election. Are our politicians so wrapped up in their own self-importance that these guest speakers in the media or in the halls of academia are never invited to address the house of representatives?

    • David Meredith

      The most likely possibility is a new party of open minded pragmatists which might attract the 5% required to elect a prospective “honest broker”. (Kind of like a thinking person’s version of Winston.)
      Without playing on simplistic public perceptions it’s not easy to attract 5% away from voting for the perceived lesser of evils amongst the major parties. It would require some of us getting off our apathetic butts and doing more than bemoaning the status quo.

  • Curtis Antony Nixon

    The problem is that the welfare system has operated as part of a highly entrenched and budget-locked in ‘failure system’ that includes police, psych services courts, prisions, CYPS …that needs new victims ( sorry ‘clients’) all the time. The same people are ‘clients’ of all these big-budget government agencies that rely on and perpetuate their client bases. Exaggeration? No, it’s the reality of an underclass. This pattern was laid down in colonial times with chattel slavery of black people and the violent dispossession of native people. Exploitation of women and children also. The ‘war on drugs’ (war on drug users) is part of the same, More victim creation. It is necessary in my opinion to face all of these issues at the same time. Basically there is a militaristic fascist underbelly to global capitalism with a veneer of liberalism papering over the (chasm-like) cracks.

  • Philip Meguire

    35% flat tax on all value added, collected at the source.
    Credit the ACC levy against flat tax liabilities.
    The Crown pays every legal NZ resident $100/week. Let this be the UBI. This amount is untaxed.
    Abolish WFF and IWTC, but continue the accommodation supplement.
    Continue the public health system more or less as is.

    We can then tolerate the precariat — a useful term, BTW. People will work as opportunities arise and as family circumstances permit, to improve their condition.

  • Robert Latchford

    The world has changed and it will only speed up. NZ has to be smarter and lead the way – we are lithe enough to do it. We still need to fight for those who don’t see the fiat train crash coming. The digital age is having a more dramatic effect in the west as the east rises. The see-saw is being rebalanced and the West is no longer the heavier kid bullying the lighter one with the bumps. p.s I hate Cats too!