Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Can Insecure Workers Be Confident Consumers?

Colin Crouch 20th January 2015

Colin Crouch, Insecure Workers

Colin Crouch

A paradox that lies at the heart of capitalism is that economies need consumers to be confident spenders of money on the one hand, while on the other workers’ must accept insecurity and flexibility in their main supply of money: employment income. Professor Colin Crouch considers the implications of this, and looks at the ways it might be resolved.

The need for workers to be confident consumers is particularly difficult as globalization and economic change destabilize the lives of working people. But this circle can be squared, and in multiple ways. Most successful have been those countries that have relied on a sense of collective solidarity to support strong public social policy and coordinated collective bargaining involving effective trade unions. Unfortunately, political and business elites are busily engaged in dismantling the bases of that solidarity almost everywhere, including the countries where this pattern has thrived, leaving in its place growing public and private debt.

This is a major conclusion of a study of the means used in European countries, Japan, Russia and the USA to square the circle of confident consumers and insecure workers. Consumers and workers can simply be different persons (as with countries that are heavily export-dependent, or with major remittances from emigrant workers). Or consumers and workers can be separated over time if the present population boosts its consumption at the expense of future generations through heavy public debt, or maintains profitable forms of economic activity at the expense of environmental damage. Some of these approaches, especially the last two, are unsustainable, but have the attraction of not making any demands on collective solidarity.

Others involve separating consumption from labour earnings, with people not being dependent on wages alone to support their spending. Growing recourse to consumer debt has been an increasingly important example. Very different is a strong welfare state. If such things as health, education and social protection are provided from outside the market economy, workers might feel able to take more risks with other types of consumption. Consumer debt (which is unsustainable over more than the short term) places minimal demands on solidarity, while strong welfare states require it.

Similar differences pervade a final set of policies and approaches to the dilemma: measures within social policy and wage bargaining that seek to combine security and flexibility within working life itself. Here there is a major difference between actions that operate generally across a national workforce and those that erect barriers between secure insiders and various outsiders who bear the brunt of flexibility (for example, immigrants, young people, women, those working in the shadow economy and the poor in general). Here we find the topics more narrowly associated with employment security: active labour market policy, employment protection laws, coordinated collective bargaining systems.

Three Basic Approaches

Behind the great diversity in these different approaches stand a few basic patterns. Generalizing very broadly, we can identify three groups of countries, based on the relative prominence within them of four different forms of governance: state, association, market and community.

Social Democracy

The first group comprises those nation states where state policy and the regulation of labour markets by coordinated trade unions and employers’ associations (associational governance) dominate, though most also make considerable use of private market resources. These can be called ‘social democratic’ and are found mainly in north-west Europe (with some doubts over France, where associational governance is weak), to some extent also in Slovenia.

Apart from Belgium and France, these cases combine strong records of employment security and economic innovation. They have a low level of income inequality, but a tendency to use immigrants and sometimes women as partially excluded groups. While some of them had in the past high public debt levels, and a few have high levels of consumer debt, these countries tend to make less use of non-sustainable practices (debt, environmental pollution and shadow economy) than others. An important formative force in making their labour and social policy regimes have been powerful trade unions – though this is most important among the Nordic countries within the set. Despite continuing success the supports underlying this social democratic model are being steadily undermined as welfare states are replaced by marketization, the role of collective bargaining is undermined, and, whether as cause or effect, social solidarity weakens.

Neoliberalism

Next come countries dominated by market solutions (such as private pensions, consumer debt, but also the disciplinary market incentive of a low level of public social policy). These are the ‘neoliberal’ countries; mainly Anglophone cases, but partially also including the Czech and Slovak Republics, Japan and Switzerland. Though small, this is a heterogeneous group. Public social policy in Switzerland and the UK is stronger than the stereotype anticipates; Japan, the UK and the USA have levels of public debt incompatible with the limited neoliberal state; the two central European cases have neither strong private social policy nor consumer debt. These countries have strong to moderately strong records of employment and economic innovation.

Apart from the highly egalitarian Czech and Slovak Republics, they tend to have high levels of income inequality. Social exclusion is concentrated, not on specific social categories, but on the poor in general, whose standard of living tends to be detached from that of the bulk of the population. Some of these countries (but not Switzerland or the Czech and Slovak Republics) have high levels of public and private debt and (not Switzerland) of environmental pollution, but they all have low levels of shadow economy. They therefore have some problems of sustainability. They are not distinguished, as are countries in the social democratic group, by trade union strength, this ranging from moderately strong in Ireland to exceptionally weak in the USA.

Traditional Community

Finally come countries where the main measures for providing security come from family and local community (hence, ‘community’ governance). Negative market measures (i.e. relative absence of state social policy) and in some cases growing levels of consumer debt provide some ‘market’ support, and in south-western Europe (except Spain) there is very high public debt. This is the largest group, and includes most of central, eastern and southern Europe. Employment and economic innovation are poor almost everywhere. Most have high levels of income inequality and practice a wide range of forms of social exclusion. Levels of environmental pollution, like public and private debt levels, vary, but all make use of non-sustainable shadow economies.

Conclusion

The financial crisis was a massive failure of the core neoliberal strategy of deregulating financial markets, but its advocates have very skilfully redefined the crisis as having been one of public spending, skating over the fact that it was bailing out the banks that put intolerable strain on many countries’ public resources. Since then the growing inequality being produced by neoliberal economy has become an object of concern for the OECD, the World Bank and other international agencies, not for reasons of social justice but because of its looming negative economic effects.

Starting in the US and spreading across the advanced world, the richest 1% of the population is taking an ever bigger share of growing wealth, leaving working people depending increasingly on credit to finance their consumption. The more egalitarian societies of north-western Europe have had a social model that has evaded this problem. How long will it be before dominant economic and political opinion recognizes that understanding, strengthening, and if possible exporting that model would serve the general interest better than undermining it?

This article was first published by Elgarblog. The arguments made above are based on Colin Crouch’s new book ‘Governing Social Risk in Post-Crisis Europe’.

admin ajax.php
Colin Crouch

Colin Crouch is a professor emeritus of the University of Warwick and external scientific member of the Max Planck Institute for the Study of Societies at Cologne. He has published within the fields of comparative European sociology and industrial relations, economic sociology and contemporary issues in British and European politics.

You are here: Home / Economy / Can Insecure Workers Be Confident Consumers?

Most Popular Posts

Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic

Most Recent Posts

transition,deindustrialisation,degradation,environment Europe’s industry and the ecological transitionCharlotte Bez and Lorenzo Feltrin
central and eastern Europe,unions,recognition Social dialogue in central and eastern EuropeMartin Myant
women soldiers,Ukraine Ukraine war: attitudes changing to women soldiersJennifer Mathers and Anna Kvit
military secrets,World Trade Organization,WTO,NATO,intellectual-property rights Military secrets and the World Trade OrganizationUgo Pagano
energy transition,Europe,wind and solar Europe’s energy transition starts to speed upDave Jones

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Foundation for European Progressive Studies Advertisement

Discover the new FEPS Progressive Yearbook and what 2023 has in store for us!

The Progressive Yearbook focuses on transversal European issues that have left a mark on 2022, delivering insightful future-oriented analysis for the new year. It counts on renowned authors' contributions, including academics, politicians and analysts. This fourth edition is published in a time of war and, therefore, it mostly looks at the conflict itself, the actors involved and the implications for Europe.


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

Social policy in the European Union: state of play 2022

Since 2000, the annual Bilan social volume has been analysing the state of play of social policy in the European Union during the preceding year, the better to forecast developments in the new one. Co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), the new edition is no exception. In the context of multiple crises, the authors find that social policies gained in ambition in 2022. At the same time, the new EU economic framework, expected for 2023, should be made compatible with achieving the EU’s social and ‘green’ objectives. Finally, they raise the question whether the EU Social Imbalances Procedure and Open Strategic Autonomy paradigm could provide windows of opportunity to sustain the EU’s social ambition in the long run.


DOWNLOAD HERE

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube