The US stock market fell dramatically at the beginning of March. The reason? More workers had found jobs than the speculators expected. Cuts in interest rates would be postponed and they would not make such heavy profits. This trading in human misery isn’t just the prerogative of the stock markets. As long term unemployment continues the state, throughout the West, is desperate to stigmatise the unemployed and thus cut benefits. The latest attack is the Job Seekers Allowance.

This is just one more of the many steps in the dismantling of the welfare state taken by a crisis-ridden capitalism since 1977. Contrary to the leftist hangers on of the Labour Party this is not merely an ideological campaign by the Tories for less welfarism, in opposition to the Labour Party’s ‘greatest moment’ of 1948, the establishment of central features of the welfare state. Basically the welfare state is now something that the strongholds of world capitalism cannot afford.

In the years after the war the welfare system gave workers the illusion that they had something to gain under state capitalism. Above all it helped to keep the class struggle “within manageable bounds”.

But the welfare state was always an elaborate con. There was never any fund set up to pay for future pensions or unemployment. The whole business was funded by using direct taxation of the working class. The end of the boom has found capitalism out. Today with unemployment at higher levels than at any time since the Thirties, and the population age profile higher than ever, the welfare state is unravelling. It is like a dodgy insurance salesman who spent the premiums of the past 50 years on the horses. We, the punters, are the big losers.

The Job Seekers’ Allowance (JSA) is only the latest part of a concerted attack by capitalism’s agents-in-office on the working class, both in work and out of work. It forms part of a long-term strategy to both reduce government expenditure (to the magic number of less than 35% of the GDP) and to increase profitability through the lowering of wage rates. It has become a well established principle here, that although it may cost the government a little in the short-term, it is safer for the state to make changes in small steps rather than risk an awakening of class anger (as the Poll Tax did).

The rest of the measures are now planned to follow in October. These measures should all have come into force in April but, it is said, the need to train staff and installing new computer systems have delayed matters. It should be said also that staff have generally opposed the new regime because it goes hand in hand with planned job cuts as part of a campaign by the government to reduce its own wages bill. Hence the rash of strikes in so-called “benefit” offices.

The New Regime

Unemployment Benefit and Income Support will be abolished and replaced by the Job Seekers’ Allowance. There will be two versions, Contributory and Means Tested. The government has said that this will be a simplification, replacing two benefits by one, it actually replaces two benefits by another two.

The Contributory versions lasts for six months, unlike the one year of Unemployment Benefit. The Adult Dependant Allowance will be abolished, thus those with enough NI (National Insurance) contributions will not be able to claim for partners. Those under 25 will receive the reduced rate, even if they have enough NI contributions, a similar situation to Income Support at present and for 16-18 year olds it will be even more difficult to draw benefits.

The Means Tested version is similar to Income Support but with a new set of thresholds for reducing benefit. The waiting period before receiving benefit will be two weeks instead of three days. Savings and redundancy will reduce benefit on a sliding scale from £3000 until the cut off point of £8000. Personal pensions will be taken into consideration, as will new rates with respect to part-time working. More important, though, are the new rules governing the other aspects of the benefits. As part of what the government calls a ‘Stricter Benefits Regime’, claimants will have to satisfy stringent new conditions before receiving JSA. They will have to set out a whole series of measures they will undertake to find work. This will include writing to a number of employers every week, telephoning a number of employers every week, visiting so many, turning up at the Jobcentre so many times, searching a series of newspapers every week, registering with employment agencies and so on and so forth. This will form apart from a Job Seekers’ Agreement. If staff do not believe that you are trying hard enough they can ultimately apply a Job Seekers’ Direction. These are instructions to do a series of things, which could mean attending various courses or schemes, making themselves more ‘presentable’ to employers. Sanctions can be applied beyond this situation, i.e… a cut or removal of benefits. These sanctions are now far stiffer under JSA and are expected to be used far more often.

The Background and Effects

The effects of these measures are likely to be in the first year - 70,000 claimants losing all entitlement to benefits, 95,000 being forced into means tested benefits, with 250,000 worse off in some way. Through these new rules the government hopes to cut the unemployment figures by 25,000 in that first year of operation and reap around £400 million within the first two years. They hope to cut the relevant social security spending from £1.3 billion to £0.7 billion. This, though, must be set beside the announced rise in NI employee contributions, from 9% to 10%, raising an extra £2.2 billion. In other words Chancellor Clarke wants us to pay more for less. Rather than address the problems of unemployment and the underlying reasons for it (something capitalism cannot do), they massage of the figures, or “reduce” them by coercion.

The Low-Pay Labour Market

The government is anxious, in its own terms, to create a “flexible labour market” and “reduce welfare dependency”. In the words of the late Keith Joseph,

The only help we can give to the poor is helping them to help themselves; to do the opposite, to create more dependence, is to destroy them morally, whilst throwing an unfair burden on society.

This “remoralising” of society, the return to “Victorian values”, is seen in terms of return to the Poor Law situation of the 1830s when poverty was criminalised. It is evidently moral to create a culture of low pay and destitution welfare benefits whilst handing out greater opportunities for the bourgeoisie to profit at others expense. Through these coercive measures and the new regime ‘in-work-benefits’ unemployed workers and other claimants will be thrown onto the labour market and forced into bidding at ever lower rates for work. Employers will be faced with a flood of people applying for work, alongside the chance to pay less because the government will top-up pay through various new measures. These new pilot schemes and extensions of older schemes include - Family Credit, Earnings Top Up, back to Work Bonus. In a Treasury statement the government had this to say:

An efficient and flexible labour market is one in which unemployed people are helped and encouraged to compete effectively for jobs... (and)... the unemployment benefits system promotes incentives to work and prevent dependency.

Government claims that they are helping people back to work can be rejected. For example:

Only 60% of those leaving unemployment in 1993 went into work compared with 80-90% in the late 70s.

Oxford Review of Economic Policy 1995

Where people did manage to find work is tended to be because opportunities for work arose through the forced devaluation of the pound, or people went into low paid work. It is also the case that there are fewer entering the labour market, fewer school-leavers, there are more going into further education, the population is not growing as much. Just to give further lie government figures claims concerning employment, in 1979 there were 8% of households without a working adult, in 1994 there 19%, and this is likely to rise even further.

Internationally

This attack is not confined to Britain alone. We must set in the context of other events, particularly within the capitalist heartlands in Europe and the USA. In France recently a wave of general strikes and mass demonstrations showed that the French working class were opposed to state’s ‘reforms’ of welfare system (see Revolutionary Perspectives, 3rd series, no. 1). Similarity in Italy, strikes and demonstrations have been the result of the a debt-ridden state’s decisions to alter the pensions and social security regimes (see Workers Voice 75). This is to mention but two. In the USA, where welfare has been cut continually for twelve years, the gulf between the poorest and richest has never been higher. An American dream for the few and a capitalist nightmare for the many.

The Response

These attacks will not go away so long as the working class accepts them. However in the current climate it is relatively easy for the ruling class to keep the employed and unemployed apart. In the recent strikes by the benefit office staff there could be little solidarity with their so-called “clients” who they have to hassle increasingly on behalf of the state despite the JSA. What is required is for workers to look further than the immediate and recognise that the present system has nothing left to offer them. A change of government will change nothing. What is needed is the abolition of the system of production for profit which leads to super-exploitation on one hand and a waste of human potential on the other. It is time the capitalist system was made redundant.

CDE