Tuesday, 25 May 2010

It is economic insecurity, more than immigration, which Labour struggles to talk about

A guest post from David Coats on how Labour's post-election inquest risks missing the point.

There is a depressing consensus emerging that a failure adequately to deal with the issue of immigration was a major contributory factor in Labour’s defeat. It would be absurd to deny that the issue was of real concern to the electorate – what was the substance of the “bigot” incident all about anyway? But it would be equally wrong to believe that a tougher stance would have delivered more votes or that victory could be achieved quite so simply.

To begin with we need to be clear about the economic consequences of migration since 2004 from the new EU member states of Central and Eastern Europe. The best evidence suggests that there was no negative impact on the employment prospects of “native” British workers and no downward pressure on wages either. Some may find this conclusion counter-intuitive and will draw attention to anecdotes involving job loss and wage cuts. But public policy has to be driven by social science, not by what somebody in the pub or at the school gates has told you. A strong case can be made that the arrival of large number of Poles and Lithuanians helped the economy to grow more rapidly than would otherwise have been the case. Labour shortages were avoided, interest rates remained low and inflation was subdued. At the same time of course the National Minimum Wage was rising faster than average earnings, which guaranteed a firm floor in the labour market. These are hallmarks of policy success, not failure.

So does this mean that we can simply discount the immigration issue and move on to more comfortable territory for the centre-left? The answer here, I’m afraid, is a resounding “no” and the reasons are deeply embedded in the ideological construct we know as New Labour. There is a gap between public perception and reality on the one hand – immigration has not had adverse labour market effects even though many people believe this to be so – and an inability to talk about economic insecurity on the other.

New Labour often gave the impression that markets were difficult to resist, that intensifying global competition was an inevitability, that workers had to adapt themselves to the demands of the knowledge economy and that the state’s only role was to equip people with the skills needed to find a secure place in a rapidly changing world of work. At the same time of course employers were retreating from their own welfare responsibilities, eroding or abandoning final salary pension provision and engaging in a permanent revolution of continual corporate restructurings and reorganisations. People may not have lived in fear of imminent job loss (although the recession changed all that) but they were uncertain about their futures in an era of bewildering change.

Two groups of Labour voters were squeezed by these developments. First, those with either no or low qualifications working in industries exposed to low wage competition from the developing world and second, those described in market-research speak as C2s, employed in semi-skilled jobs and on the receiving end of technological change, rising customer expectations and intensifying competition. By 2010 New Labour had little to say to either group. Our rhetoric was focused on the alleviation of poverty, self-evidently a noble aim, but of little direct relevance to manual workers losing their jobs or the struggling bottom of the aspirational middle classes.

Moreover, until very late in the day the government made only half-hearted attempts to capture public anger about excess at the top, bankers' bonuses and wholly unjustified rewards for failure. Ministers found it hard to explain why economic insecurity in an age of affluence was such a problem for so many voters. In other words, we had forgotten Bill Clinton’s elementary lesson. It was and remains “the economy, stupid” that gets social democrats elected. Labour will only deserve the public’s trust again when we can answer the hard questions about economic insecurity.

That means looking beyond the migration issue to questions of corporate power and responsibility, the regulation of the labour market, the role of trade unions and the prospects for industrial democracy. That is the real challenge for the leadership contenders and it has absolutely nothing to do with the toughness or otherwise of Labour’s immigration policies.

David Coats is a research fellow at the Smith Institute.


Robert said...

Well tats why your in opposition now, you can look back on this and make statements as much as you like.

Immigration and migration has affected many many people in my area. I look around at the Polish people who now live in council houses around me, one lad lives in a three bedroom council house on his own, yet the lady who has been waiting for five years with her kids, is still waiting.

I'm sorry but you cannot keep pulling the wool over people eyes if you like until you go blue in the face, we can see the difference immigration has made.

Smowboy said...

Very good analysis and very true. Only one small problem, your proposed solution.

"That means looking beyond the migration issue to questions of corporate power and responsibility, the regulation of the labour market, the role of trade unions and the prospects for industrial democracy"

You are going to look beyond at questions?

Could you be more specific?