It's About Labour, Not Captial

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We've been told that this election is about growing the economy. But all of the parties are still focused on capital, not labour. Murray Dobbins writes:

Just three weeks before the federal election comes a report from Morgan Stanley that should remind everyone that the election is still about the economy. The message of the paper is as unambiguous as it is surprising: the era of cheap labour is over. It all has to do with demographics, which are changing, and public policy, which is not.

For thirty years, we have been living under the dark shadow of supply side economics -- which holds that governments should cater to the demands of capital. And that's what they have done, as the world experienced a surplus of labour:

The percentage of the global population who were working experienced a huge increase in recent decades due to the post-war baby boom in developed countries and the entry of China and Eastern Europe into the capitalist system. That abundance of working-age people created the conditions for the cheapening of labour and the reduction of its bargaining power. That, says Goodhart [the author of the report] is already ending, noting that "population growth in the rich world, which was 1 per cent a year in the 1950s, has fallen to 0.5 per cent and should drop to zero by 2040."

Governments eager to advance the interests of large corporations took advantage of this labour surplus by developing convenient theories to justify a broad assault on wages and salaries -- and unions. Things like labour standards, generous employment insurance and poverty-reducing welfare schemes made labour "inflexible," the argument went -- by which they meant uppity workers demanding their fair share.

The Liberals, under Paul Martin, put the squeeze on labour. And, under Stephen Harper, that squeeze has become an iron grip:

It was Liberal finance minister Paul Martin who implemented the grand plan in the mid-1990s. Insisting that inflation greater than two per cent was a threat to the economy, Martin used high interest rates to actually suppress economic growth and deliberately create high levels of unemployment. Few people recall that under Martin's reign, unemployment hovered around nine per cent for most of the 1990s -- higher than at any time following the 2007-08 financial collapse.

Artificially high unemployment was perhaps the most powerful weapon, but Martin also hit workers with draconian cuts to EI eligibility and the elimination of the Canada Assistance Plan (CAP). The CAP transferred money to the provinces and was targeted specifically at establishing a minimum national standard for welfare. With its cancellation, the provinces were free to radically reduce social assistance rates. The provinces also began cutting back on the enforcement of labour standards -- dealing with things like time-and-a-half for overtime, disallowing back-to-back shifts, unpaid apprenticeships, notice of dismissal, sexual harassment, etc. Added up, it meant a dramatic reduction in the power of labour to bargain with employers.

The result of all of these policies has been the creation of the precariat:

The 25-year pursuit of cheap labour across the developed world has resulted in what has been called the "precariat" -- those working in precarious, low-paying jobs with little or no protection from ruthless employers. Paul Martin's anti-labour crusade (continued by Stephen Harper) has given Canada the dubious honour of having the third-highest percentage of low-paying jobs in any of the 35-nation OECD countries -- with 22 per cent, it is third behind the U.S. and Ireland (the average is 16 percent).

 Now, as we boomers retire, the world is facing a shortage of labour:

The Morgan Stanley paper contains a warning to employers -- that if they continue to mistreat and underpay their employees they will pay the price with an increased militancy as labour shortages kick in and workers' bargaining power increases. Goodhart recommends that employers get out ahead of the curve: "The synergies are stark: if the global economy needs a return to higher-paid work, then attacking precarity is the quickest way of achieving that." I can't see that happening any time soon and personally I'd like to see a little militancy for a change.

However, the Harper government has absolutely no time for labour. They don't see what's coming. But, then, they have never seen what's coming.