Harder or smarter? Work intensification and reforming capitalism

stress_at_workBritish workers are suffering, with little to show for it. As Sarah O’Connor writes in last Wednesday’s FT: “[they] are working harder than at any time in the past 25 years, to tighter deadlines and with less autonomy. Medical research shows a link between “high strain” jobs, which combine high pressure with a lack of control, and cardiovascular disease, musculoskeletal problems, stress and depression.” She notes that the recent World Mental Health Day brought news of employer initiatives to combat workplace exhaustion. But will this be enough?

According to recent surveys, 20 percent of women and 15 percent of men were in high strain jobs in 2017, the highest percentage on record. Thus huge numbers of Britons are apparently working harder, but not smarter, with average productivity around a fifth lower than in France and Germany, two countries which have significantly shorter average working hours and more holidays than the UK.

Productivity and wages have stagnated for a decade and while most rich countries have seen weakened productivity growth since the financial crisis, the UK has performed particularly poorly. Companies have “underinvested in new technology relative to their peers” and many seem to have relied on increases in employee work intensity to support growth in output.

These trends are unsustainable. In the long run, increases in living standards, balanced between welfare gained via income from work, and leisure time, must come from rising productivity, often measured as the output produced per hour of work. Increased output can result from working longer or more intensive hours but there are only so many hours in the day and limits to how much workers can respond to demands to achieve more in the same time.

Ill-health resulting from overwork can lead to economic losses in the form of lower productivity, reduced morale and goodwill towards employers, and even lost hours and absenteeism. If people end up on disability benefits, this represents a further cost to society.

The Institute for Public Policy Research, a left-of-centre thinktank, recently published the final report from its Commission on Economic Justice. It argues that the UK labour market is divided into those who do relatively well and those who suffer from job insecurity, long hours and low pay. Modern practices of ‘flexibility’ have contributed to these problems. Declining trade union membership has also weakened the bargaining power of many employees.

This rise in work intensification has been caused in part by increased competition in product and labour markets, the rising influence of shareholder value in the private sector, and public sector downsizing, most recently in the austerity drive. These trends are not new, but are some of the negative consequences of the neoliberal turn in economic policy which began in the late 1970s and 1980s, particularly across the Anglo-Saxon world, and to a lesser degree in continental Europe.

Was it all inevitable then? Falling profit rates in many rich countries in the late 1960s and 1970s led to a shift in the dominant political ideology from Keynesian welfarism to neoliberalism in many countries, and clearly something had to change. However this rightward shift has undoubtedly contributed to dramatic changes in the workplace, some of which have surely reached their limits, as described above.

According to Marxist theory, there is an inevitable struggle between labour and capital over the length and intensity of the working day. Workers are paid, not for their labour, but for their labour power, or their capacity to work. Under capitalism, there is a competitive drive for firms to raise profitability, investment, output and productivity. Once the wage has been settled, there is an inevitable pressure from capital via management to extract as much labour as possible from the workforce.

As Marx recognised, there are limits to this process, in both directions. Since the industrial revolution, in many countries that have grown rich, working hours have in general fallen, and workers have gained various rights in the workplace, child labour has been banned and so on. However in recent decades, neoliberal policies have pushed back in the opposite direction.

Perhaps Marx neglected the role of co-operation in the workplace. While there may be a struggle between capital and labour over work intensity, such that they have partly divergent interests, there are also mutual interests in increased productivity, the proceeds of which are distributed between wages and profits.

This shared interest means that perceptions of trust and fairness over work can incentivise co-operation and more efficient working practices. This is where institutions such as trade unions can act as a ‘countervailing power’. They can represent workers collectively, increasing their influence over pay, working conditions and performance and provide some balance to the capital-labour relationship.

As O’Connor argues in her article, when it comes to workplace exhaustion and improving worker wellbeing, employers must recognise that they are part of the problem and should offer deeper solutions than overwork followed by suggestions for workers to meditate.

Many are unlikely to do this in the absence of the countervailing power of trade unions. It is no accident that in many northern european countries such as Germany and Sweden, stronger trade union influence has sustained shorter average working hours alongside significantly higher productivity when compared with countries such as the UK. This results in higher living standards, including more leisure time. While trade union membership is in decline in these countries as well, they remain much more influential than in the UK and US.

In order to reverse these damaging trends, a shift in bargaining power back towards labour is surely necessary. This is more likely to happen in a tight labour market, in which demand is pressing on supply. This seems to be the case in the US at the moment, thanks to Trump’s pro-cyclical fiscal expansion and monetary policy that remains loose.

Firms are beginning to struggle to fill vacancies, which is putting upward pressure on wages. However, trade union density remains low and current labour market conditions may have to be sustained for some time to encourage ordinary workers to press for improved working conditions.

Things are a little different in the UK. Real wages have been stagnant for a decade, and although unemployment is low, and the employment rate is higher than in the US, there is scant sign of wage inflation. Once again, a period of sustained tightness in the labour market, and a leftward turn in economic and social policy is needed, without squeezing profits excessively and reducing investment, or leading to excessive inflation. This will be a delicate balance to strike, and our political masters are far from omnipotent.

The way to higher wages without squeezing profits and investment is for productivity to rise faster and to return to its pre-crisis trend. But higher productivity must come with improved pay and working conditions. This is proving difficult to achieve in the UK and requires policies which go beyond more progressive labour market and social policies to industrial and technology policy, investment in improved infrastructure where it is most needed, and even to political changes such as regional devolution to decentralise power and decision-making.

It also stretches to reducing the cost of housing, which some economists argue is a source of labour market rigidity, as many workers cannot afford to relocate in order to find more remunerative and satisfying jobs.

In short, for the UK at least, the current economic model is in dire need of change, and reducing work intensification and improving well-being in the workplace requires changes across a whole raft of policy areas. With the government heavily preoccupied with Brexit, for now this seems some way off.

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One thought on “Harder or smarter? Work intensification and reforming capitalism

  1. You write: “In order to reverse these damaging trends, a shift in bargaining power back towards labour is surely necessary.”

    I agree with you on this and practically every point you make in this post featuring a very important issue.

    We may disagree on your suggestion of an earlier and more pronounced ascent of neoliberalism in the UK compared to Europe; but the matter is many faceted and you may be right in a number of aspects of the issue while your point may appear less convincing in others. But this question is naturally controversial and not that important for my present purposes.

    However, I’d like to point out that continental Europe witnessed a dramatic neoliberal turn in the early 1980s, with Mitterrand making an astounding about-face, transforming a man campaigning on the promise of pursuing staunch socialist policies into a neoliberal champion of austerity.

    More generally, what I find particularly pertinent to the issue that you are writing about in the present post is that the left as the champion of the working population has disappeared.

    Those considering themselves to be on the left are more into protecting the environment than human beings. While the problems with the environment are fictitious, the hardship suffered by millions of people in the EU are real.

    The Italian government has to beg the EU for charity in order to pursue a socially responsible economic policy.

    But the EU figureheads and their bureaucrats do not relent, insisting that their totem be worshiped — the procyclical and antisocial Maastricht criteria whose observance boils down to fetishising meaningless numbers at the expense of the welfare of millions of Europeans.

    It is the high priests against the masses, while the better off Europeans sneer at their disadvantaged brethren.

    Where are the calls for socially acceptable policies?

    Where is the left? Well, the left left long a go.

    The EU is a monument to the death of social democracy, the victory of neoliberalism and the defection of the left to its former opponents and its acceptance of the world view of capital.

    There is an urgent need of Vergangenheitsbewältigung (coming to grips with the past after a period of utter political failure) on the part of the left, who ought to look carefully into the matter of their turncoat-syndrome.

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