Responsible capitalism means better protection for workers when the music stops

January 21, 2013 2:27 pm

The media is full of angst, anger and advice for HMV, Comet and Jessops customers who have lost out on gift vouchers, but too few are bothering to spare a thought to the thousands unceremoniously thrown out of their jobs. If Labour believes in a one nation economy, we must make sure that redundant workers get a better deal.

Trauma of redundancy

Anyone reading Caitlin Leyshon’s article in the New Statesman about losing her job in Zavvi should be in no doubt, being made redundant is a painful, traumatic process. Not only does your livelihood and ability to pay your rent disappear – but so do your relationships with friends and colleagues. People spend more than half of their waking hours at work. After long periods of service for one employer it can be near impossible to change working habits, customs and practices to be ready for a new job.

Redundancy Rights

Our redundancy rights are weak and ineffective. Statutory redundancy pay in the UK is calculated as a function of age and length of service. For people who have had their professional identity and livelihood disappear, this pay is essential for allowing a smooth transition from employment to unemployment and back into the jobs market again. But with pay normally barely over a week’s wages for every year employed, a 30 year old who has worked for a company for a decade will get little over two month’s money upon being made redundant. If the company is in liquidation or administration, even getting this will likely be a fight, with individuals often required to go to employment tribunals to secure the money they are owed. If you have worked for an for less than two years, which will become increasingly common as our labour market changes, then you get nothing at all. If there is no money left, the government is forced to cough up for a company’s decision to run its business into the ground.

Even the few rights that exist are under attack from the Coalition government. In November Vince Cable announced that the right to a ninety day redundancy period in large companies where over 100 employees were losing their jobs would be halved, causing many workers to effectively lose forty five days of notice and pay whilst they were losing their jobs. Under the dubious banner of making our labour market more flexible, the government is stealing from the plates of the soon to be unemployed and causing the taxpayer to foot the bill of the extra dole payments which will be the inevitable result of shortening the time period available to people to seek alternative employment.

Labour’s response

At times, Labour’s response to shop closures has appeared to deviate between nostalgia for familiar brands and an odd attempt to blame the government for the lack of success of the companies involved. Not only does this strain credibility- plenty of shops closed during Labour’s time in office- but it misses the key point. While high street closures are inevitable as our retail habits change, shoddy treatment of redundant workers is not. Big name consumer brand closures make media headlines, but each year over 300,000 workers in the UK are made redundant, throwing family finances into doubt and putting futures at risk.

A better way

Where companies choose to make mass redundancies, Labour should ensure that shareholders are required to pay for the social costs of their decisions. Reversing the terrible decision to halve consultation periods for large businesses should only be the first step. Companies should be responsible for a retraining allowance, so former employees can build new skills to find alternative employment more easily. The measly statutory redundancy pay should be increased and reformed, so young people are not so cheap to fire. Where companies end up in administration, workers should have first rights to the proceeds of asset sales, not commercial creditors.

In the neo-liberal fantasy world in which the Coalition government lives, moving between jobs is no more difficult an economic transition than changing insurance providers. In the real world it can be a stressful, upsetting and difficult experience. If Labour wants to speak with authority to the newly redundant workers of HMV, Jessops and Comet, it should promise to ensure that in future people in their position will be invested in and protected, not left on the shelf.

  • Quiet_Sceptic

    Do MPs still get resettlement grants (50%-100% of salary on redundancy/loss of their seat)?

  • AlanGiles

    It is reported today that from tomorrow Jan 22nd HMV will accept gift vouchers again. The trio of Sony, Universal and Warner Brothers are apparently going to help HMV with stock to keep it afloat while the administrators try to find a buyer or buyers.

    That said, it is a great pity so many people are more concerned about the £10 gift voucher Aunt Fanny gave them for Xmas than the livliehoods of hundreds of retail workers.

  • http://twitter.com/youngian67 Ian Young

    I’m sure the bosses of these companies would be the first to tell us that people rely too much on a bloated welfare state. Six months full pay to buy someones job would do much to alleviate the welfare bill.

  • Redshift1

    Well said!

Latest

  • Comment Europe McFadden (rightly) slams EU’s “unacceptable” cash grab. We need to tell Brussels to get lost

    McFadden (rightly) slams EU’s “unacceptable” cash grab. We need to tell Brussels to get lost

    As someone who is broadly pro-European, there comes a point every so often where the European Union do something so completely indefensible that makes you wonder if they want the UK to leave after all. Today is one of those times, with the UK being presented with a backdated bill for £1.7 billion, based on growth calculations that have been inaccurate for 20 years. Seemingly these changes are due to “European Union-wide changes to national accounts designed to better measure […]

    Read more →
  • Comment I’m on the frontline against UKIP and the Tories

    I’m on the frontline against UKIP and the Tories

    Hello! My name is Naushabah Khan. I’m a keen kickboxer, and I’m on the frontline against UKIP and the Tories. Will you join me? I’m the Labour candidate in Rochester and Strood. Mark Reckless defected to UKIP — now we’re in a three-way fight with two right-wing parties and the by-election is on 20th November. I really need you in my corner in the next five weeks. Support has started to flood in already. We’re trying to do something different […]

    Read more →
  • Featured Labour need to go further on the National Minimum Wage, say LabourList readers

    Labour need to go further on the National Minimum Wage, say LabourList readers

    At the start of the week, Alan Milburn the former Labour minister who now chairs the commission on social mobility and child poverty said that Labour’s plan for the National Minimum Wage wasn’t ambitious enough. The party leadership – who have said that they would ensure the minimum wage would be £8 by 2020 – responded to this criticism by deeming it “plainly absurd” and defending their proposed policy as more ambitious than the Tories’. But we wanted to know […]

    Read more →
  • Comment Britain needs to renegotiate its relationship with the real world

    Britain needs to renegotiate its relationship with the real world

    British politics is peculiarly dominated by the relationship between this country and the rest of the world. Margaret Thatcher’s politics were led by the effort to restore Britain’s global prestige. Since then the EU and foreign wars have divided opinion, and hastened the downfall of two Prime Ministers. They may very well undermine third. The political storm of our day comes from the rise of a party interested– it seems –in little other than severing our relationship to Europe. Every […]

    Read more →
  • Comment Europe McFadden’s appointment comes at a time of big opportunity for Labour on Europe

    McFadden’s appointment comes at a time of big opportunity for Labour on Europe

    Pat McFadden is taking over the Europe brief just at the time when the issue can work in Labour’s favour. Provided we hold to Ed Miliband’s decision not to cave in to the calls to offer an in-out referendum. Europe is again becoming toxic for the Tories. How Cameron must be looking back wistfully to that time when he told his party to stop banging on about Europe. That’s exactly what it is now doing. And it’s largely his own […]

    Read more →