Responsible capitalism means better protection for workers when the music stops

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.