IPR Blog

Expert analysis, debates and comments on topical policy-relevant issues

Topic: labour market

Spring Budget 2017: T-levels, apprenticeships and industrial strategy

📥  Economy, education, future, labour market, policymaking

Dr Felicia Fai is Senior Lecturer in Business Economics and Director of Widening Participation and Outreach at the University of Bath's School of Management

In many ways, there were no real surprises in the Spring Budget, with many of the initiatives having been announced in the Autumn Statement, which focussed more specifically on science and industry. The point of greatest novelty (although still not a complete surprise) was the focus on the longer-term future pipeline of talent in the workforce and the need to raise productivity in the UK. There is some attempt on the government’s part to more comprehensively approach the issue of the future workforce, and to provide an alternative but equally prestigious and valuable route into education and careers to the standard ‘A-level + Bachelor’s degree’ route. The government will create the ‘T-level’ for 16-19 year-olds, in which formal training hours will be increased by 50% over existing options and include a minimum 3-month placement in industry to ensure school leavers are ‘workplace ready’. This is in addition to other vocational initiatives that the previous parliament established, such as the creation of 1,000 degree apprenticeships, plus implementation of the new apprenticeship levy that will commence in April 2017. Beyond the 16-19 T-levels, loans are to be made available on a similar basis to existing support for university degrees to study at the new institutes and technical colleges the government intends to create. Further, at the highest educational levels, there is £300m funding support for 1,000 PhDs across all STEM areas.

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The announcement of T-levels and a commitment to apprenticeships is welcome. The UK has long suffered from having too few clear and well-recognised (by both applicants and employers) alternative routes into skilled and high-paid work except for university degrees – and it is clear to me, as a university lecturer, that a degree structure and the forms of learning and knowledge testing used as standard forms of engagement in degree-level programmes do not suit all learners; nor is it always the most appropriate way to develop skills. As a senior admissions tutor for undergraduate programmes, I consider applications from mature applicants in their early- to mid-20s who state that, whilst they have progressed in their careers since leaving school, they now realise their ability to advance in their careers further is blocked by not having a formally recognised degree. I do wonder whether the decision to attend HE is the right one for them.

Sometimes, people are not ready emotionally or intellectually to deal with university-level education at 18, so choose not to apply for entry straight after school. Coming in later would seem appropriate, and we welcome them as they are more likely to succeed now than they would have been had they tried to come earlier. Others may have avoided university because they recognised early on that they did not want to, or were not able to, think in the particular ways in which we require students to think in order to achieve good marks in academic institutions driven by a strong research culture. For example, a recurring weakness in exam performance is the failure of students to answer the specifics of the question set – as opposed to displaying the general breadth of their knowledge – and an ability to make connections between the content they experienced on one subject and the content in the subject the specific exam is testing. The latter is looked for more generally in coursework or dissertations, but is not always appropriate in examination settings. There have been times in my career when I have seen the promise of an individual in the workplace setting and known that they will be a truly amazing employee, manager or future leader precisely because of their ability to see the ‘bigger picture’; yet, in the classroom and in written coursework and exams, they do not reveal the academic skills and precision that would get them the marks which signal their potential. Being ‘book smart’ is different to ‘street smart’, but our current system of HE is highly skewed towards the former.

The T-levels will offer a more streamlined pathway, with focused routes into 15 different areas, and have the potential to offer a different and equally valued and prestigious route into a career; but will their potential be realised? Leaving specific content aside, one of the key problems is the low profile, poor advertising and opacity associated with alternative routes into a career. The most well-established path is GCSEs, A-levels then university degrees. Chancellor Philip Hammond noted in his speech that 13,000 vocational and technical qualifications exist. How many of these are well-recognised and valued by HE institutions and employers? How much advice can cash-strapped schools and colleges provide on these qualifications to individuals looking for a career path that does not involve attending university for a bachelor’s degree? Arguably among the most well-established and widely recognised vocational qualifications are HNDs, NVQs and BTECs; how will these fair with the introduction of the new T-levels? Will the T-levels be a complementary or alternative offering to these existing qualifications, and, again, how will under-funded schools and FE colleges cope in terms of resourcing them? Whilst the Chancellor is keen to maintain choice, in reality will this mean cutting back on the provision of existing vocational qualifications?

Even if there could be a smooth introduction for T-levels, there is the question of how they would lead to more training and qualifications. One can envisage that T-levels could lead either directly to an apprenticeship, or to a place on one of the new degree apprenticeships that should emerge in the next few years, much like A-levels are the most commonly accepted way of accessing bachelor degree programmes. However, again, the pathway of this route is not as smooth as the one into existing degrees.

Whilst the government proudly announces its claim about 1,000 new degree apprenticeships being formed, the system that alerts people to these opportunities is hard to find and tricky to navigate. The chances of a person finding the right degree apprenticeship for them is remote – at least without a significant personal investment of time and research effort trolling through university or employer websites. The UCAS website provides basic information about apprenticeships, questions to consider and how to apply. It also lists employers with current schemes and links through to the government’s apprenticeship website – but from there the application process proceeds on a case-by-case basis because applicants are considered to be applying for jobs. Degree apprenticeships should grow quickly in the next few years, given the compulsory levy, and assessing these entirely on a case-by case basis is likely to become increasingly bureaucratic and cumbersome for both the employer and the university partner – who both need to be satisfied the applicant meets their respective requirements. The T-levels, alongside the better-recognised and better-established vocational qualifications, could be used as publicly available entry criteria by the universities providing the degree apprenticeships on the UCAS website. The applications should be made through an expanded UCAS service so that one application could be sent to multiple degree apprenticeships. From there, universities could select applicants who meet their academic requirements in a first round of consideration, and then this subset could be forwarded for consideration by the employing organisational partner in a second stage of the selection process; together, these actors could make a decision as to the suitability of the applicant. This would streamline the process for applicants, universities and employers alike, reducing the opacity and confusion of a currently complex pathway between school, post-16-19, further education, higher education and beyond.

The announcement of T-levels is an interesting proposal, and a welcome one at that – but there needs to be deeper and more systemic policy-thinking about how its introduction and implementation, as well as that of the apprenticeship levy, will lead to a greater proportion of the future workforce having the requisite skills to raise UK productivity.

 

UK Industrial Strategy – Mirage or Destination?

📥  Economy, labour market

Dr Felicia Fai is Senior Lecturer in Business Economics and Director of Widening Participation and Outreach at the University of Bath's School of Management

The UK’s Industrial strategy green paper was released on Monday 23rd January 2017. It is founded on 10 pillars that the government predicts will drive productivity and balanced economic growth – but its reception has been mixed, with some business leaders giving a lukewarm and others a more resounding welcome.

A dirty term

To reiterate what Carolyn Fairbairn, Director-General of the CBI said, it is better to have an industrial strategy than not, so it is good to see the UK government explicitly embracing an industrial strategy – something of a dirty term in previous governments of the last 3 decades, among whom a non-interventionist philosophy has prevailed. If we look at emerging economy challengers such as China and India, however, it is common to have 5-year plans and to prioritise the industries that will receive investment and support – automotive and aerospace, pharmaceuticals, etc. Furthermore, as an academic working out of a Management School, I know that no organisation operates without a strategy; thus it seems strange to observe previous governments’ aversion to the term.

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The reluctance to embrace industrial strategy proceeds, in the case of the UK, from having been burnt by such an approach in the 1970s – when the government attempted to ‘pick winners’ and failed miserably. However, modern academic definitions of the policies arising out of industrial strategy are much broader and more comprehensive:

“[Industrial strategy] comprises policies affecting ‘‘infant industry’’ support of various kinds, but also trade policies, science and technology policies, public procurement, policies affecting foreign direct investments, intellectual property rights, and the allocation of financial resources. Industrial policies, in this broad sense, come together with processes of ‘‘institutional engineering’’ shaping the very nature of the economic actors, the market mechanisms and rules under which they operate, and the boundaries between what is governed by market transactions, and what is not”[1].

This contrasts with a definition provided in a recent House of Commons Library Briefing Paper[2]:

“’Industrial strategy’ refers to government intervention which seeks to support or develop some industries to enhance economic growth”.

The latter definition appears to prevail in the minds of the public, and explains the rather mixed reception of the green paper. If our understanding of the purpose of industrial strategy is to support some industries, then it is unsurprising that industries which are specifically mentioned – such as the creative industries and aerospace – have welcomed it, whereas others perceive the green paper as merely reiterating what the government is already doing with little added that is new. It has also been criticised for being a broad, discursive paper with little insightful direction. To be fair, it is a green paper, not a white one – and in that sense fulfils its purpose: to engage discussion and seek feedback from those potentially affected by its proposals, and to inform future policy formulations. However, it seems that the government has moved to a definition of industrial strategy that is closer to the broader definition. What if we interpret its breadth and apparent reiteration of existing policies and initiatives as deliberate? How do we assess it then?

Safeguarding innovation

As an academic with a background in evolutionary economics and an interest in the role of systems, the fact that much of the content looks familiar is comforting to me, not disappointing. Most innovation is incremental rather than radical; knowledge progresses cumulatively. Radical shifts in policy are disturbing to industry, not reassuring (although maintaining stubborn adherence to an inappropriate path would be irresponsible). The ‘exogenous shock’ is of course Brexit, which does require a strong response from UK industries who look to the government for guidance. The steer the government has given in its proposed industrial strategy is not radical in itself, but the methods by which it will be pursued are more multifaceted than they have been in the past two decades – and their delineation clearer.

The green paper might be called ‘broad’, but a kinder interpretation is that it is seeking to be ‘comprehensive’. Much of it is encouraging. It continues with the horizontal support that has proven popular in the last three decades (albeit with some new initiatives – the Industrial Strategy Challenge Fund, for example), potentially allowing all industries to benefit. Importantly, however, the paper also signals a willingness to re-engage in vertical support for some industries, so far identified as ultra-low emission vehicles, life sciences, industrial digitalisation, nuclear energy and the creative industries. The paper recognises the need to increase productivity and the quality of human resources with improved basic education in STEM and more business-led vocational routes. It also recognises the role of capital in raising productivity – both physical capital investment in infrastructure for transport (rail, road and air) and digital infrastructure. Further, in its identification of the need for ‘patient capital’, it acknowledges the importance of financial infrastructure – particularly that targeted towards the commercialisation stage of innovation processes.

While the UK has always been a great trading nation, the pillar ‘encouraging trade and inward investment’ takes on particular significance in the Brexit and post-Brexit era. Addressing the gap in basic skills to raise productivity, thereby driving our comparative advantages in science and innovation, is critical if we are to ensure that our capabilities are augmented to the point that they compensate for any higher costs companies might face when trading from the UK with the EU in their international value chains. In this way, the UK can remain attractive as a location for inward direct investment. Simultaneously, the government is using industrial strategy as a tool to address the underlying reasons behind Brexit – inequity in wealth creation and disparities in regional growth. The pillars on ‘developing skills’, ‘upgrading infrastructure’ and particularly ‘driving growth across the whole country’ resonate with earlier rhetoric to improve the UK economy for all and achieve more balanced growth across regions.

The move to devolved regions makes sense. Regional economic geographers and scholars of innovative clusters all find the formation of relationships and knowledge creation, diffusion and transfer operate best when there is physical proximity between different organisational players. The emphasis on regions also reflects influences from EU policy based on the SMART specialisation of regions. Having conducted the first Science and Innovation Audit in 2016, the government’s understanding of the industrial basis upon which various UK regions might build industrial strength is much clearer and the variance highlights why a one-size-fits-all approach will not work.

At the same time, clusters – when completely localised – can lose their energy, inspiration and relevance. They need to be connected to other clusters and the wider global economy. These connections can be created through the presence of multinationals in the economy. These are often, but not always, large corporates – academic work on international new ventures and born-global companies attest to the rise of technology-based SMEs which operate globally. Therefore, the sections in the green paper stressing the importance of anchor organisations and the supporting role they play, the importance of supporting start-up businesses, and, crucially, the importance of encouraging trade and inward investment are integral. Anchor firms have the capability to embed local SMEs into their global supply chains. The small firms can be supported by anchor firms through their growth stages via mentoring support, and their financial security ensured through procurement contracts – but this requires the UK to have strong SMEs with ambitions to be international in the first place.

Policy to practice

Nevertheless, as managers are well aware, strategy – while useful as a broad plan of action – is one thing, its implementation and the fulfilment of strategic objectives another. So whilst the outline proposals for UK industrial strategy are reassuring, it is still an open question as to whether this strategy will come to fruition.

In part, it depends on how the 10 identified pillars will influence the UK, as well as its regions and industries, as systems (national, regional and sectoral innovation systems). In the evolutionary economic perspective, systems consist of both ‘nodes’ and, critically, their relationships. Indeed, within the green paper there are lots of ‘nodes’ – the involvement of private firms (large and small, manufacturing and service based), universities, colleges and schools, government departments and supporting institutions. They are each being asked to undertake multiple tasks, roles and responsibilities which may be challenging for some. The role of relationships between the nodes seems to be recognised in several ways. For example, creating the right institutional support that helps the sharing of knowledge, establishing contacts for businesses and representing their collective views, encouraging organisations to come together to seek support from the government to ease the regulatory environment and so on.

The importance of relationships is also reflected in the green paper’s emphasis on the regions, and this is perhaps the greatest novelty in the proposed industrial strategy. Whilst we know the benefits and potential pitfalls of localised economic activity from regional economic geography and innovative cluster research, these agglomerated effects have emerged rather organically. How to purposively foment these same changes by implementing a place-based strategy within devolved government is a new challenge of which the UK has little experience beyond the level of the four nations within the UK. You can create the institutions to support the growth of industries, small businesses and regions, but whether they operate effectively to raise productivity and economic growth is another matter.

Financial commitment from the government will also affect its ability to deliver the strategy. Whilst big announcements about increased investment for UK science and technology and the establishment of various funds for horizontal support are welcome, local governments and LEPs face tight budgetary constraints – so although it would be politically popular, giving greater autonomy at the regional level might put additional strain on resources.

Another significant challenge is the timeframe. To implement this proposed industrial strategy requires a long-term commitment from the government – and successive governments. Political challengers to the incumbent government may not look substantial at present, but there must be a degree of continued support for these various initiatives in future.

Overall, this green paper is a stage in a process. The government appears to be genuinely seeking a coherent and consistent strategy which will led to the formulation of a set of policies that are designed to improve the performance of the economy. Time will tell whether this stronger embracing of industrial strategy is any more successful than its predecessors.

The green paper is open for consultation until 17 April 2017.

[1] Cimoli, M. Dosi, G. and Stiglitz, J. E. 2009. Industrial Policy and Development: The Political Economy of Capabilities Accumulation, Oxford, Oxford University Press, pp1-2.

[2] Rhodes, C. (2016) “Industrial strategy”, House of Commons Library Briefing Paper, Number 07682, 14 October 2016.

 

The rise of Bristol, success but not yet shared growth — notes for a new mayor

📥  cities, Economy, education, employment, labour market, Welfare, young people

Gavin Kelly is Chief Executive of the Resolution Trust, and former Deputy Chief of Staff at 10 Downing Street.

Any outsider asked to comment on Bristol’s prospects should, of course, tread fairly carefully. I love coming to the city but claim no special knowledge of it. I like to think I’ve been here enough to see past the standard cliché that it’s a city made of hipsters and hills, balloons and bridges. But I have no granular understanding of the different communities within the city, the twists and turns of its economy, and how its politics have ebbed and flowed.

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So I’m going to rely instead on some arid statistics to form a dispassionate external impression. Statistics are, of course, always partial and quite often misleading. They never tell the whole story  – they’re just dots on a chart. But if you join the dots you form a picture, even if it’s a sketchy one. And pictures can be very revealing. As I’ll explain, the image that emerges for me is a city that has rare strengths as well as major challenges.

What’s happened in Bristol should, I think, be of interest across the country. That’s because to some degree Bristol’s story reflects the received wisdom about the correct recipe for urban economic success. Mix physical regeneration of a city-centre with a successful and growing university, a large pool of high-skilled labour and strong transport links. Sprinkle in some cultural-cool and a high quality of life. And then sit back and watch a place thrive. On this basis, Bristol has the lot.

Given these ingredients, how does the city perform? Like most things, it’s a mixed story. Its strengths are very real: simply put, it has high employment levels, above-average pay for those working in the city, and a remarkably high share of graduates in the workforce. These are big assets. Some cities have lots of jobs but weak pay; others have decent pay but fewer jobs. To do well on both fronts is impressive. And being a magnet for graduates is more vital than ever. Every city that wants to succeed in high-knowledge, high-value sectors will always require a critical mass of highly-educated workers. Outside of London, Bristol outperforms every other city in the UK on this front with 4 in 10 of those in Bristol’s workforce holding a degree.

So far so good. Why, then, do I say the city faces deep problems? For me, three challenges stand out.

First, it is something of an understatement to say that the benefits of the city’s success have not been evenly shared. It is a city of deep inequalities. If we look at child poverty across the city we find a gigantic poverty gap with 5% of children in poverty in some wards and just under half in others. That’s a far more pronounced difference between affluent and deprived communities within a city than we see in places like Glasgow or Nottingham.

But to really get a sense of the challenge facing Bristol look at educational inequality. GCSE attainment for state schools in the city is slightly below the national average and this is mostly due to the low attainment of the poorest children. 25% of pupils on free school meals in Bristol reach the usual benchmark of 5 good GCSEs including English and Maths, compared to 62% of non-poor pupils. That’s a big, ugly, 37% gap between the poor and the rest: only nine local authorities in the country have a larger one. Put simply, non-poor pupils in Bristol do better than the national average, whereas the poor do worse.

This inequality at age 16 is maintained as young people progress. Just 13% of those on free-school meals in Bristol at GCSE progress onto higher education (and the gap between the poor and the rest in this regard has been getting larger in Bristol over time while it shrinks nationally). To put this in context, compare it to the London story. In Inner London half of the poorest kids achieved five good GCSEs including English and Maths. That’s not much lower than the overall score for all pupils in Bristol. And 42% of the poorest pupils in inner London go on to university. That’s three times as many as in Bristol. Let me repeat that: a poor child in London is three times more likely to progress to higher education than their counterpart in Bristol. And, no, it’s not just London: the 13% of poor children progressing to university compares to 30% in Birmingham and 25% in Manchester. Until this is turned around then any talk of improving social mobility in the city will be a pipe dream.

Even on wages  –  where Bristol performs better than average –  there is still a lot of poverty-pay: one in five workers earn less than the (real) Living Wage. Moreover, like everywhere else in the UK, it has been a lost decade for workers. After the financial crisis average pay in Bristol collapsed all the way back to the level it was at in 2001. As of today it has climbed back to 2005 levels. It would be very surprising if pay returns to its 2009 peak before 2020.

If the first big challenge facing the city concerns inequality then I’d argue that a second issue concerns productivity. Bristol has its very own productivity puzzle  –  and it’s a worrying one. Now, in some ways that’s an odd thing to say. Bristol  – and the South West region  – performs better than large parts of the UK on this score and, historically at least, the city looked like a strong performer outside London. The puzzle is that since the financial crash Bristol’s productivity has been sliding backwards. It now stands at just 93% of the UK average (and bear in mind that this has occurred while national productivity has itself flat-lined).

The conundrum grows when we consider that Bristol very nearly matches London in terms of the high share of graduates in the workforce. Yet it resembles places like Darlington or North Lincolnshire in terms of productivity. That’s an odd combination. It should cause pause for thought within the city’s business community and invite questions about the utilisation of skills, along with the quality of infrastructure in the city.

Finally, there is  –  of course –  the housing challenge. Again, Bristol is hardly alone in facing acute affordability issues. But the problem is particularly severe and getting worse. The average house price in Bristol has now passed £250,000. According to the ONS it has jumped 15% in the past year alone, 50% since 2010 and 255% since 2000. You don’t need me to tell you that this isn’t sustainable. To see why look at the ratio of house prices to average earnings. It leapt from around 5:1 in the early 2000s to over 9:1 today. Or to put it another way, house prices have grown more than 3 times faster than earnings in Bristol since 2002. And things are just as bad for renters. A household on a modest income in the private sector will typically spend at least a third of their total income on rent. That is what housing experts call ‘unaffordable’. And it puts Bristol in the top quarter of the most expensive places to rent in England.

Let me finish by saying that being a mayor of an incredible city like Bristol must be a remarkable privilege. But being a new mayor has to be both a luxury and a burden. It’s the former because you have the joy of being able to speak freely about the city’s challenges. And it’s the latter because you know that moment is a fleeting one and that soon all the city’s shortcomings will be hung around your neck if they aren’t addressed.

I hope and expect the new mayor will prioritise an agenda of ‘shared growth’. Doubtless he’ll already be familiar with the received views on the right recipe for a successful city. My argument is that some extra ingredients are required. I hope he won’t hold back in being candid about the scale of the challenge if the ‘shared’ part of the equation is to be made real. And he’ll need to be ambitious and innovative in his agenda for putting it right.

This piece was the basis of remarks made in response to the Inaugural Address of the Mayor of Bristol, Marvin Rees. It first appeared on Gavin Kelly's personal blog.

 

Young, Female and Forgotten?

📥  Economy, employment, labour market, Welfare

Professor Sue Maguire is Honorary Professor at the IPR, and is distinguished by her important work on the topics of education, employment and social policy.

Way back in 1988, the Thatcher government, through the Social Security Act, took most young people under the age of 18 out of the unemployment statistics by effectively removing their welfare entitlement. Then, in the 1990s, concerns over the numbers of 16-18 year olds who were not engaging in formal learning, training or employment led to the creation of the term ‘NEET’ (not in education, employment or training) – which sought to capture the size and scale of youth disengagement and social exclusion. In the UK, as in most countries across Europe and other advanced economies, the economic turmoil of the 2000s saw an alarming rise in the levels of young people who are detached from both the labour market and the education and training system. However, rather than the initial focus on a younger cage group, the term ‘NEET’ is now applied internationally to a much wider cohort, typically 16-24-year olds (and, in some countries, up to the age of 29 years), and includes young people in receipt of unemployment benefit as well as to those who claim other types of welfare support or none at all. Despite the official NEET figures in the UK falling over the last couple of years, the numbers remain persistently high. For example, in the period January to March 2016, 865,000 young people (aged 16 to 24 years) were NEET[1]. Of these, 485,000 (56%) were classified to be ‘economically inactive’, with the remainder being ‘unemployed and actively seeking work’.

ladyresized

 

A striking feature of these statistics is that young women accounted for nearly two thirds (62 per cent) of the economically inactive group, but only 40 per cent of the unemployed group. In the UK, trend data show that young women consistently outnumber young men within the economically inactive group, although the number of economically inactive young men is currently rising. While there have been a number of studies[2] which have segmented the NEET group in terms of young people’s propensity to re-engage with education, employment or training, the prevalence of high economic inactivity rates among young women is under-researched. This perhaps reflects a widespread belief that it is largely attributable to early motherhood or other caring responsibilities and that this group of young people requires little policy attention or intervention because of their domestic commitments. Such assumptions run counter to a body of research evidence which has demonstrated that periods of economic inactivity in early life leave a scar on the individual’s education and employment prospects that persists over time[3].

I am currently collaborating with the Young Women’s Trust (YWT) in undertaking a two-year study (2015-2017), with supported funding from the Barrow Cadbury Trust, to examine economic inactivity rates and why they disproportionately impact on the lives of young women. Early evidence from the research points to the picture being far more complex than the conventional explanations would suggest. It is apparent that there has been a distinct lack of investigation into why so many young women are economically inactive, and at a time when teenage pregnancy rates have reached their lowest levels across England and Wales[4]. While engaging in ‘caring responsibilities’ is undoubtedly a significant factor, evidence about the characteristics of young women who carry this label, where they live, who they are caring for and for how long, as well as data on what types of intervention they attract or require, is thin on the ground. What is clear is that economically inactive women (and men) are assigned to different welfare trajectories than the young unemployed, with those on Employment Support Allowance (ESA), Income Support (IS) and Carer’s Allowance (CA) receiving significantly less intensive support and intervention than those on Jobseeker’s Allowance (JSA). Crucially, young people on ESA/IS/CA are not included in the ‘official’ unemployment statistics.

High rates of economic inactivity within the NEET population are not peculiar to the UK. Young women are disproportionately more likely to be NEET and economically inactive in almost all OECD countries, with the exceptions of Luxembourg and Spain. Female NEET inactivity is overwhelmingly linked to child or elder care and/or other domestic/family responsibilities and in some countries, to cultural expectations. As an extreme case, 40 per cent of young girls in Turkey are NEET (compared to 18 per cent of boys), of which 93 per cent are economically inactive, possibly with family care responsibilities[5]. It is contended by Assaad and Levison that inadequate global labour market demand for young people invariably leads to young women being more likely to be found doing non-labour-force work and less likely to report themselves as actively seeking work. This results in many young women not being included in the unemployment rate, especially when the ‘seeking work’ criteria are applied[6].

While large groups of economically inactive females are a common feature among most NEET populations world-wide, there is a dearth of national and international evidence about effective interventions to reverse this trend, or, in fact, to accurately quantify or qualify their composition or existence. Some commentators highlight that the NEET economically inactive group is essentially an under-researched ‘black box’, which is categorised in terms of what young people are not doing, as opposed to understanding the likelihood of young people within the overall group or subgroups (re)engaging with education, employment or training (EET)[7]. The research by the YWT is exploring the reality of the lives of young women in the economically inactive group in England, including an analysis of their circumstances and aspirations. It is being carried out in a climate where impending welfare cuts are likely to remove even greater numbers of young people from independent welfare support, including housing benefit. However, early evidence suggests that the majority of economically inactive young women live with their families or relatives, with the impact of their ‘exclusion’ being borne by themselves and their household group.

With regard to future policymaking, the research into the economically inactive NEET group also calls into question the continued rationale for assigning both the young unemployed (i.e. those ‘actively seeking work’) and the economically inactive group within the umbrella term ‘NEET’. Is such an approach an equitable or acceptable way of ensuring that significant numbers of young women (and men) are not simply ‘written off’? Given that the epithet ‘NEET’ was coined originally in the UK to define 16- and 17-year olds who were outside the unemployment count, but is now commonly applied to those over 18 who are eligible to claim unemployed status, it may be both opportune and productive to question whether ‘NEET’, as currently defined and applied, is appropriate. Certainly, if it is applied too casually, it may mask rising and unacceptable levels of inactivity among young people. Another issue is whether an age range of 16-24 is too wide, as it encompasses significantly different ‘sections’ of the life course. Pronounced differences are apparent between the under-18s NEET group and the 18-24s NEET group in the UK. Here, the percentage of under-18s who are NEET is higher for males, whereas among the 18-24s, the percentage of females who are NEET is higher than that of males. Overall, there is an urgent need to reappraise how we define the NEET group, and, as a consequence, to re-think our policy responses to the issues confronting the various sub-groups within the NEET category.

At present, policy intervention is primarily targeted at young people who are ‘available for work’ (i.e. the unemployed group within the NEET population), as opposed to those who are defined as economically inactive. In order to formulate appropriate policy measures, we first of all need to identify and locate those who are presently ‘unknown’, ‘missing’ or ‘forgotten’, as far as the statistics are concerned. Along with this process, we need to generate substantive evidence – especially relating to the legion of young women who are affected – about what support, if any, they require. Crucially, this will include understanding what works best in assisting them to engage with support services and what additional support mechanisms may be required to attain an education, employment or training (EET) outcome. As far as current policy direction in the UK is concerned, there is a need to assess the potential impact of any national roll-out of Universal Credit on the future trajectories of the economically inactive NEET group.

[1] Office for National Statistics (ONS) (2016), Statistical Bulletin ‘Young People Not in Education, Employment or Training (NEET), May 2016’, 26th May.
[2] Eurofound (2016) ‘Exploring the diversity of NEETs’, Publication Office of the European Union, Luxembourg.
[3] Britton J, Gregg P, MacMillan L, Mitchell S. (2011) The Early Bird... Preventing Young People from becoming a NEET statistic. Department of Economics and CMPO, University of Bristol.
[4] http://www.theguardian.com/society/2016/mar/09/halving-of-teenage-pregnancy-rate-hailed-as-extraordinary
[5] Bardak, U., Maseda, M. R. and Rosso, F. (2015) Young People Not in Employment Nor in Education or Training (NEET): An overview in ETF partner countries. Turin, European Training Foundation. July.
[6] Assaad, R. and Levison, D. (2013) Employment for Youth – A Growing Challenge for the Global Economy’. Background Research Paper. Submitted to the High Level Panel on the Post-2015 Development Agenda. University of Minnesota.
[7] Tamesberger, D. & Bacher, J. (2014) NEET youth in Austria: a typology including socio-demography, labour market behaviour and permanence. Journal of Youth Studies. 17:9, 1239-1259.

#I’m with her, and for him?

📥  employment, labour market, political parties

An important factor in Hilary Clinton’s victory in the Democrats’ Presidential nomination race was the support she attracted from middle-aged and older women. As is well known, millennials broke for Bernie Sanders, but Clinton won the support of women in their thirties and upwards.

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There are plenty of reasons for this, but one has to do with Clinton’s consistent advocacy of stronger parental leave and family-friendly employment rights, and her commitment to expand early-years education. US women who have children are hit by one of the least-supportive welfare states and employment policy frameworks for parents in the developed world. It's no better for men who become parents either.

As the figure below shows, the USA is at the very bottom of the table of OECD countries in the provision of paid parental leave available to mothers and fathers. There are no nationwide rights to paid maternity, paternity or parental leave.

WithHer1
Partly as a consequence of its failure to institute paid parental leave, flexible working and decent childcare policies, the USA has seen a decline in the female employment rate in recent years. Here’s how the US and Japan have fared over the last few decades:

WithHer2
Clinton’s main policy commitment is to pay 12 weeks at two-thirds of wage replacement for family or sick leave (for the care of newborn or sick children, the care of spouses and relatives, or recovery from serious illness). This will be paid for by taxes on the wealthy, rather than a system of national insurance or payroll taxation. This policy has already been introduced in New York state (some other states, like California, also pay leave, but only for six weeks). If OECD evidence is anything to go by, the policy should start to lift the female employment rate by making it easier for women to combine work and motherhood or family care (although there are, of course, other determinants of the decline in female employment in the USA).

The policy simply brings the USA up to the starting gate, however. Most other OECD countries have much more extensive forms of leave. As ever, the Nordic countries stand out as having the best provision for parents and children in their early years, combining generous paid parental leave with universal childcare and family-friendly employment. This ensures high female employment rates, and extensive enrolment in early learning for toddlers – a dual carer-worker model that ensures child poverty is very low, and egalitarian outcomes for children are high.

The leading-edge Nordic countries – chiefly Iceland, Norway and Sweden – also reserve a portion of paid leave for fathers (so-called “Daddy Leave”). This ensures greater gender equality in leave take-up, which in turn has knock-on consequences for equality in caring and household labour tasks.  Look at the clustering of the Nordic countries at the right hand end of this graph, again from the OECD:

WithHer3
Interestingly, a number of other countries have followed the Nordic lead. On average, men’s use of parental leave is rising – in Finland the male share doubled between 2006 and 2013, and in Belgium grew by ten percentage points over roughly the same period. Germany brought in extensive reforms in 2007 that improved pay for leave periods and gave bonus leave to families where fathers took leave. Elsewhere in Europe, policy has changed but practice has not: French and Austrian men haven’t increased their leave rates. The UK has become slightly more generous to fathers, allowing women to transfer some of their maternity leave to men – but take-up, unsurprisingly, is low. The gender pay gap, lack of reserved “Daddy Leave” and low flat rates of statutory pay all militate against it.

Interestingly, some of the most extensive leave provision for fathers is now found in South East Asia, where countries like Korea and Japan have sought to boost female employment rates – to cope with demographic pressures and the loss of productive talent – by expanding leave entitlements for both men and women. In the first decade of the 21st Century, Korea took a “social investment state” turn and gave parents extensive new leave rights, alongside improved childcare: fathers are entitled to 53 weeks of paid paternity and parental leave that can only be taken by them. But socially conservative attitudes, particularly amongst employers, have held men back from taking up their rights; public policy has not yet fostered widespread cultural and structural change, as it has in the Nordic countries.

Yet overall, austerity in the EU and fiscal constraints elsewhere do not appear to have impeded the advance of public investment in childcare and parental leave entitlements. Spending cuts have been made in the UK and elsewhere, but the trajectory is still broadly upwards along the continuum towards the Nordic model in advanced capitalist economies. The pre-crash social investment state paradigm appears – in this area of policy, if not in others – to have retained its traction. But to really achieve its gender equality goals, it has to provide for men and women, mothers and fathers – asking employers, as well as the state, to play their part. To be with her, you need to be for him.

Sources:

The Economist

OECD Policy Brief

OECD iLibrary

Hillary Clinton campaign website

 

Universal income or universal divide

📥  Economy, EU Referendum, Finland, labour market, Switzerland, universal income

Dr Luke Martinelli, Research Associate

Interest in universal basic income has been intensifying lately, with a discernible proliferation of opinion pieces in the mainstream press. While the reasons for the increased awareness are up for debate, it has surely been fuelled by an increasingly precarious global economic outlook, with rising inequality, the growth of in-work poverty alongside worklessness and underemployment, and the impending claimed obsolescence of labour due to automation all posited as problems with which existing welfare state institutions are ill-equipped to cope. The idea, popular among social democrats and libertarian thinkers alike, is simply to provide everyone with an unconditional income, without intrusive means-testing and work requirements: to provide, in the words of basic income’s long-standing advocate Philippe Van Parijs, “a floor on which [people] can stand, because it can be combined with earnings, rather than a net in which they can easily get stuck”.

In any case, basic income – for decades an abstract idea at the margins of the welfare debate – may soon become reality in a number of European countries. Finland and the Netherlands have already opted to trial basic income schemes in the coming years, and this Sunday, Switzerland will hold a national referendum on whether to introduce legislation to pay each of its citizens a proposed 2500 SFr. per month.

At the IPR, as part of a project assessing the case for a universal basic income in the UK context, we are following these developments keenly. This week we were delighted to welcome Jurgen De Wispelaere, a member of the working group advising the Finnish government on the upcoming experiment, to share his considerable expertise in an informal seminar. view Jurgen’s presentation.

hero-livingwage

 

Dr Emma Carmel: 'Migration and EU membership'

📥  Brexit, David Cameron, employment, EU membership, EU migrants, EU Referendum, labour market, migration, Uncategorised

Dr Emma Carmel, Senior Lecturer, Department of Social & Policy Sciences

The political arguments around EU membership and migration have the qualities of children’s playdough: eye-catchingly bright, highly malleable, and good to keep us busy for a while. Unfortunately, also like children’s playdough, they turn dull and crusty, and have a tendency to fall to bits if left out in the air too long.

From 2014-2015 David Cameron and his Eurosceptic Work & Pensions Secretary, Iain Duncan-Smith, pursued a strategy of restricting benefits to EU migrants. In its first phase, this was a ‘domestic’ strategy: it focused on changing UK benefit regulations for EU migrants. Accordingly, there were 11 changes to benefit administration rules from January 2014 to the end of 2015, all designed to make it difficult for EU migrants to access social benefits. None of these measures required new legislation, and they were entirely in accordance with EU law and regulations.  No-one from the EU had ever stopped the UK from introducing these regulations, and restricting access to benefits for migrants was not something that had been high on voters’ agendas.

hero-blog-lowebb

 

So how did the agenda get there and what purpose was served by these measures?

Well, the topic of migration was on voters’ agendas. Cameron and IDS chose to make a rather spurious and inflammatory, but politically convenient argument: that high levels of benefit (not true) and easy access to benefit (not true) in the UK made it uniquely attractive as a destination for EU migrants (not true). They then showed that the government ‘was doing something’ to restrict EU migration by restricting access to benefits.

Yet the changes in regulations, and the arguments justifying them, achieved a number of other things too. They added an easy rhetorical boost to the government’s wider anti-welfare agenda, which assumes that people in receipt of benefits (unless they are pensioners) are frequently fraudulent, and need punitive treatment. In doing so, they enhanced the generalised fictitious division of society into ‘hard-working families’ and ‘welfare scroungers’. This is important because the identity of ‘hard-working families’ is so central to the Conservatives’ political positioning. (The division is fictitious because many ‘hard-working families’ are also in receipt of social benefits for disability, care, or by virtue of being in low-paid jobs and overpriced housing markets. Their family members also experience spells of time without work.) The benefit regulation changes also dovetailed neatly with demands for budget cuts, especially to housing benefit, which is paid out by severely cash-strapped local authorities.

So it turns out that the argument about ‘migration and benefits’ was only partly about EU migrants. They in any case tend to have higher employment rates than UK citizens, making them more ‘hard-working families’ than ‘welfare scroungers’. However, it set up the context for Cameron’s campaign to ‘re-negotiate’ the UK’s membership of the EU in the run-up to the referendum.

This campaign, which really got underway in 2015, developed a new theme: restricting access to in-work benefits (formerly known as tax credits). The negotiations eventually garnered agreement that member states can invoke an ‘emergency brake’ on the rights of free-moving workers. What this means in practice is that the UK can argue that it faces problems from the migration of EU citizens to the UK, for example with pressure on housing or public services. If such a case is acknowledged by other member states, it can restrict new entrants’ access to tax credits. It still cannot restrict EU citizens’ right to enter, reside and work in the UK. However, this is a very unsavoury political agreement. Let’s see why.

By excluding new EU migrants from tax credits for four years, those same ‘hard-working’ migrants who were previously distinguished from the ‘welfare scroungers’, are corralled into a (more) subordinate position in the UK labour market, along with 18-24 year-olds. New EU migrants in low-paid employment will end up with lower household income than equivalent UK workers and already-resident EU nationals. The number of migrants to the UK will only be affected at the margins, if at all[1]. EU migrants come to the UK for many reasons, but those in low-paid jobs – i.e. those of concern to the government – take up such employment in a labour market that thrives on the availability of lower-paid and flexible workers. Excluding new migrants from tax credits makes no difference to these wider conditions. Except that now those new migrant workers will have to work even more hours to stay above the poverty line. The planned gradual increases to the minimum wage for over-25s will eventually raise such EU workers’ incomes, but it is clear that the ‘emergency brake’ was more about benefits and public expenditure cuts than it was about reducing incentives for migration.

For the Bremain camp, the ‘emergency brake’ satisfies, as it needed to, the foundational requirement in the EU for free movement of workers. This requirement was in place before the UK even joined the EU, and it has been more highly specified over the years, as a key attribute of ‘barrier-free’ trade and the single market. Yet it is precisely this requirement that exposes the contradictory position loudly pursued by the Brexit camp, mostly, but not only, from the right.

Such Brexiteers want to restrict migration from the EU, and reject the brake as inadequate. Yet they also want access to ‘barrier-free’ trade and the single market. Without free movement of workers, however, there is no barrier-free trade. Of course, any outcome of a leave vote is deeply uncertain, because it is subject to negotiation with the other 27 members of the Union. However, no other state with access to the single market has negotiated out of the requirement for free movement of workers. The terms of a looser trade agreement would permit restrictions on migration, although the terms of such an agreement are, if anything, more uncertain.

It seems that the malleable political arguments about migration and the EU are, in the end, rather straightforward. They are, broadly speaking: how can we restrict migration from the EU versus how can we claim to be restricting migration from the EU (by cutting benefits)?

Migrants to the UK, whether from the EU or elsewhere, contribute to its social life and its public services, as well as to its economy, as doctors, dentists, nurses, carers, cleaners, coffee-shop staff, beauticians, factory workers, farm workers, pharmacists, restaurant staff, academics, bus and delivery drivers, warehouse packers, teaching assistants, oh yes – and plumbers. There are, of course, real challenges to public services when faced with a growing population and public budget cuts. There are challenges for the UK economy faced with growing its employment through precarious, low-paid and low-skill work. There are challenges for workers and communities facing such job opportunities, from school leavers to debt-burdened graduates. But these challenges are not caused by migrants from the EU. They are shared by migrants from the EU. They are also shared by many EU citizens in their home countries. It is time to put the playdough political debate about migration behind us and retrieve a more honest political analysis of the underlying challenges facing the UK, in or out of the Union.

This blog post is part of a new IPR Series – all related to the BREXIT debate and the EU Referendum. This collection of commissioned blog posts will be published as an IPR Policy Brief in May 2016. Sign up to the IPR blog to get the latest blog posts, or to join our mailing list to receive invitations to our events and copies of our Policy Briefs.
[1] Portes, J. (2016) ‘Immigration, free movement and the EU referendum’, National Institute Economic Review 236 p. 14-22

 

When the sun rises on workers' wages, and what to do when it sets

  ,

📥  labour market

Californian workers have enjoyed a week of sunshine.  The Governor of California, Jerry Brown, has reached a deal with labour unions and state political leaders to raise the Californian minimum wage to $15 an hour (£10.45 at current exchange rates). The proposal now goes to the state Assembly for approval; if it is passed, six million Californian workers will get a big pay rise.

British workers are also feeling the benefit of a minimum wage increase. From 1 April, the so-called National Living Wage kicks in for employees over the age of 25. It will start at £7.20 an hour and rise to £9 by 2020. In practice, this is a higher minimum wage, not a Living Wage, but it is still a pay rise for millions of workers. The Resolution Foundation estimates that 4.5 million workers will see their pay rise as a result of this policy in 2016 – for those on the national minimum wage, it will mean a 10% pay rise.

front cover

These are big wins for working people on both sides of the pond. But they have been achieved by political action, not industrial muscle. The vast majority of workers who will benefit are not unionised. Their gains have come from political mobilisation instead. In the US innovative, energetic campaigns to raise the wages of employees in fast food chains have been targeted at city and state legislators who have the authority to set local minimum wages. As the power and reach of big unions has waned, alternative organising campaigns have sprung up, and they are chalking up some impressive victories, like that in California.

In the UK, the Living Wage campaign has proved the most effective cross-party, civil society organiation to organise for low-income workers’ interests in recent decades. It has gone from strength to strength, even in the months that have followed the government’s announcement of an official National “Living” Wage. It is highly unlikely that the government would have acted to raise minimum wages without the trailblasing efforts of the Living Wage campaign.

None of this is much consolation to the steelworkers facing unemployment at Port Talbot and other plants. Despite the talk of assistance to retrain and find new jobs, the likelihood of their gaining employment at the skill and pay levels they can secure in the productive steel industry are remote, particularly with the public sector shrinking. Many will end up on the National Living Wage instead.

There are plenty of global factors at work in the steel crisis, chief amongst them the export of huge volumes of Chinese steel onto world markets, and the stagnation of demand for steel, both in China itself, and in the investment starved West. But one thing unites both steel and the service sectors where the majority of minimum wage workers are employed, and that is the need for long-term, coordinated industrial strategies to raise R & D, investment, skills and productivity.  EU state aid rules may be too prescriptive – the continent needs to advance its global interests through public investment and EU-wide industrial strategies, and not just to enforce single market rules – but plenty of this is possible within the existing policy framework. If the minimum wage gains offer one lesson, it is for the primacy of politics: shaping markets in the public interest, not just compensating the losers.

 

 

Disability Benefits

📥  Budget, Economy, labour market, Osbourne

The day after a Budget is usually a difficult one for any Chancellor, but this year, George Osborne has been subject to sustained and withering scrutiny, most notably on the failure to meet his fiscal targets and the shunting around of corporate taxes revenues and capital spending that enable him to reach a projected surplus in 2019/20. There are deep-seated problems in the British economy  - expressed most sharply in our weak productivity performance – that the Chancellor’s economic strategy has exacerbated, not solved, and he is paying a fiscal price for these. But his Budget decisions may yet extract a political price from him too.

Last year, the Chancellor was forced to abandon tax credit cuts announced in the summer. This year, political disquiet has focused on cuts to disability benefits, principally those to Personal Independence Payments (PIPs). Spending on these benefits has been rising above forecasts, so the government is cutting entitlements. The IFS says 370,000 disabled people will lose an average of £3,500 a year thanks to PIP cuts. This is causing outrage amongst the Chancellor’s opponents and anxiety on his backbenches.

There is a good explainer of both the substance and the politics of this issue by the political journalist, James Kirkup, in the Daily Telegraph. In sum, Kirkup thinks the government may have walked into a new tax credits row.

To see why this is plausible, we can turn to evidence from the authoritative British Social Attitudes survey. In the 32nd report of the survey, covering data up to 2014, the public was asked (as it is every year for the survey) about attitudes to social security and welfare benefits.

Here is the table showing priorities for extra spending on benefits since 1983. It shows fairly consistent support for disability benefits, which are now second only (and narrowly so) to retirement pension in the hierarchy of public priorities.

Figure 3. Priorities for extra spending on social benefits, 1983–2014

blog one.

 

Furthermore, this support cuts across party lines. Here is the table that shows levels of support for extra spending on welfare, by party identification.  Support for extra spending on disability benefits is fairly uniform, clustering around 60%: the views of those who identify with the Conservatives don’t differ much from those who identify with Labour, the Lib Dems and UKIP.  This contrasts with spending on other benefits.

blog two

 

The Chancellor has picked a fight on an issue on which public opinion is solid, and on which his own supporters agree with those of other parties. He may live to regret it.

 

..and justice for all? Basic Income and the Principles of Gender Equity

  , ,

📥  labour market

Caitlin McLean, of the Center for the Study of Child Care Employment, University of California-Berkeley, writes on basic income and gender equity

Cross-posted from the website of the journal Juncture http://www.ippr.org/juncture

International interest in universal basic income[1] proposals has increased markedly in recent years.[2] In the UK a basic income has been supported by the Green party and the non-partisan Citizen’s Income Trust. In other countries, such as Finland and France, proposals for basic income pilots and experiments are on the agenda.

The arguments for implementing a basic income are many and varied,[3] yet the proposal remains controversial. And nowhere is this controversy more prominent than among feminists, who have hotly debated the merits of a basic income in terms of its potential contributions to gender equality. Feminist advocates for basic income have pointed to its potential to correct the paid-work bias of contemporary social security systems, and to increase women’s economic autonomy and power within the household by providing a source of unconditional income support that is not tied to paid employment.[4] Critics have argued that basic income will do nothing to directly challenge the gendered division of labour – and may well reinforce it, especially to the extent that unconditional cash benefits increase the incentive for women in particular to reduce their labour market participation, given their relatively weaker attachment to the labour force as a group relative to men, and the central role that this plays in broader inequalities such as income gaps and poverty risks.[5] Accordingly, the feminist debate about basic income has reflected wider feminist disputes about how the state can recognise the unpaid work largely done by women, such as the care of children and the elderly, without reinforcing existing inequalities between men and women.

Recently, many of basic income’s advocates have argued that it promotes gender equality precisely because it is able to skirt this long-running debate. Like Nancy Fraser’s famous ‘universal caregiver’ policy model,[6] a basic income has the potential to satisfy the two core principles of gender equity: anti-marginalisation and anti-androcentrism. This twin potential is the keystone of Fraser’s argument in favour of a universal caregiver model over the caregiver parity or universal breadwinner models. She argued that a caregiver parity model (whereby income supports are directed toward caregivers specifically) would lead to marginalisation, secluding women in the private sphere and perpetuating gender essentialism; on the other hand, the universal breadwinner model (whereby income supports are tied to paid employment) would perpetuate androcentrism by emphasising masculine life-patterns and requiring women to conform to men’s standards in order to be considered equal. Fraser argued that avoiding both of these outcomes requires that we follow what she called the universal caregiver model, under which both men and women are encouraged and supported to participate in the labour market as well as the care and work of the household.

Advocates of basic income have pointed out that it represents a move towards this type of policy model, because its lack of conditionality means that it goes down neither the labourist nor the care path of citizenship.[7] A basic income provides a floor of economic security for everyone, and remains neutral regarding what activities they engage in. In this sense a basic income avoids the drawbacks of a universal breadwinner model that perpetuates androcentric assumptions about the nature of work. But at the same time, a basic income provides a means of valuing the care work that cannot be provided via state or market.

Basic income and intersectionality
A key missing component in the discussion thus far is attention to intersectionality. In recent years, feminist thought has increasingly shifted towards understanding and accounting for the heterogeneity of women’s experiences, and the difficulties of effectively including all types of women in the feminist movement. The role that divides among women play in gender inequality between men and women has emerged as a key debate. Intersectionality, or ‘complex inequality’,[8] means that the experience of any given woman is shaped not only by her gender but by other systems of social stratification such as race and class – and that these dimensions are not simply an additional facet of her identity, but affect her gendered experience as well.

For debates about basic income in particular, intersections between gender and class are especially relevant.[9] Basic income proposals are, in essence, an attempt to provide economic security and raise the welfare floor for the least well-off, without encouraging stigmatisation or further increasing the hardships that they face in terms of complex eligibility and administrative requirements. Thus there is a case to be made that, to the extent that a basic income addresses these particular issues, it does not only reduce or alleviate the suffering associated with poverty and income inequality – it also helps further gender equality goals, particularly when taking heterogeneity among women into consideration as well as differences between women and men.

Crucially, such issues are addressed in Fraser’s underlying framework, even if they are not explicit in shorthand references to the universal caregiver model. In their emphasis on the universal caregiver model, feminists debating the merits of a basic income have downplayed two additional principles of gender equity – anti-poverty and anti-exploitation – that a basic income is best-placed to address, especially when compared to other commonly advocated gender equality measures such as childcare provision or parental leave policies.

Anti-poverty AND anti-exploitation
Fraser lists ‘anti-poverty’ as the very first principle of gender equity. She argues that the prevention of poverty is a key aspect of gender equality, given that women in general are at higher risk of it than men. Indeed, the phrase ‘feminisation of poverty’[10] was coined in recognition of the fact that women tend to be economically disadvantaged in the labour market for a variety of reasons, including responsibilities for children and domestic tasks as well as outright discrimination, which leads to lower market income. This economic risk is then further compounded by many aspects of current social security systems that tie income supports to labour market participation.

While poverty may be ‘feminised’, certain groups of women are clearly more vulnerable to poverty than others. This is particularly true of single mothers, although the level of risk to which they are exposed varies by country. Further, ethnic minority women, disabled women, refugees and migrant women also face a higher degree of economic disadvantage, such that they might be especially likely, relative to more privileged women, to benefit from an income floor. The anti-poverty agenda also recognises gender inequalities as a global or international, rather than intra-national, issue. A high proportion of the world’s poor are women, with those in many developing countries facing a greater array of social, political and economic disadvantages that raise their risk of poverty, as well as related problems such as poor health.

Thus the potential for a basic income to reduce poverty is a crucial component of its potential contribution to decreasing gender inequality. Basic incomes can contribute to poverty reduction in the straightforward sense of securing a certain level of financial welfare via cash transfers. This has been one of the key rationales for piloting basic income proposals in countries in the global south such as Namibia and India, where the anti-poverty effects of cash transfers are most stark given their low standards of living.

Furthermore, the universal aspect of a basic income is likely to increase its effectiveness in terms of preventing, rather than simply alleviating, poverty, because it avoids the unemployment traps of targeted cash transfers. Basic income recipients are free to combine paid employment with receipt of the benefit, and do not risk losing a steady income stream by taking on paid employment or increasing their hours at work. This is especially relevant for single and lower-income women, who are particularly likely to be recipients of targeted cash transfers.

The core role of a basic income in providing economic security and stability also contributes to Fraser’s second principle of gender equity: anti-exploitation. She characterises this as the prevention of the exploitation of vulnerable people, including within the household as well as via the market and the state. Crucially, Fraser argues that anti-exploitation as a principle requires that welfare benefits are not linked to dependency relationships (such as benefits through a husband or an employer). This is a key strength of basic income proposals as opposed to other forms of social security: it has the potential to reduce the power of ‘bosses, boyfriends and bureaucrats’[11] over women’s lives.

With regard to ‘bosses’, a core argument among basic income advocates more generally is that an unconditional source of income will increase the bargaining power of the worker in relation to the employer, as the threat of destitution is removed. This is especially relevant for women given that they tend to be lower paid and in lower authority positions.

With regard to ‘boyfriends’, as an individual-level benefit, basic income helps to redress (or, at the very least, avoids exacerbating) intra-household inequalities between men and women in couple relationships. A core feminist critique of tax-benefit systems has been their use of household rather than individual-level assessments. This system relies on assumptions about the equal sharing and pooling of household income and other resources, which does not always hold in practice – usually to the disadvantage of women and children, who tend to bring lower amounts of independent income into the household. Economic inequalities within the household also underpin and reinforce power differentials between men and women, and between children and adults, more generally. Individual, unconditional payments paid to everyone have the potential to offset some of these inequalities.[12] For women who make less money than their partners, or who would otherwise have no income of their own, a basic income could increase their bargaining power within the household.

A less commonly acknowledged but nevertheless key avenue for exploitative power relationships is the interaction between women and the state. Paternalistic, intrusive and/or coercive interactions between welfare administrators and claimants have become particularly relevant in recent years given the increased use of sanctions in some countries, such as the UK and the US, in order to control the behaviour of those claiming benefits. In contrast to means-tested and/or conditional cash benefits, a basic income’s universal and unconditional nature would remove the need for eligibility enforcement, and so reduce the power and oversight of state officials and caseworkers over benefit claimants’ personal lives – an issue that is especially pertinent for women, who are more likely to be claimants and more likely to be subject to scrutiny of their coupled relationships based on household-level means-testing.

Intersectionality, and a renewed feminist case for basic income
The basic income debate as it currently stands reflects a fundamental feminist disagreement – namely, what to do about the unpaid work of the household: how to value it (and avoid perpetuating androcentric biases) without reinforcing the gendered division of labour and the resultant socioeconomic disadvantaging of women. Nevertheless, the worker-vs-mother dichotomy does not encapsulate the sum total of the female experience, or of gendered disadvantage.

Attention to intersectionality provides an opportunity to widen the feminist debate about basic income beyond care alone, and to better incorporate insights about the diversity of women’s experience. Arguably, this also strengthens the case for a basic income in relation to the goal of gender equality. Not only does it mediate one of the core polarising issues among feminists (whether to prioritise support for labour market participation or care work in the home), but it also addresses issues that are sometimes sidelined within the feminist movement yet which are especially important for the most vulnerable groups of women – issues such as poverty and the exploitation of unequal power relationships between women and their employers, their families and state administrators.

Caitlin McLean is workforce research specialist at the Center for the Study of Child Care Employment, University of California-Berkeley. Previously she was Ailsa McKay postdoctoral fellow at Glasgow Caledonian University, where her research focussed on examining the feminist case for a basic income.

This article appears in edition 22.4 of Juncture, IPPR's quarterly journal of politics and ideas, published by Wiley.
[1] ‘Basic income’ refers to a cash benefit that is: universal – paid to everyone in the population; individual – paid to each adult rather than as a single household payment; and unconditional – paid without means-testing or conditions with regard to family or employment status.
[2] Edition 22.4 of Juncture features two other articles on the basic income, by Anthony Painter and Hillel Steiner.
[3] McLean C (forthcoming 2016) ‘Debating a Citizen’s Basic Income: An International and Cross-Disciplinary Perspective’, in Campbell J and Gillespie M (eds) Feminist Economics and Public Policy: Reflections on the Work and Impact of Ailsa McKay, Routledge.
[4] See McKay A (2001) ‘Rethinking Work and Income Maintenance Policy: Promoting Gender Equality through a Citizens’ Basic Income’, Feminist Economics 7(1): 97–118; McKay A (2005) The Future of Social Security Policy: Women, Work and a Citizens’ Basic Income, Routledge; Pateman C (2004) ‘Democratizing Citizenship: Some Advantages of a Basic Income’, Politics and Society 32(1): 89–105; and Zelleke A (2011) ‘Feminist Political Theory and the Argument for an Unconditional Basic Income’, Policy and Politics 39(1): 27–42.
[5] Gheaus A (2008) ‘Basic Income, Gender Justice and the Costs of Gender-Symmetrical Lifestyles’, Basic Income Studies 3(3): 1–8; Robeyns I (2001) ‘Will a Basic Income do Justice to Women?’, Analyse 23(1): 88–105.
[6] Fraser N (1994) ‘After the Family Wage: Gender Equity and the Welfare State’, Political Theory 22(4): 591–618.
[7] See for example Zelleke A (2008) ‘Institutionalizing the Universal Caretaker through a Basic Income?’, Basic Income Studies 3(3): 1–9.
[8] McCall L (2001) Complex Inequality: Gender, Class, and Race in the New Economy, Routledge.
[9] The importance of intersectionality, especially gender–class divisions, as it pertains to debates about basic income has been recently raised by Camila Vollenweider, who focussed specifically on the role of domestic service in structuring class relations between women. See Vollenweider C (2013) ‘Domestic Service and Gender Equality: An Unavoidable Problem for the Feminist Debate on Basic Income’, Basic Income Studies 8(1): 19–41.
[10] Pearce D (1978) ‘The Feminization of Poverty: Women, Work, and Welfare’, The Urban and Social Change Review 11(1–2): 28–36.
[11] Levine J (2013) Ain’t No Trust: How Bosses, Boyfriends, and Bureaucrats Fail Low-Income Mothers and Why It Matters, University of California Press.
[12] Robeyns 2001.