WG 3: Equity and redistribution questions

rationale for inclusion: Wilkinson & Pickett (2009) provide data on the range of human and social problems that are associated with higher levels of inequality in a society, including mental illness, drug use, physical ill health, obesity, teenage pregnancy and violence. In relation to sustainability, the greater the level of inequality, the greater the status differentials; and ‘a great deal of what drives consumption is status competition’ (p222).

set maximum pay differentials – 5:1 highest to lowest the average in the Mondragon co-operatives in Spain; 20:1 recommended for UK public services by Hutton report (2010)

establish more employee-owned companies – as well as all employees having a say in income distribution, company less likely to ‘undertake speculative or needlessly risky actions’ [and more likely to become rooted in it’s community?]

transform enterprises into co-operatives – similar argument

Wagstaff and Leach (1986) proposed a method that would combine the governmental and the corporate. Instead of corporation and income tax, and national insurance, one corporate tax could be implemented.   This tax would be a function of the number of people employed, and of the variation in income between them.  So for a given corporate profit before payment of salaries and wages, the more people who are employed the less tax; and the more equal the salary distribution the less tax.

rationale for inclusion: to challenge the myth that ‘we can only solve unemployment through growth’.  In general, in the UK and the USA people in managerial and professional jobs are now working significantly longer hours than people in such jobs did 30 or 40 years, earning significantly more than their parents’ generation did. Not unrelated to the rise in work-related stress. This trend is significantly less in many countries in continental Europe. This working  group will look at the various policies that might be adopted which result, in effect, in ‘carving out components’ of these highly paid, long-hours jobs and ‘parcelling them up’ to create opportunities for the unemployed. Remember only a small percentage of the population are unemployed so the logistical task of carving out new jobs from the timetables of the over-worked is not that great.Orthodox economists will say we are propagating the ‘lump of labour fallacy’.  We will show that there is, at any given time, a finite ‘lump’ of employment opportunities, and that it can be redistributed much more equitably, to the common good.

Dietz & O’Neill (2013, ch 10) discuss three flaws in the economic system (p129-30): as referred to in 2.3 above, the misuse of increased labour productivity for the production of extra (and unnecessary) goods rather than reduction in working hours, and the mismatch between the kind of jobs supplied by the economy and the jobs that society actually needs to be done; also the inflexibility of many employment practices: ‘in trying to cut costs by standardising their operations, firms often institute one-size-fits-all rules for work schedules and hours’.  E.g. some firms only offer ft employment for a range of jobs.

They suggest two strategies for achieving a better distribution of working hours and income:

1.  work-time reduction: they discuss a range of methods for achieving this end: shortening the standard working week; offering opportunity for early retirement (could have mentioned phased-in retirement); offering more opportunities for part time work; career breaks. They cite the example of the Netherlands where work-life balance has been integrated into overall employment strategy.  In an 1980 agreement unions and employers agreed to reduce unemployment by sharing available work. Employees have right to request shorter working hours and career breaks of up to three years.  They can enter and leave the labour market more flexibly, have more security and can spread income more evenly over their lifetimes.  Netherlands now has the lowest (average) working hours among developed countries: 1377 pa as against 1778 pa in USA and 1647 in UK.

As these policies reduce unemployment they reduce tax burden on government.

2. guaranteed jobs: the state as an employer of last resort creates jobs for those wishing to work but unable to find employment.  The right to work included in UN declaration in 1948 and partially enacted in India.  A guaranteed jobs policy:

* provides income for people who need it

* uses relatively cheap labour to accomplish useful public works

Deitz & O’Neill (2013, p135-6) discuss the Civilian Conservation Corps (CCC) which ran in the USA from 933 to 1942. This programme ‘built some of the most enduring and beautiful structures on the American landscape’ apart from the poverty reduction and social benefits achieved for its 3million participants.

(Read also the Peter Victor study in either Deitz & O’Neill or Jackson;

see also Juliet Schor (2010), Skidelsky & Skidelsky (2012), Wagstaff and Leach (1986))