The reason many Conservative MPs want Unemployment is to reduce the bargaining power of the Trade Unions to negotiate up wages as there will always be a regular source of labour ready to take up the work the striking workers are in dispute over at a lower wage. With the European Union, if the fundamental freedoms were fully realised this would be unnecessary, as workers from across the Union would always be ready to provide labour more competitively so as to drive up production and consumption.
The thing that is crippling the UK economy is the ever rising welfare bill, with unemployment likely to be exasperated by the present government as a result of their drive to cut public sector spending. Even so, I have spoken recently of the need to provide out-of-work maintenance grants to people involved in sort term activities in the people sector, education and training, or raising a pre-school child. Perhaps instead of these as at present being paid on a means-tested basis out of taxing others, the student loan system could be extended to replace the benefit and tax credit system?
Rather than those without work being registered unemployed, everyone should have to register as a ‘Contingent Worker’ if they are not in full-time employment. This could be done using the Construction Industry Scheme, which could be renamed the ‘Contingent Worker Scheme’.
In fact, I worked in the construction industry at various stages between 1996 and 2010. In 2007 the UK Government found contractual loopholes to force registered sub-contractors (a type of contingent worker) to become employed, fuelled by a trade union campaign.
The construction industry is now in dire straits. Small firms forced to take on workers permanently are having to close down due to high overheads, and many of the people once registered self-employed and ready to take up work are now claiming welfare benefits after their jobs were made redundant.
Instead of “maintenance grants”, or “universal credits” a source of income called “repayable maintenance vouchers” which could be redeemed for cash to those people who take up education/training, are raising a pre-school child, or are providing work for the people sector. It could also be paid to people who fall below a certain income as reported by the Contingent Worker Scheme (based on CIS). The “repayable maintenance vouchers” would be administered by an extended Student Loan Company.
When the Contingent Worker’s income goes above a certain amount, say £21,000 per year then they have to start paying their loan back, through the same system as the Student Loans repayments for those abroad. National Insurance which would fund public health insurance like the NHS rather than Pensions which should be administered through compulsory contributions to Individual Pension Accounts on the ISA model. Those who are paid ‘Gross’ through the CWS would pay Corporation Tax on their surplus, whereas those who are paid ‘Net’ on the CWS would have already paid tax at 20% or 40% as appropriate and would pay dividend tax on their surplus.
Moving away from the employee model with a simpler tax system based on that currently used for incorporated firms in the construction industry should allow for greater mobility and more competitiveness. Having people ready to take up work at any moment, even just for a day, will give more people the chance of which, and lead to a society where people can do the work they enjoy the most and are best at, wherever they want.