The Corbyn Factor

23/09/2015  -  12.42pm

Roger Seifert, Professor of Industrial Relations

I attended the TUC conference in Brighton last week. The highlight was a speech by Jeremy Corbyn. He covered three main areas: first he gave total support to trade unions and trade unionism as a force for good in this country and vowed to fight the current proposed legislation curtailing the right to strike; second he spoke of the key issues of housing, mental illness, poverty, welfare reform, and the refugee crisis, and the need for investment in infrastructure and education; and thirdly he promised to hold the Government to account as prelude to winning the 2020 General Election.

The consensus among delegates was that this was a historic turning point in the history of the labour movement. This was tempered by reflections from many union leaders with whom I spoke about the difficulties ahead, the hostile media coverage of the new leader, and the need to forge a credible alternative economic strategy. The overall sense was that his leadership would energise union activists to fight harder in their workplaces, help renew unions’ national strength, and allow and unity of purpose of the Labour Party and the trade unions not seen since the 1960s.

On policy matters the argument is that the Government wishes to hold down public sector pay, reduce overall spending on welfare, and reduce terms and conditions of employment for the majority in the private sector. This is seen by the Government as part of balancing the books, as well as creating a more flexible labour market and workforce. Thus, perceived barriers to such a free market model of labour demand and supply are deemed to have to be removed.

These include, inter alia, trade unions and their ability to strike; EU regulations on working practices; and the perverse incentives to work or not work within both the benefit system and the low wage sectors of the economy. The case against the Government’s policies include that they will choke off economic growth as demand remains sluggish, they will fail to attract inward investment, and they will fail to stabilise the welfare bill. In addition the strong pound makes it harder to export and therefore diminishes the manufacturing sector, while allowing the growth of another credit bubble in terms of personal borrowing.

The Corbyn alternative, backed by some of the unions, is to allow sustained and strong wage growth, thus stimulating domestic demand, reducing the risk asset bubbles, and permitting state-sponsored investment. This is a traditional mix of Keynesian economics from the 1960s and some additional left options which are new to the UK, but exist in some other economies.

The extent to which this debate will reach out to a wider audience depends in part on how well the current Government’s economic policies roll out, how the Corbyn factor is able to keep going, and/or whether it is all simply swallowed up by the enormity of the problems facing the global economy.