Retrenchment, Conditionality and Flexibility: UK Labour Market Policies in the Era of Austerity

This paper maps the changes and continuities in the areas of unemployment benefits, employment protection legislation, active labour market policies, training and human capital formation, and needs-based social protection for the unemployed. The year 2010 represents a key turning point in two respects: it was the year in which the full onset of the crisis was felt in Britain, but also when the government changed to a Conservative-dominated coalition with the Liberal Democrats, resulting in a number of significant welfare and labour market reforms.

We argue that since the crisis the pattern of labour market and unemployment policies has changed towards even more flexibility and less income protection despite growing problems of precariousness. Many of the existing programmes that aimed at human capital formation have been redefined either as a work test or turned into an opportunity for employers to undercut existing employment protection legislation and the minimum wage. With the exception of a brief ‘Keynesian’ moment in which the focus was on fiscal stimulus and one temporary direct labour market programme was introduced, the emphasis has been on ‘deficit reduction’. Rather than seeing the crisis as a turning point, the policy path taken since the 1980s was continued. Any ‘old industrial logic’ of income and job protection – that was never particularly relevant in the British case in any case – has been further undermined over the decades, while any tentative efforts towards social investment–type policies in line with post-industrial logic have been cut back.