The British Work and Pensions Secretary Iain Duncan-Smith reacted angrily to the victorious legal challenge made by an unemployed geography graduate who was forced to do unpaid work stacking shelves at Poundland, a British discount chain.
Miss Reilly, a University of Birmingham geology graduate, and 40-year-old unemployed HGV driver Jamie Wilson, from Nottingham, both succeeded in their claims that the unpaid schemes were legally flawed.
This was because the regulations behind the schemes did not comply with the Act of Parliament that gave the DWP the power to introduce the programme.
Miss Reilly said that in November 2011 she had to leave her voluntary work at a local museum and work unpaid at the Poundland store in Kings Heath, Birmingham, under a scheme known as the “sector-based work academy”.
“Those two weeks were a complete waste of my time, as the experience did not help me get a job,” she said, after the court ruling on 12 February.
“I was not given any training and I was left with no time to do my voluntary work or search for other jobs.
“The only beneficiary was Poundland, a multi-million pound company. Later I found out that I should never have been told the placement was compulsory.
“I don’t think I am above working in shops like Poundland. I now work part-time in a supermarket. It is just that I expect to get paid for working.”
Now, I don’t think that people should be paid for doing nothing, and I want to see a reduction in the welfare bill through employment growth as much as anyone else. But the idea that people with skills and qualifications should be forced into subsidised menial labour is absurd, and an absolute misallocation of capital and labour.
It is important to emphasise that this was not a paid job, because that has important economic implications. If this were a paid job, offered by the market, then there would be no reason for the unemployed person to refuse it. In a market economy, there will always be a degree of economic mismatch, and people who are trained in one thing may well have to take a job in another temporarily or even permanently. That is undisputed. But that is not the issue at stake here.
If the company in question cannot or will not pay a wage for a worker’s labour, then the position is unsustainable and untenable. Effectively, the government is engaging in subsidisation — providing labour free of cost to corporations to support otherwise unsustainable activities. So in this case the government is choosing to subsidise shelf-stacking over geology.
Shelf-stacking is more important than geology.
This is an outstandingly unwise decision, made by a government that has spent the last three years making profoundly unwise decisions that has led to a severe stagnation in growth worse than the Great Depression.
The state should not prioritise one sector over another. The state should certainly not subsidise work in one industry, when an unemployed person has skills and qualifications to work in another industry where there are vacancies. It is a waste of taxpayer’s money to place unemployed people in an irrelevant sector. In fact, the energy and mining industries are a key growth sector today in Britain and around the world, so the notion that someone trained in geology should be subsidised into stacking shelves is eye-poppingly absurd, and reminiscent of the kinds of grotesque capital misallocations in the Soviet Union and North Korea where skilled workers and intellectuals were (and are) often forced to work in demeaning jobs.
The real point of these programs appears to be to provide corporations with a source of free labour, and to engage in demeaning moral paternalism. As Iain Duncan-Smith himself puts it:
I’m sorry, but there is a group of people out there who think they’re too good for this kind of stuff.
Duncan-Smith seems keener to teach young unemployed people a moralising, paternalistic lesson than he is to pursue sound economic policies. In fact that is very much the trajectory of this entire government and its self-defeating “age of austerity” project.