Prof. James Petras
Leading management consultants, top government officials and prominent financial journalists are proposing, what they dub, “labor reforms” as the solution for double-digit unemployment and underemployment, economic stagnation and the decline of capital investments.
“Labor Reform” as the Concentration of Power and Profits
First of all, the term “labor reform” is just a euphemism for labor regression, the reversal of laws and practices that workers and employees secured through decades of struggle against employers.
The idea that “labor reforms” would create jobs for the unemployed has been tried and disproven over the past decade. Throughout Europe, in particular Spain, Portugal, Greece, Ireland and France, laws facilitating firings, pay differentials between short-term and long-term contract workers and speed-ups have not reduced unemployment, which still remains at depression levels.
What neo-liberal economists and journalists call “labor market flexibility” is really all about increasing the power of the bosses to impose reductions in wages, dominate and dictate work rules, intensify management bullying in the workplace and fire workers without just cause or redress. Likewise “wage flexibility” means giving management the exclusive power to unilaterally lower wages, to alter work contracts, to stratify payments between workers , to downgrade job categories in order to lower wages and to increase output, and to pit unemployed workers against employed workers, temporary workers against long-term workers.
The Consequences of “Labor Reform”: Rising Inequalities
“Labor reforms” are not policies designed to end unemployment, encourage economic recovery and increase capital expenditure. They are not an economic strategy. The principle goal is to concentrate power in the hands of the bosses in order to lower labor costs, increase profits and double-up production from a reduced workforce.
The growing disparity of power between capital and labor resulting from “labor reforms” is the key factor producing inequality. Neo-liberals attribute growing inequality to technological changes, ignoring the fact that it is the growing power of capital that determines how productivity gains, from the introduction of technological innovations, are distributed between capital and labor.