This paper from the Centre for Analysis of Social Exclusion defines exclusion in terms of relativity, agency and dynamics. It explores the three-way relationship between poverty, unemployment and social exclusion, and the position of the UK labour market. Unemployment may lead to poverty, but it does not necessarily do so. Whether employment promotes inclusion depends on the quality of the jobs. It is important to consider the role of the government and of companies in relation to exclusion.
Increased labour market flexibility has been forcefully advocated by the IMF and the OECD, but the Continental European approach gives more weight to labour market security and values the economic contribution of social protection. Policies of labour market flexibility may simply shift people from unemployment to marginal jobs with no prospects. Employment in itself is not necessary inclusionary; new jobs need to restore a sense of control, provide an acceptable relative status, and offer prospects for the future.
In many Continental European countries, the massive rise in unemployment has not been accompanied by a corresponding rise in poverty. However, unemployment has costs beyond the loss of cash income.
People may be excluded from participation in society by the operations of the state, by companies reluctant to invest in job creation or by the pricing decisions of suppliers of key goods and services.
- The government’s benefit system itself may be exclusionary if social security programmes privilege certain groups of workers or generate stigma.
- In terms of exclusion from the labour market, more attention needs to be paid to firms’ influence on job creation and destruction. If, for instance, employers expect jobs to be short-lived, job creation is less attractive.
- People are excluded from consumption if they are unable to participate in the customary consumption activities of the society in which they live.
- Linking benefits to the general price index may be insufficient to prevent people from being excluded from the consumption of key goods and services. This is because as the bulk of the population becomes richer, prices rise and the poor need more income to keep up.
Social exclusion, then, is not just concerned with unemployment. Government policy can make a difference, and should take a broad view.
- The role of employers in job destruction and job creation needs to be considered.
- Labour market measures should not be seen as an alternative to social transfers; these policies are complementary.
- The form of social security may need to be reconsidered, but collective provision – whether social insurance or citizen’s income or participation income – seems essential to assure social integration.
- The government can intervene in the tariff policy of privatised utilities, which may prevent people from having access to essential services.
- Economic analysis has a useful role to play in illuminating the different elements of social exclusion – dynamics, agency and relativity.