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How Austerity Is Re-Shaping Work Regimes


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Commonly Austerity is seen as an array of ideological, political and economic policies aiming to reduce a government’s budgetary deficits to be achieved through harsh spending cuts and tax increases – for the working class rather than the rich – or a combination of both instruments. Austerity has a negative impact on the world of work. Despite the warnings of the former World Bank chief economist and Nobel Prize winner Joseph Stiglitz, Austerity is staunchly carried through; that happens even though, as Stiglitz emphasised, no large economy has ever recovered from an economic downturn through Austerity.

The initial government responses in 2008-09 were stimulus packages which came with an implicit Too Big To Go To Jail dogma. Rescuing banks is one thing; however, letting the bankers who caused the crisis to get off scot free is another. So the bankers that had caused the Global Financial Crisis (GFC) were not held to account. Instead, they were rescued and rewarded, and incidentally the big financial institutions were kept in business.  The governments responsible for this misplaced justice then introduced three policies:

  1. Spending cuts for the public service;
  2. Downsizing, privatisation, and marketization of the public sector; and 
  3. Lowering the cost of the public service through wage caps and cuts.

This had a flow-on effect from government jobs into the private sector which in turn had a deleterious effect on the latter. Most interestingly, The proportion of employees in permanent job has increased in many OECD countries. However, this manoeuvre did not alter the trend towards short-term tenure as job stability (the length of time individuals spend in their current job) decreased. Much of what happened since the GFC remains part of Neoliberalism’s attack on three core themes of post-war economics:

  1. To roll back Keynesian-like stimulus packages;
  2. To introduce blame transfer, i.e., shifting from the private sector that caused the crisis to the public sector, and from the public sector to the populace; and finally,
  3. The ideology of Austerity went through a three-stage process: anticipating Austerity  adapting to Austerity  accepting Austerity.

To make all three stages acceptable, a thoroughly ideological-driven programme capable of shifting blame away from capital and towards workers accompanied the Austerity. This made Neoliberalism and Austerity (both treated as viable entities in themselves, hence the upper case letters) even more dependent on the only transmission institutions capable making Austerity acceptable: the media. It is the Media (once again reified and allegorized) that can make the widening of existing inequality tolerable. For example, the Media has pushed a narrative of crisis and public sector excesses. Indeed, the ideology of Austerity became even more aggressive and hegemonic than in earlier phases of neoliberalism.

Most importantly, The Spectacular Achievements of Propaganda included a shift towards identifying the GFC as a public sector debt crisis [while also] blaming trade unions. In this context, Austerity is not only a continuation of an established neoliberal ideology, it turbo-charges neoliberal ideology. The ideology of Austerity had to be strong enough to disguise four essential pathologies:

  1. Since 1979, real wages have stopped growing for most workers;
  2. The risk of injury and illness, unemployment and old age are increasingly borne by workers;
  3. Many employers have abandoned their role in training workers; and finally, 
  4. Unions are viewed as toxic by corporate apparatchiks, the media, and pro-business think tanks.

Camouflaging Adam Smith’s invisible hand, this shows the visible hand of social actors at work. Inside the state, private companies and corporations, workers are generally considered profit-limiting liabilities rather than profit-boosting assets. Joining capital’s choirs are right-wing organisations funded large by the Koch brothers and, of course McKinsey and the Boston Consulting Group.

Their advocacy assures the acceptance of middle-class employment insecurity anxiety and income stress, i.e. keep up with the bills. Ultimately, Austerity is concerned with offloading costs – making others pay. Economists call this externality. Seen from the standpoint of Managerialism, this means selective formalisation, i.e. a set of business practices that formalises the employment relationship with an emphasis on creating conditions of informality. This enhances the power of management while adhering to the first rule of Managerialism: when things go wrong, workers are to blame; when things go right, management takes the credit. 

Simultaneously, the ideology disempowers workers in other words, hits those who are expected to carry much of the administrative, fiscal, and legal burdens. In turn, this leads to psycho-social violence at work. Psycho-social violence at work is created through isolating people, manipulating reputations, withholding information, assigning tasks that do not match capabilities and assigning impossible goals and deadlines. For that to work, managers do not need to be corporate psychopaths. Ordinary managerial nastiness is enough. Beyond the structural domination of management, the market system also provides a primary mechanism for worker discipline. Hence, Neoliberalism and Austerity advocate the Market – the great arbiter of all things.

Almost self-evidently, Austerity persuades as an ideological frame where the sacrificial labour force pulls itself up by its own bootstraps in the hope that hard work and risk taking will pay off. The hard-work ideology is broadcast by those who do not work hard but are willing to introduce punitive working conditions for others. Beyond that, Austerity also means that the EU’s Troika limited wages to a 9% maximum increase in unit labour cost within a period of three years. Limiting wages came at a time when collective bargaining coverage declined in the EU. The exception is Finland.

The propagandistic achievements of Neoliberalism and Austerity also added to the widely concocted hostility to unionism as collective bargaining became the focus of much of the blame for the financial problems of states and individual cities while public sector workers were also portrayed as lazy and privileged. This masked the fact that the rescue of those who had caused the GFC was paid with tax money. These are funds the state no longer had to cover its responsibilities. This deficiency demanded a further round of blame-shifting to legitimise three earnings-related trends:

  1. The constant presence of low nominal wages growth;
  2. The widespread growth in wage inequalities; and 
  3. The occurrence of declines or very limited rises in real wages.

In the UK, for example, real wages in 2019 were 5% below their 2008 levels a trend that Brexit will only worsen. What Brexit, Neoliberalism and Austerity also foster is a trend towards privatisation. In the care-giving sector, privatisation has taken on seven forms. The privatisation of

  1. ownership: the traditional form of privatisation;
  2. costs: families pay for private care workers;
  3. cuts by stealth: the shrinking of public space to fund care;
  4. management: non-profit management behaves like for-profit management;
  5. responsibility: shifting towards unpaid care workers and families;
  6. decision-making: decisions taken behind closed doors legitimised as corporate confidentiality;
  7. services: care for those who can pay to access needed “extras”.

Not yet practiced in the other industries, in the fast-food industry there is a long history of aggressive anti-unionism, where head-offices of fast-food corporations widely pursue the carrot strategy to counter unions: they promise to improve pay and working conditions in anti-union meetings and sometimes even hold employee parties to win over staff. If the carrot does not succeed, then the stick is employed: sympathisers are harassed and intimidated. They have their hours shortened or denied, they have their shifts changed to times when they cannot work, and/or they are given unpleasant duties to fulfil.

Such strategies are often paired with two ideologies: efficiency gains and more with less. These two ideologies are never applied to CEOs. For workers, it all too often means Austerity-related downsizing, restructuring which can lead to 7% of job losses, and an increase in managerial scrutiny – known as aggressive micro-management. Micro-managerial control is exercised through bureaucratic procedures and intensified work arrangements as well as the infamous KPIs – Key Performance Indicators. As one worker said, we’re a slave to the KPI. 

It also means getting e-mails about missed paperwork and not ticking a box. Meanwhile, a Scottish fire fighter said we, do not have enough bodies to do the job leading to a question no fire fighter should ever ask, will I take the risk. In other words, Austerity creates a strong incentive to reduce costs as far as possible even when this means people will die.

In many countries, Austerity has shown that both disproportionally impact on the most disadvantaged and vulnerable. As the Coronavirus pandemic was hitting in 2020, the virus entered countries with already debilitated human-service programmes. Such programmes still accounted for 5.1% of gross domestic product (GDP) in the 1980s – the time Neoliberalism took off. By 2019, it was less than 3%. It is hard to save lives when human-service programmes have been reduced by 41%.

Undeterred, Austerity advocates lean and mean management, increased productivity and an intensification of organisational control. This will lead to what Siegrist calls effort-reward imbalance which is a mismatch between high workload (high demand) and low control over long-terms rewards. This will become even more severe as Austerity’s on-going race to the bottom on pay continues. This race is ideologically-framed as freeing up of labour markets. In reality, this means minimum commitment from employer demanding maximum flexibility from employees. You can see that this is a one-way system advantaging the employer.

Set against all this is union activism framed as a moral project. Linking unions to morality is appealing to workers and it makes it more difficult to attack or discredit the union. Yet unions are locked into a 2-against-1 battle with trade unions on the one side and capital and corporate media on the other side. As a consequence of capital-media’s combined power, trade unions have been on the losing side for decades. Hence, trade union membership in OECD countries has dropped by 16%.

Austerity will further this decline. In the period since 2010, when Austerity mania took over government policies fuelled by media calls to balance the books, the capital-media alliance has been a winning ticket. What is to be done? Perhaps the much acclaimed universal basic income will offer relief. Yet, the UBI remains a system-stabilising instrument that, if introduced, will sustain capitalism. In the end, Jameson’s dictum remains, It has become easier to imagine the end of the world than the end of capitalism.

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