Britain's workers reluctantly at the cutting edge

Downsizing may now be discredited, but it has come too late, writes Nick Cohen

It may sound like a piece of meaningless business-school jargon, but it has cut a swathe through work-forces in the US and Britain, and it is set to dominate the next general election.

Highlighting the issue of "downsizing" - the cost-cutting strategy disowned last week by a leading Wall street economist (as reported on page one) - is "absolutely essential to our strategy", says one senior Labour Party policy adviser: "The Conserv- atives just do not understand the country they are governing. For most people job insecurity and fear of redundancy is not just an issue, it's the issue."

The party has no shortage of ammunition. Eight weeks ago Labour showed how 9 million people, a quarter of the work-force, had experienced unemployment since John Major won the 1992 general election.

Most of the 9 million have found other work, but as research from the London School of Economics has shown, there has been a seismic change in the quality of jobs.

On average, for example, people who found new jobs were paid 20 per cent less than contemporaries with similar backgrounds who had never been on the dole. And they found their contracts were less secure and terms and conditions worse.

The culture of downsizing, fuelled by new technology, take-overs, global market and facilitated by impotent trade unions, dominates world boardrooms.

When Percy Bavernik was put in charge of the Swiss engineering company ABB, he proclaimed that headquarters staff of any traditional company could take a 90 per cent cut in staff.

The result of such thinking has been widespread anxiety. Those out of work fear long-term idleness and penury while those in work fear the sack. The result can be economically damaging: witness the continued absence of the feelgood factor in Britain.

A study by International Survey Research revealed that British workers were the most dissatisfied in the European Union. Only 22 per cent of those questioned felt secure in their jobs. One quarter said they identified with their managers.

The British, the researchers concluded, "have little confidence in their managers". They believe they are leading them into "a knee-jerk reacting short-term future".

The loss of the job for life has also triggered an epidemic of stress- related illness, Kenneth Calman, the Chief Medical Officer, warned last year.

Edward Luttwak, the radical American political economist who has built his reputation by arguing against downsizing, describes this as a world where society exists to serve the economy instead of the other way round.

Last week he said he could not see Tony Blair changing it. "I can't imagine him saying that Britain will get unemployment down to 4 per cent and if that means inflation so be it. But if he is not prepared to challenge it, what's the point of elections?"

But others are more optimistic. The LSE's Paul Gregg said a new government may not be able to slow job losses, but it could force through better redundancy terms, make unfair dismissal harder and ensure, through a minimum wage and greater trade union rights, that terms and conditions improved.

Leading article, page 20