The corona crisis is already worse than any crash in our modern history. By last week, a million British people had claimed universal credit. Ten million Americans had claimed unemployment insurance, and the St Louis Federal Reserve warns there could be 32% unemployment.
Job losses are sharper than the global financial crisis, the Wall Street crash, the South Sea bubble, everything, and the herd irrationality created by our economic system is making it inevitable. Admirably, the UK government announced subsidies to replace 80% of income for all employed and self-employed people, modelled after Denmark’s 75% subsidies. The US is still deliberating on what to do next. But the UK’s scheme will probably fail to stop a depression, while Denmark succeeds, unless we improve job security. We need a freeze on people being fired over corona virus, worker voice in enterprise decisions, and the extension of rights to everyone who personally performs work.
Why Denmark’s subsidies will work, and the UK’s won’t
Why will Denmark’s subsidies work to limit mass unemployment, but the UK’s probably won’t? There are three major differences in Danish job security laws, so employers cannot take subsidies and fire anyway. First, Danish workers can only be fired for strictly defined reasons, and it has elected work councils that can stop dismissals without negotiation with workers. Second, in enterprises with over 35 staff, Danish workers elect up to one-third of the board of directors. This gives workers a vote to stop irrational, short-term dismissals. Third, Danish law does not tolerate sham self-employment like the UK. It protects more people with worker rights. For instance, in 2017, Denmark banned Uber for refusing to treat drivers as employees, pay taxes, and pay social security, but the UK fails to make Uber follow the law. So far, Denmark has seen a 45,000 person rise in unemployment – bad, but far better in relative terms than the UK or US. Denmark’s subsidies will keep more people in work. UK subsidies will vanish like a cough.
