If you work for a living, youâe(TM)re better off when welfare payments are high.Sound strange?

Only because truth is often ignored in a society where the narrow interests of wealth holders dominate over all else.

Earlier this month, Quebecâe(TM)s newly elected pro-business Liberal Party government announced they were going to cut monthly welfare payments to the poor.

In Germany, the Social Democratic government of Gerard Schroeder is about to reduce unemployment benefits from 32 months down to 12.

In British Columbia, the extremely pro-business Liberal Party governmentâe(TM)s plan to cut welfare payments entirely for those they deem able to work will soon take effect.

In the U.S., both state and federal governments have enacted drastic cuts to welfare.

These attacks against the poor and unemployed should be opposed by everyonewho cares about their fellow human beings. But, in addition to compassion, working people have another important reason to oppose these cuts to social benefits — our self-interest in maintaining the social wage.

Right-wing pundits often claim that welfare payments or unemployment benefits cost us all. In rare displays of concern for “society”, they say that those unwilling (or unable) to work are a burden on us all. Often, these pundits develop elaborate, and often racist, discourse about Black (or Aboriginal, or Hispanic or immigrant) communities to strengthen opposition to (non-corporate) welfare benefits.

On one level, it is true that welfare benefits cost us all, though rarely are these costs a significant chunk of public expenditure — unlike military spending or road building, which are essentially forms of corporate welfare. However, examined from another perspective, social entitlements such as welfare and unemployment insurance are an important means to protect the wages and conditions of working people. Decent welfare and unemployment benefits provide a security guarantor for working people who may fear losing their job. When decent social entitlements exist, invariably workersâe(TM)bargaining power is improved. In short, the strength of welfare and unemployment benefits helps determine a countryâe(TM)s social wage — its generally accepted minimum pay.

A comparison between countriesâe(TM) level of welfare/unemployment benefits and their social wage reveals this correlation. It is made most clear with an analysis of poorer countries. Most donâe(TM)t provide any welfare or unemployment benefits, which correlates with extremely low social wages in comparison to North America or Europe. Even within the industrialized nations this correlation holds true. The social wage in Scandinavian countries, for example, is higher than that of the U.S. or England. So are welfare and unemployment entitlements.

Capitalists understand that larger social entitlements drive up the social wage, which displeases them immensely — as anyone reading the business press can attest to. Why? Because, the higher the social wage, the higher will be the wages business owners must pay their employees. Capitalism causes immense pressure to cut costs — one of the most significant of which is wages.

So, if business owners can reduce salaries they will. But, they recognize that to reduce their salary costs, a multi-pronged attack against wages is needed. Simply cutting their own workersâe(TM) salaries is only effective to a point. If workers feel they deserve better wages, and social entitlements are available, they will refuse to accept less than the prevailing social wage. (As a personal example, my roommate recently told me that she wouldnâe(TM)t take a job if it offered her less than $30,000 per year. This is an arbitrary number, but for her $30,000 was what her time was worth. Said differently, in Montreal the social wage is around $30,000, at least for her line of work. And if an employer wants her services this is more or less what they will need to pay.)

Lobbyists for wealth holders certainly understand the relationship between social entitlements and the social wage. Business organizations over the past 20 years have ferociously attacked social entitlements around the world. In fact, one could say that these assaults on social entitlements are central to neo-liberal ideology. If successful, they drive down the social wage and increase the proportion of income that goes to the relatively small number of wealth holders.

In some U.S. states, (non-corporate) welfare has been cut to the point where benefits can only be claimed by working an inordinate number of hours in highly exploitative industry, as Michael Moore’s film Bowling for Columbine highlights.

But, the corporate sectorâe(TM)s drive to reduce the social wage does not end with its assault against welfare and unemployment benefits. In fact, that is just the beginning and just one more way to divide the working class. The government sector is also attacked to help reduce the social wage. That is because unionization rates are substantially higher in the public sector — only 8.5 per cent of private sector employees are unionized whereas the rate is 37.5 per cent in the public sector. (laborreasearch.org)Governments that, on some level, must be responsive to the democratic will are usually less fierce in their attacks against unionization. As a result of higher unionization rates government-run services typically pay workers somewhat better average wages, which drives up the social wage.

According to The Economist, average public sector pay is 27 per cent higher in Spain, 10 per cent higher in France and 45 per cent higher in Portugal than private sector pay (July 5). At a minimum, the wages and benefits of public sector workers, especially clerical and other “service” workers provide some point of comparison for similar private sector workers. Thus, in British Columbia one of the first neo-liberal measures announced by the Liberal government was an attack on the wages of public sector hospital cleaners and clerical workers, who — according to the government — were paid too much.

The soon-to-be passed pension reform in France is a prime example of how public sector workers make gains that, from a capitalist point of view, are a bad example to private sector workers. The last two months of strikes in France were a result of the right-wing governmentâe(TM)s plan to increase the needed years of contribution for full retirement benefits for public sector workers. Currently, public sector workers are entitled to full retirement benefits after a 37.5-year contribution period, which the government wants to increase to 40 years. This is the number of years required in the private sector for full retirement benefits so itâe(TM)s no surprise that employer federations support the governmentâe(TM)s pension reform proposals.

The privatization or contracting-out of government-run operations is also often a roundabout way of lowering the social wage. The B.C. Liberalsâe(TM) plan to privatize provincial liquor stores, which are a highly profitable source of revenue for the government, is an example of such an attack. The workers in the stores are unionized and make decent wages, which are substantially higher than the usual hyper-exploitative retail wage. The government claims they want to introduce “competition” but what they really mean is they want to undermine wages. (At the end of the same process in neighbouring Alberta there were no unionized, decent-paying jobs in liquor stores.) The beneficiaries will be the new private owners of liquor stores and more generally the entire retail sector, which will no longer be reminded of those better-paid liquor store workers.

Capitalists understand that the stronger the social entitlements the higher their wage costs. But they do not come right out and say (except occasionally in the business press) “letâe(TM)s lower social entitlements so we will be better off.” Instead, they divide and conquer. They play off workers against welfare recipients. They blame immigrants or exploit lingering racism.

What to do? How do we protect and boost the social wage? The answer is obvious. Ordinary working people must stand together with welfare mothers. Unions must fight for wider interests than narrowly defined membersâe(TM) wages and benefits. Coalitions must be built. Thereâe(TM)s a very good reason that the union and other progressive movements like to say “an injury to one is an injury to all.&#0148

Yves Engler

Dubbed “Canada’s version of Noam Chomsky” (Georgia Straight), “one of the most important voices on the Canadian Left” (Briarpatch), “in the mould of I. F. Stone” (Globe and Mail), “part...