Mrs. Thatcher's Employment Prescription: An Active Neo-Liberal Labor Market Policy

Though each of the capitalist democracies has developed a similar battery of programs for mitigating labor market problems, politically significant differences in strategy underlie superficial similarities. By the 1970s, labor market strategies could be distinguished by three models: a passive social democratic or guardian strategy (Britain), an active social democratic or egalitarian strategy (Sweden), and a passive neo-liberal or business-centered strategy (United States). In response to high unemployment, the Thatcher government has resurrected a long dormant fourth strategy that combines neo-liberal principles with an active state. This active neo-liberal or market-centered approach seeks a workforce that is less organised, has greater wage disparities, and is more adaptable to business needs. The government's activism is evident in the growth of the Manpower Services Commission, both in absolute terms and relative to passive compensatory measures. Its neo-liberalism is evident in reducing structural impediments to lower wages, increasing incentives for individual initiative, and revamping employment and training schemes along neo-liberal lines. These efforts correlate with decreasing levels of union membership, increasing self-employment, and increasing wage disparities in the British economy, trends that are, by the government's criteria, improvements.