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Making the UK a Good Place to Work: Why We Still Need Collective Bargaining

Last week saw the publication of Understanding Society’s Insights 2017 report, which includes new evidence on low pay and work using findings from the UK Household Longitudinal Study. It provides an opportunity to apply this to some of the policy challenges we are faced with and highlight the role of worker voice. I was able to do this as a panellist at the report’s launch event on ‘Making the UK a Good Place to Work’.

Low pay is a major issue in the UK. This isn't just a problem of the extent of low pay (one in five workers in Britain is on low pay and the majority of British people in poverty live in a household where someone is in work), but also in terms of the effects low pay can have on individuals, businesses, the economy and society at large. In fact, evidence for the Insights report finds that only one in four workers ‘escape’ low pay.

There has also been a rise in earnings inequality over the last 30 years, which has been consistently high in the UK. Insights 2017 finds that this is partly explained by the spread in the hours worked by the highest and lowest paid workers. This raises the issue of underemployment, which itself feeds into concerns about insecurity at work (zero hours contracts, bogus self-employment, etc) and the quality of jobs. In his foreword to the reprt, David Walker refers to a “new anxiety about anxiety” and this seems particularly apposite in the world of work.

What is also clear from the report is that where you work (both sector and place) matters.

The government is about to publish its Industrial Strategy White Paper and respond to the Taylor Review on employment practices in the modern economy. The return of industrial strategy to government thinking is welcome, as was Taylor’s recognition of the importance of the quality of work and the fact that too many workers feel they lack control or have a voice in the workplace.

But here’s the rub. As I have written before, Taylor gives a nod to how trade unions have tackled abuses and worked with employers to deliver more successful and secure working environments, yet there’s nothing in his report to properly promote collective bargaining and the ability of workers to organise.

And the most glaring omission from the government’s Industrial Strategy Green Paper is the voice of workers and their representatives. One of the ’10 pillars’ identified in the Green Paper is ‘institutions to bring together sectors and places’. Trade unions, collective bargaining and social partnership are precisely the sorts of institutions and mechanisms that need to be part of delivering a sustainable and equitable economy.

And it’s not just the unions saying this. Both the IMF and OECD have published working papers on the link between collective bargaining, strong trade unions and lower levels of inequality. However, this doesn’t necessarily translate into policy action or practice.

Whilst trade unions themselves need to rise to many of the challenges in a modern economy, it is important to realise that trade unions do not operate in a vacuum and that public policy has an important role to play. We need to think about what kind of labour market and jobs we want. The TUC has launched its ‘Great Jobs Agenda’ and Unite has its own ‘Decent Work for All’ campaign, both of which identify the importance of collective worker voice. Policy has been too neutral (if not hostile) about the labour market and the role of labour regulation. To quote a senior specialist at the ILO making historical comparisons: “the strengthening of unions and collective bargaining in the period following the Great Depression was not a historical accident. It was an explicit intention of public policy”.

Furthermore, the National Institute of Economic and Social Research finds that: “…labour market institutions, regulations and traditions matter. The rise of insecure forms of work is not an inevitability of macroeconomic change. Rather policy decisions play an essential role in determining the level of non-standard work arrangements and the insecurities associated with them”. It adds that the absence of new legislation, in the context of other changes, can be regarded as a policy decision in itself, as it can be seen as an endorsement of the already existing deregulated and liberal labour market.

The Green Paper proposes that a series of ‘sector deals’ will underpin a new industrial strategy. But any ‘sector deals’ need to ensure the meaningful participation of workers and their representatives from the outset.

Interestingly, Professor Paul Gregg from the University of Bath, who was a fellow panellist at the Insights event, raised the issue of ‘sector structures’ that could help set pay beyond absolute minimum standards and address other issues.

Sector wide collective bargaining, along with proper employment protection, can help address undercutting and exploitation in labour markets and the unfair treatment of migrant workers and agency workers.

The task required is to develop institutions that will facilitate the process by which wages and conditions can be negotiated and then set for the industry as a whole. Sector forums could also consider other matters of strategic importance such as training and skills.

The Labour party, as part of its industrial strategy, has said it will “set up sector councils for each strategic sector…to bring together government, employers and workers and their trade unions as part of a new era of economic cooperation”. 

A modern economy must consider how national sector bargaining can be rebuilt for the 21st century

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