This May Day, workers face the worst real-terms incomes squeeze in 50 years. As many of the UK’s biggest companies enjoy booming profits, ordinary people are experiencing an unprecedented assault on their economic security and financial well-being as wages and benefits fail to keep pace with the rising cost of living. At the same time, the pandemic has exposed and sharpened the deeply gendered and racialised faultlines along which work – paid and unpaid – is organised. Across the economy, from care sectors to retail and hospitality, the inequalities that the organisation of work generates are clear to see. None of this is natural or inevitable. It is the result of deliberate political choices: choices in how work is organised and on whose terms, choices in how employers and policymakers have responded to rising costs and whose interests to prioritise, choices in terms of the purpose and operation of our economy.
It is time we choose a different future. That means a serious strategy for boosting real incomes, both wages and benefits. And it means challenging rentier power that extracts money, from eye-watering childcare costs to exploding energy bills, from hard-pressed households channelling it to wealthy investors. At the heart of that must be a new Employment Bill – much promised, long-delayed – that rebalances power at work.
The need is urgent. As real incomes are eroded and insecurity grows, we are less free in work, and we have less freedom outside of work. The cost of living crisis is, then, also a crisis of working time: we work more hours to meet rising prices as our time is not properly rewarded, many do not have control over scheduling, forced to accept shifts at short notice or unsuitable hours, and at work, the pace of work is set from above, with digital surveillance of workers becoming increasingly normalised in the wake of the pandemic.
The struggle for a shorter working week, democratic work, gender equal care from ‘“cradle to the grave”, and economic security for all – historic conjoined demands of the labour movement – goes hand in hand with the fight for a transformative response to the living standards squeeze. Boosting incomes, empowering workers, challenging rentier power: these are all part of the same agenda: to ensure our labour is properly valued and that our time is our own, in and beyond work. There is no single lever or policy that can secure this. A remaking of our institutions is needed to guarantee economic security for all, waged and unwaged. But the five steps outlined here – mainstream in much of Europe – can begin to build that future.
1. Restore sectoral collective bargaining to rebalance power and boost wages.
2. Take back control of time by boosting workers’ rights in the Employment Bill.
3. Introduce a Living Income social security system to guarantee economic security for all.
4. Reform the rules of the company to give everyone a stake and a say.
5. Organise care as a public good free at the point of use to reduce unpaid work and gender inequalities.
Workers are facing an unprecedented and brutal pay squeeze: real regular pay fell by 1.3 per cent in the year to February, with the fall in real wages projected to endure until late 2023, leaving average wages no higher than in 2007. Nor is this a short-term problem: since the 2007/08 financial crisis almost 40 per cent of employees have seen a decline in incomes and a majority have seen less than two per cent real increase per year over that period to 2020. Work is no longer a guarantee of growing prosperity; labour market institutions are not delivering. To address this, we need to rebalance power in and beyond the workplace to ensure workers can reclaim both their time and the wealth they collectively create. To that end, the crisis should be a trigger to:
1. Reintroduce sectoral collective bargaining to boost wages and conditions, starting with the largest sectors by employment, including care, retail, logistics, hospitality, and construction. The evidence is overwhelming that this is the most effective way to increase real wages, reduce inequality, and strengthen the economy through rising collective prosperity.
2. Introduce new rights from day one to improve conditions and rebalance power between employers and employees, including family-friendly rights such as maternity, paternity and adoption leave, alongside increased holiday pay, enhanced sick pay set at a Living Wage level, and strong protections from unfair dismissal, and the effective enforcement of employment regulation.
3. The Institute for Employment Relations found that the legal framework which governs trade union rights in the UK “are the most restrictive in the Western World. This is indisputable in relation to the right to trade union autonomy, right to strike, and the right to bargain collectively.” Structural reform must address and reverse this as a priority, including rolling out sectoral collective bargaining, as well as repealing legislation which places unfair or unreasonable restrictions on trade unions, and significantly strengthening the ability of unions to organise, to improve working conditions and pay, reduce wage inequality, and strengthen workplace democracy.
4. Make the national minimum wage a Real Living Wage.
Insecure work has become endemic in the UK. According to the TUC, one in nine workers – or 3.6 million people – are in insecure work, including more than one million on zero-hours contracts, the majority of them against their will. What’s more, a third of workers are given less than a week’s notice of their shifts according to The Living Wage Foundation. The lack of control and pressure this puts on people is acute. It can, however, be addressed. Changes to employment law can give people security over their hours and more control over their work. A set of changes can deliver this:
1. IPPR Scotland have recommended the introduction of a new Working Time Commission (WTC), based on the model of the Low Pay Commission, which makes recommendations on setting the minimum wage. Like the LPC, WTC would be a statutory body that reports to all the various parliaments of the UK, bringing together representatives from across the economy, including trade unions, business, academics, the voluntary sector and representative bodies. The WTC’s role would be to consider and make recommendations on fair work on a sector-by-sector basis, and across the UK economy, including, as IPPR Scotland set out, on:
I: Reductions in working time, taking economic conditions into account (such as productivity increases, unemployment and under- and over-employment rates) to understand what reductions in average hours worked could be delivered as the economy strengthens.
II: Recommended new minimum floors on hours worked by sector and across the economy to help drive progress towards living hours for all, taking into account any risks of increased unemployment for lowest income groups and those population groups with lower employer rates.
III: Recommended new maximum ceilings on work to limit maximum working hours per week based on economic conditions, wellbeing and likely compliance.
2. Introduce and enforce a Right to Disconnect. Digital communications technology have extended the working day: workers are expected to respond to emails and other communications from employers. This always-on culture has significant negative effects on workers’ health and personal lives. Establishing a “Right to Disconnect” would combat hidden overtime by protecting employees’ free time from the intrusion of work communications. Because the balance of power is tilted towards employers, having a legal right alone means very little. Enforcement - whether by a strengthened trade union movement or by labour inspection bodies or both - will be central to the establishment of a meaningful right to disconnect.
3. Introduce a Right to Flexible Working Patterns, including rights to work from home for those who can and want to. During the pandemic many employers have unilaterally decided where and when work takes place, adding to the lack of agency in the workplace. New rights to flexible work arrangements are needed to ensure flexible and remote working does not become the preserve of a lucky few.
4. End fire and rehire. Already illegal in many other countries, it is a bullying tactic that has no place in the modern world of work which can and must be banned immediately.
5. Set an ambitious 2030 target for a reduction and rebalancing of average working hours without loss of pay as part of sector-wide fair work bargaining agreements. This should include the goal of a managed reduction in overall hours while addressing underemployment and insecure hours many workers face.
6. The UK and devolved governments should offer support for expanded trials of shorter working time across a broad range of sectors, including non-office workplaces.
Alongside a rise in the national minimum wage, economic security should be guaranteed for all, both in and out of work. With 23.4 million people unable to afford the cost of living this spring, and nearly half of all children now living in families having to skip basic essentials, the introduction of a Living Income social security is now an imperative.
As NEF, IPPR Scotland, and others have argued, a Living Income system can ensure everyone has enough income to live with dignity, whether in or out of paid work. By guaranteeing a minimum level of income for all, it would help to eliminate market dependence, meaning the compulsion to work is reduced and people would be able to better choose the terms on which they worked.
There is a clear pathway that the Chancellor could take to transition toward a Living Income system:
I: Uprating benefits by the latest level of inflation,
II: Restore the £20 uplift for universal credit (UC) and extend to all other means-tested benefits,
III: Reverse the cuts to working age benefits since 2010, and “auto-enrol” everyone onto the UC system.
The company is a collective endeavour. Its success is rooted in common effort. Yet decision-making is undemocratic; the rules and ownership structures that govern the company currently stack power in favour of distant shareholders and senior management. Given people spend much of their lives living under the rule of their company, both democratic justice and aligning interests more effectively demands that ordinary workers have a genuine stake and a say in corporate governance. In the process, reform can help better align the interests of people, planet, and long-term company success. To that end, we propose a series of measures:
I: Reform the Companies Act to end shareholder primacy and democratise corporate governance, including through making employees company members and electing workers to company boards.
II: Ensure that asset managers and other major shareholders vote on instruction from the underlying beneficiary, with their voting at corporate AGMs and other forms of corporate engagement determined by democratically elected pension trustees. At present, asset managers use their control of other peoples’ money to vote in favour of climate damaging, inegalitarian measures.
The pandemic has shone a light on the serious problems in the current approach to care - from a gendered division of labour, reliant on low and unpaid work, to the higher deaths rates in social care - it is clear that urgent action is required to transform care for care workers and care receivers. We must treat the provision of care (including childcare, adult social care, care for the elderly) as a public good, provided free at the point of use.
The profound deficiencies in our existing system cannot be fixed by increased spending alone, rather, they require a transformation of caring activity and provision. The existing mode of providing care depends on a low or unpaid gendered workforce. The Centre for Progressive Policy recently found nearly half of working-age women are providing an average of 45 hours of unpaid care every week, while 25% of men provide 17 hours, which drives gender-based inequalities in and outside the workplace. Changing this through the provision of high-quality, well-paid, free-at-point-of-use care systems is therefore good for equality and can also ease the pressure on labour, both waged and unwaged.
Decommodifying and democratising care also transform the conditions of care for both care givers and care recipients. There are different models to deliver that future for different forms of care, attendant to whether responsibility is devolved or not. The Women's Budget Group and NEF “National Care Service'' proposal, for example, sets out one model. A similar approach to deliver high quality universal care in other sectors would include:
I: A generous new funding settlement to provide care free-at-point-of-use.
II: Much stronger role for public provision, including local authorities, replacing for-profit providers.
III: Wages and conditions set by sector wide collective bargaining, in order to ensure good pay and conditions for all care workers.
IV: An enhanced role for care receivers in setting terms of care.
V: A new national body overseeing each care sector to drive improvement.
This May Day, we have a whole new world of work to win.
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