Labour must take seriously the need to expand collective bargaining

In the coverage of Ed Miliband’s recent speech at Newham Dockside, the sections of the speech on employment sadly received scant media coverage. The press focused instead on welfare and benefits.

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In the coverage of Ed Miliband’s recent speech at Newham Dockside, the sections of the speech on employment sadly received scant media coverage. The press focused instead on welfare and benefits.

However the speech set out some of Ed Miliband’s strongest statements yet on abuses of agency workers and low paid workers and the fact that the state is subsidising low-paid jobs paid by skinflint employers via state benefits. He also admitted Labour’s terrible failure to tackle low pay in the past.

Specifically on low pay, Miliband said:

“Today, people often don’t get paid enough in work to make ends meet and the taxpayer is left picking up the bill for low pay. We must change our economy, so that welfare is not a substitute for good employment and decent jobs.”

And he admitted:

“We (Labour) didn’t do enough to tackle Britain’s low wage economy, a low wage economy that just leaves the taxpayer facing greater and greater costs subsidising employers.”

On the world of work and agency work Miliband referred to people working 40, 50, 60 hours a week, having to work two or three jobs just to make ends meet:For too many people in Britain the workplace is nasty, brutish and unfair”.

He also pointedly referred to theexploitation of zero hours contracts to keep people insecure”.

This week we saw Vince Cable announce a review of zero hours contracts – probably in response to the Miliband statement – we shall see what comes out of any review; but don’t hold your breath!

I think we can also read into Ed’s statement an end to the so-called ‘Swedish Derogation’, or Clause 10 in the UKs transposition of the Agency and Temporary Workers Directive, which allows companies to hive-off parts of their businesses and staff to managed service providers paying even lower wages that other agency workers.

Swedish unions and employment lawyers will tell you the way that the clause has been transposed has nothing to do with the way the derogation works in their country which is designed to provide protection in between assignments.

On the Living Wage, Ed Miliband made it clear that:

We will do everything in our power to promote the living wage. If local councils can say if you want a contract with the council then you need to pay the living wage, then central government should look at doing that too...We should look at offering some of these savings back to those employers to persuade them to do the right thing and pay the living wage.”

One of the key issues arising from Ed’s speech is the fact that the state is now propping up Low Pay UK. Employers paying as little as they can get away with – with the state making up the rest in benefits.

The decline in collective bargaining has clearly contributed to this.

In times past collective bargaining was the main way of regulating pay and conditions across the workforce – from the 1940s through to the 1980s. Workers were covered by national or sectoral agreements which created a level playing field – and redistributed pay across the economy. Many other workers were covered by company or group agreements and low paid workers received some protection via wages boards.

But the number of workers covered by a collective agreement has fallen by more than half over the past 25 years. Around 70 per cent of all workers had their pay and conditions covered by collective agreements in 1984 – this has fallen to 33 per cent and 18 per cent in the private sector.

National-level bargaining still exists among some industries and in some private firms, but multi-employer collective agreements in the private sector have all but disappeared. Now an even larger and growing proportion of workers have their pay and conditions determined by management at the workplace, with little if any input from unions – or even the workers themselves.

We have seen new jobs being created but many are agency based – or workers start as agency staff working their way to becoming permanent employees.

In tackling low pay and breaking the spiral of taxpayers and the state propping up low pay via benefits, Labour must now begin to take seriously the need to introduce sectoral pay and expand collective bargaining.

As the esteemed employment lawyer professor Keith Ewing has pointed out on several occasions, in 1938, Ernest Brown, the then minister of labour (in the then Tory-led government) announced in the House Of Commons it was the policy of the government to promote collective bargaining, and with it, the trade union voice.

As Keith has said “…a simple attempt by a thoughtful man to increase wages, equalise incomes, stimulate the circulation of money, increase demand, and promote job growth, for the good of the country and the benefit of everyone”.

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