New rights for agency workers point to a better economy for all

New protection for agency workers should lead to better jobs, helping turn back the tide of lagging lower pay and a better economy for all.

The government has announced guidance today to help employers comply with new regulations, due in October, that ensure directly hired agency workers have the same rights as other employees after 12 weeks. This has prompted the Daily Telegraph to worry about the ‘onerous’ nature of the changes, and has rounded up an employment lawyer and manufacturer’s orgnaisation EEF to fret about the new regulations.

But it does not have to be this way. Wages of the lowest-paid 50 per cent have made up an ever-decreasing proportion of total earnings over the last 30 years.

We can choose a ‘high-road’ to better paid jobs.

As Left Foot Forward contributor and secretary to the Resolution Foundation’s Commission on Living Standards James Plunkett writes:

Too many trot out the standard line that any government action on pay increases unemployment; too few look at the evidence.

“In doing so, this talk by Nobel Laureate Robert Solow, is not a bad place to start. It’s based on the findings from a major international research project on low wages in the wealthy world.

“The project found, first, that some economies have much higher rates of low-wage work than others; in the US, one in four workers is in a low paid job and in the UK one in five, compared to around one in ten in Denmark.

“But the project also found that the choices of government can have a big effect on the proportion of people in low wage work—without a significant effect on employment. In fact, as Solow points out, the interesting question when it comes to government action to raise wages is why we don’t see a large effect on employment.

“His answer – and that of the broader project – is that when the government puts upward pressure on wages, companies have many more options open to them than simply firing their unskilled workers.

“In practice, many companies respond by taking the ‘high road’, adapting their business model in a variety of ways – increasing capital intensity, changing manufacturing processes, investing in training and even redesigning their products. Firms change rather than reduce the jobs they offer – and they change them in positive ways.”

Solow’s talk can be watched here.

These changes can not only afford some of the most vulnerable workers – the so-called permatemps – so protection, but would have the potential to be part of a wider push to ensure the the UK takes the high road of economic develope

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