Work in progress

Improving worker’s rights was a central part of Labour’s 2024 manifesto. The government’s flagship employment rights bill, which is progressing quickly through parliament, is the clearest articulation of this vision. Its welcome measures represent a modest reregulation of the UK’s world of work, with new protections for those with zero-hours contracts; employment rights from day one of employment; enhanced leave for working parents; protection for workers transferred from the public to the private sector throughout sourcing; a new negotiating body to raise employment standards in social care; and reforms to the statutory trade union recognition procedure that, in principle, should make it easier for trade unions to establish robust collective bargaining arrangements. In large measure, the commitments in the pre-election policy document, Labour’s New Deal for Working People, will be on the statute book when parliament rises in the summer.

It is a little dispiriting that the public conversation has followed a very familiar course. The bill’s enthusiastic supporters present it as transformative; historic wrongs will be righted, exploitative practices eliminated and a fairer labour market created. Opponents of these measures, on the other hand, suggest that they are a charter for job destruction, inconsistent with the government’s growth objectives and fundamentally misconceived, albeit well intentioned. What is missing on both sides is a compelling and wide-ranging vision for labour market policy. More ambition is required if present discontents are to be addressed effectively.

Readers of a certain age might reasonably feel they are stuck in a rhetorical doom loop. Similar arguments were deployed during the early period of the Blair government in relation to the national minimum wage and the Employment Relations Act 1999. Throughout the tenure of the Thatcher and Major governments, employment rights were viewed as burdens on business and trade unions as impediments to the efficient functioning of the economy. Harold Wilson’s government was deeply divided by the 1969 white paper In Place of Strife, which envisaged a much stronger role for the law in regulating the activities of trade unions. And Edward Heath’s Conservative administration experienced similar tribulations following the Industrial Relations Act 1971, which foundered on the rocks of union hostility and employer indifference. Arguments that began sixty years ago – or more – seem far from settled today.

A swift glance at some international comparisons suggests that the cases both for and against are somewhat overcooked. When the legislation comes into force, the UK will continue to have a relatively lightly regulated labour market; there will be no comprehensive labour code, no measures to extend collective agreements across industries and none of the universal rights to information, consultation and agreement that are taken for granted in western Europe. Nor is it possible to sustain the argument that workers’ rights are invariably burdens on business that restrict employment growth. The Organisation for Economic Co-operation and Development (OECD) undertook a comprehensive review of the evidence in 2004 and again in 2018, finding no relationship between the strength of employment protection and the level of unemployment. A number of countries, including the Nordics and the Netherlands, achieved labour market outcomes that were as good as or better than either the UK or the USA while maintaining relatively strong regulation. In other words, the ‘burdens on business’ argument is an assertion, not a statement of fact, and it is possible to reconcile economic efficiency and social justice. Moreover, the OECD also suggested that the choice for employers was not between collective bargaining and no bargaining, but between collective bargaining and regulation. To be clear, if employers want to avoid statutory intervention, their best response is to negotiate wide-ranging agreements with responsible trade unions. Electorates in democracies have a low tolerance threshold for the worst excesses of capitalism, exemplified by the finding from a recent TUC survey that a majority of Reform voters support the measures in the employment rights bill.

But we are still left with the sterile and ritualised discussion of the last year, a successful escape from which demands a more comprehensive and dispassionate. assessment, focused on a wider set of questions. How, for example, should the labour market be regulated to achieve sustainable, non-inflationary growth in conditions of full employment? What is the role of institutions like trade unions and employers’ associations in delivering that objective? How should the balance be struck between statutory employment protection rights for individuals and the joint regulation of the workplace (and resolution of disputes) by trade unions and employers? The goal must be a shared understanding of the principles of labour market regulation, a consensus about the problems to be solved, a commitment to devising effective solutions, whether statutory or voluntary, and an equal commitment to building institutions that are not themselves continuously in question, which can shoulder the burden of policy implementation.

This does not mean that the parties can never disagree – there is ample scope for disputes about appropriate levels of pay or changes to conditions of employment. It is essential, however, that the parties are not questioning each other’s legitimacy or seeking to demonstrate that they are wholly right and the ‘other side’ wholly wrong. Diplomacy is a better model for industrial relations than trench warfare. In the past, building a consensus of this kind might have been the responsibility of a royal commission, charged with evaluating the evidence, taking written and oral submissions and making recommendations to achieve the government’s declared objectives. Sucha patient, deliberative approach might be unpopular today, but it has much to commend it – and the success of the Low Pay Commission and Adair Turner’s Pensions Commission both prove that smaller scale initiatives can draw on this method, laying the foundations fora sustainable shift in policy direction. In the absence of consensus-building exercise focused on creating new labour market institutions, the likelihood is that Labour’s legislation will be repealed by a future government of the right or centre-right.

For those who argue this is a counsel of perfection, itis worth recalling the broad agreement that endured for most of the twentieth century about the regulation of the world of work and the role of trade unions. Yes, the system began to break down in the 1960s and yes, it was messy, unstable and sometimes infuriating. But all political parties viewed collective bargaining as a collective good, the inequalities between individual workers and their employers were well understood and unions, rather than being the enemy within, were indispensable institutions in the governance of the nation.

As a first step in the process of reconstruction we might remind ourselves that in many cases the Webbs were right to suggest there is no substitute for the painstaking collection and evaluation of data. That is the foundation on which sustainable, progressive public policy has to be built. Today, labour market policy is framed in response to anecdotes rather than evidence, simply because in many cases the evidence is absent. The most recent Workplace Employment Relations Study was completed in 2011, and while the monthly labour force survey offers useful headline data – on the incidence of work related ill-health, for example – it lacks the detail and texture enabling us to understand how the world of work is changing. The need for more and better research is compelling.

To stimulate further discussion, I would suggest that the principles of efficiency, equity and voice – or productivity, fairness and industrial democracy – should inform policy development in the future. The UK’s industrial relations system, if it can be described as such, fails today in relation to each principle. Productivity growth in the UK has been woeful since the financial crisis of 2008, wage growth has been sluggish, bad practice is widespread and the tenets of industrial democracy – to organise, speak up, be heard and negotiate with the employer.

Image credit: Swaminathan via flickr