Restoring the ability for workers to have a voice is a step in the right direction, write KEITH EWING, JOHN HENDY and CAROLYN JONES
RECENT suggestions from the candidates for the Labour Party leadership election endorsing a reinvigoration of collective bargaining — including for employers of more than 250 workers — and the revival of wages councils coupled with reinstatement of the ministry of labour are all to be welcomed.
But as we and a dozen more leading labour law academics set out in the Institute of Employment Rights’ Manifesto for Labour Law a month ago, much more is needed for law at the workplace to play its proper place in restoring a productive economy, creating demand, diminishing inequality and giving back to workers dignity, respect and security.
A ministry of labour is central to the proposals. Employers should welcome it to provide proper planning for the skills, training and apprenticeships needed for a successful economy and reduce dependence on expensively trained workers from abroad, who are often much-needed in their home states.
Workers need a ministry to ensure that their 31.7 million voices and interests are heard at the Cabinet table.
The restoration of collective bargaining is, of course, vital. Nowadays only two out of every 10 workers have terms and conditions protected by collective bargaining — the lowest level since before the first world war.
This compares with collective bargaining coverage of eight out of 10 workers for most of the period from the second world war until Margaret Thatcher came to power in 1979. In Europe the average is still over 60 per cent.
Collective bargaining is vital for the voices of workers to be heard and for some form of democracy at the workplace.
Otherwise terms and conditions are set unilaterally by employers responding only to the labour market, in which labour is no more than a commodity.
The national minimum wage and the living wage are, of course, beneficial but apart from their low level the fact is that workers have no input into the level at which they are set.
Collective bargaining is also vital for social justice; without it the inequality of power between the worker and the employer is unmitigated.
In particular, recent research has shown that “collective bargaining has long been recognised as a key instrument for addressing inequality in general and wage inequality in particular.” Growing inequality is a scourge of modern society.
Recent research, including by the IMF, has also shown that extensive collective bargaining is vital for economic recovery.
It increases wages, and the fact that “Britain needs a pay rise” is near universally accepted.
Higher wages increase demand in the economy so stimulating economic activity and employment.
Higher wages diminish the huge sums spent by government in subsidising low-wage employers while at the same time increasing tax take.
Collective agreements set “the rate for the job” so preventing undercutting by employers seeking ever cheaper labour, including by importing cheap labour.
Competition is stimulated instead by investment in efficiency, research and development.
But such beneficial results cannot be achieved by confining collective bargaining to big employers.
Most employment is with small and medium-sized employers (SMEs). To get the economic benefits, especially by the avoidance of undercutting, it is essential that all businesses in an industrial sector are bound by the same conditions.
That means sectoral collective agreements: a base agreement across an industry — nationally or, in some cases, by region — on which enterprise level agreements can build.
Enterprise level agreements, even with the biggest firms, simply cannot either prevent bad employers undercutting or raise income across the working population.
Wages councils — introduced by Winston Churchill and abolished 70 years later by the Tories — were good examples of industry-wide collectively bargained wage-setting and would form the basic building blocks of economy-wide sectoral employment commissions as outlined in our Manifesto.
These principles, overseen by the ministry of labour, were well understood as the antidote to recession in the 1930s.
They were adopted throughout the Western world and were successful both before and for long after the war.
And, as lawyers, we should add that the commitment to collective bargaining is a legal duty on states imposed by multiple international treaties, all of which have been ratified by Britain.
So the recent commitments to collective bargaining by Labour are to be commended. But we urge that the full measures of our Manifesto for Labour Law be adopted for the next Labour government.
While a revamped system of collective bargaining is at the heart of these proposals, they also deal with problems of insecurity at work, trade union autonomy and reclaiming the right to strike.
Professor Keith Ewing, John Hendy QC and Carolyn Jones are president, chair and director respectively of the Institute of Employment Rights.
A Manifesto for Labour Law: towards a comprehensive revision of workers’ rights can be bought from the Institute of Employment Rights at www.ier.org.uk.