How Britain can avoid a post-Brexit race to the bottom in labour standards
William Brown, Emeritus Professor of Industrial Relations, University of Cambridge and Chris F. Wright Senior Lecturer, University of Sydney / 6 June 2018
There is a risk that Brexit could erode workers’ wages and conditions, particularly if the British government deregulates employment laws and undercuts European Union standards, as various ministers have suggested. These concerns are acute given recent trendsof widening income inequality, sluggish wage growth and an increase in the low-paid workforce.
To ensure that Britain does not fall into a competitive race to the bottom, it must put in place a robust way of enforcing decent labour standards. In a recent analysis published in The Political Quarterly journal, we outline various ways to achieve this.
1. Trade unions
Legal changes to restore sector-wide collective bargaining between trade unions and employers have been proposed as one possible solution. While the majority of the British workforce once relied upon collective bargaining for pay increases, there are various reasons to question whether this proposal alone would be sufficient.
Not only has union membership collapsed, particularly in the private sector, but so too has membership of employer organisations whose involvement is necessary to sustain collective bargaining.
There is a strong case to restore trade union rights stripped away by successive Conservative governments. For instance, heavy restrictions on the right to strike have contributed to a rise in covert individual forms of workplace conflict like disengagement, absenteeism and turnover.
But the negligible effect of legislation introduced by the Tony Blair government, which forced employers to recognise trade unions if a majority of workers in a workplace supported this, indicates that the impact of such changes is likely to be minimal. More creative solutions are also needed.
2. Wage laws
There is scope for more creativity when it comes to the way wages are set and monitored. Instead of a single national minimum wage, for example, this could be expanded to include higher rates for specific sectors.
The International Labour Organization has found “inclusive” wage-setting systems, which set minimum standards for all workers in a particular industry, to be effective for reducing income inequality while sustaining economic growth. These are especially important for protecting the pay and conditions of workers who are especially susceptible to mistreatment or being paid below their worth. Often these are women, migrants, younger workers and those in low-skilled occupations.
Government intervention is also needed to protect employers who maintain good employment practices from being undercut by employers who seek competitive advantage through poor employment standards. As Winston Churchill famously remarked, in the absence of such oversight:
The good employer is undercut by the bad and the bad by the worst … Where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.
3. Tax measures
Tax measures could be used to protect responsible employers. For example, a higher employer’s National Insurance tax contribution could be introduced for fixed-term, zero-hours, agency-provided, or otherwise insecure jobs.
Extending this kind of provision to the growing number of companies which rely on individual “contractors” on gig economy platforms like Uber and Deliveroo, who lack the rights and protections of employees, would also help to address problems of low pay and insecure work.
4. A stronger watchdog
Britain has never had a comprehensive labour watchdog. It could introduce one that would eradicate company non-compliance with minimum standards of treatment. The same body could enforce the decisions of the employment tribunals that are in place to hear claims from people who think their employer has treated them unlawfully.
The government’s recent creation of a Director of Labour Market Enforcement, which recently issued its first annual strategy report, is a welcome sign. David Metcalf’s role is to oversee a government crackdown on exploitation in the workplace. Yet lack of resources for government inspectorates remains a major challenge in achieving this.
The UK could learn from the US, which has introduced a “strategic enforcement” initiativeto help underfunded enforcement agencies make better use of limited resources. It involves targeting major retailers and brands and making them accountable for the standards of suppliers and labour contractors in their supply chains, rather than targeting small non-compliant businesses directly.
5. Consumer campaigning
The emerging power of consumer campaigns, aided by social media, can be mobilised more effectively to improve labour standards. The influence of these campaigns is generally limited to consumer-facing large firms that are averse to reputational damage.
But there is substantial scope for increasing consumer power with new legal obligations to ensure firms exercise due diligence over their supply chains so that labour standards here are also subject to inspection. This is evident in the strategies used to improve working conditions in the meat processing and construction industries in Britain, as well as internationally to protect workers in developing countries who manufacture the goods marketed by multinational clothing and electronics brands.
No good will come from the vision of a hard Brexit where Britain competes internationally through degrading labour standards. But there is a very different vision which could be nurtured. It would draw on the fact that the newly energised part of the electorate are young workers who are currently most vulnerable to bad employment practice. They may not join trade unions, but they will support political action to strengthen labour standards.
This blog post was originally published on Theconversation.com. Their fuller article is here