31 May 2017

By Faiza Shaheen, Director of CLASS

Director of the CLASS Think Tank Faiza Shaheen comments on the Conservative Party Manifesto pledges for workers' rights.

There's been a huge splash about the Conservative proposals to address workers' rights. These proposals include the right to request leave for training or to care for a sick relative, regulations to protect workers' pensions, and protections for those suffering discrimination because of mental health conditions. Theresa May is claiming enacting these proposals would be “the greatest extension of rights and protections for employees by any Conservative government in history.” But rather than comparing these proposals with those of previous Conservative commitments, we must ask if they meet workers’ key concerns and the root causes of the decline in working conditions. Using this framework, it’s clear that the Conservatives have forgotten two fundamental things - pay and power.

Pay

In 2017, work doesn’t pay. With 3.8m workers living in poverty today – 1m more than a decade ago – working poverty has reached record levels. In fact, 55% of people in poverty today live in a working family. After inflation, wages are still 3% below their pre-recession peak, and workers face another four years of income stagnation, making for the longest pay squeeze in 70 years.

The Conservatives have proposed raising the national minimum wage rates in line with median earnings until 2022. While this sounds promising, this rise would in fact be lower than what George Osborne promised back in 2010. Moreover, the new proposed rise illustrates an abandonment of the government’s goal of getting the national living wage up to 60% of median earnings by 2020. This simply cannot be done if the national living wage rises at the rate of median earnings.

What’s more, given that median pay is likely to be squeezed, national living wage growth will stagnate. When we look at this proposal in the context of other Conservative party policies - a freeze on tax credit rises, along with further cuts - then we will see the living standards of those on the national living wage squeezed. In short: the Conservative party are committing to increasing in-work poverty.

Precarious and insecure contracts

The ‘uberisation’ of the UK economy has not gone unnoticed. One in ten workers are now in insecure work, with the number of zero hours contracts having increased sixfold from 143,000 in 2008 to 905,000 in 2017. Self-employment is also up 26% since 2008, disproportionately in low paid sectors. However, the proliferation of precarious work and insecure contracts is yet to be sufficiently challenged.

The Conservative Party has commissioned RSA Director Matthew Taylor to review possible new protections for ‘gig’ economy workers. As we are yet to know what this will say, we cannot judge policy. However, it is notable that the Conservative party have not said they will ban zero hour contracts - a proposal supported by 71% of the public.

A meaningful say at work

The declining union membership and the absence of collective bargaining structures mean that most workers no longer have the ability to harness their collective power by coming together and ensuring they are paid and treated correctly. This has contributed to growing wage ratios between bosses and workers, exploitative contracts, and falling pay and conditions. Structures for sectoral collective bargaining - whereby pay and conditions are negotiated at a national level and cover all workers and employees within a given industry - have all but disappeared. The Trade Union Act 2016 further eroded the ability of trade unions to organise collectively by introducing arbitrary thresholds for industrial action ballots, new ballot and notice rules, and introducing new restrictions on union campaigning and political funds.

The Conservatives have proposed representation for workers on company boards under their wider reforms to corporate governance. Theresa May has repeatedly voiced her support for workers on company board as a voluntary measure.

However, as a voluntary option, workers on boards won’t achieve the changes to corporate governance and inequality that the Conservatives claim they want to see. As it stands under the current voluntary measures, only two UK companies describing themselves as having an employee on their board.

Secondly, with no national rules on workers on boards on the UK, there is a danger of the position being tokenistic. In what many suspect is a public relations exercise, Sports Direct – best known for paying workers below minimum wage and creating such a culture of fear that an employee gave birth in the toilets – ran an election last year to include a worker on their board.

Unfortunately, the elected worker isn’t actually a board member, and has no voting rights. On top of this, trade union Unite wasn’t involved at any stage of the election. Given that it was a Unite campaign that brought to light the Victorian working conditions in Sports Direct, excluding the union suggests that Sports Direct aren’t serious about improving conditions for their workers. Unless workers on boards is mandatory, with trade union support and guaranteed voting rights, this will be a missed opportunity to tackle inequality in UK companies and give workers a real voice.

Another proposed solution to workers not having a meaningful say at work is new statutory right to receive information about key decisions affecting your company’s future, subject to reasonable safeguards, and in keeping with but not exceeding the rights of shareholders. While greater transparency in business should be welcomed, and knowledge about future decisions would be useful for trade unions in the workplace, this alone would not give workers a meaningful say in company decision making.

Unscrupulous bosses

In recent years there have been a number of campaigns and exposés that have brought to light a culture of bosses ripping off workers while making huge profits for themselves. The BHS fiasco, whereby Sir Philip Green was found to have stripped the company and undermined its ability to stick to pension promises to workers, was a huge scandal, and demonstrated just how much the bosses can get away with.

Today’s announcement included a proposal for new rules to protect workers’ pensions from irresponsible behaviour by company bosses, like unsustainable dividends and takeovers that put the future of the pension scheme at risk.

These new rules are welcome and necessary. Again, greater collective bargaining coverage and workers with a meaningful say would go a long way to ensuring these scandals do not repeat themselves, as well as ensuring bosses are held to account on all actions affecting workers.

Brexit induced race-to-the-bottom on workers' rights

One major concern has been that the hard won rights under the EU would be abandoned with the swish of a pen, leaving us at the mercy of unscrupulous employers such as Sports Direct. As such, the Conservatives have proposed the UK will keep all workers' rights currently guaranteed by EU law.

This is certainly welcome. However given Brexit has drawn attention to workers’ rights, we should use it as an opportunity to look at what additional rights are needed. Though EU law on workers’ rights has been a lifeline to millions of workers, it has failed to protect the zero-hour contract worker, the temp refused a permanent contract, or the bogusly self-employed. Neither does it guarantee against discrimination at work. The degree of workers’ rights has a huge impact on whether the labour market continues it trajectory of growth of low skilled, low paid positions, or whether we create good quality jobs and avoid the race to the bottom.

Rights to paid leave

While EU law has meant the introduction of paid parental leave and other extended rights, there are still considerable gaps. In particular, with an ageing population and the social care crisis, many more workers need to take time off to care for their elderly relatives.

The Conservative proposals included:

a) A new statutory right to request leave for training purposes.

b) A new statutory right to leave to care for a family member, in line with other countries.

c) A statutory right to child bereavement leave, for those who suffer the tragedy of losing a child.

d) The introduction of new returnships for people returning to the labour market from a period of absence, including from parenthood and elderly care.

These proposals are welcome. The problem is, of course, the issue of pay. In essence these mean nothing for those on low and middle incomes who won't be able to actually consider these options because of affordability.

A second issue is that the Conservative proposals do not include a plan to scrap the employment tribunal fees, meaning that most people will not be able to hold bosses to account and rendering these new rights obsolete.

The bottom line? There are some worthy proposals here, but in light of the scale of the challenge, May’s attempt looks at best piecemeal and at worse, lip-service.

Ultimately, we can only really judge Conservative proposals to tackle deterioration in our labour market once we’ve seen their investment plans, as it will be these that provide us with the infrastructure which increase productivity and create good jobs over the medium to long-term.