4 September 2014

By Professor Keith Ewing and John Hendy QC

In an important speech in May 2014, Mark Carney, the Governor of the Bank of England spoke out about the need for ‘distributive justice’, ‘social equity’, and fairness between generations.

Carney continued – in what might be seen by some as an excoriating attack on the impact of government policy – by saying that ‘relative equality is good for growth’; and that ‘inequality is one of the most important determinants of relative happiness and a sense of community’.

When he addresses the TUC this year, Mr Carney will be able to explain to delegates just what needs to be done to promote a more equal society. A good place to start would be the new booklet by Lydia Hayes and Tonia Novitz, published jointly by the IER and CLASS.

There the authors make it clear that one of the key levers for reducing the inequality gap is extending the scope of collective bargaining, across whole sectors of the economy so that more workers are covered by a collective agreement. This would be the most effective way to ensure that everybody gets a wage rise.

Hayes and Novitz are not alone in extoling the virtues of collective bargaining. The equally important report of an independent review established by the Scottish Government was also published in the summer. This recommended that:

The Scottish Government should continue to emphasise the significance of Scotland’s trade union movement, the valuable part which unions can play in building economic success.

This recommendation applies whichever party is in power in Holyrood, and whatever the outcome of the independence referendum. So does the recommendation that steps should be taken to ‘explore the potential to extend collective and sectoral bargaining in Scotland and seek to increase levels of workplace democracy across the private, public and third sectors in Scotland’.

Carney has the opportunity to deliver a game – changing speech, in the same way that Jacques Delors did in his speech to the TUC in 1988. Delors – then the President of the European Commission – won over large sections of the British trade union movement to the idea of a ‘Social Europe’, with a promise that every worker would be covered by a collective agreement.

That is a promise that has been shattered by Delors’ neo-liberal successors. Collective bargaining structures are being dismantled in Member State after Member State, whether as a result of the EU’s so-called ‘growth strategy’, or as a result of the austerity measures being imposed in a number of Eurozone countries. So we find collective bargaining destruction in Romania, Greece, Italy, Spain, and Ireland.

This ‘arc of despair’ reveals that it is not only the British government that is squeezing collective bargaining. So too is the European Commission and the European Central Bank, which may well lead more and more workers to question EU membership. It can no longer be taken for granted that the citizens of this country would now be willing to vote ‘yes’ if offered an ‘in-out’ referendum.

At the moment, however, all eyes are on the Bank of England (not the Labour party) to deliver on ‘distributive justice’, ‘social equity’, and fairness between generations. These things will not be wished into action. Nor will they happen without recognising the crucial role that trade unions can play in their delivery. Over to you, Mr Carney.

Trade Unions and Economic Inequality by Lydia Hayes and Tonia Novitz is available here

The IER publication Reconstruction After the Crisis: A Manifesto for Collective Bargaining is also available for purchase.