05 June 2017

By Alan Bogg, Professor of Labour Law, the University of Oxford

Workers' rights and wage inequality have become a key political battleground this General Election following public outrage over the stagnation of real wage and the increasing gap between the haves and have nots. A TUC analysis released last summer showed that real wages fell by a massive 10.4% between 2007 and 2015 – the largest decline in the EU, matched only by Greece. But while average workers were feeling the squeeze, their bosses were flying high. FTSE 100 CEOs collected a 10% pay rise between 2014 and 2015 and now earn 183 times that of the average worker, according to the High Pay Centre.

Meanwhile, we are now living in an economy that is increasingly split between workers forced to take on excessive hours, with almost 3.5 million working more than 48 hours a week in 2015; and those who cannot get enough work, such as the near-million workers on zero-hour contracts.

But what should the next government do to reverse these trends? As part of my work with the Institute of Employment Rights' on its Manifesto for Labour Law, I have worked with academics and lawyers from across the UK to develop the following eight policy proposals:

1: Restore sectoral collective bargaining

Sectoral collective bargaining refers to the process whereby the unions and employers of each industry negotiate minimum term and conditions applying to all workers in their sector including (amongst other things) minimum pay rates and allowances, and permissible forms of employment. This is the most effective way of increasing the real value of wages and removing precarious forms of employment.

2: Create a Living Wage Commission

Today's Low Pay Commission advises the government on setting the minimum wage, but the Living Wage Commission would have the aim of eliminating low wage work from the economy and ensuring that all workers' salaries always cover the cost of living in their geographical area at the very least.

3: Enforce the Living Wage effectively

An estimated 362,000 jobs paid less than the National Minimum Wage or National Living Wage in April 2016, according to official data, and among the 360 businesses most recently named by the government for flouting minimum wage law were household names Debenhams, Subway, Lloyds Pharmacy and St Mirren Football Club. Without adequate enforcement, workers' rights are just paper rights. More robust measures are required to ensure sectoral collective bargaining is underpinned by decently remunerated work and employers are not able to evade the law. The introduction of an independent Labour Inspectorate with the power to access workplaces, the abolition of employment tribunal fees, and a responsibility placed on employers to conduct audits that identify whether wage laws are being met will all improve enforcement.

4: Give workers information on wage rates

Workers must be provided with sufficient information at the point of payment so that they can verify that they have been paid correctly and in particular in compliance with minimum wage laws. Regulations to this effect could be made immediately under the National Minimum Wage Act 1998, and would play a crucial part in enhancing wage transparency for the most vulnerable, and thereby enforcement of the law.

5: Ensure wages rise equally for all

Unionisation currently improves workers' pay by 14.5% in the public sector and 7.6% in the private sector, so it is expected that as more people are covered by collective agreements, average wages will increase. However, measures are required to ensure that everybody benefits from this progress equally, regardless of their gender, sexual orientation, race, or any other protected characteristic. Where collective agreements are thought to perpetuate pay inequities, or fail to make sufficient progress towards equality, they should be referable for scrutiny by the CAC. Where there is no collective agreement in place, employers' pay structures should be referable on the same grounds.

6: Tackle the culture of overwork

To ensure that excessive working hours are tackled, minimum legislative standards should be established to set decent annual and weekly working hours, and specify daily, weekly and annual rest periods. These standards should be viewed as a floor to be built upon through collective agreements with employers.

7: Tackle the culture of underwork and unpredictable work

To protect workers from being exploited through agreements that do not offer them guaranteed work – such as zero-hour contracts - all workers should be engaged on 'defined hours contracts' by law. These would set out the minimum number of hours that the worker in question will be required to work either each week or each month. These contracts must also prescribe the permitted percentage (up to a statutory maximum of 10-20%) of the hours that a worker can be placed 'on call', during which time they will be entitled to be paid a retainer.

8: Stop employers from relying excessively on zero-hours workers

To prevent employers from relying excessively on vulnerable workers on zero-hour contracts, a duty should be placed on employers to provide fixed and regular working hours to any person they engage continuously for at least 12 weeks.