I

THE new government is to be congratulated for the commitment in the King’s Speech that it will honour its manifesto commitment to implement the proposals made in Labour’s Plan to Make Work Pay, the latest version of its New Deal for Working People.

The government’s proposals include major changes: employment rights from day one, doing away with zero-hours contracts, banning “fire and rehire,” easing the conditions for statutory sick pay, allowing workers to take carers’ leave and bereavement leave, ensuring workers have the right to switch off, extending full employment rights to all workers other than those truly in business on their own account, and much else besides.

II

But although most welcome, even if fully implemented these changes to individual rights will not address the real problem faced by the overwhelming majority of our 31 million working people. That problem is lack of power at the workplace, with the vast majority of workers having no control over — indeed, no input into — the terms and conditions on which they work. 

6.1 million workers in the UK are in insecure work, with 3.4m being in low-paid insecure work. Over 1 million workers are on zero-hours contracts not knowing how many hours they will work and hence how much they will earn in any given week. The earnings of half the workforce are not keeping pace with inflation.

The fundamental need is for changes to the law to allow workers to exercise collective power through their trade unions to balance the power of employers. Labour’s Plan will certainly help in this respect, with reforms to the statutory recognition procedure making it easier to establish bargaining rights at places like Amazon. 

Unrestricted to recognition claims, Labour also proposes long overdue changes to allow unions to have reasonable access to members and potential members at their workplace. 

But a problem which Labour is not currently planning to fix is that the statutory recognition machinery only allows a claim against a single employer. Labour it seems has put on hold the proposal in the New Deal to legislate to impose collective bargaining across each sector and most occupational groups in the economy. True, Labour intends to require such bargaining across the social care sector and for school support staff; but why pause there? 

III

The case for extensive collective bargaining is well accepted internationally. Both the OECD and the ILO have been pressing its case for years. The EU introduced a directive last year requiring states with less than 80 per cent of the workforce covered by a collective agreement to produce an action plan to achieve it.   

In the UK, collective bargaining coverage from the second world war to 1980 covered over 80 per cent of the UK workforce. But now, thanks to 45 years of anti-union legislation, privatisation, out-sourcing, globalisation, and government policy, less than 1 in 4 of our workforce has negotiated terms and conditions. The rest have their terms dictated by the employer unilaterally — on a take-it-or-leave-it basis. 

The result has been catastrophic for workers. “In addition to the growth of job insecurity, real wages have not risen in value since 2007. Of the 6.7 million people on universal credit, 2.3 million workers (38 per cent) are in work. Indeed, the real scandal of universal credit is not a few hundred people claiming for what they are not entitled but the fact that 38 per cent of the £59.8 billion annual cost of universal credit is spent on subsidising employers paying low wages. 

Apart from improving the conditions of life for millions, higher levels of collective bargaining would increase demand for goods and services which would be instrumental in Rachel Reeves’s hope of achieving growth in the economy. It would also help to slash the government’s expenditure on benefits and at the same time increase its tax take. Above all it would restore some degree of democracy to the workplace so that workers again have some say in setting the terms and conditions in which they spend their working lives.

IV

The best way of achieving these objectives would be by restoring sector-wide bargaining, the case for which is overwhelming. By setting minimum terms for an entire industry minimum wages and allowances can be enhanced, pay gaps eliminated, fair differentials maintained, hours and holidays regularised, apprenticeships and training credentials standardised, and competition on labour costs eradicated. 

Employers will then compete on efficiency, productivity, research and development, and investment.   Sector-wide collective bargaining would also magnify trade union voice, without displacing enterprise or company based activity. In good collective bargaining regimes both sectoral and enterprise-based bargaining co-exist, the former enhancing opportunities for the latter by making it easier for unions to penetrate hostile firms.

Labour’s Plan to Make Work Pay therefore cannot stop at sectoral bargaining for social care and school support staff. The need for sectoral bargaining across the food production and agriculture sector, the warehousing sector, the parcel and food delivery sector, the hospitality sector, and many others is just as acute. And as the RMT and Nautilus pointed out in evidence to the International Labour Organisation, if there had been a sectoral agreement for seafarers, it would not have been possible for P&O Ferries to sack 786 seafarers and replace them on inferior terms.

That said, there is a commitment in the current New Deal/Plan to review the operation of sectoral bargaining and to “assess how and to what extent” sectoral bargaining arrangements “could benefit other sectors and tackle labour market challenges.” Although this falls far short of undertakings made in earlier versions of the NDfWP, there is enough here to provide a basis for future action enabling ambitious trade union leaderships to maintain political pressure for legislation to extend sectoral bargaining more widely.

V

But there is more. To redress the power imbalance in the workplace, the heavy restrictions on industrial action imposed in the 1980s must be reversed. Labour’s Plan proposes workplace and electronic balloting, repeal of the Minimum Service Level legislation and the Trade Union Act 2016. But that is not enough. 

The New Deal for Working People made the modest proposal that UK industrial action law should, at the least, meet the standards of those international laws which the UK has ratified and by which it is notionally bound. That would be transformational. But so far it is not reflected in Labour’s Plan. It should be.