Labour needs policies that end low paid and low skilled work

By Tony Burke | Published: October 27, 2014

The UK has too many poorly performing workplaces, according to a new report

On October 23, the Smith Institute launched a report entitled ‘Making work better: an agenda for government‘ – an independent inquiry into the world of work by Ed Sweeney.

Sweeney of course is the former chair of the Advisory Conciliation and Arbitration Service (ACAS), former deputy general secretary of Unite and former general secretary of the finance union Unifi, now part of Unite.

The report, which runs to over 100 pages, is the product of a nine month inquiry involving research, interviews, discussion events around the UK as well as opinion polling.

It sets out the argument that the UK has too many poorly performing workplaces, with poor treatment of workers who Sweeney’s report states are “underpaid, over-worked and ignored”.

The report also argues that the UK has a “long tail of broken workplaces” which are holding back the recovery and costing the country billions in lost income and in the payment of welfare benefits to those out of work but also to those workers eking out a living in low paid, precarious and agency work.

The report has been welcomed by Labour, the TUC and EEF (the manufacturing employers’ organisation), who were all represented at the report’s launch: shadow business secretary Chuka Umunna for Labour; general secretary Frances O’Grady for the TUC and Judith Hogarth, head Of employment policy of the EEF

Sweeney’s report highlights the UK’s poor performance on a range of indicators, including:

poor productivity, with the USA, France and Germany being 30 per cent more productive than the UK;
a skills shortage and mismatch, with half of employees interviewed saying that their jobs do not make full use of their skills and abilities;
job insecurity with over half of employees worried about loss of employment or job status – the Office of National Statistics now estimates there are 1.4 million zero-hour contract workers;
stagnating pay levels – since 2004 wages for workers on the median wage or less have stagnated or fallen in real terms and since 2010 median wages have fallen by more that 6 per cent in real terms;
and 50 of workers interviewed said they faced unreasonable treatment, while 40 per cent faced disrespect from employers.

The report also recommends that the government should amend the Information & Consultation Regulations to giver workers a stronger voice and bring the UK into line with other EU countries.

The ICE Regulations are barely used by unions to establish these structures as they are dauntingly complex and unions usually face open hostility from some of the worst employers who do not wish to hear the views of their workers, never mind consult with them.

The report makes a series of important recommendations, including a new mandate for the Low Pay Commission to increase the national minimum wage towards 60 per cent of the median wage; a target for government of lift one million workers to the living wage by 2020 and, interestingly, a requirement on the government to promote the positive role trade unions play in achieving fair pay and giving ACAS the power to promote collective bargaining and good employment relations.

At the launch, the issue of collective bargaining was a major talking point, with a number of speakers and questioners (including academics and trade unions) arguing strongly that the restoration of widespread collective bargaining would do much to restore decent work and pay equality.

Speakers pointed out that this was always ACAS’s role (it was the Major government who scrapped ACAS’s role in promoting collective bargaining) and it would require significant political and financial support.

On the role of trade unions, Chuka Umunna said in his remarks:

“The report is right to highlight that trade unions have an important role to play here in boosting training, pay and conditions for their members and helping Britain win that race to the top.

“At a time of rapid global economic change and a cost of living crisis at home, it is vital that the UK continues to have strong and modern trade unions as a genuine voice fighting against discrimination and abuse.”

Building on Ed Sweeney’s report, Chuka Umunna also announced the setting up a further review of Labour’s policies in regard to the world of work, to be lead by John Monks, former head of the TUC and the ETUC, Douglas McCormick, former MD of Atkins UK Rail and Alison Downie, head of the Employment Department at Goodman Derrick LLP.

Frances O’Grady hit the nail on the head at the launch when she said:

“With so many facing stagnant pay and too many new jobs made insecure through zero-hours contracts, agency working or low value self employment, we won’t fix the economy without fixing the workplace.”

Labour has to recognise that in order to win the election and win back working people, there is crying a need to promote clear policies to end low paid and low skilled work; but also to end exploitation, firmly regulate precarious work and create decent employment in decent workplaces.

Tony Burke is assistant general secretary of Unite

Labour needs policies that end low paid and low skilled work

Increase in number of people on low pay

Increase in number of people on low pay
By Left Foot Forward | Published: November 3, 2014

The number of people on low pay has risen by 147,000 to 5.3 million in the last year, according to a study by KPMG.

Childcare vouchersjThe research indicates that 22 per cent of employees are now earning less than the Living Wage – up from 21 per cent last year.

According to the data, part-time, female and young workers are the most likely to be earning a wage that fails to provide a decent standard of living.

The research, conducted by Markit for KPMG, also found that the proportion of people earning less than £7.65 per hour (£8.80 in London) is higher amongst part-time workers. More than 4 in 10 part-time workers take home less than the Living Wage, compared to 13 percent of full-time employees.

There are also more part-time roles paying less than the Living Wage (2.98 million) than full-time jobs (2.29 million), despite making up less than a third of all UK jobs.

The research revealed that during October of this year almost three times as many people who earned less than the Living Wage (29 per cent) reported that their household finances had worsened over the month, compared to just 10 per cent who saw an improvement. Meanwhile, twice as many people who earn below the Living Wage (18 per cent) reported an increase in their need to borrow, compared to 9 per cent who saw a reduction.

The financial outlook for many remains bleak. Five per cent of those earning less than the Living Wage said they expected to see their household finances worsen between now and November 2015. Almost a quarter (22 per cent) also reported fears over job security.

Commenting on the research, head of Living Wage at KPMG Mike Kelly said:

“Although there are almost 1,000 organisations pledged to pay a Living Wage, far too many UK employees are stuck in the spiral of low pay.

“With the cost of living still high the squeeze on household finances remains acute, meaning that the reality for many is that they are forced to live hand to mouth. Inflation may be easing, but unless wages rise we will continue to see huge swathes of people caught between the desire to contribute to society and the inability to afford to do so.

“For some time it was easy for businesses to hide behind the argument that increased wages hit their bottom line, but there is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity. It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying a Living Wage.”

Increase in number of people on low pay

Politicians are clearly misreading EU provisions regarding freedom of movement

UKIP’s success in the Clacton by-election has prompted further unease in Conservative and Labour ranks, with free movement of people in the EU, a cornerstone of the Union, now suddenly under fire from the political elite. Brad Blitz writes that the shift in tone is not only at odds with previous policies, it reflects a clear misreading of EU provisions regarding the free movement of people. The free movement of people is not an absolute right and does not guarantee automatic access to the UK; states are still permitted to treat nationals and EU citizens differently and prevent benefits fraud and welfare tourism.

After 21 years UKIP finally secured a seat in Parliament, prompting both the Conservative and Labour parties to express their desire to revise European Union provisions regarding the free movement of people. Prime Minister David Cameron went on record to say that within the EU, citizens from new EU Member States should not have automatic access to the UK’s labour market and that he supported a crack-down on benefits. London Mayor Boris Johnson stated that freedom of movement was central to negotiations over Britain’s future in the European Union and suggested that it was a deal-breaker. Labour’s Shadow Chancellor Ed Balls, though more circumspect and committed to Britain’s membership of the EU, nonetheless called for raising the qualification period for unemployment benefits and argued that Britain must put a stop to the practice of EU migrants sending child benefit back to their families outside the UK.

The cross-party fury over freedom of movement is not informed by statistical evidence regarding levels of immigration from the new European Union Member States. According to the Office of National Statistics (ONS), between March 2013 and March 2014 an estimated 560,000 people immigrated to the UK. Though a substantial increase on the previous year when the UK received 492,000 migrants, almost half of those who arrived in 2014 were non-EU citizens (265,000). While the overall increase in UK immigration figures is attributed to EU nationals, the ONS records that only 28,000 ‘new Europeans’, Romanians and Bulgarians, moved to the UK during that period. The vast number of EU nationals who entered the UK, including these Romanians and Bulgarians, did so in pursuit of work or study.

Why has the immigration of EU nationals become such a political bugbear? For more than a decade the UK has received considerable numbers of EU nationals, the largest originating from Poland. The arrival of hundreds of thousands of migrants arguably poses a challenge to the existing social infrastructure just at a point when it is calling out for modernisation, especially in the health and education sectors. But previous British governments actively supported EU enlargement, which has been a consistent plank of UK foreign policy. Until recently both the Conservative and Labour parties expressed at least a qualified support in favour of immigration from the European Union.

Unlike most other EU member states, the UK government chose not to impose significant transitional provisions to delay the right of freedom of movement to nationals from the A10 countries – Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia – when these states joined the EU in 2004. Instead the UK opted for a registration scheme for workers of eight of the new Member States. While both the previous Labour and Conservative governments fought to protect UK rights to control immigration – the UK has never joined Schengen – British governments have, until recently, openly respected the rights of EU nationals to freedom of movement (as opposed to asylum seekers and migrants from outside the EU). In contrast to fringe nationalist parties including UKIP, which have seized upon the rise in migration as their principal cause, the main parties have generally worked within the EU system.

The latest declarations from David Cameron and Boris Johnson, however, point in a different direction. The shift in tone is not only at odds with previous policies, it reflects a clear misreading of EU provisions regarding the free movement of people. The free movement of people is one of the fundamental freedoms that underscores the EU but it is not an absolute right and does not guarantee automatic access to the UK. The free movement of workers was historically treated in the context of production where labour was a central input and the desire was to remove national barriers rather than press for a common European right to mobility per se.

The rights to free movement are set out in the consolidated version of the Treaty on European Union (TEU) signed in Maastricht in 1992 and the Treaty on the Functioning of the European Union (TFEU), formerly known as the EC Treaty, signed in Rome in 1957. In addition, there is an important body of secondary legislation and the right to freedom of movement has been further clarified by the EU Court of Justice, giving rise to a significant body of case law.

While the right to free movement has been expanded, via jurisprudence or through legislation, and most clearly by the introduction of the Citizenship Directive (2004/38/EC) which encourages EU citizens to exercise their right to move and reside freely within Member States, there remains an important divide between those who may benefit from the right to freedom of movement.

The legislation extends access to the Single Market beyond the original beneficiaries, namely workers and self-employed persons, to people who enjoy various types of economic status. Nonetheless, several categories remain outside the scope of existing EU free movement provisions. This includes non-economically active people (with no family link to an EU economically active citizen) who fail to meet the test of self-sufficiency (e.g. the ill, elderly and unemployed); and non-EU nationals who cannot derive rights on the backs of family members. One obvious point of exclusion stems from the transitional provisions which qualify the right to free movement for nationals of new EU Member States.

Both the Treaty of Accession of 2003 and the Treaty of Accession of 2005 include transitional provisions which set out transition periods before workers from new member states are able to enjoy full rights to freedom of movement. Individual member states may restrict the right to work of EU citizens from the acceding states for up to seven years from the date that their home state joined the EU. In the case of Bulgaria and Romania, this period expired at the end of December 2013. Croatian citizens of the EU, however, have been denied the full/free movement rights afforded to other European nationals until 2020 and must apply for work permits in other EU member states. Although migrants who are subject to these transitional arrangements are entitled to equal treatment with national workers after a period of employment, these transitional arrangements enable social assistance and services to be refused.

Moreover, states are still permitted to treat nationals and EU citizens differently when they can demonstrate a justified distinction. Member States’ actions must be in pursuit of a legitimate public interest and must be proportionate. EU Law prohibits clearly arbitrary rules and collective blanket-bans. This applies to areas which may be considered basic rights by large sections of the European population and include, for example, affordable education and decent housing. The case of Förster (C-158/07) illustrates this point. Förster was a German national who had been denied a grant to study because she was economically inactive and had not been a resident in the Netherlands for five years. In this case the Court ruled that the Dutch authorities were permitted to deny her the funding that would have been available to Dutch nationals. This was not a matter of nationality-based discrimination but rather a conclusion that she had not satisfied the criteria for integration – in this case, the residence test. In fact, there are many conditions that may be imposed before an EU citizen from another member state is able to access welfare support in the UK, and the government has been able to introduce several new restrictions within the existing framework of EU law.

Previously the Commission has found that the free movement provisions are not sufficient in themselves to promote mobility. The numbers benefiting from the exercise of free movement rights remain low by comparison with the inward migration of third country nationals into the European Union. Eurostat records that only 2.3 per cent of EU citizens reside in another member state and that almost two-thirds of migrants come from countries outside the EU.

Despite the introduction of EU legislation on free movement, there are still multiple legal, administrative and practical obstacles that complicate the exercise of free movement. These include the recognition of qualifications and portability of supplementary pension rights as well as more typical challenges that face any migrant, for example, housing, knowledge of a foreign language, the employment of spouses and partners, return mechanisms, historical ‘barriers’ and the recognition of mobility experience, particularly within SMEs.

In spite of the development of EU case law, the introduction of the Citizenship Directive, and the promise to respect the rights of family members as set out in Regulation 492/2011 (formerly 1612/68), the practical enjoyment of the right to free movement rests on the satisfaction of several conditions. This includes not only overcoming the societal challenges associated with relocation from one country to another but also political requirements.

The UK government has sufficient tools at its disposal to address the problems of benefit-cheating among what must be a small population of new EU nationals. EU law already allows British authorities to fight potential fraud and welfare tourism, even though the government has yet to provide evidence of the scale or indeed existence of the problem. Furthermore, the suggestions made by the UK government amount to arbitrary blanket rules which are clearly not compatible with EU law. Rather, the government should simply implement EU law on a case-by-case basis instead of answering UKIP’s overblown alarm call to curb the right to freedom of movement.

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Featured image credit:

About the Author

Brad K. Blitz is Professor of International Politics and Deputy Dean of the School of Law at Middlesex University and Senior Fellow at the Global Migration Centre, Graduate Institute, Geneva. He is the author of Migration and Freedom: Mobility, Citizenship and Exclusion, Edward Elgar Publishing, 2014. He is also an LSE alumnus, graduating with an MSc. in European Studies in 1991.

Why did Britain’s political class buy into the Tories’ economic fairytale?

Ha-Joon Chang
Falling wages, savage cuts and sham employment expose the recovery as bogus. Without a new vision we’re heading for social conflict

Sunday 19 October 2014 17.46 BST

The UK economy has been in difficulty since the 2008 financial crisis. Tough spending decisions have been needed to put it on the path to recovery because of the huge budget deficit left behind by the last irresponsible Labour government, showering its supporters with social benefit spending. Thanks to the coalition holding its nerve amid the clamour against cuts, the economy has finally recovered. True, wages have yet to make up the lost ground, but it is at least a “job-rich” recovery, allowing people to stand on their own feet rather than relying on state handouts.

That is the Conservative party’s narrative on the UK economy, and a large proportion of the British voting public has bought into it. They say they trust the Conservatives more than Labour by a big margin when it comes to economic management. And it’s not just the voting public. Even the Labour party has come to subscribe to this narrative and tried to match, if not outdo, the Conservatives in pledging continued austerity. The trouble is that when you hold it up to the light this narrative is so full of holes it looks like a piece of Swiss cheese.

First, let’s look at the origins of the deficit. Contrary to the Conservative portrayal of it as a spendthrift party, Labour kept the budget in balance averaged over its first six years in office between 1997 and 2002. Between 2003 and 2007 the deficit rose, but at 3.2% of GDP a year it was manageable.

More importantly, this rise in the deficit between 2003 and 2007 was not due to increased welfare spending. According to data from the Office for National Statistics, social benefit spending as a proportion of GDP was more or less constant at about 9.5% of GDP a year during this period. The dramatic climb in budget deficit from there to the average of 10.7% in 2009-2010 was mostly a consequence of the recession caused by the financial crisis.

First, the recession reduced government revenue by the equivalent of 2.4% of GDP – from 42.1% to 39.7% – between 2008 and 2009-10. Second, it raised social spending (social benefit plus health spending). Economic downturn automatically increases spending on many social benefits, such as unemployment benefit and income support, but it also increases spending on things like disability benefit and healthcare, as increased unemployment and poverty lead to more physical and mental health problems. In 2009-10, at the height of the recession, UK public social spending rose by the equivalent of 3.2% of GDP compared with its 2008 level (from 21.8% to 24%).
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When you add together the recession-triggered fall in tax revenue and rise in social spending, they amount to 5.6% of GDP – almost the same as the rise in the deficit between 2008 and 2009-10 (5.7% of GDP). Even though some of the rise in social spending was due to factors other than the recession, such as an ageing population, it would be safe to say that much of the rise in deficit can be explained by the recession itself, rather than Labour’s economic mismanagement.

When faced with this, supporters of the Tory narrative would say, “OK, but however it was caused, we had to control the deficit because we can’t live beyond our means and accumulate debt”. This is a pre-modern, quasi-religious view of debt. Whether debt is a bad thing or not depends on what the money is used for. After all, the coalition has made students run up huge debts for their university education on the grounds that their heightened earning power will make them better off even after they pay back their loans.

The same reasoning should be applied to government debt. For example, when private sector demand collapses, as in the 2008 crisis, the government “living beyond its means” in the short run may actually reduce public debt faster in the long run, by speeding up economic recovery and thereby more quickly raising tax revenues and lowering social spending. If the increased government debt is accounted for by spending on projects that raise productivity – infrastructure, R&D, training and early learning programmes for disadvantaged children – the reduction in public debt in the long run will be even larger.

Against this, the advocates of the Conservative narrative may retort that the proof of the pudding is in the eating, and that the recovery is the best proof that the government’s economic strategy has worked. But has the UK economy really fully recovered? We keep hearing that national income is higher than at the pre-crisis peak of the first quarter of 2008. However, in the meantime the population has grown by 3.5 million (from 60.5 million to 64 million), and in per capita terms UK income is still 3.4% less than it was six years ago. And this is even before we talk about the highly uneven nature of the recovery, in which real wages have fallen by 10% while people at the top have increased their shares of wealth.

But can we not at least say that the recovery has been “jobs-rich”, creating 1.8m positions between 2011 and 2014? The trouble is that, apart from the fact that the current unemployment rate of 6% is nothing to be proud of, many of the newly created jobs are of very poor quality.

The ranks of workers in “time-related underemployment”, doing fewer hours than they wish due to a lack of availability of work – have swollen dramatically. Between 1999 and 2006, only about 1.9% of workers were in such a position; by 2012-13 the figure was 8%.

Then there is the extraordinary increase in self-employment. Its share of total employment, whose historical norm (1984-2007) was 12.6%, now stands at an unprecedented 15%. With no evidence of a sudden burst of entrepreneurial energy among Britons, we may conclude that many are in self-employment out of necessity or even desperation. Even though surveys show that most newly self-employed people say it is their preference, the fact that these workers have experienced a far greater collapse in earnings than employees – 20% against 6% between 2006-07 and 2011-12, according to the Resolution Foundation – suggests that they have few alternatives, not that they are budding entrepreneurs going places.

So, in between the additional people in underemployment (6.1% of employment) and the precarious newly self-employed (2.4%), 8.5% of British people in work (or 2.6 million people) are in jobs that do not fully utilise their abilities – call that semi-unemployment, if you will.

The success of the Conservative economic narrative has allowed the coalition to pursue a destructive and unfair economic strategy, which has generated only a bogus recovery largely based on government-fuelled asset bubbles in real estate and finance, with stagnant productivity, falling wages, millions of people in precarious jobs, and savage welfare cuts.

The country is in desperate need of a counter narrative that shifts the terms of debate. A government budget should be understood not just in terms of bookkeeping but also of demand management, national cohesion and productivity growth. Jobs and wages should not be seen simply as a matter of people being “worth” (or not) what they get, but of better utilising human potential and of providing decent and dignified livelihoods. Ways have to be found to generate economic growth based on rising productivity rather than the continuous blowing of asset bubbles.

Without a new economic vision incorporating these dimensions, Britain will continue on its path of stagnation, financial instability and social conflict.

http://www.theguardian.com/commentisfree/2014/oct/19/britain-political-class-tories-economic-fairytale?CMP=fb_gu

Crisis, What Crisis? Tackling the London housing emergency by David Lammy MP

stevehilditch's avatarRed Brick

david lammy

The London my young children are growing up in today is very different to the one I grew up in in the 1970s, and the one that greeted my parents when they arrived here from foreign shores in the post-war years. It is not the city of opportunity and aspiration it was when my father came here in 1956. Then, he was able to buy a house for £6,000 and find work and my mother was given the opportunity to learn new skills which enabled her, too, to gain employment. Those kind of opportunities are simply no longer there for many people growing up in the capital. Today, 640,000 Londoners are in low paid jobs, one in four young people are unemployed and the average age of a first time house buyer is set to rise to an astonishing 52 years old.

I don’t need to tell readers of Red…

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