‘Starmer’s vision for workers’ rights will fail without a new Ministry of Labour’

In an important speech to the GMB annual conference on June 6th, Keir Starmer reaffirmed a strong commitment to the Labour Party’s new deal for working people. In a number of crowd-pleasing gestures, he promised to ban zero-hours contracts, outlaw fire and rehire and enhance flexibility rights at the workplace. He also engaged positively with the GMB campaign to secure recognition at Amazon and spoke of the need to strengthen the role of trade unions.

He also spoke at some length about the need for fair pay agreements in social care, so that there would be a sector-wide wage for everyone employed in the sector. So far, so good.

What was missing, however, was any promise of fair pay agreements outside the care sector, a glaring omission in light of the commitment to “establish fair pay agreements across the economy”, which is a pivotal component of the new deal’s vision to “empower workers”. It is to be hoped that the omission was an oversight and not a signal that policy is to be diluted. (Certain other elements of the new deal were missing too – such as the removal of key restrictions on the right to strike and a single status for all workers – but it is a long document, and he couldn’t mention everything.)

Restoring collective bargaining is vital to address rising inequality

The new deal covers all areas of workplace law. But the most significant in our view is the reinvigoration of sectoral collective bargaining, referred to in the new deal as ‘fair pay agreements’ (though they will not be confined to pay). It is sometimes forgotten that the proportion of the workforce with terms and conditions set by a collective agreement between unions and employers has fallen from more than 80% in the 1970s to less than 25% today (far below the European average). The consequence is that three-quarters of our 30 million-strong workforce have their terms and conditions set by employer diktat – on a take-it-or-leave it basis.  

It is the collapse of collective bargaining coverage that has resulted in the real value of wages not rising since 2007, while the cost of living relentlessly increases. It has led to more people in work receiving state benefits than those who are out of work. The increase in poverty as a consequence is reflected in the fact that four million children are in food poverty. It is the collapse of collective bargaining that has led to 1.1 million of our workers on zero-hours contracts, not knowing when they will work and how much they will be paid at the end of the week. 

And as collective bargaining coverage falls, and with it the value of wages, the level of profits rises. In 1976, wages accounted for 65.1% of GDP, now it is around 50% – a 15% transfer of wealth from workers to shareholders.

So, the restoration of collective bargaining is crucial. And, realistically, it can only be done sector by sector. That is why sectoral bargaining legislation is being introduced in New Zealand and a version of it operates in Australia and is to be developed by the new Labor government there. Sectoral bargaining also remains widespread in the successful economies of Europe.

Social care is a good place to start – but it can only be a start

Indeed, the EU has recently set a legal target for member states to reset employment practice so that collective bargaining reaches 80% of workers in each country. We need to do the same, with workers and trade unions in many sectors of our economy badly in need of this kind of support. Social care would be good place to start. But it can only be a start. There is a need also in agriculture, where the Tories ended sectoral bargaining in England in 2013; hospitality and catering; parcel delivery; food production and delivery; retail; and most of the construction industry.

The benefits are immense and ought to appeal to a Labour government. As workers’ wages rise, demand in the economy is restored, stimulating production of more goods and services and creating more jobs and more investment. The government receives more in taxes and needs to pay out less in benefits. Employers enjoy the economic stimulus and are protected from undercutting by bad employers. Collective bargaining is crucial to reducing inequality of income, and hence of wealth and the other inequalities that flow from that, such as unequal life expectancy, as well as closing gender and ethnic pay gaps. 

We do not underestimate the difficulties involved in restoring sectoral collective bargaining or employer resistance to it. Not only must there be an unequivocal political will, there needs also to be provided the equally unequivocal means to enable it to happen. The resetting of employment relations and the rebuilding of a new economic constitution will not happen on its own, no matter how great the desire. The commitment must be met by government resources to make it happen – as part of the responsibilities of a new Ministry of Labour, to restore the voice of workers in government.

Effective labour law requires an effective Labour Department

It is notable that when, in 1917, the then government committed to a roll-out of sectoral bargaining, the programme coincided with the introduction of a Ministry of Labour, and a minister of labour of cabinet rank. As a result, the programme was phenomenally successful until it was unpicked following the neoliberal revolution beginning in 1979. The experience of the Blair/Brown governments during which workers’ rights were the responsibility of what is now the Department for Business and Trade was not a happy one, with workers’ rights competing for attention with the priorities of employers. 

The outcome was a low minimum wage, ineffective and now largely redundant trade union recognition legislation and minor amendments to Tory restrictions on trade union freedom that fell short of international standards – for example in relation to the right to take solidarity action. The absence of an independent government department with its own resources to develop, implement and enforce wide-ranging policies will mean inevitably that we are about to repeat the failures of the Blair/Brown years. The message is clear: there can be no effective labour law without an effective Labour Department at the heart of government.