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Work and Business: The low pay crisis

The sections on ‘Better workplaces’ and ‘Improving employment rights’ in the Your Britain policy consultation on Work & Business, now in their third iteration, remain extraordinarily weak and woolly. To be doorstep ready, they must become more radical, and more...


The sections on ‘Better workplaces’ and ‘Improving employment rights’ in the Your Britain policy consultation on Work & Business, now in their third iteration, remain extraordinarily weak and woolly. To be doorstep ready, they must become more radical, and more specific.

Low pay, the minimum wage, and the living wage

Britain is suffering from a low pay crisis that demands robust action. So vague talk of ‘strengthening’ the minimum wage (NMW) must be ditched in favour of (a) a clear commitment to raising the NMW rate immediately to at least £7.00, with further real-terms increases to follow; (b) a commitment to establishing a (higher) London NMW; and (c) a pledge to commit additional human resources – boots on the ground – to enforcement. The coalition has already quadrupled the financial penalties for non-compliance, so any further increase in penalties would be a token gesture.

Not only has NMW enforcement been protected from the coalition’s austerity cuts, but at 180 the number of HMRC enforcement staff is actually 20 per cent higher than when Labour left office in 2010. And, with many local authorities on the brink of bankruptcy, legislating to give them enforcement powers, as several shadow ministers have suggested, would make little practical difference unless accompanied by significant additional funding.

Improving workers’ access to justice

It is not enough to simply condemn the coalition’s erosion of workplace rights and access to justice. Labour must, at the very least, commit to: restoring legal protection against unfair dismissal, by reducing the qualifying period from two years to 12 (or even six) months; and restoring access to the employment tribunal system, by reducing to a nominal level the Coalition’s hefty, upfront tribunal fees, which have wiped out two-thirds of claims by individual workers.

The fiscal impact of reducing claimant fees should be partially or fully offset by introducing a nominal fee for employers to defend a claim, and a more substantial ‘losing’ fee for those employers found by a tribunal to have breached the law (the real ‘users’ of the tribunal system).

Whilst extending the remit of the Gangmasters Licensing Authority to sectors such as construction, hospitality and social care sounds good, this would be another token gesture without significant additional human and other resources.

Labour should in any case go further, and radically transform the GLA into a proper Fair Employment Agency, empowered and resourced to ‘root out the rogues’ and effectively combat e.g. the exploitative use of zero-hours contracts wherever this occurs, not just in specific sectors. As exploitative use of zero-hours contracts is a symptom, not the disease, partial bans of the sort proposed in the policy consultation will achieve little if anything (and a full ban is neither desirable nor practicable).

Improving employment rights

Rather than enhancing existing employment rights, or introducing new rights, the principal priority of any Labour government elected in 2015 must be to swiftly reverse the coalition’s erosion of legal protection against unfair dismissal and access to the employment tribunal system, as above.

However, there are two new rights that could be introduced with little if any fiscal impact, and which would greatly support parents, carers and others in the workplace, boost maternal employment, and improve staff retention rates for employers.

Firstly, a statutory right to a short period of unpaid ‘adjustment leave’, to enable workers to cope with e.g. bereavement or the serious illness/onset of disability of a partner or child, with the security of having their job to return to once any new caring arrangements have been put in place, for example. It is at this stage that many women, in particular, drop out of work: only 13 per cent of mothers of a disabled child are in paid employment, compared to more than 60 per cent of mothers generally.

Secondly, a statutory right for grandparents to unpaid time off work to care for a grandchild (similar to the existing right of parents to unpaid parental leave).

In addition, the coalition’s unduly complex, and almost certainly doomed-to-failure, new right to shared parental leave – due to come into force in April 2015 – should be radically reformed. Labour should simplify the legal framework, open eligibility to all fathers from day one of their employment, enable leave to be taken on a part-time basis, and enable mothers to share the leave with a close relative other than the child’s father. As it stands, shared parental leave offers nothing to single parents – the vast majority of them women.

Lastly, to boost employment rates among single parents and parents of disabled children, the supply of quality part-time jobs must be increased, by central and local government adopting a ‘flexible by default’ approach to job design and recruitment. And ministers must act and recruit business leaders as ‘flexible working’ champions.

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