Since the 1980s, income inequality has been growing to such an extent that there is now an astonishing gulf between the haves and have-nots. While some top bosses have seen their earnings soar by as much as 4,000% over the last 30 years, the poorest half of the population receive 25% less of the wage share than they did in the late 1970s. The average CEO now takes home 145 times more than the average wage*.
Such extreme inequality has been driven by the anti-trade union laws instituted by Margaret Thatcher, perpetuated by consecutive governments, and now made even stronger by the Coalition. Collective bargaining coverage in the UK was at 82% of workers in 1980; it now stands at just 23% (while in western and northern Europe the average remains at around 80%). Now that a minority of workers have a voice to negotiate on pay and conditions through their trade union, millions are at the mercy of their employer’s every whim – and that means lower pay, exploitative conditions, and miserable living standards for a growing number of Britons.
Reversing this trend is not only a question of morality, it is also critical to the one thing you would think governments would jump at: economic growth. This isn’t a new idea, it’s been known for almost a century that setting pay and conditions through negotiation between workers and employers is the most successful way to achieve a strong and resilient economy (take a look at our infographic to see how). In the post-war years, all political parties positively encouraged collective bargaining to raise Britain out of the depression of the 1930s, and the same method was used in the US and across Europe. It was not until Thatcher took power that the neoliberalist ideology of cutting workers’ rights and deregulating the market became so commonplace, leading inevitably to the 2008 crash. Since then, the crash has been used to squeeze workers still further, resulting in the vastly unequal country in which we now live, where employers abuse zero-hours contracts, and millions are struggling in part-time or low-paid jobs.
With the 2015 election looming, the Institute of Employment Rights (IER) believes a change in economic strategy is the only way forward for the UK. To inform the debate we have produced new policy proposals for the consideration of the next Labour government. In Reconstruction after the crisis: a manifesto for collective bargaining, authors Professor Keith Ewing and John Hendy QC – President and Chair of the IER respectively – set out a detailed guide to the implementation of new measures to encourage collective bargaining at a sectoral level.
A new Ministry for Labour should be established to give workers a voice in parliament to weigh against corporate interests, and this department should delegate to a body such as ACAS the responsibility to encourage collective bargaining. The only companies eligible for public sector contracts should be those which engage in collective bargaining. The policies should be implemented gradually and flexibly, so as to respond to the needs of differing sectors, but current rules on trade union recognition should be overhauled so that trade unions have a presence in more workplaces and every worker has the automatic right to be represented by their trade union.
We should all be given the opportunity to come to mutual agreements that benefit everybody in society, not just the few. This isn’t a radical idea, it’s tried and tested, and there simply is no alternative.
*Figures from TUC, Britain Needs a Pay Rise