How do UK worker rights’ compare to other countries? And what changes could be coming our way?
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As we approach a General Election, the issue of workers rights’ is rising up the political agenda. After facing claims that they had ‘watered down’ their proposed New Deal for Working People, yesterday the Labour Party reached agreement with trade unions on their plans.
Labour plans to redress the power balance of current employment legislation and is proposing changes to maternity and sick pay, day-one protection against unfair dismissal, bans on zero-hours contracts and fire and rehire practices, introducing fair pay agreements and improving union access to workplaces.
Last night, I was invited onto Radio 4’s The World Tonight[MA1] (from 33.30) to discuss the UK labour market and workers’ rights.
What is the current situation with the UK labour market?
This month’s labour market statistics point to a weakening jobs market, despite the UK economy growing again after a short recession.
Employment is down by 0.5 percentage points on the quarter while unemployment and economic inactivity are estimated to have risen by 0.5 and 0.2 percentage points respectively over the same period.
Vacancies have also fallen for the 22nd consecutive period to around 900,000, which reflects employer uncertainty about the future health of the economy. These headline indicators signal that the labour market is heading in the wrong direction.
With unemployment on the increase during the last quarter and a near record 2.8 million leaving the labour market due to long-term ill-health, our analysis has shown that we must focus on driving up the quality and security of jobs available. This would help more people enter and stay in work.
How do workers’ rights compare to other countries?
It’s important to note that the UK can be considered as an international outlier on workers rights. It ranks second from bottom – followed only by the United States – in a list of 22 OECD countries for levels of protections for temporary workers.
Meanwhile, the UK’s current rate of sick pay ranks among the lowest in Europe. As little as 19% of the average UK salary is paid in statutory sick pay, and many workers don’t even qualify given that they work in insecure jobs and simply don’t earn enough.
Workers in Germany may receive a minimum of 70 per cent of their wage for up to 78 weeks. Sick pay varies from country to country in the rest of the EU, but in some countries, workers are entitled to 100% of their pay.
There has been a vacuum on employment policy for several years now. As we laid out in our policy paper Zero Choices, Several countries have either banned zero-hour contracts, or heavily regulate their use, including New Zealand, Italy, France, Germany, the Netherlands, Ireland, Finland and Norway. After a decade of indecision, the UK is simply falling behind.
Source: Analysis of OECD data by Ben Chu.
Are new proposals going to cause problems for employers? And who could benefit from these changes?
Recent discussions between the Labour Party, business groups and unions has focused on how workers’ rights can be strengthened without causing unmanageable costs to employers. The challenge facing any Government is how extra protections can be introduced in a way that employers can both deliver and afford.
Some commentators have fallen into the trap of thinking of worker protections as a cost alone, which is taking a very limited view. Secure jobs can drive economic activity and growth. It can fuel demand and increase consumer confidence and spending power. If we get this right, worker protections will improve economic outcomes and benefit businesses through having a more secure and committed workforce. We need the workforce to have jobs that pay a predictable income, if we want people to make ends meet and spend those wages back into the economy.
Furthermore, insecure work risks undermining labour supply. Recent years have seen a large increase in the number of people who are out of work and not looking for work due to ill health. However, a third of these people do want to work. We need well designed, good quality and secure jobs that are able to accommodate people with myriad health conditions.
Improving terms and conditions and making work in the UK more secure will arguably support more people to stay and enter work and improve the economy overall.
These changes would benefit the 6.8 million people (21.4%) who are currently in insecure work, particularly those who are more likely to be in this type of work. These include women, people from ethnic minority backgrounds, young workers, and workers with disabilities.
Whilst some of Labour’s proposals in the New Deal for Workers may sound bold, they are not dissimilar to what the current Government was exploring back in 2017 as part of the Taylor Review of Modern Working practices.
These new measures would also bring the UK more in line with other countries and ensure that the UK improves its position and no longer ranks second from bottom in a list of 22 OECD countries on protections for temporary workers.
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