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My Lords, today we pay tribute to the ILO for its contribution to our social and economic development over the past 100 years. On a personal note, I pay tribute to the late Ernest Bevin, one of my predecessors at the T&G. As Minister of Labour, he contributed much to the development of the ILO and other institutions.
Although there were trade unions as far back as the early 17th century, the TUC celebrated its 150th anniversary last year. During that time, trade unions have provided advice at work and fought to improve pay and conditions, and they have been a force for fairness and social justice. Although membership increased in 2017, it is reported that just 23% of employees are now members of a trade union. There is a growing power imbalance at work, contributing to the massive rise in inequality throughout our society. It should surprise no one that people feel a lack of influence and control at work and in society generally. We are now experiencing public anger and fear for the future at a higher level than I can ever remember.
In a speech in 2017, Andy Haldane, the chief economist at the Bank of England, said that the decline in union density had contributed to the slowest period of wealth growth in over a century. He evidenced a clear wage premium associated with trade union membership, possibly as a result of the greater bargaining power of union membership. He suggested that estimates of the aggregate wage premium in the UK are typically centred in the range of 10% to 15%. Therefore, trade unions are good for workers and good for the economy, with decent pay bringing higher spending and higher tax income. What Chancellor would reject that?
Yet it is reported that the UK is now the fifth most unequal country in Europe and that more than one-fifth of its population live on incomes below the poverty line. The irony is that most of these households are in work, yet every time there is a debate on poverty, inequality and austerity, we hear from the Government that everything is fine because employment is rising. Trade unions can tell the Government why austerity bites, even though you are employed. Among the causes are zero-hours contracts, under which, the TUC states, workers typically earn one-third less than average employees; the gig economy, with workers often waiting to hear whether there will be work that day and for how long; contract work—such workers do not get a job if they do not agree to become self-employed; and outsourced working, including working in some government departments, I am told. Meanwhile the Living Wage Foundation has said that workers paid the national living wage are struggling to keep their heads above water. The Low Pay Commission reported earlier this year that tens of thousands of workers are, illegally, not being paid the national living wage. One is bound to ask what stopped them joining a trade union.
There has been a small increase in trade union membership, and the benefits of joining are attractive. Trade unions offer a full range of services and benefits, wage negotiation, legal representation, insurance, healthcare and more. That is a decent package. Clearly, non-union workers are not getting that message, nor the message that trade union membership is likely to lead to higher wages and better conditions. People are fearful of the future and worry about job prospects for them and their families. The prospect of leaving the European Union has caused considerable unease, as have the new technologies and automation, which are seen to induce and promote low pay in many instances. The isolation that many of these problems brings is the cause of much unrest, yet, as I found when I first joined my union in the 1950s, membership is a community in which we can share problems and work to overcome them, and strength in numbers is important.
Trade unions must find ways to inform the country as a whole—workers and their families, employees, shareholders and government—that trade unions are not their enemy. They are, and should be recognised as, contributors. We have to challenge some of the right-wing press and demonstrate that trade unions can be an asset, not a liability, and that they are essential to business not only as workers but as consumers. Let me repeat a story I heard a long time ago which demonstrates the reality of the workplace. The late Henry Ford was visiting one of his factories in Detroit. His guest for the day was the late Walter Reuther, president of the United Automobile Workers. Henry Ford was describing how he had automated the factory and boasted that the robots would not be asking for a pay rise and that he could rely on their accuracy. Walter Reuther, the trade union leader, replied, “Yes, Henry, but they won’t be buying any of your damn cars either”. My message to trade unions is clear: we have inherited the past, and now you must build the future.