We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.Donate to our crowdfunder
My Lords, my father was a postman for 30 years and the two great heroes of his life were two leaders of what is now the Communication Workers Union, my good friend Alan Johnson and my noble friend Lord Clarke of Hampstead, whose memoirs have just been published. I recommend them to noble Lords; they are an excellent read.
I agree with every word said in this debate so far about how the crisis of social inequality and alienation gripping our societies at the moment is partly rooted in the weakness of trade unions and the growing weakness of unions in the workplace. The remarks of my noble friend Lord Monks, who was a very distinguished general secretary of the TUC, were absolutely apposite. A generation ago, nine out of 10 workers were covered by collective bargaining, largely organised through wages councils. Now, as my noble friend said, it is two and a half out of 10, and that change underpins what has been a dramatic increase in inequality. The work done in this area by Andy Haldane, deputy governor of the Bank of England, has been deeply illuminating. The labour share of national income, which was two-thirds a generation ago, is now barely more than half and workers have been seriously short-changed by many of the developments in the gig economy, as mentioned in a brilliant speech by the noble Baroness, Lady Lane-Fox.
The great question that ought always to face us as practical politicians is what we are going to do about it. The thing that comes through loud and clear is that obviously we need to strengthen the unions. If I may make a comment on the debate so far, the unions need to do more to help themselves. Unions are very poorly organised in the gig economy.
The establishment of the Independent Workers’ Union of Great Britain is one of the most positive developments of recent years. It seeks to organise in the gig economy but it needs a great deal more support from the TUC, if I may say so. Jason Moyer-Lee is doing a great job, but it is a tiny union in comparison with the established unions. We need a new unionism for the next generation, just as unionism has repeatedly renewed itself in the past 150 years when facing new challenges. Given the weakness of the union movement at the moment, but also irrespective of it, because it is a duty of the state, we face a massive problem of lack of enforcement of basic labour standards, which significantly exacerbates the problems caused by weak trade unions. I hope that the Minister will address himself to the biting criticisms made by Sir David Metcalf, the outgoing director of Labour Market Enforcement, on the Government’s poor enforcement record. I will say something about how poor it is and then the steps being taken, so that the Minister can comment on that.
The fundamental fact before the House is that the ILO benchmark for enforcement of labour market standards is that there should be one inspector per 10,000 workers. At the moment, in the United Kingdom there is one inspector per 20,000 workers, despite improvements in recent years, which I recognise. As a rule of thumb, we have roughly half the level of enforcement that we should have. That goes to the heart of our problem with lack of respect for the minimum wage and for basic workers’ rights.
The figures Sir David Metcalf highlights are shocking. Last year, there were 2,600 inspections for the minimum wage out of 1.3 million firms with employees. That means a typical company can expect a minimum wage inspection once every 500 years. This is simply unacceptable as a basis of the state regulating the labour market and enforcing basic standards, which is why minimum wage regulations are so widely ignored. At the moment, we have a complete patchwork quilt of regulators in this area. We have HMRC, employment agencies, the Gangmasters and Labour Abuse Authority and the HSE. There is no clear demarcation between them. In fundamental areas, no one is responsible for enforcing basic standards.
One of the biggest issues at the moment—a bigger problem than minimum wage regulation—is the non-payment of holiday pay. There is no one whose primary responsibility is to see that firms pay holiday pay. Penalties are hugely important in ensuring compliance, but whereas we have draconian fines for breaches of the Immigration Rules—rightly so—which act as a big deterrent on employers, penalties for minimum wage breaches, even when identified, are paltry. At the moment, the civil penalty for breaching minimum wage law is only twice the wage arrears in question. In the very few inspections carried out last year, the average minimum wage arrear identified was £76 per person. That means that the average fine has been only £150. There is practically no incentive, apart from being good corporate citizens, for companies to observe minimum wage law and regulations at the moment.
As the Minister will know, this is a long-running issue. Why are the fines not larger? Why are there not more inspectors? Why is breach of minimum wage regulations not a criminal penalty, just a civil one?
As in so many of these areas, the Government are moving, but at a snail’s pace. Yesterday, Greg Clark published a consultation paper, the Good Work Plan: Establishing a New Single Enforcement Body for Employment Rights, which is welcome and would bring a lot of the regulatory agencies together. It also highlights that part of the remit would be to enforce holiday pay. I hope the Minister will say more about this in his concluding remarks. The consultation document published yesterday makes no commitment at all to enhancing resources. On the contrary, it says that this new body,
“would not be an exercise to reduce costs”.
That is a great relief, because it is not talking about reducing enforcement. It goes on to say that,
“resource for enforcement would be maintained, but used more effectively”.
Many of us have heard those weasel words in government consultation documents in the past. It is not good enough simply to say that they will be maintained. If this new body is to be anything other than a deckchair moving operation, the resources need to be significantly enhanced. Does the Minister recognise that our enforcement regime at the moment is far too weak, and that this new body, if it is set up, will need significant additional resources and powers?
Finally, on the gig economy, I give some comparative figures to set the debate going. It is estimated that the gig economy, as the noble Baroness said, embraces about 4.5 million workers, which is a huge part of the workforce. To give some comparison, the transport industries, which I am very familiar with, are highly unionised and have 1.6 million workers, so it is three times the size—it is the new frontier of employment. However, the total number of members in the IWGB, the new union for this sector, is 2,500. For comparison, Unite has 1.27 million members and the National Union of Rail, Maritime and Transport Workers—the RMT—has 80,000.
To end on a challenging note for the union movement, I think that trade unionism in the next generation will stand or fall by its capacity to organise effectively in the gig economy. At the moment, it is only just starting.