As Covid-19 wrecks havoc on workers’ lives and livelihoods, a discussion has opened up within the labour movement on post-pandemic economic reconstruction. JIM HORTON considers whether a contribution from the Institute of Employment Rights offers a way forward for trade unionists.
Reconstruction after the Crisis: Repaying the nation’s debt to our workers
By Keith Ewing, John Hendy, Carolyn Jones and Geoff Shears
An Institute of Employment Rights paper, June 2020
The coronavirus pandemic has exposed not just the disastrous incompetence of a Tory government wedded to a neoliberal ideology, it has also laid bare the innate iniquities and inequalities of the capitalist economic system.
In their paper, Reconstruction after the Crisis, the Institute of Employment Rights (IER) authors present a searing indictment of capitalism, not only in relation to the economy during the pandemic, but the impact of forty years of neoliberal policies and ten years of austerity on workers living standards, job security and employment rights.
The primary focus of the IER is on the inadequacy of labour law as the cause of low pay, long hours, poor health and safety, and the decline in collective bargaining coverage. The authors fail to mention that all laws, including employment, will always ultimately serve the interests of capital. This focus naturally inclines the authors to locate the solution in recommendations on changes to labour law, rather than clearly spelling out the need to replace the anarchy of capitalism with a socialist planned economy.
This has been a recurring theme in a series of publications by IER over many years, particularly during Jeremy Corbyn’s period as leader of the Labour Party. In the run up to last year’s general election great hope was placed by the IER, and many trade union leaders, in a Corbyn-led government enacting progressive legislation on workers’ rights. This expectation was dashed by Labour’s crushing electoral defeat, in terms of parliamentary seats, and Corbyn’s subsequent resignation as Labour leader.
The IER wants legally enforceable sectoral collective bargaining, along with other legal changes, to tackle the scourge of low pay and insecure employment, the prevalence of which has increased dramatically over the last ten years.
Insecure work, mostly low paid, affects one in nine UK workers, 3.7 million people. Bogus self-employment denies millions of workers basic employment rights. The number of workers on zero hours contracts alone increased from 168,000 in 2010 to 900,000 in 2019. Many of these were the key workers cynically lauded by Boris Johnson and his government ministers at the height of the first pandemic lockdown.
Over the last forty years the share of national income going to workers has declined dramatically, while company profits and dividends to shareholders have rocketed. In 1976 65.1% of GDP went to wage earners, but by 2019 this had slumped to 49.2%. This now means the average chief executive of the biggest companies is paid 117 times more than the average worker.
Abject failure of… law?
Union activists will welcome the IER’s proposals, which include reducing the working week without loss of pay, ending the public sector pay cap, extending legal protection to all workers, the regulation of zero-hour contracts, repeal of the 2016 Trade Union Act and easing other restrictions on industrial action, improvements in health and safety law, and restoring sectoral collective bargaining.
In introducing its recommendations the IER refers to the need to “mitigate the current crisis of capitalism”. Socialists support any measures capable of alleviating the impact of the economic crisis on workers, but it is an exaggeration for the IER to claim “the law has a major role in protecting workers, their incomes, their jobs, their health and safety and, above all, in enabling them to exercise the collective power necessary to maintain and advance the condition of their working (and non-working) lives”.
For example, the IER refers to the “abject failure of the law to protect the health, safety and lives of workers in the pandemic”. Without doubt, current health and safety legislation could and should be improved, but if every employer were to actually adhere to their duties set out under the existing law all our workplaces would be much safer during the pandemic, and more generally the incidence of accidents, ill-health and death would be much reduced.
Even in union organised workplaces however, which are generally safer than non-union workplaces, every union activist understands the conflict between not just profit and pay, but profit and health and safety. We know from bitter experience the employers’ resistance to diverting money from shareholder dividends to paying for safety measures, or the reluctance of managers in the cash-strapped public sector to prioritise health and well-being.
Blaming poor health and safety primarily on the failure of the law not only masks the real problem, it directs us away from the only viable solutions. Only trade union control of workplace safety can ensure the safeguarding of workers’ health, and only a socialist planned economy can ensure we effectively combat the virus while protecting workers’ lives and livelihoods.
The IER’s over reliance on the law is revealed in their comments on the current economic fallout from the pandemic. The authors concede that “labour law cannot, of itself, prevent unemployment”, but then state it “could establish a framework in which decisions are taken fairly, job loss is properly compensated, and the burden is more equitably distributed”.
There is no call to open up the books of companies threatening job losses, no call for work or full pay, and no call for democratic public ownership to safeguard jobs. This issue alone speaks volumes about the shortcomings in the political outlook of the authors, and reveals their lack of confidence in the ability of workers to resist job losses if given a fighting lead and a clear political alternative.
The Socialist Party campaigns for and welcomes progressive changes in the law to achieve benefits for workers, but the law is not the key to securing lasting improvements. For a start, such radical changes in the law will, as in the past, require class struggle, and once achieved workers face the daily battle of enforcing workplace rights against intransigent bosses, much harder in non-union workplaces. Moreover, these legal gains will prove to be ephemeral unless workers fight for a fundamental transformation of society. After all, is this not the experience of the last forty years?
Following the major defeats of workers struggles in the 1980s, many of the trade union leaders responsible sowed illusions in laws emanating from the European Union, as part of a ‘new realist’ substitute for class struggle. Three decades later, the majority of Britain’s union leaders were caught off-guard by the vote for Brexit as millions of workers rejected the economic consequences of the EU’s neoliberal agenda.
Workers do not have less individual employment rights today than forty years ago, they have more. While it is true that zero hour contracts and bogus self-employment legally deprive millions of workers of many of these rights, this is not, as the IER claims, because employers hire clever lawyers, but is due to the failures of the tops of the unions to lead battles in defence of pay, conditions and jobs, and to sufficiently extend union membership beyond traditional sectors into the gig economy.
Precarious employment, low pay and employer disregard for safety are endemic to capitalism. The postwar political consensus on full employment, secure work and other social reforms, was an aberration. Over the last few decades, after legally shackling the unions and making the Labour Party safe for the bosses, capitalism has reverted to its true, brutal nature. Ultimately, only a planned economy, based on democratic public ownership can guarantee job security, decent pay and safe workplaces. This does not mean of course that the labour movement cannot secure gains for workers, but as in the past, it will require both militant struggle and a socialist perspective.
Sectoral collective bargaining
For the IER the key to obtaining secure work and decent pay is the restoration of sectoral collective bargaining. Since 1979 there has been a dramatic decline in the proportion of workers covered by a collective agreement, down from its height of 80% that year to less than 25% coverage today.
Sectoral collective bargaining entails employers and unions at national level negotiating minimum wage rates, and terms and conditions for each sector of the economy through sector Bargaining Councils, the decisions of which would be legally binding on every employer and worker in the sector, but subject to enhancement through local level negotiations.
The IER views sectoral collective bargaining as “the only realistic way of redressing the fundamental imbalance of power at the workplace”, claiming it will reduce the incidence of industrial action. We support the restoration of sectoral collective bargaining, but as posed by the IER it is an attempt to return to the postwar pluralistic approach to industrial relations, which recognises opposing class interests, but attempts to regulate the class struggle through the law and tripartite structures.
Historically there has invariably been a pattern of employers conceding collective bargaining when the balance of class forces is against them, and retreating from collective bargaining when they have the upper hand.
At the dawn of capitalism the initial response of the bosses to workers organising collectively was to ‘legally’ ban them, with severe penalties for transgression. When this did not succeed the employers resorted to lockouts. During the second half of the 19th century the bosses cottoned onto the benefits of engaging compliant union leaders in policing the militants in the factories and warehouses, marking a policy change by the capitalist state from repression to regulating the class struggle to avoid industrial conflict and the potential threat to capitalism itself.
Sectoral collective bargaining was first established at the end of the first world war, partly to cut across the developing class struggle and the socialist-led national shop stewards movement, only to be abandoned for a period following the defeat of the working class in the 1926 general strike. It was restored at the end of the second world war, and endured for several decades. Margaret Thatcher’s Tory government eventually dismantled most of the remaining wages councils.
Collective bargaining was already threatened by attempts by both Labour and Tory governments in the late 1960s and early 1970s to legally shackle unions’ ability to conduct industrial action, moves thwarted by rank and file militancy. The defeats of major workers’ industrial struggles in the 1980s, due to the perfidy of the labour and trade union leaders, were crucial in precipitating a huge decline in collective bargaining coverage over subsequent decades. Pluralist industrial relations were eventually replaced by ‘partnership’, with negotiation increasingly replaced with at best consultation, and at worst employer imposition, representing a further shift in the balance of shop floor power away from shop stewards to the bosses.
By the 1990s most union leaders had succumbed to the capitalist propaganda of no alternative to the market economy, particularly in the wake of the collapse of the Stalinist planned economies in the Soviet Union and Eastern Europe.
The IER correctly points out that the history of the labour movement has, in large part, been a struggle to put in place laws which redress the imbalance of power in the workplace, but neglects to make clear that much of this was achieved through the bitter struggles of the working class against the malign opposition of the bosses and their state. The last forty years has been a period of the gradual rolling back by both Tory and Labour administrations of the social gains workers achieved in the postwar period.
Who will deliver?
The history of our movement also includes attempts to establish a mass political voice for workers, including debates centred on whether permanent improvements in pay, conditions and workers’ rights could be achieved under capitalism. We witnessed this during the formation of the various precursors to the Labour Party towards the end of the 19th century, and at the birth of the Labour Party itself in 1900. And again, throughout the Labour Party’s history, particularly during the 1930s, 1970s and 1980s, when the left dramatically increased its influence.
However, from the mid-1990s, under the leadership of Tony Blair and Gordon Brown, New Labour firmly became a bourgeois party, and the need for a new mass party of and for the working class was seriously posed within the trade unions until Corbyn was elected leader in 2015. The potential then existed to transform Labour into a mass radical workers’ party. Having squandered this opportunity, the Labour left have been lumbered with the Blairite Keir Starmer, and once again, but more pressingly, the trade unions face the crucial task of establishing a new mass working class party.
This is not an incidental issue. The IER’s programme on workers’ rights begs a pertinent question: who will implement it?
The IER calls for a new Minister of Labour, which it claims will guarantee that “the voice of workers is heard at the cabinet table”. But surely this depends on who the minister is, their political party and, moreover, the class character of the government? Can it really be said that a Tory Minister of Labour would bring the voice of workers into the cabinet? Or for that matter a Blairite Minister of Labour?
The idea a Ministry of Labour would “ensure the orderly and fair conduct of industrial relations” is pure fantasy, it has never been achieved historically. In other publications the IER has called for a National Economic Forum to be established by the new Ministry of Labour on which workers, employers, government officials and independent academics would sit to plan for industrial challenges and to scrutinise the impact of policy on all sections of society.
The IER reflects the wishful thinking on the part of many trade union leaders, who hark back to the apparent golden era of the postwar period, when tripartite institutions gave union leaders a voice in government; but such arrangements always excluded the trade union ranks who had to fight rearguard battles on the shop floor over pay and working conditions.
The pandemic appears to have given traction to this idea. At the TUC congress in September TUC general secretary Francis O’Grady repeated her call for the establishment of a National Recovery Council, with representatives from government, workers and employers.
Return to Neddy?
No doubt O’Grady and other union leaders were flattered by government consultation with them on the establishment of the original Coronavirus Job Retention Scheme back in March, which allowed millions of workers to be furloughed during lockdown with cuts in pay of at least 20 percent, and the government consultation with unions on Covid-19 safe workplace guidance, which in many respects weakened existing safety regulations.
It now appears some union leaders, including O’Grady, hope for a more permanent collaboration with the bosses and their government along the lines of the National Economic Development Council (NEDC), often referred to as ‘Neddy’, established by the Tory government in 1962 to address Britain’s relative economic decline.
Sections of the capitalists today may be attracted to the idea of implicating union leaders in the post-pandemic drive to convince workers to shoulder the financial costs of the battle against Covid in order to restore the profits and profitability of British capitalism. The head of the Confederation of British Industry has already echoed the call of the TUC, and it cannot be discounted that Starmer and even some Tories might support this.
In the US Joe Biden has said he will meet with business and union leaders to discuss the economic recovery and building back better in the long term, a phrase also used by Boris Johnson. Both though will always prioritise the interests of the capitalist class.
It would be a mistake for the left to draw positive comparisons with Roosevelt’s 1930s National Recovery Administration. It is true the 1935 National Relations Act gave recognition to unions and support to collective bargaining in response to ‘wildcat’ strikes and factory occupations. The aim of the US state and employers though was to use conservative union leaders to control the militant rank and file. Sit down strikes became illegal in 1939. Eight years later Congress passed the Taft-Hartley Act, restricting union activities and allowing states to pass ‘right to work’ laws that prohibited closed union shops.
We saw a glimpse of the reality of O’Grady’s class collaboration in October with the embarrassing spectacle of her joining Tory chancellor Rishi Sunak and CBI head Carolyn Fairbairn on the steps of Downing Street to support the Treasury’s now abandoned job support scheme which would have cut coronavirus payments even further, and not saved jobs.
We need to be clear that even during a period of prolonged economic upswing the NEDC in Britain could not reconcile the conflicting interests of workers and bosses. Inevitably, it ultimately acted in the interests of capital.
No substitute for socialist policies
The apparent “orderly and fair conduct of industrial relations” was already creaking at the seams before the end of the two decade long economic upswing. Arguably, postwar tripartitism actually undermined genuine collective bargaining as the capitalists sought to use class collaboration to hold down workers’ wages in order to restore the profitability of British capitalism following the war. During the 1960s militant shop stewards in the workplaces were forced to lead unofficial ‘wildcat’ strikes in response to management provocations or to improve shoddy deals agreed at national level. The pluralist approach ultimately failed when capitalism went into inevitable economic crisis at the end of the decade, and a battle ensued over who would pay for it, the bosses or workers.
In the late 1970s the collaboration between union leaders, employers and the then Labour government was shattered by strikes of low paid workers against punitive wage restraint, resulting in the election of Thatcher, who turned to more open class warfare against trade unions and the social gains of the post-war period. It was left to Tory prime minister John Major to finally bury NEDC in 1992.
The economic situation today is far less favourable than sixty years ago, we are experiencing the most severe recession for many generations. There is not the scope for the grand reforms of Clement Attlee’s 1945 Labour government, which itself for a period imposed austerity on workers and retained punitive wartime laws against strikes.
It is vital trade unions maintain their independence. This is particularly crucial when not just jobs and pay are under threat, but the health, safety and the very lives of thousands of workers. Class conflict does not disappear when a pandemic erupts any more than when countries go to war, it intensifies. Class collaboration is a dangerous trap for the workers’ movement.
Trade unions are fighting on two fronts, workplace safety and mass job losses. In addition, employers, including Labour-controlled local authorities, are taking advantage of the pandemic to fire and rehire workers on worse pay and conditions, and to derecognise unions, for example at British Gas. We need union independence industrially, in every workplace and economic sector, but also politically.
An over-emphasis on the failures of employment law, and an over-reliance on legal mechanisms to restore collective bargaining, neglects the vital tasks required to rebuild the membership and combativeness of the trade unions, and the vital task of addressing working class political representation.
The authors of the IER paper point to “the fact that the contract of employment is a relationship of subordination, reflecting the economic disparity of power between the seller and the buyer of labour”. This will always be the case under capitalism, for the economic disparity of power rests on the fact that the means of production are owned and controlled by a handful of corporate billionaires who produce for profit, not need. Even the full implementation of the IER’s recommendations would not change this.