Employment

Lord Monks Excerpts

Thursday 6th June 2019 Lords Chamber

[Lord Monks (Lab)]

My Lords, I too congratulate the noble Lord, Lord Leigh, on securing this debate on employment. It is certainly understandable that he has focused on the good news. The headline job figures have been impressive. That is what Governments do though, is it not—accentuate the positive? The employment figures have certainly held up well since the 2008 crisis, perhaps surprisingly so to many of us who have been through other recessionary periods. But it is also understandable, as my noble friend Lord Haskel pointed out, that others of us should peer under this sunny side up approach and look at the more negative features of the world of work in Britain. The noble Baroness, Lady Fall, touched on those in her contribution. On a day when we commemorate the heroic D-day landings—a period when the country came together impressively—it is particularly disturbing to see the current divisive state of the UK.

A central problem is that wage rises have been traded for jobs. The share of earnings in the UK national income has fallen markedly, and within the earnings figures, the share of pay going to high earners has risen at the expense of the lower paid. In 2017, the CEO of a FTSE 100 company earned 145 times the salary of the average worker—up 47 times from just 20 years earlier. As the noble Lord, Lord Shipley, said, we were one of the most equal societies in the world in the 1970s. We have become one of the most unequal nations, with one of the worst records in the world. Those on the lowest incomes, despite the work done on the national minimum wage and the national living wage, earn little more in real terms than they did in the mid-1990s.

There are some dire consequences of these figures. The suicide rate has grown. Drug and alcohol abuse are on the rise. A bigger proportion of jobs are classed as precarious. We used to think of them as atypical, but now they are the norm in many parts of the country, particularly in those regions to which the prosperity of the south-east has not really spread. More families are increasingly chaotic and insecure in our society today—it is not a happy story. The only plausible defence of this would be that economic performance has improved, but in important respects it has not. Growth, productivity, investment, innovation and the trade balance show clearly that there is a huge amount of work to be done, and huge challenges. We are in a low-growth, low-productivity, low-investment, low-innovation economy in many parts of Britain, where people work long hours to compensate for nugatory pay levels. The prospect of Brexit is resulting in the loss of some good jobs already. I shall not labour the Brexit debate—we have debated it many times in this House—but today’s tragic news about the closure of the Ford plant in Bridgend is an indicator of what we might be looking at in the car industry and other key industries.

Apart from Brexit, how did we allow the UK labour market to unbalance itself in this way? It is true that more insecurity and more inequality in labour markets is an international phenomenon, but it has gone further and faster in the UK and the USA than in most other advanced economies. That is not a natural phenomenon; it is because of successive Governments’ policies of deregulation of business and encouragement of the flexible labour market, and the Conservative Government’s strict regulation of trade unions. As the recent IFS report, which will be debated fully next Thursday, shows, all this insecurity and inequality has coincided with a decline in trade union membership and the coverage of collective bargaining. Collective bargaining now covers only about 30% of the workforce, mainly in the public sector, and outside important sectors in the private sector—I would pick out engineering, construction and steel—industry-wide agreements have largely disappeared. What bargaining does take place, takes place at the plant and the enterprise level, and is often vulnerable to changes in management styles and policies.

What can we do about this? This is an opportunity to share some ideas. The dark side of the British labour market needs urgent addressing. I pay tribute to Greg Clark, who has made a start on all this with his response to the Matthew Taylor review on good work. I hope that will not be held against him when the Cabinet is being considered by a new Prime Minister. However, we need more ambitious plans than those announced so far—on productivity, on performance and on promoting longer-term business perspectives, which distribute the benefits of growth more fairly. A more collaborative approach to work cultures, greater emphasis on skills and respect for workers and, indeed, for trade unions, seems to me very important.

Finally, central to this should be a reform of government departmental responsibilities. Stanley Baldwin knew that the Ministry of Labour was important to promote collective bargaining and to tackle inequality and overmighty employers. We should take a leaf out of his book and return to a department charged with tackling many of the problems that have already featured in this debate.

What the noble Lord, Lord Leigh, said, in his spirited, optimistic presentation earlier, is important. I acknowledge that. In turn, I hope he will acknowledge that the dark side of the UK’s labour market also needs attention and acknowledgement.