The New Serfdom

by Angela Eagle

  Such a callous approach to the care of workers with family responsibilities is not only confined to those employers who utilise zero-hours contracts. Examples of employers treating their workers as economic factors of production rather than human beings are myriad at the ‘lousy’ end of the work spectrum. Minimising their cost to the business while maximising their work output appears to be their only concern. And we know that, in the current permissive environment that is the UK labour market, employers can get away with it. Thus, service charges paid using credit cards in restaurants that are meant to go to waiting staff are often taken by the owner. This is why Unite the Union launched its campaign for fair tips as far back as 2008, beginning with Pizza Express. Even if tips are given to employees, there are examples of companies charging an ‘administration fee’ to distribute them. High-end grocer Fortnum & Mason has attempted to persuade some of its staff to accept a big cut in basic pay in return for a share of tips in a move that will help reduce its own tax bill.47 Staff at the exclusive Devonshire Club, which is owned by Conservative Party donor Lord Ashcroft, have been asked to take a pay cut, reducing their earnings to the legal minimum wage, in exchange for a share of the service charge. This reduces the club’s national insurance bill because tips are not taxed. It also reduces staff entitlements to national insurance-related benefits such as redundancy pay, maternity pay and the state pension.48 Once more, the risk is passed on to staff, the employer reduces their tax liabilities and the Exchequer loses tax revenue. This may be technically legal behaviour, but it isn’t ethical, and it should not be tolerated in law.

  Sunday Mirror reporter Alan Selby went undercover at Amazon’s creepily named new ‘fulfilment centre’ in Tilbury, Essex.49 This is where the UK’s largest retailer Amazon dispatches its orders from. The reporter found people working ten-and-a-half-hour shifts chasing impossible targets. They were expected to find 300 items per hour and pack two items a minute or be sacked. He found some workers so exhausted they were asleep on their feet. Staff who earn £8.20 an hour are under constant surveillance and will get a final written warning if they make seven mistakes out of 4,000 items they pick. Staff talked of working though injured, having to do compulsory overtime to take their working hours to fifty-five a week and being under such pressure to meet impossible targets that they could not take time out to go to the toilet. They lived in constant fear of the sack. The undercover journalist, a fit man, reported that he walked ten miles most days fulfilling the orders expected of him and was completely exhausted by the work rate Amazon demanded. Amazon is the UK’s biggest online retailer, with an annual turnover of £7.3 billion last year. Its founder, Jeff Bezos, tops the Bloomberg Billionaires Index and earns £2.2 million an hour. The lack of dignity and control at work, fragmented unpredictable hours which deny workers any real time off, the requirement to fulfil almost impossible targets, constant fear and insecurity about the consequences of failing inevitably takes a toll on health and wellbeing. And there is much evidence to suggest that women and ethnic minorities suffer disproportionally in this system because they bear the brunt of discriminatory practices which are rife in the labour market. The situation is made infinitely worse by a benefit system that would sanction anyone who gave up a job such as those we have highlighted here, leaving them without support for weeks as a punishment for leaving their employment voluntarily.

  Even the current Conservative government has belatedly become aware of the likely political effects of the spread of this New Serfdom. As a consequence, they have tried to appear as if they are taking action while in reality they are talking, not acting. They banned exclusivity clauses in zero-hours contracts with much fanfare in 2015, leaving many of the other abuses outlined here completely unaddressed. They have even recently appointed a Director of Labour Market Enforcement to try to cut exploitation at work. This appointment is based in the Home Office and BEIS. The scope the director has to tackle the larger issues remains to be seen, especially given his extremely modest budget. His first report was published in July 2017. In addition, the government has changed the name and extended the remit of the Gangmasters Licensing Authority to include ‘labour market abuse’. And, in 2016, they asked Matthew Taylor to examine how workers might be protected from exploitation in the so-called gig economy.50 When it was finally published in July 2017, his report was greeted with widespread dismay by trade unions and those who campaign for fair treatment at work. Not only were its recommendations modest in the extreme but the government took seven more months to respond to them at all. Finally, in February 2018 they announced a further four ‘consultations’. Real action on employment protection for some of the most vulnerable people in the workforce has receded even further into the distance. The government’s real attitude to enforcing standards in the labour market can be more easily discerned by ignoring this recent flurry of minor measures and the odd prime ministerial comment about the ‘just about managing’: they need to be judged by their actions.

  Both the coalition government and its Conservative successor have consistently neglected to provide adequate funding for the enforcement of those employment protections which still do exist. As Prime Minister, David Cameron made a habit of ridiculing and attacking health and safety protections, a pastime which was enthusiastically taken up in the Conservative-supporting tabloids. He appointed Adrian Beecroft, a multimillionaire venture capitalist and Conservative Party donor, to head a review into employment law. First drafts of this report were to outrageously recommend the complete abolition of the concept of unfair dismissal, which would have made summary sackings legal but preserved an employee’s right to redundancy pay. Beecroft recommended limiting maternity rights for women of childbearing age at work and proposed a cap on compensation in discrimination cases. The final report was leaked and partially disregarded because of the furore it caused. Some of it, however, was enacted. Consultation periods in mass redundancies were halved from ninety to forty-five days and TUPE rights which protect many low-paid women and BAME workers were also restricted.51 The full report provides a chilling Conservative blueprint for the future of employment law after Brexit, when EU protections will have been removed and the Conservative Party and its multimillionaire donors will have ‘taken back control’. As we have outlined, the real issue with the labour market is the lack of enforcement of the employment rights that Parliament has legislated for, not that the laws which do exist are cumbersome or unfair to employers.

  The current government’s record of cuts to and neglect of enforcement is a scandal. It amounts to looking the other way as abusive employers get away with exploiting vulnerable and often powerless workers. Employment rights count for little if they cannot be enforced and the likelihood in the UK in 2018 is that abuses will go unpunished. The deliberately punitive changes to the benefit system also ensure that those who are being exploited have little practical chance of escape by resigning from their job. That is the situation that Hayek would have wanted to bring about and it has been successfully delivered slowly but surely over the past thirty-eight years by successive Conservative administrations. It has systematically lowered the expectations of generations of workers who now accept treatment which would not have been tolerated by the more unionised and more organised workers of the post-war past.

  The Conservatives’ persistent failure to resource the enforcement of employment rights properly means that Britain has only 0.9 labour inspectors per 100,000 workers – the smallest employment inspectorate in Europe.52 The aforementioned Gangmasters and Labour Abuse Authority exists to licence and enforce standards in the ‘farming, food processing and packaging and shellfish gathering sector’. The sector is worth £109 billion, yet the GLAA operates on a £4 million budget – 0.004 per cent of the turnover of the sector it is supposed to regulate. It employs just sixty-seven staff members.53 The budget of the Employment Agency Standards Inspectorate, which regulates employment agencies, has been cut by more than half since 2010 as staff numbers fell from thirty to a mere
nine – a decline of 70 per cent. Perhaps this is why it failed to bring about a single prosecution in the 2015/16 financial year.54 Finally, HMRC National Minimum/National Living Wage Inspectorate has recently had its budget increased to £20.0 million, from £9.2 million in 2014/15.55 This is welcome news, but the introduction of the so-called national living wage means that the inspectorate will have to cover the 2.7 million more workers who will come into its scope on what remains a very modest budget.56

  The biggest indication of the past two governments’ real attitude to enforcement of labour law was its decision to follow the Beecroft recommendation and introduce fees to access employment tribunals in 2013. This sent a powerful signal to employers that the likelihood of their being caught for breaking the law was diminishing rapidly. As we have seen, in the ‘lousy’ end of the jobs market, it was already vanishingly small. The result of this introduction of fees was a predictably massive 70 per cent fall in applications to the system. Public service union Unison’s victory four years later in the Supreme Court, which unanimously ruled the fees were unlawful and must be scrapped, will restore some measure of fairness. But the government fought it all the way to the top court in the land and in the interim the tribunal system has been decimated. Getting it back into reasonable working order in the age of never-ending austerity will be a very difficult task.

  ENDING THE NEW SERFDOM

  In order to provide the protection from exploitation which workers are entitled to, the balance between employers and the workforce needs fundamental change. And so, at a macroeconomic level, does the balance between the owners of capital and those who work to earn a living. The Hayekinspired changes to the UK labour market that we have outlined here have helped to decouple earnings from output in the past thirty-eight years. This means that even though the economy and corporate profits have grown, wages have stagnated or gone down in real terms (taking inflation into account). Thus, more of the proceeds of growth in the UK economy was taken by the owners of capital compared to those who rely on wages for their income. The wage share (wages as a percentage of national income) was once erroneously thought to be stable,57 though while stability has been observed for some periods, Thomas Picketty has shown that the share achieved by capital will rise and become more concentrated over time because, all other things being equal, the returns to capital are higher than rates of economic growth. In keeping with this observation, the wage share in the UK has declined sharply in the UK from 1980, when market fundamentalist ideas were first implemented by the Thatcher government.58 Mrs Thatcher’s reforms weakened the ability of trade unions to bargain for their members while removing most restrictions on capital in the 1986 Big Bang in the City. The aim of securing a more equal society was wrongly decried by market fundamentalist ideologues as a cause of poverty itself. The right-wing theories of the ‘trickle down’ of wealth have been tested to destruction in this period and found sorely wanting. The result is large and increasing inequalities in wealth and income which disfigure our country. They have added to the economic imbalances which caused the global financial crisis and the austerity-led policies of the government have added insult to injury by hitting wage-earners rather than capital-owners hard. If the economy is to return to healthy growth again and the fruits of that growth are to be shared by all rather than taken by a few, we need fundamental change. We need a new economic model and at its heart must be a new social contract with labour.

  This begins with the creation of a powerful new Department for Labour in Whitehall, so that all of these issues can be given the priority and the focus within government that they deserve. Workforce and skills planning would be a priority for this new body – especially important in this era of rapid technological change. It is clear from the persistent failure of the ‘free market’ to deliver a modern and effective skills and apprenticeship system that government planning is vital if we wish to maximise the prospects of the country and enjoy a prosperous future. Equal access for women and ethnic minorities to the opportunities being created should be an important criterion for success and a way to strengthen the delivery of ‘inclusive’ growth. The department should also have an important role in ensuring the successful delivery of an industrial strategy which would prioritise development in the regions hardest hit by the deindustrialisation that has taken place since the 1980s. Working-class communities, which have seen their economic prospects blighted by the hands-off approach of successive governments to economic planning and development, need to be prioritised in this new model, so that both disparities in regional and working-class opportunities can be narrowed and the growth of opportunity and economic prosperity made available to all.

  Employment rights need to be strengthened and modernised to deal with the abuses we have outlined and to ensure that the most glaring loopholes currently being ruthlessly exploited by amoral employers are closed. Enforcement of labour standards would be a core priority of the Labour Department’s work. Enforcement of employment law needs to be less fragmented and much better resourced. A strengthened and centralised Labour inspectorate based in the new department would need much clearer investigatory powers and more resources – enough to initiate criminal proceedings where necessary. Fines for employers breaching the law must be much greater than they are now and should be recycled back into enforcement. Employment tribunal decisions need to be enforced much more effectively, including the collection of the compensation which they award, which is currently haphazard and not effectively enforced.

  After thirty years of market fundamentalism and a legal landscape specifically designed to weaken trade unions and collective bargaining, it is time to reverse this damaging trend. Hayek would doubtless celebrate the fact that, in 2018, the majority of wages in the UK are not negotiated but simply handed down by employers to their workers as a fait accompli. A recent study by the Greenwich Political Economy Research Centre and the New Economics Foundation has showed that the loss of union density since 1981 has cost a permanent loss of 1.6 per cent of GDP, which will never be recovered.59 Because growth in the UK economy is wage-led, the suppression of wage levels by weakening trade unions and shrinking the scope of collective bargaining actually costs economic growth. Doubling trade union densities could add £27.3 billion extra to our GDP.

  The legal right to trade union recognition and representation, introduced by the last Labour government, was too modest to reverse the baleful effect of Thatcherite anti-union laws aiming to destroy collective bargaining. A return to sectoral bargaining, which became Labour policy in the 2015 manifesto, is much more likely to increase levels of union density and increase trade union effectiveness. Sectoral agreements should be negotiated on wages and conditions, on skills and training requirements, and could be conducted on a tripartite basis by employers, the unions and the government. The Institute of Employment Rights has set out a compelling case for creating such a structure in its Manifesto for Labour Law: Towards a Comprehensive Review of Workers’ Rights. Rights to recognition and rights to bargain at company level should also be granted. Trade unions will need to reform themselves to renew their appeal, especially in the private sector, where a majority of the workforce now simply never encounter them. There is innovative work going on within the structures of individual trade unions to accomplish this. Unions 21 are also making a major contribution to this necessary work as is the TUC through such initiatives as the organising academy.

  Alongside the institutional reorganisation that will create the framework for our new labour relations, Britain needs to fundamentally rethink its understanding of work. As we argued earlier, work is not just a burden. At its core, it is the means by which we create society and shape our environment to meet the needs and wants of all humankind. Imagine a world in which work was seen as part of the gift that each person gives to others. Everything you are wearing as you read this, everything you consume today, every building you enter and every road you travel on, is the product of other people’s labour – perhaps even your own.
If we each thought not just of the things we buy but of the people involved in bringing it from raw materials to your hands, then perhaps we would pay a little bit more. The success of fair trade goods indicates that this is true. We might even cherish that object more if we knew that our purchase had put food on a table in a household in which children could admire their parents for having brought enough money home for them to have fulfilling lives and opportunities for their own self-advancement.

  This shift in mindset is important, because we will need to change our understanding of work and how we contribute to society in the coming decades. As our population lives for longer, we will need to find ways to contribute for longer, too. Lifelong free education – like the National Education Service proposed by Labour’s shadow Education Secretary, Angela Rayner – will allow us to retrain throughout our working lives, to adapt our skills and knowledge to the changing labour needs of society in an age in which automation, artificial intelligence and algorithms will fundamentally reshape our society and completely change work.