2015 06 – Power Imbalances in the Workplace

Addressing Power Imbalances in the Workplace

Frances O’Grady, General Secretary of the British Trades Union Congress (TUC)

As trade unionists, fighting inequality is in our DNA. Governments come and go, and have a huge effect on whether we face a rising tide of worsening inequality or have them as willing partners in the fight. But for me it always comes down to tackling the imbalance of power in our society, starting with the workplace. Despite the lessons of the financial crash, over the past five years we have seen that balance of power tip yet further away from workers in favour of employers and big capital. From the new government’s early pronouncements, we are concerned that trend may continue.

Ordinary people have seen their pay held down, and have paid all over again through cuts to the services and benefits they rely on. David Cameron has claimed that child poverty fell under the coalition. But a more accurate assessment by the Institute for Fiscal Studies finds that 700,000 more children are likely to be in relative poverty by 2020/21 compared to 2011/12 – the majority of them in families where at least one person is in work.

So it’s disappointing to say the least that the government has made attacking union rights an early priority, at the same time as proclaiming that they are the party of the workers. Not setting out meaningful measures to tackle the UK’s productivity challenge, investing in decent jobs or further education, but imposing thresholds on union strike ballots that many MPs would struggle to beat.

So we have a tough five years ahead, but I want to stay focused on the practical changes that could make a difference in redressing that imbalance of power and tackling inequality. I believe that we need to build new institutional mechanisms to improve pay and give workers a voice in the boardroom, and ultimately to strengthen unions and collective bargaining.
At the lower end of the pay spectrum, the national minimum wage (NMW) and the Low Pay Commission have created an essential floor. But the NMW is not a living wage, and it has become the ‘going rate’ in some sectors. Low paid people have been hard hit by welfare and service cuts. Ministers talk about workless households, but three-quarters of all cuts to working-age welfare will affect working families, with almost half hitting families with children.

To get to the root of low pay, it’s time for new institutions with the power to set higher floors in sectors that can afford it. Social care – where zero hours contracts and rock-bottom pay have exploited workers and undermined service quality – should be one of the first areas for this approach.

At the top end of the spectrum, executive pay has soared while ordinary workers faced the longest living standards squeeze since the Victorian era. The remuneration committees who set directors’ packages are drawn from an out-of-touch, overpaid elite. The TUC report  A Culture of Excess found that FTSE 100 remuneration committee members were paid on average £441,383 – sixteen times more than the average worker. And they come from a small pool, with the majority holding at least one board position at another company.

Worker representatives on remuneration committees would bring an essential real-world perspective to the issue of executive pay and would help companies take the pay and conditions of other company workers into account in their decisions. Taking the next logical step, it might sound radical in our lopsided corporate culture, but the principle of worker representation on boards, not just remuneration committees, is mainstream in much of the EU and demonstrably popular with voters across the political spectrum in this country. Strengthening requirements for information and consultation would provide routes for workers’ voice and involvement in these roles and throughout the company and could be used by unions as organising opportunities to promote collective bargaining.

Addressing power imbalances in the workplace comes down to union strength and influence, including collective bargaining. Where unions are strong, equality improves and individuals, their families and the economy as a whole benefit from reduced inequality. Unions deliver better pay, fairer treatment and safer workplaces. Unionised workplaces have a better record on equal pay, work/life balance and discrimination too. And unions have a proud record of lobbying for laws to help vulnerable workers who don’t have a union to help them.

The share of the national income that goes to wages has been falling for three decades, in parallel with the drop in collective bargaining coverage, which is now at around 30 per cent. The International Monetary Fund and the OECD have both recognised that declining collective bargaining is linked to rising inequality. The measures above provide some starting points for rebuilding collective bargaining for future generations.

We know now that for the next five years we’ll need to tackle inequality head on in a challenging environment. We’ll need steps like these, underpinned by strong union organisation and broad alliances with those who share our aims, to succeed.