Economic justice is a prerequisite to social wellbeing

28 August 2014

By Professor Keith Ewing and John Hendy QC

A new pamphlet charts, with great clarity, the path to greater economic equality, write Keith Ewing and John Hendy

Workers are now worse off to the tune of £1,600 annually than they were at the time of the last election. Pay freezes and below-inflation wage rises have led to this fall in real wages, the low-paid being punished with cuts to benefits.

As well as the problem of low pay, too many workers are subject to the misery of zero-hours contracts while the abuse of agency workers continues.

The impact of the government’s tribunal changes price workers out of justice and the effect of austerity on public services has had a serious effect on quality of life.

The deterioration of pay and conditions for workers are of course a symptom of the great cruelty at the heart of modern society.
This is the cruelty of rising inequality, all the more cruel because it is deliberate and avoidable. There is no natural law by which inequality is commanded.

But if inequality is cruel, it is irrational in equal measure. It is not only from the left that we hear calls for the need for a more equitable society, in order to ensure what has been referred to as the “trinity” of distributive justice, social equity and fairness between generations.

Inequality is irrational because “relative equality is good for growth” and “inequality is one of the most important determinants of relative happiness and a sense of community,” while the new holy trinity appeals to a “fundamental sense of justice.” So says Bank of England governor Mark Carney.

We are not aware that Carney is a revolutionary, nor that he is out to destroy capitalism rather than save it.

But Carney is not alone, with other rational voices aware of the grave implications of growing inequality, not only for the workers affected by it but also for the economic system in whose name it is promoted.

Many economists appear to be aware that austerity creates problems that are unsustainable — it exposes the great contradiction that it is both an inevitable consequence, and a serious threat, to capitalism.

But unlike in the 1930s the economists appear to be unable to offer a sensible way ahead.

Which is why the latest pamphlet from the Institute of Employment Rights (IER) and the Centre for Labour and Social Studies (Class) by Lydia Hayes and Tonia Novitz is so important and so highly recommended.

It provides an excoriating critique of inequality and its consequences. But unlike others, the authors provide a blueprint for how to tackle it.

Writing in clear and accessible terms, Hayes and Novitz explain the central role of trade unions in closing the inequality gap, and in particular the need to rebuild collective bargaining arrangements that will give trade unions an opportunity to speak more loudly on behalf of the dispossessed.

To these ends the authors present valuable proposals designed to change public policy, so that trade unions are better able to represent their members, by (a) simplifying the statutory procedure for trade union recognition, and (b) putting in place arrangements for sector-wide collective bargaining.

The last of these proposals is the boldest and most important. It is surely no coincidence that the decade in which the equality gap in Britain was at its narrowest was the decade in which trade union penetration was at its greatest, with more than 80 per cent of British workers covered by a collective agreement.

The challenge now is to get the Hayes-Novitz proposals onto the policy agenda and to rebuild collective bargaining along the lines they suggest. There are so many compelling reasons why this should be done, and why the ideas in this pamphlet should be warmly embraced by the trade union movement and beyond.

Everybody talks about Britain needing a wage rise. But how is this to be done? Everybody talks about ensuring that everyone gets a living wage. But how is this to be done? And everybody is agreed that we need to stamp out the abuse of zero-hours contracts. But how is this to be done?

The answer is simple. Sector-wide collective agreements provide a solution to all of these problems and much else besides — the growing gender pay gap, the abuse of agency workers, and the problem of the two-tier work force and the contracting out of public services.

These problems will not be wished away. It is the responsibility of politicians to provide the means by which they can be addressed, if we are to take their promises of reform seriously, and reward them with our votes. This IER pamphlet sets out very clearly what urgently needs to be done. There can be no excuses.

Trade Unions and Economic Inequality by Lydia Hayes and Tonia Novitz is available here

This article was first published in the Morning Star on 22 August 2014