The Long Slow Death of Labour’s Plans for Sectoral Collective Bargaining?

In this series of blogposts the Institute of Employment Rights explores various policy dimensions associated with the delivery of Labour’s reform agenda in the domain of workers rights. It argues that while several reform proposals contained in Labour’s Plan to Make Work Pay – Delivering A New Deal For Working People seek to address genuine regulatory failures and a number major concerns faced by workers and unions alike, they sometimes lack in detail and/or occasionally appear to fall short of the policy objectives they appear to pursue. Implementing in full Labour’s New Deal for Working people will require a significant policy delivery effort, spanning well beyond the quasi-emergency legislation that the new executive intends to present to Parliament in the first 100-days of government, in the form of an Employment Rights Bill. Ending the Conservatives’ ‘scorched earth approach’ to industrial relations will not be a quick fix. This blogpost explores options for the delivery of sector level collective bargaining.

Introduction

 In 2021 the Labour Party conference committed to expanding trade union voice and influence.  This would be done principally by rolling out a programme of sectoral collective bargaining, as well as reforming the statutory recognition procedure.  In the following year the EU approved the Adequate Minimum Wage Directive 2022/2041, setting a target of 80% coverage of collective agreements to be achieved by every Member State.  Had the United Kingdom remained in membership of the EU this would have been a formidable target, even with strong government support behind it.

But rather than strengthen its plans for the expansion of collective bargaining coverage, the Labour Party appears – wittingly or unwittingly – to have taken full advantage of Brexit.  Backpedaling from the 2021 Conference position, Labour’s plans for trade union recognition appear limited and vague, while the proposals relating to sectoral bargaining are unrecognisable from the ones originally envisaged .  The limited reforms proposed are unlikely significantly to address the collective bargaining crisis in the United Kingdom, demanding an urgent response which the new government is now in a position to make.

In this blog we explain what is meant and not meant by sectoral collective bargaining (SCB), show the drift in Labour Party policy since its seminal A New Deal for Working People (NDfWP) in 2021, and address the implications of confining the introduction of SCB to the adult social care sector, as is now proposed.   We also consider what needs to be done if the government is serious in proposing that adult social care is to be only a template for further reform, and we offer a simple administrative procedure for the development of SCB on a gradual basis in an expanding number of sectors.

 What is sectoral bargaining?

Sectoral collective bargaining was promoted and practised in this country by governments of all political persuasions from the end of the First World War until the advent of Thatcherism in the 1980s.    As a result, by the end of the Second World War no fewer than 86% of all workers were covered by a collective agreement. In consequence, workers benefitted from higher wages and better working conditions.  Having also been commonplace throughout Europe, SCB is now being promoted by the European Commission, as a means of reducing low pay and promoting equality.

There are, however, trade unionists who remain sceptical about the practice.  It is thus important to emphasise that:

• Sectoral bargaining sets an industry minimum. It does not stop collective bargaining by trade unions at enterprise level negotiating better terms and conditions than the industry minimum, or negotiating enterprise agreements on matters not covered by the sectoral agreement.  If a company is profitable and productive, it is important that the fruits of that profitability and productivity are shared with the workers who created it.

• There will be industries or occupations where sectoral bargaining may not be appropriate. One example might be train drivers, with ASLEF having secured collective bargaining arrangements with most if not all of the railway operators.   It would be important not to disrupt existing arrangements of this kind, though the effect of rail nationalisation on collective bargaining structures remains to be seen.

But although there may be other industries which have reached saturation levels of collective bargaining coverage by enterprise bargaining alone, these sectors are exceptional.   With at least 60% of British workers (about 19 million) untouched by enterprise level collective bargaining, a sectoral agreement is currently the only hope.   These workers should not be abandoned.

Has the New Deal been diluted?

So what are the government’s plans?   As originally proposed, A New Deal for Working People promised to restore a modernised framework for collective bargaining.   It was stated unequivocally that ‘Labour will empower workers to act collectively via the roll-out of Fair Pay Agreements’. These would be ‘negotiated through sectoral collective bargaining, reversing the decades-long decline in collective bargaining coverage’.

To this end, the New Deal continues, ‘worker representatives and employer representatives would be brought together to negotiate Fair Pay Agreements that establish minimum terms and conditions, which would be binding on all employers and workers in the sector’.   Covering a ‘wide range of issues’, Fair Pay Agreements together with existing national agreements already in place would ‘form a floor across industries that would give working people a real voice, as well as preventing exploitative employers undercutting the many excellent employers in a sector’.   Following the example of (unspecified) other countries, FPAs were ‘a solution to rising inequality’.

These proposals have since been heavily diluted at least twice for reasons unknown, with the most recently revised Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People (NDfWP ) barely a pale shadow of the earlier  clear and unequivocal 2021 undertaking.  The commitment to SCB is all but gone, with the new proposals focussed principally on adult social care where ‘institutional innovation’ is needed to deal with the ‘very stark and specific issues in this vital sector’.  The need is not to find a solution to ‘rising inequality’, but to deal with ‘a turnover rate of nearly a third and [a] vacancy rate of nearly 10%’.  In other words, crisis management rather than progressive change.

Apart from this commitment to adult social care with a view to the negotiation of a Fair Pay Agreement, the only undertaking relating to the original SCB promise is that Labour will ‘assess how and to what extent FPAs could benefit other sectors and tackle labour market challenges’.   It is made clear that a Fair Pay Agreement ‘will not be the best solution for many parts of our economy, where labour markets are operating effectively or where existing collective arrangements at employer or sector level are already working well and are supported by trade unions’.  Labour it seems will simply ‘look to support and build on these existing arrangements’.

A solution for adult social care only?

Unsurprisingly, these plans have led to speculation that the objective is simply to deal with the problem of adult social care rather than gradually to roll out a plan for sectoral bargaining across the economy.  Indeed, the Institute of Government has suggested that if the adult social care is the problem, there is no need for sectoral bargaining at all, thereby avoiding the problem of having to develop a complex legal framework within which to house it.   Among the alternatives proposed by the Institute for Government are:

• to set a sector-specific minimum wage: setting this above the nationwide National Living Wage (NLW) and developing it in consultation with employers and unions would – it is said – immediately make the sector more attractive to workers.
• To a create a social care Pay Review Body (PRB): said to provide evidence-based advice and recommendations to the government on pay, similar to the NHS PRB.
• To look at Australia’s Awards System: an independent body, the Fair Work Commission, sets minimum rates of pay and other terms (such as overtime) for the sector based on submissions from unions and employer industry bodies.

With the exception of the third, these are very pragmatic solutions that will get money into people’s pockets quickly.

But they are not collective bargaining as that process has historically been understood, and on the contrary represent a further step on a slippery slope whereby trade unions are permitted only to make representations about pay and working conditions which are determined by someone else.   Trade unions are reduced to being little more than lobbyists looking for handouts, removed from the position of negotiating and determining jointly with employers the terms and conditions of employment.

As a template from which to learn lessons about SCB, adult social care is far from ideal, given the nature of the sector as one in which real collective bargaining cannot take place between the employers on the one side and trade unions on the other.   Real power lies with the government as paymaster, and employers will pay only in accordance with the financial resources the State provides.  So to the extent that Adult Social Care is a test bed it is one that would have to be treated with caution simply because the lessons learned may not be easily transferable to other sectors where there is a more obviously bilateral relationship between the employer and the trade union.

If there are to be pilots for the gradual rolling out sectoral bargaining, it is thus essential that some should be found in the private sector as well.   There are several obvious areas of exploitation where such an intervention could easily be justified.  Obvious candidates identified by the Resolution Foundation in a report published last year include warehousing, cleaning, security services, hospitality, construction, couriers, textiles, and agriculture.  To which we might add seafarers: as the RMT and Nautilus suggested in evidence to the ILO Freedom of Association Committee, the P&O scandal would not have been possible if there had been a Sectoral Collective Agreement for seafarers.

How could a wider commitment be implemented?

This is not to under-estimate the problems of implementing a commitment to sectoral bargaining, whether full strength or heavily diluted.  Here the debate has been side-tracked by the ill-fated experiment in New Zealand, which gave its name to Labour’s commitment to Fair Pay Agreements.  However, the last thing we need is a complex statutory model of 285 sections and four schedules, which is guaranteed to ensure the plans never get off the ground.  A better alternative would be an administrative model which empowers ministers and civil servants to take the initiative to create the necessary procedure that will enable bargaining arrangements to develop.

The solution is to be found in the Apprenticeships, Skill, Children and Learning Act 2009, Schedule 15.  The latter established a simple statutory framework for the School Support Staff Negotiating Body (SSSNB), created by the Labour government in 2009, abolished by the Coalition in 2011, and – according to the revised NDfWP – now to be restored by the current government.   This is an important if obscure piece of modern legal history which in eight short paragraphs makes provision for the creation of sectoral collective bargaining machinery by delegating power and responsibility to ministers – while eschewing the legal process with its delays and frustrations.

The 2009 Act provided for the SSSNB to be ‘constituted in accordance with arrangements made by the Secretary of State’.   It gave maximum flexibility to the Minister as to the composition of the SSSNB (which should consist of representatives of employers and trade unions, as well as the minister), and also maximum flexibility as to the proceedings of the SSSNB (which included ‘provision allowing the SSSNB to determine its own proceedings’).   That is all that needs to be done:  the Minister (i.e. their officials) was (were) personally responsible for convening the parties, and personally responsible for overseeing the process until the constitution is drafted.

This is a model that would be as suitable for adult social care, as it is for school support staff. It would also be appropriate for all other sectors, public and private, though it would have to be adapted for application to the latter, where the aim should be to promote bilateral negotiations.  Similarly, provision would have to be made for those sectors where employers refuse to co-operate, though that is a not an insurmountable problem, and one more likely to be resolved by a process in which ministers are potentially directly involved than in one where the government transfers responsibility to the CAC or some other agency.   Steps would also have to be taken to ensure everyone in the sector was covered by the agreements.

Conclusion

The expansion of collective bargaining is essential to close the pay gap and reduce inequality.  It will not be done by tinkering with ballot thresholds in the statutory recognition procedure.   The Labour Party has rowed back from its original commitments on sector wide collective bargaining and has fallen a long way short of the steps being planned elsewhere in Europe, and as required by the United Kingdom’s commitment under international law to promote the ‘effective recognition of the right to collective bargaining’.

The proposals are now confined to adult social care and school support staff. The latter commitment appears generally to be overlooked as an extension of SCB but it is an important illustration that the creation of SCB machinery does not need an elaborate statutory framework.  On the contrary all it needs is a statutory power vested in a minister to take steps by administrative means to facilitate the creation of procedures for the negotiation of agreements in what would be a gradual roll out of SCB.

It is a matter of great regret that the government has chosen only adult social care to pilot its proposals for SCB.    The focus on this one sector and the lack of any clear commitment to expansion will fuel scepticism that the plan for SCB has effectively been abandoned.  If the government is committed to the development of SCB, it would surely lead by example and undertake its immediate restoration in the civil service and prison service.   Likewise, a century of national pay bargaining in the education sector would be easy to restore.