Wales is leading the UK in progressive trade union policy

President, Congress, it is a very great honour to address the Wales TUC. I congratulate you on returning a progressive Labour Welsh government to power.

I would like to speak to you today about collective bargaining. It may seem strange that a lawyer should presume to address trade unionists about a subject which is their daily bread and on which they are expert. But there are two justifications for my attempt to teach grandmother to suck eggs.

First, experience has shown that in order for collective bargaining to be effective across the whole economy in raising wages and improving terms and conditions, it needs legal underpinning. Of course, trade union organisation is a necessity to make collective bargaining work and, sometimes to establish it. But collective bargaining needs supportive laws and government policies. At the very least it needs the repeal of laws which undermine collective bargaining and the ability of unions to represent their members.

This is particularly true of sectoral level collective bargaining, that is to say collective bargaining setting minimum terms and conditions across each sector of the economy. Nowhere in the world has sectoral collective bargaining been effectively established without some legal support.

Sectoral collective bargaining is the only way of improving working class living standards generally and diminishing inequality. On the back of sectoral collective bargaining enterprise level bargaining can thrive. But enterprise level bargaining by itself has not maintained the standard of life of working people generally anywhere in the world. Look at the example of the USA.

The second reason that warrants the lawyer speaking about collective bargaining is that the promotion of it is a requirement of international treaties which bind Wales and the United Kingdom. Governments are duty bound to promote it, though many do not. But the Welsh government is better than the rest! It will do its international duty.

It has already made a start. In 2014 the Senedd enacted the Agricultural Sector (Wales) Act 2014 which established, by law, sectoral collective bargaining in agriculture. It replaced the Agricultural Wages Council of England and Wales which the Tories in Westminster abolished in 2013. This ended statutory sectoral collective bargaining which had originated in 1909 and was part of their war on collective bargaining to which I shall return in a moment.

Your government has also passed the Well-being of Future Generations (Wales) Act 2015 which you now propose to fortify by the Draft Social Partnership and Public Procurement (Wales) Bill. Drawing on the work of the Fair Work Commission the Bill, it will impose on public bodies a social partnership duty to consult recognised trade unions in relation to sustainable development. It will also impose on Welsh ministers and in public procurement and in outsourcing contracts a duty to promote fair work goals.  So far, those fair work goals have not been defined.

In the light of the election results, I hope I am right to assume that those fair work goals will include a duty to promote and observe sectoral collective bargaining and to bargain collectively at enterprise level. The creation of a tripartite Social Partnership Council is an encouraging sign, with its role in advising and consulting on the social partnership duty and giving guidance to public bodies about consulting recognised trade unions.

The reference in the Well-being of Future Generations (Wales) Act 2015 to ‘allowing people to take advantage of the wealth generated through securing decent work’ could be a reference, as the Institute of Employment Rights pointed out in its recent meeting with the Welsh TUC, to the Decent Work Agenda initiated by the International Labour Organisation (ILO) in 1999. That important international document was amplified by the ILO Declaration on Social Justice for a Fair Globalisation in 2008, which set out ‘important strategic objectives’ in relation to decent work.  They included ‘promoting social dialogue and tripartism’ and ‘respecting, promoting and realising … fundamental principles and rights at work’.

Those fundamental rights include ILO Convention 98 on collective bargaining.

In case you were thinking that this is turning into a mind-numbing and irrelevant legal lecture I want to add another piece of international law which the Welsh government might wish to deploy in making the rolling out of sectoral collective bargaining an essential element in its goal of decent work. This is the Brexit Deal, properly called the Trade and Cooperation Agreement (TCA), signed last December.

Title XI, Art 8.3.6 says this:

Each Party shall continue to promote, through its laws and practices, the ILO Decent Work Agenda as set out in the 2008 ILO Declaration on Social Justice for a Fair Globalization … and in accordance with relevant ILO Conventions, and other international commitments…

If the UK government can commit itself to such ILO standards, who could criticise the Welsh government if they put them into practice?

But the TCA goes further. Title XI, Art.8.3.2 says that:

… each party commits to respecting, promoting and effectively implementing the internationally recognised core labour standards, as defined in the fundamental ILO Conventions, which are: (a) freedom of association and the effective recognition of the right to collective bargaining …

Title XI, Art 8.3.7 of the TCA states that

each Party shall protect and promote social dialogue on labour matters among workers and employers, and their respective organisations, and with relevant government authorities.

Finally on the TCA, title XI, Art 8.3.5 also commits the UK (and EU countries) to implementing all the ILO Conventions and provisions of the European Social Charter which they have ratified. For the UK that includes Convention 98 on collective bargaining and Article 6(3) of the European Social Charter. Convention 98 requires the UK:

to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers’ organisations and workers’ organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements.

Article 6(2) of the Charter requires the UK:

to promote, where necessary and appropriate machinery for voluntary negotiations between employers or employers’ organisations and workers’ organisations, with a view to regulation of the terms and conditions of employment by means of collective agreements.

What could be clearer? All these obligations have been binding on the UK for decades. But now the commitments have been repeated again (in a rather unexpected place). The Welsh government is entitled to heed them in defining its fair work goals, the nature of decent work and the objects of its public procurement arrangements.

So much for the law lecture. But before I finish, I would like to say a word about the benefits of collective bargaining, especially sectoral collective bargaining. In 1979, 82% of British workers were covered by a collective agreement. Now it’s down to about 25%. In Wales its about 10% higher. By the standards of a modern European democracy these levels are lamentable.   Because they mean three-quarters of British workers and two-thirds of Welsh workers have their terms and conditions set, not by negotiation, but by employer say-so – on a take it or leave basis. That is the measure of the imbalance of power in the workplace. It is a denial of industrial citizenship through participation in making and administering the rules governing the workplace.

In fact, there are other reasons too why collective bargaining, particularly sectoral collective bargaining should be promoted. There is good evidence now from multiple sources (including the OECD and others) that collective bargaining is one of the most effective ways of promoting social equality, with evidence of striking correlations between high levels of collective bargaining and lower levels of inequality.

Collective bargaining increases wages. This in turn increases the consumption of goods and services, which creates employment. Higher wages mean increased tax revenue and diminished subsidies to workers paid low wages. This permits more government investment in better public services. Sectoral collective bargaining reduces the incentive of employers to undercut each other by saving on wage costs. Instead it encourages competition by investment in efficiency, productivity and research and development. These are the reasons why President Biden in April signed the Executive Order on Worker Organizing and Empowerment.

Historical and comparative data show clearly that the most effective way of improving collective bargaining density is the level at which collective bargaining is conducted, that is to say on an industry or sector wide basis rather than enterprise by enterprise or workplace by workplace.  This is why the New Zealand government has just announced that it will introduce later this year legislation for “Fair Pay Agreements” (“FPAs”) that establish minimum terms and conditions for all employers and employees across a particular industry or occupation, to be implemented in 2022. It is not unique; sectoral collective bargaining has been established in the Nordic countries and many western European countries for decades. Even the OECD is now advocating it as the panacea. Subject to the constraints of your devolved powers, why shouldn’t Wales lead the way in the UK?