This year’s revelations about Amazon and Sports Direct’s business practices have shown that even though we are in the year 2016 some companies still behave as if we were still in the Victorian age. As the Labour party drifts into an ocean of hard left anti-business irrelevance we in the Liberal Democrats have an opportunity to speak up for a better way forward.
In the area of low pay, many companies especially in the retail sector have taken advantage of the introduction of the living wage to chip away at other benefits. Take the example of Cafe Nero which took away the free panini from staff in response to the Living Wage.
Paying staff properly so that they do not have to take second jobs is good business sense. Making work pay reduces staff turnover and consequently recruitment costs as Costco found out in the US a few years ago.
We as a party should be calling for an expansion of the teams involved in enforcing regulations on pay and calling out companies who act in this way.
Secondly there is the issue of transport to work. As this weekend’s Sunday Times reports, some temporary workers were being charged £10 per day to be transported to work in Amazon sorting centres. After taking this into account and unpaid lunch breaks they were paying staff below the minimum wage for a day’s work. Public transport options involved a three hour journey to work. We should be asking why decent, affordable public bus services are not available for thousands of workers to enable them to get to work. Caroline Pidgeon may not have become London Mayor but her excellent campaign has jolted Sadiq Khan into implementing a hopper fare on buses which will make a real difference to the lower paid in London. This excellent idea should be replicated elsewhere in the UK.
In the area of internships, some organisations are still expecting people to work for nothing. This year the National Trust was offering an unpaid internship for 6 months to do marketing and admin work. Their annual report shows that the charity received more income than ever in 2015/2016 so it’s surprising to see they felt the need to rely on free labour. I believe that we should as a party be calling for regulation to stop the exploitation of graduates and young people via unpaid internships unless we want to enable only those with wealthier parents to be able to gain work experience.
Finally there is definitely merit in the idea of having workers have some say on company committees in the same way that German employees have. While it is not sensible for employee representatives to be able to decide on strategic matters such as on down-sizing or takeovers, changes in regulations could at least enable dangerous or unethical business practices to be highlighted sooner to senior management.
Surely the management and shareholders of Sports Direct would have preferred to have been forced to discuss their internal issues during Board Committee meetings after hearing from the coal face rather than waiting for a Panorama investigation and a Select Committee hearing? Staff forums and whistleblowing hotlines are common place in leading-edge employers in the UK but not every company has these. In larger organisations with many tiers of management these can be a valuable source of information to prevent mole hills becoming mountains. Even the Conservatives the bastions of low regulation have woken to up to the idea of worker participation in management being good for business.
Some of the best loved and most profitable brands in the UK like John Lewis have learned that good governance and looking after staff makes good business sense. Let us learn from some of those business models and as a party help shape a better corporate governance model for UK PLC.
* Chris Key is dad of two girls, multilingual and internationalist. He is a Lib Dem member in Twickenham who likes holding the local council and MPs to account.
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22 Comments
We have a minimum or living wage, yet a great number of the low paid are not paid it.
There are many loopholes to close and there is enforcement to enforce. I would just say that for me the most glaring loophole is employers treating low paid employees as self-employed (which at a stroke transfers the payment risk from the employer to the employee). To be treated as self-employed, people must be invoicing companies for their work, and the company should have to place an order in advance for the work. In other words: with the Lib Dems, no one in the UK will be paid below the minimum wage.
Some serious studies, including one by the Bank of England (http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/swp574.pdf) show that pay of semi and unskilled workers is negatively affected by immigration. To state this is not to be racist, it is economics, based on evidence, however unpalatable that may be.
Simply focusing on enforcement is not going to solve the problem of low pay and poor conditions. It is just tinkering around the edges of a basic, underlying market situation. How can we have a high skill, high pay economy when workers and employers know there is an unending supply of willing replacements available if they object to working at minimum pay levels? Workers are less confident in pushing for wage increases and employers know they can get away without offering them or indeed investing in training and new equipment to improve productivity. The result is what we have seen in what remains of UK industry: a labour-intensive economy based on swathes of minimum wage employment and outdated equipment and working practices.
If you want to increase the price of anything, you limit its supply. It works for oil (see OPEC’s recent moves), so why is it not the same for labour?
If you don’t get the price you want for your oil you can leave it in the ground. If you don’t get the price you want for your labour you are free to starve in the streets. That’s why labour cannot be treared as a commodity.
I totally agree with the author that Lib Dems need to reach out to workers. But to built a platform that will appeal includes far-reaching changes to the Lib Dems’ mindset and approach.
For instance, governance of the economy for nearly 40 years has been based on the ideas that (1) competition is invariably a Good Thing, and (2) that where it can’t exist regulation can step into the breach.
Both these assumptions are simplistic and flawed. Competition has its place but too much leads to a race to the bottom that even the John Lewises of this world can’t ultimately stand against. The end point is ‘crapification’ of goods and services and firms screwing their workers – because they have to to survive. And of course mass immigration helps them mightily in that by destroying what bargaining power less skilled workers have. Perversely, it also leads to oligopoly as small firms are crushed and that in turn leads to a less vibrant business culture and excess profits.
As for regulation that’s not exactly working out. Any fans of Ofsted here? And what of regulation of the City that’s not yet stopped any of multiple blatant frauds (although it’s quite good at hassling minnows)? I believe a lot of regulation, particularly of businesses, is intentionally full of holes so that government can hide behind it while actually folowing an ultra-free market philosophy.
A good start would be to unashamedly “put people first” instead of doing things “for the economy”.
@ Robert C.
Agree entirely that while failure to pay the minimum wage is completely unacceptable, the real problem is that there are too many people on the minimum wage. We now have a low wage economy, while a small minority continue to prosper. Labour markets are clearly not working for many. One could write a book about why that is and what should or could be done, suffice to say that we need to invest in the skills workers of all ages (including older workers who are supposed to be working for longer) and must contemplate a redistribution of income if the whole country is going to share the gains of economic growth.
That investment must come from business as well as government, but why spend the time and money training a Brit when you can import an overseas worker trained in another country ?
It’s absolutely no consolation, but those minimum (ish) wage jobs at Amazon will probably soon be replaced by robots or some other form of automation. And the Government will probably give Amazon grants to “invest” in doing this.
Best re-train in robot maintenance.
I actually work with robots at an Amazon warehouse. I’m writing to Caron to see if I can put forward my ideas.
James – based on this and your comment on the other thread, you are clearly better qualified than most here to comment. I look forward to reading what you have to say.
I’ve often wondered what would happen if we could somehow link tax free allowances for inheritance, pensions and MP’s pay to the minimum wage and/or median salary. It might focus the minds of the people who happily insist that they have ‘earned it’, on whether other people have earned more than they’re getting.
I found the recent BBC2 series showing the experiences of people from a variety of backgrounds, who were forced to consider taking minimum wage jobs, an eye-opener. The raising of the minimum wage, whilst in many ways a good thing, has happened in industries where margins are tight, and competition cut-throat. Firms are therefore demanding ever higher targets from their employees, as the cost of employing them rises. Those that fail to reach the targets, or take longer to learn the tasks, are easily replaceable. The result is that many employees are left feeling like pressurised automatons. Merely emphasising the need to enforce minimum wage legislation, whilst necessary, ignores the dehumanisation of the workplace environment which is an unintended consequence of such regulation.
@ Robert C. The report you quote does confirm that immigration has a negative impact of the wages of native semi-skilled and unskilled workers but its not very big, indeed much less than the fall in real wages experienced by the general population since 2008, which is about 10%. Implying that major curbs on immigration will solve the problem of low wages is therefore misleading, and indeed diverts attention from far more significant issues in the structure of the UK economy.
Of course one way of appealing to low wage workers would be to significantly reduce their living costs through a massive national council house building scheme.
Glenn Andrews
If you subsidise council house rents to reduce the costs of all the tennants then this would have to be paid for by raising the council tax of everyone including low wage workers.
Nothing is for free but the way to reduce the costs of goods and services is to increase productivity.
David Evershed;
I’m pretty sure councils can maintain properties for less than the rent paid by the tenants, in fact there is no reason if there are enough properties that they couldn’t be making a profit and reducing the council tax (not to mention what they may be saving not paying out as much housing benefit). I was suggesting by ‘national’ scheme that it wouldn’t be the councils that built them; just the councils get to own and maintain them.
Not sure how increased productivity would encourage housing costs to fall so dramatically that it becomes easily affordable to the average low paid worker though – given how far they need to fall. Private landlords being undercut by readily available council housing would have far more success I imagine.
Also see that Kate Godfrey has apparently left Labour and joined Lib Dems. She was the Labour Parliamentary candidate at Stafford in 2015.
Glenn Andrews
For the council “to get to own” council houses they would need to pay for them. So the council costs would be maintenance, loan repayments and interest. Nothing is for free. Who pays?
Chris
Excellent subject and a fine eye-catching opening about a Labour party that now has input from the Morning Star !
We need , with regard to the now essential balance element in Liberalism , more social liberalism in our economy sometimes . And at times more economic liberalism in our society. In other words the dynamism of business needs greater equality and security. The equality and security in our services needs greater dynamism.
This is why I say I am in the centre of our party not left or right of it .
Monopoly is the enemy of Liberalism .
Too many big businesses have a stranglehold on the very working lives of the poor or made poor.
It is to the practices of the Christian and Quaker social enterprise Liberals of old , in our later classical and earlier social Liberal eras we need to look .
David Evershed
I’m suggesting this fall under national government expenditure and gifted to councils – so general taxation and the only costs loaded onto councils being maintenance costs. The councils will then be getting a large steady income from rents in addition to council tax; and the extra disposable income that residents have will be fed into the real economy through VAT receipts will help alleviate the extra national debt…. of course you’d have to end right to buy.
The absolute core of it must be a high national minimum wage. Work should not just pay.
But we absolutely must also find a solution to the cost of housing.
I wrote a LDV piece on the need for more co-operatives a couple of months back. Co-ops are one way to reach out to the lower paid: co-op owned and run social housing, businesses and public transport. It’s not just that co-ops tend to treat their staff/residents/passengers/customers better than the Sports Directs of this world, but by the very nature give them a “say” in how things are run, thereby reducing that sense of fear and powerlessness that has driven so many people to blame London or foreigners for their problems, vote for Brexit or Scottish independence, and support UKIP or Momentum.
@David Evershed As I understand the original idea of Council houses, they were intended to be cost neutral over the long term, indeed to run a surplus after the initial cost has been recouped in rent, and that’s without taking into account the savings in housing benefit that Glenn Andrews has mentioned.
In these days of low interest rates, I’d imagine councils could fund the initial capital outlay by issuing 25-year bonds, if they were allowed to.
David Evershed seems to forget that social rents were forced to become 80% of the market rate whilst the grants to social landlords were cut savagely. The excess is supposed to go towards the cost of new builds.