What do we need trade unions for?

A lot of workers are losing out. And an even bigger number face huge threats coming down the line. Workers need more help. Help to get better wages, help to gain new skills, help to create new careers, help with childcare, help to work longer and help to cope with dramatic changes from new technology and global competition. Where are they going to find that extra help? Not many of them are seeking it from trade unions. In the UK, only one in seven private sector employees are in a trade union and that’s higher than most other Western countries. Maybe the State has made trade unions, or much of what they currently do, redundant. In most Western countries, workers don’t need to join a trade union to win employment rights now guaranteed by the State (e.g. holidays, parental leave, health and safety protection, non-discrimination, etc) and the State has taken the financial heat off employers in providing old age pensions, top-ups to low wages and free healthcare. Indeed, France has the lowest union membership in the OECD  but the highest employment protection. Employment issues (e.g. the minimum wage, migration, childcare, etc) are front and central in the political agenda in Western countries, but it is no longer the trade unions driving this agenda. Has the baton for helping workers been permanently passed from unions to Governments? Are Governments doing the right things for the future and are there limits to what the State can do? If so, is there a need for a new era of organised labour and what should that look like? The answers depend on what extra help we think workers need.

One thing many workers need is access to more job and career opportunities. And that means weakening the grip of some existing trade unions. The Left likes to portray trade unions in terms of a struggle between labour and capital, or labour and the State. But a lot of trade union activity is about creating and protecting a set of privileges for one group of workers at the expense of others. This matters because the labour market is increasingly sharply divided between a smaller number of professionalised and licensed jobs, which are well-rewarded but have high barriers to entry, and a bigger number of lower-skilled jobs, which are easy to access but less well-rewarded. A good example is the divide between nursing and social care. In the UK, the nursing union campaigned to make nursing a graduate-only profession. This means that people wanting to be a nurse have to undertake five years of post-compulsory education, including a degree in nursing. Unions and Government have combined to centrally plan the numbers to be college-educated and recruited to nursing, making sure that numbers don’t undermine the scarcity value of nurses. The graduate-only and restricted-numbers policies have been a disaster. The UK has a desperate shortage of nurses and even after exceptional levels of overseas recruitment it cannot fill its nursing vacancies. There is a much larger nursing workforce called social carers. In reality nursing is a broad continuum between some highly specialised medical tasks which require doctor-level education and very basic personal care which requires no training at all, with all shades of tasks in between. But nursing unions, and the regulation they have sponsored, overly restrict the nursing tasks which social carers can undertake. Unless social carers can take years out of the labour market to become a graduate nurse, they are limited to low-paid, low skill and dead-end jobs. Nursing could be re-regulated to allow modular accreditation of social carers to undertake specific medical tasks, with the ability to work towards full nurse status through in-work training and assessment. By taking on higher value tasks, social carers could earn higher wages, develop a rewarding career and be upwardly socially mobile. (In turn, the tasks and status of doctors should be opened up to nurses in a similar modular approach to in-work progression.) Even this one example matters – as within the next decade social carers will become one in ten of the UK workforce. But the problem is much more widespread. It is particularly entrenched in three areas: the regulated professions (e.g. law, accountancy, banking, medicine, architecture, etc), the public services (e.g. education, police, social work, health, etc) and where licences-to-trade are required (e.g. taxi drivers, financial advisers, street traders, driving instructors, etc). The privileges accorded to each of these jobs have their origin in the medieval patronage of the State affording workers and traders exemption from competition. In the twenty-first century, one in three American jobs is state-licensed and it is one-in-four in Europe. More generally, the demarcations and exclusive roles of many professions and licensed-occupations are the same now as when they were created 200 years. In most cases, it is organised labour which preserves these privileges for the current job-holders. The organising form varies from traditional trade unions through professional institutes to licence-holder associations. But they are all unions, and they are anti-competitive unions. In many cases, consumers are denied the benefits of open competition and technological innovation. But it is also the wider labour market which suffers. Workers are locked out of the chance to move up the food chain, or to move across and combine roles, or to move into a new job in middle age, or to innovate with new types of job. Most of these privileged workers are increasingly worried about being replaced by software and artificial intelligence. But new technology can be used by lower-paid and lower-skilled workers to augment their own skills and knowledge and allow them to take on higher-paid and higher-skilled jobs. Meanwhile the privileged workers are doing their best to slow down these threats, e.g. the remarkably slow adoption of technology in education. In order to open up the best job opportunities for the many rather than the few, western countries should create a powerful Employment Opportunity Regulator. The regulator should be empowered to identify and remove any unnecessary restrictions on open competition between workers, in the same way that the best regulators open up competition between companies. The regulator would cover all areas of the labour market, accelerate new technology, remove unnecessary restrictions and, where restrictions are necessary, force modular accreditation which allows workers at any age to be approved for specific tasks, or to move up to the next level or to combine any roles together in new types of hybrid jobs. There will be losers, as privileges are removed. But there will lots of winners. And just as importantly, there will be more dynamism in the labour market, fuelling productivity growth and better social mobility. The goal would be an Opportunity Society, where anyone at any age can have a fair crack of making the most of their talents.

But workers also need more economic security. How can we square the circle of increasing the dynamism of the labour market with improving economic security for workers? The answer lies in the State creating the right system of “flexicurity” which supports workers throughout their life, as they change jobs and careers. At one level, balancing flexibility and security is a matter for an individual employer and its employees, both collectively and individually. It is at this level that traditional trade unions are an important part of rebalancing the power of employers and employees. But it is not enough. This is particularly true given the scale of technological change that we face and the urgency of improving productivity. The State needs a national system of flexicurity which ensures that employers are free to manage their business and respond to the market, whilst workers are able to have a successful working life, find new jobs when they want them, develop new skills and cope with periods of unemployment, under-employment or low income. Workers are voters and most voters are workers. Public confidence in the national system of flexicurity is the key to the politics of economic change. Millions of workers feel threatened by new technology, migration and international trade. This is manifesting itself in populist politics, nationalism and anti-business sentiment. Politicians appear to be offering one of these three types of solution to the public’s search for more security:

  • a promise to resist change and to turn back the clock;
  • a plan for the State to take back control from the market economy;
  • an offer of more support for workers affected in exchange for letting the market rip. 

I am broadly in favour of the last option. And therefore the State should offer workers a flexicurity system with these features:

  • keeping it (fairly) easy to fire workers, so that it also easy to hire them; 
  • encouraging flexible jobs (e.g. part-time, self-employed, zero hours, etc) to increase participation in the labour market; 
  • generous State top-ups to the earned income of low-wage workers;
  • State-funded healthcare so that workers can take more risks without worrying about losing employer-funded healthcare;
  • generous, time-limited out-of-work State benefits, easing the transition for workers as employers improve productivity;
  • rights to employment flexibility, for parents and people with disabilities; 
  • State-funded lifelong education, with income-contingent repayment from workers through loans or specific taxes; 
  • good transport links and a sufficient supply of affordable housing to allow geographical mobility, both regionally and nationally. 

Most Western Governments have a lot to do to fully deliver this framework, e.g. France needs to liberalise employment, the US needs to boost self-employment, the UK needs to sort out housing and everyone needs to sort out lifelong learning. If Governments can deliver on this policy framework for flexicurity, as well as open-up new opportunities for all in the labour market, then we need modern trade unions to take on two big roles.

Firstly, we need to see a big step forward in industrial democracy. Every employer of a certain size should be legally obliged to appoint an independent, third party “Staff Association” to organise and represent employees. (If the minimum size was 50 employees, 50% of the UK workforce would be covered. If it was 10 employees, the coverage would be two-thirds). The key word is “appoint”. In my model, the employer and employees would have to agree on which independent Staff Association they chose for their company and it would then be appointed by the employer. They would choose after a beauty parade of potential providers and a secret ballot of employees. Many of these providers would be existing trade unions or professional associations, but private companies and NGOs would be free to compete for these roles. The Staff Association would be funded through a mix of payroll deductions and employer contribution, at or above a statutory minimum fee.  Like traditional trade unions it would operate through staff representatives, supported by the professional staff and services of the Association. If there is no agreement between staff and employer on which Association to choose, then an independent statutory office would select and mandate a provider. The dual-key appointment (and future re-selection) of the Staff Association is at the heart of this model. Both sides need to work together to help the business adapt to change, thrive in the market and share the risks and rewards fairly between the owners and the employees. They need a Staff Association which builds co-operation, pushes for better management and helps engages and motivate the workforce. The Staff Association would have at least one seat on the Main Board and be represented in the Remuneration Committee. All employers (above the minimum size) should also be legally obliged to formally consult their staff, at least once every five years, about employee ownership. Employers would be required to set out the options for greater employee ownership, explain the company’s approach and listen to staff opinion. The options could include stock options, profit sharing, voting rights and full or partial mutualisation. There would be no compulsion on companies to increase employee ownership, only to consult upon it.

Secondly, we need to see a big step-forward in the mutual support workers offer each other. Governments should help nurture a set of “Career Guilds”.  Guilds would offer workers a community, over and above their current job. They would address the issue that workers don’t stick to one employer or career for life and therefore people’s long-term success increasingly depends on their personal networks and their ability to update, reinvent and market themselves. Whereas many well-off people are already have formal or informal career guilds, the majority of workers don’t. In this model, Guilds would compete for their Members, but their aim would be lifelong retention of their Members, offering them the support they need to thrive as they navigate their career through a variety of jobs, employers and customers. The Guilds would be owned by their Members and, whilst they would offer a wide range of professional services, their focus would be on organising mutual support between Members. They might be industry-focused (e.g. construction or childcare), or they might be geographically-focused (e.g. a big city) or they might be solving a common issue (e.g. women in engineering). There would be no compulsion for anyone to join a Guild, but Governments would incentivise membership, e.g. refunding membership fees through a tax rebate to workers, seed-funding a dozen Guilds for the first three years of their life, moving some of the vocational education funding from public colleges to the Guilds, etc. Over and above promoting an esprit de corps and an intensive social network between Members, the Guilds would provide a variety of services:

  • Employment agency – Guilds could eliminate the need for their members to work through separate employment agencies. In the UK, 1.2m workers are on a temporary contract via an employment agency, which is taking a significant percentage of the total wage paid by the employer. Employment agencies in the UK are a business, with 96,000 staff, more than the total number of trade union representatives. The Guild could act an employment agency, pushing for the best wage deal for its Members and mutualising any profits back to the Members. (Most other countries have a much higher proportion of temporary workers than the UK, e.g one in four in the Netherlands vs one in twenty in the UK. So their prize is bigger still)
  • Sharing economy within the Guild – Guilds could digitally match-up their Members to pool their resources. For example, parents with part-time jobs could provide regular, free and reciprocal childcare for each other on the days they themselves are not working. Or self-employed Members could share vehicles, tools, premises and office services to improve utilisation. Flexible workers might pay a commission to each other for helping them find work. Some Members might start small businesses to meet the needs of other Members, e.g. offering P.A. services or security. Guilds might offer peer-to-peer funding, as a saving and credit union, as well as a source of capital investment.
  • Digital marketplaces – Guilds could offer their Members digital marketplaces, their own version of Uber or Task Rabbit, but where all the profits are mutualised back to Guild Members. For example, there is a great opportunity for home carers in adult social care. In the UK, local authorities pay an average of £15 per hour for this service, with the carer typically earning a minimum wage of £7.20. Many workers and clients are equally alienated by the way they are allocated to each other by remote agencies. An Uber style marketplace could allow carers to directly choose and rate self-employed carers, allowing those carers to earn much more of the full £15 and possibly more where they are highly appreciated by their clients. Guilds could bring this type of disruptive empowerment to other areas of blue-collar alienation, like contract cleaning and security.
  • Skills and accreditation – Guilds could transform vocational training. They could turn their community of Members into a hive of mentoring, apprenticeship, work experience and collaboration. They could commission high-quality digital education for their Members, with world-class content, learning records and peer-to-peer forums. They could commission and brand their own accreditation of key skills, whether they have been self-taught, learnt on the job or gained through an educational programme.
  • Financial services – Too many financial products (e.g. pensions, vehicle and equipment leases, unit trusts, insurance) offer poor value for money. Guilds could use their muscle to provide low-cost or specialised options. But Guilds should be able to go further than this. For example, they should be able to offer personal pensions which Members take with them as they change jobs and into which each of their employers makes its contribution during a period of employment. Guilds should be able to offer their Members opt-outs from State  social insurance, e.g. for unemployment insurance. Many flexible workers (e.g. self-employed) will need high quality administrative services (e.g. book-keeping, payroll, etc) and Guilds could offer a trusted service to their Members.
  • Mobility – Guilds could help their Members to move around geographically. This might be through encouraging Members to offer accommodation to each other (e.g. a spare bedroom for someone working away during the week) or it might be having dedicated student-residence style accommodation for people who are working away or just settling in a new area. However, it might  often be about Members offering friendship and support to other Members moving into, or considering moving into, their area.

I think any new support for workers has to have the four strands I have set out above:

  • the State acting to open-up job and career opportunities by re-regulating professions and licensed occupations; 
  • the State putting in place the right system of “flexicurity” to be on the side of the disrupters and the disrupted; 
  • a legal obligation on employers to appoint a third-party organisation to organise and represent its employees; 
  • a new movement of mutual-aid organisations which help workers support each other throughout their working life. 

If we act on all the strands together, we could build the new progressive institutions we need to unlock economic growth, improve equality of opportunity and to rebuild social cohesion.

This piece was published by Radix on 25 September 2016 in its report on the future of trade unionism. This is well worth reading if you’re interested in this subject. http://radix.org.uk/wp-content/uploads/2016/09/Radix-Trade-Unionism-Report-2016-1.pdf

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One thought on “What do we need trade unions for?

  1. Lots to take aim at, so one point on flexicurity. At some points in a career people need to be sure of their kids future. Redundancy for me was always a plus but shifting schools … Clearly all’s well that ends well but encouragement towards human compassion somewhere should be part of a winning formula.

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