Opportunity for new industrial relations?

When new Greek finance minister, Yanis Varoufakis, observed austerity is akin to trying to milk a sick cow by kicking it, he was spot-on. Austerity is the latest failed, ideological and unacceptable face of capitalism, deepening inequality and poverty and, in Greece, causing a desperate collapse in living standards and public services. Syriza’s election was the successful outcome of a mobilisation to reject austerity; inspiring hope that democratic politics shape an economy fit to serve its people, snubbing decades of uninterrupted neo-liberal economic doctrine across Europe.

Austerity has entrenched deepening inequality, stagnating wages and growing poverty. It entrenched but did not start these, being not accidental but the direct and intended consequences of neo-liberal economic philosophy. Evolving in Chicago in the 1970s, refined by brutal regimes in Latin and South America, they inspired Thatcher and Reagan to bring this philosophy to shores of Britain and America.

While we struggle with the political necessity to rebalance our economy from low wage, insecure work and growing personal debt, it’s hard to believe that just 40 years ago 84% of workers were covered by collective agreements and 64% of economic wealth (measured by GDP) went to workers as wages.

Not only was our economy growing and corporations and wealthy individuals paying their fair share of taxes, workers were getting a bigger share of the pie and spending it on the high street (unlike today’s rich, syphoning off billions into overseas tax havens). An organised, confident, powerful union movement led struggles for political and social advances, and millions experienced strides forward in living standards, horizons were expanded and new opportunities opened up.

Thatcherism put a stop to this. To provide for the soar away super-rich and powerful political elite – the 1% v the 99% – you need to crush opposition. Flexibility, insecurity and inequality were to become money-spinners and growing poverty an opportunity to be exploited rather than an obscenity to be addressed. Dismantling the structures of workers’ power, shackling unions and eroding bargaining were crucial to this project. Undeniably, the decline in union power since the 1970s choked off social and political progress as well as efforts to redistribute the wealth we create.

Bargaining coverage slipped and by 1990 fell to 55%, heading further south ever since. Today, it’s 23% while, over the same period, the share of our economic wealth going to working people has fallen by 11%.

There is something very wrong with an economic system that has fed wealth inequality to the point that the UK’s richest 10% own 44% of wealth. Indeed, just five families now have a combined wealth equivalent to that of the poorest 20%. Austerity is being used as a guise for systematic shrinking of the state, privatisation of public services and removal of social protection while further concentrating wealth and power amongst the few.

Low wage exploitation is, however, only one part of growing employment inequality – the Office for National Statistics confirms precarious working continues its rise as zero and short hours working, so-called self-employment, agency and casual employment swell further. Look across Scotland’s central belt; bars, retail and hospitality work replace what were once shipyards, and where once there was the car plant in Linwood there is now a retail park, home to a drive-in Starbucks. We are not a poor nation; the UK is the fifth largest economy in the world yet last year over 20m meals were given out by food-banks.

In our labour market, the impact of these trends is the lived experience of millions. Hollowing out of decent jobs, welfare support, social housing, hope and opportunity disconnects people from their communities. If society does not value its people enough to put in a floor of basic securities – not just pay, regular hours and safe, secure employment but access to homes, financial security in old age, health, social care and an environmentally sustainable planet – then we are heading for serious conflict over the coming period.

So how do we reverse these trends and begin to build decent work? Aside rejecting failed austerity economics and invest in a growing, confident, fair economy, a critical step in righting what is wrong will be the restoring of union freedoms, removing employers’ rights to undermine democratic ballots with petty, technical challenges and reintroducing regulated systems of sector level bargaining. Political and business leaders need to understand that diminishing the value of work diminishes our own future and the opportunity to build a vibrant, high-skill, high-productivity economy.

Our corporations hoarded over £500bn as they continue with a long-term investment strike while ‘corporate welfare’ forces us to pay the price of low pay via tax credits and housing benefit. This is the politics of the mad house. As citizens, we demand visionary, bold government that’s prepared to seize the moment in the collective interests of society.

A National Investment Bank and industrial strategy to rebalance and renew our economy; rebuilding our infrastructure, providing desperately needed new, environmentally refurbished social homes, governments using public procurement to rebuild our manufacturing heartlands and investing in decent, safe, unionised jobs, alongside hope, apprenticeships and opportunities for our young.

In Scotland, debate about new industrial relations models is already taking place. For us in the rest of Britain, we can only look on in envy – the idea of the union movement as a welcome partner in social progress has some way to go south of the border. While Scotland’s government is engaging unions as partners in a cross-community discussion on social progress through Working Together, their counterparts in Westminster only see a chance to launch a further assault on unions’ ability to defend and represent members and their communities.

So as Jim Mather and his colleagues from across business and the union movement were sitting down to consider the model of industrial democracy best suited for modern-day Scotland, back in London a highly ideological effort to dismantle further union power was taking shape. The road the Tories choose to travel is a world away from the serious tripartite effort that is needed to restore fairness and stability to our economy and labour market.

As opposition to deepening inequality finds more voice, too many among those who seek to govern us stick to their doctrine that the people serve the markets, rather than the other way about. The parameters of political debate are kept to defending the status quo. But the status quo is not working.

The Resolution Foundation, in discussing the future of the minimum wage, argued: ‘It is increasingly clear that low pay is a systematic feature of the 21st century UK labour market that will not solve itself through a light touch approach of pursuing growth and investing in skills. … Simply equipping individual workers to navigate these conditions will not be enough. Institutions are needed that change the labour market itself’.
If we are to reverse the growing inequality and increase the workers’ share of national wealth, we need to build the structures that could facilitate this. So Unite Scotland argued in its 2014 evidence to the Scottish government, submitted as part of the Working Together exercise: ‘Industrial democracy is not about putting one worker on a board in order to provide an employee `voice’; industrial democracy goes beyond this and is fundamentally about the power balance in the workplace’. Industrial democracy of the sort that genuinely delivers for workers and their communities can only be achieved through the collective strength of workers organised in effective, powerful unions.

A new ‘fair wages resolution’, modern wages councils and National Joint Industrial Councils can structurally address the economic democracy deficit. Regulations introducing new models of collective union engagement in corporate governance and requirements on corporate boards to take responsibility for the social and economic consequences of decisions rather than cowering to the demands of short term investors could fundamentally shift the nature of the debate at board level.

In the motor industry, we have some of the most productive, best skilled, fairly rewarded workers in the country. This is no accident. It has arisen because their Unite and employers understand the best future is a common one, collectively negotiated. I could take you around many UK workplaces with a similar outlook, where the workers – through their unions – are fully engaged in the development and planning of successful businesses. As a result, employers are able to retain skills and staff who are more productive, retaining social capital in their local communities.

But there are still far too many employers who harass, threaten, sack and blacklist those who stand up for union rights. There can be no place employers who think nothing of holding their workforce and even national economies to ransom. A modern economy cannot continue on a downhill race to the bottom. So Unite Scotland is pressing Holyrood to introduce collective bargaining into three central sectors: road haulage, the voluntary sector and hospitality. Putting a floor beneath the tens of thousands of workers in these sectors will be a good start, ensuring collaborative decision-making and a fairer share of the wealth they create.

If the Scottish government can be persuaded to agree that collectivism is a better deal for the people of Scotland than `co-determination’ or conventions, then those young people forced onto zero hours contracts, minimum wage jobs or cafes were car plants used to be can begin to believe that they are valued by their county and have a shared stake in its future.

Unions themselves have to face up to the challenges of organising the precarious that so many believe are too difficult to organise. It was casual dock and gas workers, matchgirls, agricultural workers and others that built our movement some 140 years ago. It’s our responsibility and duty to reach out, organise and fight for that better, fairer world, a socialism based on the needs of people not demands for profit.

This is our challenge, and no new institutions, rights or structures will deliver it for us. We have to enter any new structures with power not just as a voice for the dispossessed. We have to engage, protest, mobilise, build confidence, networks and alliances to win. Our governments must decide whose side they are on. Surely, the time has now come for them to conclude that our `sick cow’ cannot deliver when it’s getting kicked.

Steve Turner is Assistant General Secretary of the Unite union