A man walks past a job recruitment centre in London, on January 22, 2014. Photograph: Getty Images.
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More jobs aren't enough - we need better jobs too

For the majority of people, fair pay, flexible working patterns and genuine work-life balance remain an illusion.

The latest batch of labour market statistics appear to offer positive news. Unemployment has fallen, the claimant count is down and the gap between earnings and prices has narrowed. But we are not out of the woods yet - far from it. Dig a bit deeper and the statistics show that the Britain’s labour market has been characterised by profound structural problems for some time, all of which have worsened as a result of the global crisis. The UK is a low-wage, low-skills, long-hours economy, with far too many insecure, poor-quality jobs. For the majority of people, fair pay, flexible working patterns and genuine work-life balance remain an illusion. 

While the profitability of UK companies and executive pay has recovered from the recession, average wages still lag behind the cost of living and are around 6 per cent below what they were in 2007. One in five employees now earn less than the Living Wage (£7.65 outside of London); youth unemployment remains stubbornly high; underemployment is a persistent problem, with 1.4m part-time workers saying that they would like to work full time but cannot find a job. Recent falls in national unemployment disguise stark regional differences, with almost half of all the net employment growth taking place in London and the South East. 

These short-term problems have compounded the difficulties that predate the recession. Wages and salaries for most people have been stagnant for nearly a decade, even while top pay has continued to rise. Despite the National Minimum Wage (and the Living Wage campaign) the numbers of people experiencing in-work poverty has increased. Recent employee surveys also show that British workers are feeling more disengaged, less secure and more pressured at work than at any time since the 1990s. The quantity of employment may have increased during the boom but the quality of employment certainly didn't. 

Work (or the lack of it) can have a big impact on health, life expectancy and the wherewithal to fully participate in society. The way in which low pay impacts on inequalities, family relationships, problem debt and social mobility have been extensively documented. What is less well known is that the quality and nature of today’s jobs present challenges for those on decent earnings too. Work can still be pretty awful even if you are paid decently and have a permanent contract. The world of work has changed dramatically since the days of typing pools and assembly lines employing thousands. The decline of skilled and unskilled male manual work, more managers and professionals, and the rise in the number of women at work; all have transformed the labour market. Many people have benefited from these changes, with more satisfying jobs and career prospects. But at the same time there has been an expansion of low-quality, low-paid, insecure employment (especially for women). We have also seen an increase in low wage self-employment as those made redundant make a virtue of necessity and try working for themselves. These trends are often said to be due to the rapid growth of small businesses which need to be free of employment regulations, yet despite the over-enthusiastic rhetoric about the importance of small firms, three in five employees continues to work for an organisation with more than 250 workers.

There has been greater employment flexibility, for both employers and employees, with a wider range of working patterns enabling people to balance work and their family responsibilities. But at the same time there has been a decline in the level of control people experience at work, the extent of their ability to participate (both individually and collectively) in decision making processes and a consequent decline in the level of trust in senior managers. For the majority working life seems to have got tougher. People report that they are working harder and are subject to more intrusive performance management systems. Even though skill levels have been rising many employees report that they rarely use all their skills in the workplace. One third of the workforce report a recent experience of unfair treatment. Barely a third of employees are committed to the success of their employer’s business.

In most workplaces, employees have no mechanism to influence (or even express views) about the critical decisions affecting working life, which probably explains why we now have the second lowest level of employee participation in the whole of the EU (only Lithuania is worse). This woeful performance in employee "engagement" has been exacerbated by the decline in trade union membership – which has nearly halved since the late 1970s (and even more so in the private sector).

Union decline, while welcomed by many employers, is at least partially responsible for the growth of income inequality. Productivity growth drives wage growth and improvements in living standards; there can be no guarantee that employees will receive their fair share if there is a dramatic difference in bargaining power between workers and their employer. Recent experience proves that all the gains have gone to those at the top of the income scale. There is also evidence to show that giving workers voice boosts productivity and trust in the workplace. A sustainable economy is an economy that guarantees a degree of workplace democracy and a fair distribution of rewards.  Rather than stand aside, should the government help extend the coverage of collective agreements and support fair-wages policies or new forms of worker voice, such as works councils?  

Some of the country’s employment problems are rooted in the structural weakness of UK PLC: our poor labour productivity record (UK output per worker is a long way behind the US and most of the EU), ever-worsening regional divides, a culture of short-termism, and weak corporate governance. Others are a symptom of labour market deregulation and the declining  bargaining power of workers and clout of shareholders. What is important, as we emerge from the depths of recession, is to understand where the world of work is heading and how we can make tomorrow’s workplace better than today’s.    

Over the coming months, I will be leading an independent inquiry for the Smith Institute into working life in Britain. We will be looking at all these issues and taking evidence from workplaces and boardrooms from across the country. We aim to challenge government, employers and unions, to show how they can work in social partnership to create more productive, more inclusive, more secure, and fairer workplaces.

We are now at a crossroads. We can continue with a race to the bottom, reducing labour costs, denying employees a voice and ignoring the rising inequality and insecurity at work. Or we can try and forge a new deal which places a premium on co-operation for excellence, fair pay and higher standards of employment where the best employers are copied by the rest.  

Ed Sweeney is the former chair of Acas and is leading the ‘Making Work Better’ Inquiry for The Smith Institute

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.