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12 July 2017

There’s something missing from the Taylor Review

You cannot get people a pay rise without giving them the power to secure it.

By Alison McGovern

The Taylor Review was finally published on Tuesday as part of the Prime Minister’s damp squib relaunch, but if its main output is simply a rebrand of zero hours work, it will be an utter failure. Given the risks of Brexit to our national and individual incomes, we had better have more in our policy back-pocket than redefining the current “worker v employee” debate in even more confusing terms. The central problem of this review is that it risks leaving all those concerned, “dependant contractor” or otherwise, redefined, but not a penny better off. A review that should have addressed a huge power imbalance in our economy instead risks becoming a sugar-coating of current low-paid work by a Prime Minister on her way to a bitter exit.

Average wage growth unhooked itself from GDP growth before the global financial crash. For all the intentions of David Cameron, and the warm words of Theresa May, nothing has changed since then. There hasn’t been nearly enough growth in the UK economy. This is due first to George Osborne strangling the post-crash recovery, and now by Brexit. But worse, most Brits have not properly shared in the limited economic growth our country has seen. 

Now we are staring serious economic turbulence in the face, there has never been a more important time to protect the British workforce. Rich people tend to have choices, even in a downturn. Those with less money do not. If the idea of inclusive growth is to mean anything at all, we have a considerable mission ahead to change the structure of our economy. How can you make sure that there is an iron link between economic growth at the macro level, and pay? For my money, this should have been the question that Matthew Taylor set himself.

The Taylor Review is no doubt a worthwhile enterprise. However, I think there are some serious holes in the report’s analysis. It reviews how the labour market landscape has changed – with new technology and so on – but fails to give us a route map to better wages. So, what ought to be the answer to that? In truth, there are only two means by which we can really protect the low paid from poverty wages: the law, and a union membership card. 

In relation to both these means, the Taylor Review, worthy as it is, falls short. It simply does not get to the central problem. The pay imbalance in Britain represents a power imbalance. You cannot get people a pay rise without giving them the power to secure it.

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Since Labour introduced the National Minimum Wage legislation nearly two decades ago, a wide consensus has been established that it has been a strength in our economy to have such legal protection for the low paid, rather than a weakness. The evidenced, social partnership approach of the Low Pay Commission has made the NMW a success. The Taylor Review correctly identifies this body as having a greater role to play. Sectoral reviews into areas of low pay it suggests are the right approach. More attention needs to be focused on those great chunks of our economy where low pay is concentrated, and employees given the power to challenge low pay through this regulatory body. 

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But the review ignores the government’s recent role in undermining pay levels. 

Some of the lowest paid insecure workers are in social care. And all the while the Tories claim to have supported a national living wage, they have undermined this policy by not funding councils properly to pay it. As a result, care staff are more stretched than ever, with underpayment rife. The tripartite arrangements of the Low Pay Commission will only work in the future if the government itself ceases to be a road block to better pay. The law on pay must be properly funded and enforced. And the Taylor Review ought to have said so.

The second flaw is in relation to trade unions. It is sad to read this report, and feel the constant absence of the trade union movement on almost every page.

The history of our country has been shaped at its every turn by workers co-operating together and bargaining for better pay, better terms, and ultimately safer, happier working lives. And the evidence is clear that in industries where trade union membership is higher, and where employees work under the umbrella of collective bargaining, they earn more. It is clear that if we want better pay, we must increase trade union membership in the UK, and especially in the private sector.

New technology cannot be allowed to roll back hard-won protection against vulnerable work. Whether it is the right to regular hours if you want them, sick pay, maternity pay, or the minimum wage itself, these rights were won because of the organisation of the trade union movement. It is bizarre to think that we should now turn our back on organising, despite so much evidence that this is the best way to put power and wealth in the hands of the many, not the few.

Trade unions must modernise and think through the opportunities of new technology as well as the risk. But to write them almost completely out of the picture is a huge mistake. The Taylor Review is very much lacking because of it.

In the end, given the parliamentary maths, and the weakness of Theresa May, it will now rest with the next Labour government to address the power and pay imbalance in Britain’s labour market. When we get the chance, we should certainly learn from the Taylor Review. Both that which is in it, and that which is left out.