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  1. Ideas
19 February 2024

Labour’s “good jobs” agenda could be transformative

The party promises to revolutionise the world of work. But will it U-turn as it did over its green plan?

By Daniel Chandler

Eighty-four thousand three hundred and sixty-five. That’s a decent estimate of how many hours most of us will spend at work over our lifetimes, second only to the amount of time we spend sleeping.

It’s no surprise, then, that work shapes our sense of identity and well-being in a profound way. According to the distinguished economist and “happiness” expert Richard Layard, “quality of work” is the second-most important factor explaining differences in how happy people in the UK feel, after mental health and ahead of both income and physical health.

And yet in recent decades questions about work and production have been pushed to the margins of political and economic debate. The primary goal of economic policy has been to increase GDP, and with it the possibilities for consumption – often at the expense of escalating stress and insecurity at work, especially for the lowest paid. Progressives’ efforts to temper modern capitalism have focused on redistributing income, while the workplace has been regarded as beyond the proper reach of public policy.

Under Keir Starmer’s leadership, the Labour Party has started to craft a new economic narrative that recognises the fundamental importance of work.

In an early vision statement published by the Fabian Society, Starmer claimed that “the single most important part of improving lives is to ensure good, secure jobs are spread across the country”. He has sought to distance himself from the tax-and-spend paradigm associated with New Labour, asking whether “even when we enjoyed the most sustained period of redistribution in British history, did it also redistribute dignity and respect to working people, or was that glue… starting to come a little unstuck?”

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Crucially, thanks in large part to deputy leader Angela Rayner, this rhetoric is backed up by a surprisingly radical package of reforms, known as the New Deal for Working People. It includes commitments to ban zero-hour contracts and introduce a single “worker” status so that all employees have key rights such as protection from unfair dismissal, sick pay and parental leave from day one. Labour would also make work more family-friendly by extending parental leave, making flexible work the default and creating a new “right to switch off” outside working hours. Although reluctant to commit to a specific figure, the party has promised to tie the minimum wage to the cost of living, and to introduce measures designed to revive trade unions and collective bargaining.

Perhaps the most significant proposal is to introduce “fair-pay agreements”, which would bring together employer and worker representatives in specific sectors to set minimum standards of employment and pay, over and above the national baseline. A move towards sector-level bargaining would transform industrial relations in the UK, where negotiations typically take place between unions and individual firms, bringing it into line with many European countries. According to the OECD, this kind of model offers “the best outcomes in terms of employment, productivity and wages”.

Unfortunately, Labour has scaled back its ambitions over the past year: having initially promised to establish fair-pay agreements “across the economy”, it would now introduce one in adult social care, pending consultation on whether to extend the scheme more broadly. It is also proposing to “move towards” rather than definitively introduce a single legal category for all employees. But even after these changes, the New Deal for Working People would be the biggest upgrade in employment rights since the introduction of the national minimum wage in 1998, if not before. With its £28bn green investment pledge having been dropped, this represents Labour’s only genuinely transformative policy agenda going into the 2024 election.

As in many other areas, Labour’s new focus on the importance of work closely mirrors developments in America, where President Joe Biden has set out an ambitious Roadmap to Support Good Jobs, claiming that “a job is about [a] lot more than a pay cheque. It’s about your dignity. It’s about respect.”

The political attention being paid to questions about work is partly a response to the rise of the “gig economy”, in which workers are independent contractors of, usually, digital apps. It is also an attempt to address fears about the impact of rapid advances in AI and a reckoning with the devastating legacy of industrial decline on former manufacturing communities.

But it also reflects wider intellectual currents. The economics profession has long provided the theoretical underpinnings for the prevailing orthodoxy that job quality is best left to the market, and that redistribution is the solution to inequality. But in recent years, leading economists including Dani Rodrik at Harvard and the Massachusetts Institute of Technology’s Daron Acemoglu have started to challenge these ideas, arguing that “good jobs” are not an inevitable by-product of well-functioning markets, and that there is plenty the state can do to promote them. This shift of focus towards the production or supply side of the economy is part of a broader rehabilitation of “industrial policy”, and has been variously termed “productivism”, “modern supply-side economics” and “supply-side progressivism”.

Parallel developments in political philosophy help remind us that “good jobs” are not only a way to promote economic growth, or even to tackle income inequality – they are an essential part of a society that provides people with opportunities for individual fulfilment and social recognition.

The philosopher Michael Sandel argues that society must balance our interests as consumers in having cheaper products with our interests as producers in “satisfying and remunerative work”. In a similar vein, Elizabeth Anderson has helped put neglected questions about work back on the agenda through her influential 2017 book Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It), in which she compares the concentration of power in the hands of employers to a totalitarian dictatorship with no place in a modern democratic society.

We can also see this shift of perspective in a long-overdue reassessment of the work of John Rawls, the 20th-century’s most important political philosopher, whose ideas represent an unparalleled resource for the centre left.

Rawls argued that inequalities could be justified if they ultimately benefit the least well off – a concept he called the “difference principle”. His ideas have often been used to justify redistributive politics. But Rawls was clear that we should be concerned not only with inequalities of income and wealth, but with how our society distributes economic power and control, and opportunities for self-respect and social recognition, especially through work. “Lacking a sense of long-term security and the opportunity for meaningful work and occupation,” he argued, “is not only destructive of citizens’ self-respect but of their sense that they are members of society and not simply caught in it.”

On this basis he rejected what he called “welfare state capitalism”, arguing that rather than rely on redistribution, a just society should “put in the hands of citizens generally, and not only of a few, sufficient productive means for them to be fully cooperating members of society”.

These ideas have much to offer Starmer, Biden and other progressives as they look to develop a new economic paradigm. They also point towards a key gap in both Labour and the Democrats’ policy offer – namely, the absence of any serious attempt to give workers a meaningful say over how their workplaces are run.

The idea that owners, or shareholders, should ultimately decide how companies function is so familiar that we rarely stop to question it. But there is nothing natural or inevitable about this arrangement. Rather, it is the product of the “shareholder primacy” model of corporate governance, which gives shareholders the exclusive right to elect company boards, which in turn appoint the CEO and other managers who run companies on a day-to-day basis.

Since share ownership is concentrated in the hands of the rich, this means that a relatively small class of wealthy individuals (and the financiers who manage their wealth) has an enormous amount of control over the organisation of work, and hence over how most of us spend a very large part of our lives.

This doesn’t mean we should abolish private ownership or managerial hierarchies, as socialists have sometimes argued. Rather, following thinkers like Rawls, we should adopt whatever model of governance is best able to combine economic efficiency with widespread opportunities for dignified and meaningful work.

Fortunately, we don’t have to look far to find a different model that gives workers a much greater voice without harming economic growth. In most European countries, employees have the right to elect representatives to company boards, and to create a “works council” with the power to shape company decisions about working conditions.

This system – known as co-determination or co-management – is most developed in Germany, where it originated. In companies with more than 500 employees, workers elect one third of the board, and in companies with more than 2,000 they elect half. German works councils have wide-ranging rights, and in many cases employers must secure their consent to make decisions about pay structures, working hours, holiday arrangements, workplace facilities and major changes to the workforce. If an agreement cannot be reached, the matter is decided by a conciliation committee with a neutral chair and the power to enforce a binding decision on both sides.

There is a British tradition championing various forms of workplace democracy, too. This reached its peak in 1977 with the publication of the Bullock Report, commissioned by the then Labour prime minister Harold Wilson, which proposed giving workers and employers and equal share of seats on the boards of large companies. The report was ultimately shelved thanks to business opposition and divisions within the trade union movement – one of the great missed opportunities of the postwar period.

It is time Labour revived and reclaimed these ideas. After all, there is a limit to how far top-down regulation can go, beyond establishing a base line of employment rights – no one wants a “Department for Meaningful Work” dictating the details of working conditions in individual companies. If we really want to transform work, we need a decentralised approach, one that brings owners and workers together to strike a balance between pursuing profit and all the other things we want from work – security, dignity, a sense of achievement, community.

In theory, unions could fulfil this role. But even if we could count on a miraculous revival of union membership (which is barely one in ten in the private sector), a degree of workplace democracy should be a basic right available to all, not something that has to be fought for one company at a time.

This doesn’t mean we could do without unions. The success of co-management in Germany is thanks in part to a division of labour between workplace institutions that focus on areas of mutual gain, and unions that participate in bargaining over pay, mostly at the sector level (as in Labour’s plans for fair-pay agreements).

The case for change is reinforced by a growing body of evidence that, contrary to the predictions of simplistic economic models, co-management is perfectly compatible with a thriving and competitive market economy, and may actually increase business investment and productivity. Worker participation can help counterbalance shareholder short-termism, since workers – especially when they have firm-specific skills – often have a stronger interest in the long-term success of a company than fickle investors.

This should be an attractive area for an incoming Labour government, not least because changes to corporate governance would not require an increase in public spending. Why, then, has Labour been reluctant to adopt such ideas?

Part of the answer is that, in the eyes of the present leadership, proposals for workplace democracy are tainted by association with Corbyn, having experienced a brief revival under his leadership. But the long-term success of the Labour Party depends on finding a way to reconcile its warring factions, and these ideas offer a way to build on the most fruitful thinking that emerged during the Corbyn period.

The Labour Party is understandably wary of alienating the business community, but the shareholder primacy model is widely discredited even among business leaders. And in contrast to the 1970s, the trade union movement is now largely united in its support for worker representation. Politically, Labour can blunt inevitable accusations of a socialist plot to destroy capitalism by reminding voters that Theresa May promised to put workers on boards when she became prime minister in 2016.

In the long run, the UK should look to adopt a model at least as ambitious as that in Germany, which has increased worker power and improved working conditions without reducing productivity or growth. But there are political and practical reasons why it might be better to adopt an incremental approach, and even putting one or two employees on the boards of larger companies – as France did in 2013 – would be a significant step.

The challenge is to find a new language. Talk of industrial democracy can feel dated, a throwback to the 1970s. “Stakeholder capitalism” – a term popularised by thinkers such as Will Hutton in the late 1990s – gets closer to what is needed. But that term fails to highlight the distinctive role of workers, bundling them with other stakeholders including consumers, local communities and suppliers, whose interests may be better represented in other ways.

An attractive alternative is the idea of a “partnership economy”. The language of partnership already plays an important role in Labour’s economic messaging, albeit focused on the relationship between business and the state. Extending this to encompass partnership between workers and owners would ward off images of industrial conflict and class war, holding out instead the possibility of an economy where both groups work together towards common goals.

The key is to embed these ideas within a broader narrative focused on improving people’s everyday experiences of life and work. In contrast to economic growth, which can feel abstract and impersonal, transforming work can be the basis for a richer and more humane vision of a society in which everyone is treated with dignity and respect, and where work can be a source of meaning, community and even joy.

The broader opportunity of Labour’s emerging “good jobs” agenda is that it offers a way to address both the cultural anxieties about dignity and respect that have dominated politics for much of the past decade, and more immediate material concerns that have come to the fore because of the cost-of-living crisis. These ideas can help Labour not only to build a broad-based electoral coalition, but to develop a policy agenda that, if implemented, would leave a legacy to be proud of.

[See also: The prime minister for victims]

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