A lot done. A lot still to do

A buoyant UK labour market has survived even Covid, thanks to bold, hands-on policies. We need more—especially in enforcing minimum standards

October 01, 2021
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One of the most remarkable pieces of employment policy in our history is about to come to an end. The Coronavirus Job Retention Scheme—furlough—was dreamt up, constructed, and launched in days at the beginning of the pandemic. It has achieved what then seemed impossible: we are emerging from the Covid pandemic with the same number of people on payrolls as when we entered it. Beyond this remarkable achievement, the furlough scheme embodies something important: it is rooted in a recognition that employment is important even beyond earnings.

For many people, the assurance that they continued to be employed offered an essential crutch in getting through very dark days. Many employers—and co-workers— played a priceless role as mentors and guides to colleagues through the long, anxious and lonely months of lockdown. The fact that companies’ workforces could be retained intact, ready to spring back into life, meant that businesses exist now that would otherwise be defunct. By avoiding mass lay- offs and an enforced scramble to search for different employment, the scheme warded off a potential haemorrhage of skills from many occupations. Furlough, then, underlined that employment matters, that bold policy is possible, and can make a big difference. We should hold that thought.

The availability of jobs, their dependability, their role as a store of skills, as a network of mutual support, a source of motivation and purpose, as a place of education and growth, all on top of being the way we earn our living, make policies about jobs of special importance.

In a report, which Theresa May and I commissioned in government, Matthew Taylor set out a vision of good work. Its approach is more important now than ever. For people to have good work, we obviously first need jobs. So the Taylor Review was right to commend what it called the “British Way”—a flexible labour market with high participation, and where full-time, permanent work is the norm but in which many other arrangements are possible, especially when chosen and valued by the individuals concerned. Taylor pointed out that, once tax levels and tax credits are taken into account, average take-home pay for families in Britain with a member in full-time employment is higher in the rest of the G7. The job creation now taking place, which builds on the base of jobs protected by the furlough, is essential.

“We need to give existing workers opportunities to upgrade their skills—and the value of their labour”

But work should be better-paid. It wasn’t long ago that pensioners were often the poorest group in society. Policy action over the last decade—including the “triple lock”— has boosted to their incomes. Now, too often, some of those who struggle most are working people.

Two particular problems need to be addressed. One is that failure in education and underinvestment in training has meant that the economic value of what some people produce is insufficient to support themselves and their families. We need to invest in the quality of skills so that this applies to far fewer among the rising generation, and to give existing workers opportunities to upgrade their skills—and the value of their labour.

Another problem is that for too long we allowed pay to be too low. Plentiful overseas labour provided, in the past, an easy alternative to investing in our workforce— suppressing wages to below reasonable levels. There is no reason why a cleaner in the corporate office of a successful business should be paid so little that their earnings need to be supplemented by taxpayers to provide a decent life: if it is important to the operation of that industry, the rate for the job is too low.

Establishing and increasing the national living wage in recent years is important. We must continue to raise the pay floor. The reduced supply of cheap overseas labour prompts a reappraisal of the right rate for the job.The quality of working life should improve. The experience of living through Covid has demonstrated that there are diverse ways of being productive—including, for some, home working and for others flexible patterns of work.

Not everything necessitated by Covid can or should become standard: personal connections made in physical presence are still important; new workers deserve the assistance in making their way that more senior people enjoyed when they were starting out. But the range of possibilities of mutual benefit between employer and worker has broadened.

Experience has taught us that even in our successful employment market, abuses will be found. In theory, firms compete for workers, and workers have a real choice of where to work. But it doesn’t always happen like that. Some people, lacking the skills that are in demand, or the confidence to assert their rights, or in a sector characterised by local monopolies of employment, can fall prey to the unscrupulous and even the criminal.

The FT journalist Sarah O’Connor’s harrowing tales from the garment factories of Leicester shows the abuse that can be perpetrated even in an internationally- admired labour market like ours. That is why enforcement—making sure that every employer obeys the rules—needs to be conducted vigorously. It doesn’t just protect individuals from being victims of injustice, it safeguards positive norms that are good for society and our economy.

In many respects, this government was elected to improve the lives and opportunities of people at work. The levelling up agenda is about bringing those falling behind up to the higher levels enjoyed by the rest. The critique of pay, conditions and opportunities being undermined by readily imported labour was one of the arguments made for Brexit. The government has signalled important commitments to technical education and apprenticeships, and has also pledged an Employment Bill to raise standards at work: it can’t come too soon. And, as we have seen, the employment measures taken in response to Covid have been emphatic and imaginative. Now is the time to make it an ongoing mission to ensure good work becomes the standard in Britain.