- New report warns of growing threat of worker poverty and exploitation during crisis
- Polling shows nearly two thirds (64%) of businesses would support stronger labour market regulations
- CPP calling for change in employment law, the set-up of a labour market enforcement body, the elimination of zero hours contracts and a new minimum wage for the self-employed
To prevent extreme insecurity, in-work poverty and exploitation arising out of the end of furlough, a new report from the Centre for Progressive Policy (CPP) is calling for urgent legal reform to the labour market.
The report, From precarious to prosperous: how we can build back a better labour market, warns that rising unemployment as a result of the end of the furlough scheme and a second wave of Covid, will open the door for the take up of more insecure work. Eurostat data shows that the UK already has one of the highest levels of workers at risk of poverty in Europe, with UK workers twice as likely to be at risk of poverty pre-pandemic compared to workers in Ireland and Belgium.
To avoid an increasingly two-tier labour market, where only the highest skilled workers have job security, CPP is calling on the government to:
- Clarify employment status of workers and the self-employed in law including through introducing a statutory presumption that a person is a worker unless it can be proved they are self-employed.
- Set up a single labour market enforcement body as pledged in the 2019 Conservative Party manifesto, which improves transparency and is designed to support the most vulnerable, in recognition that the crisis has only intensified labour market pressures.
- Eliminate the use of zero hours contracts, to reduce economic insecurity for those at the bottom end of the labour market.
Polling of over 600 businesses of all sizes, commissioned by CPP, suggests tighter labour market regulations would be largely supported across the business community. The survey found that:
- 40% of employers feel more responsibility to offer secure job contracts to staff in response to Covid-19.
- 64% of businesses would support tightening existing labour market regulations including increasing minimum wage.
- 25% of businesses would support further restricting or eliminating the use of zero hour contracts.
Building back better should improve the pay and conditions of key workers yet ONS data shows that one in five workers in the health and social care sector work on zero hours contracts. This represents the second highest proportion of all categories of workers. The report argues the current lack of employment protection is severely undermining the scope for an inclusive recovery and a successful delivery of the government’s levelling up agenda, with use of insecure contracts such as zero hours most prevalent in the North East, which is also one of England’s most deprived regions.
Other recommendations from the report include:
- Implementing a minimum wage for the self-employed to reduce low pay and exploitation.
- Protecting worker rights as the UK leaves the EU, including ensuring that rights derived from the Working Time Directive are preserved.
- Collecting more detailed information on employment status as part of the ONS Labour Force Survey, including to identify gig economy workers and whether people are workers or employees.
Rosie Stock Jones, Senior Research Analyst at CPP says:
“Long before Covid, we saw the emergence of a labour market in which too many people depended on precarious jobs. But the current crisis has increased the risk of poverty to those working in them. At the same time, it has underlined the value of key workers such as carers, cleaners and couriers, many of whom are on insecure contracts.
Maintaining a system that legitimises the exploitation of society’s most important workers and contributes to rising levels of in-work poverty can no longer be acceptable. If the government truly wants to level up the country and empower more people to contribute to and benefit from increasing prosperity, they must deliver proper protections and improved conditions for our lowest paid workers.”
Paul Gregg, Professor of Economic and Social Policy at the University of Bath and member of the government’s Living Wage Commission says:
“The last recession saw sharp increases in the levels of insecure employment – zero hours contracts, agency working and low skilled contract workers designated as self employed. This never receded through the strong jobs recovery. This Covid recession will undoubtedly see this repeated.
CPP’s recommendation to set up a single labour market enforcement body which improves transparency and is designed to support the most vulnerable is a crucial step in the right direction. Millions of workers do not receive holiday, sickness and maternity pay protections or are paid less than the minimum wage through lack of enforcement. When unemployment is high, workers vulnerability to these abuses only rises.”
Notes to Editors
- Business polling was carried out by Populus for the Centre for Progressive Policy. Online polling took place between 28 August–3 September 2020. The total sample size was 609, including 102 large businesses, 101 medium businesses and 406 small businesses.
- Eurostat data is the rate of those in work at risk of poverty in 2018 by age and sex and is based on the EU-SILC survey, which was last updated on 15th October 2020. The data is available at: https://appsso.eurostat.ec.eur...
- ONS data on the characteristics of people on zero hours contracts was published on 11 August 2020 and is available at: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/emp17peopleinemploymentonzerohourscontracts
- The statutory presumption discussed under recommendation 1 should be limited to the distinction between worker and self-employed and should not apply to the distinction between workers and employees, to avoid putting employee rights at risk.
- In drafting this paper, CPP worked closely with an employment law expert from Six Pump Court and recommendations have been informed by professional legal guidance.
- About CPP: The Centre for Progressive Policy is a think tank committed to making inclusive economic growth a reality. By working with national and local partners, our aim is to devise effective, pragmatic policy solutions to drive productivity and shared prosperity in the UK. Inclusive growth is one of the most urgent questions facing advanced economies where stagnant real wages are squeezing living standards and wealth is increasingly concentrated. CPP believes that a new approach to growth is needed, harnessing the best of central and local government to shape the national economic environment and build on the assets and opportunities of place. The Centre for Progressive Policy is funded by Lord Sainsbury and host of the Inclusive Growth Network.
- For more information on the Centre for Progressive Policy, please see www.progressive-policy.net or follow @CentreProPolicy
- For media requests contact Thomas Hauschildt, Communications Manager, THauschildt@progressive-policy.net