How perforated industrial relations worsen inequalities in the UK workplace

Professor Damian Grimshaw shares highlights from his chapter with Research Associate, Mat Johnson, for the International Labour Organisation’s (ILO) latest book, Inequalities and the World of Work: What Role for Industrial Relations and Social Dialogue?

Inequality plays an instrumental role in shaping the character of work and employment, particularly norms governing flexibility and security.

Our chapter in the recent ILO publication is entitled ‘Inequality at work in the United Kingdom: How perforated industrial relations worsen inequalities and hold back progress on equalities’. In it, we identify four core features of the UK’s industrial relations model and consider the interaction with inequalities over the past two decades, with a focus on the post-global financial crisis years.

We consider the outcomes for modes of flexibility and security, with a focus on the strength of the unilateral managerial prerogative that arises from the UK’s perforated industrial relations model – characterised by fragmented collective bargaining structures and limited workplace mechanisms for worker voice – and its relatively weak employment rights framework.

In particular, we identify the ways in which austerity policies have combined with the model, and led to a failure to generate a fairer distribution of economic gains among the workforce.

Compounded by two generations of trade union decline, employment-related inequalities have significantly widened. These are reinforced by the complex and often opaque organisation of services and manufacturing along supply chains, involving practices of subcontracting that often heighten worker precarity.

Addressing inequalities in employment is one of today’s most pressing social questions and unions, employers and government should collaborate to make labour markets more inclusive and equal. There is a real need to extend employment rights and welfare state protections to all workers and address biases in wage distribution.

While the rate of job growth following the global financial crash is impressive and unemployment relatively low, this veils ongoing qualitative shifts in the nature of work, and in the labour market in terms of protections for workers.

High levels of inequality have long been prevalent in UK society, with numerous employers designing jobs paid at or just above the minimum wage. Mid-pay jobs in the manufacturing and public sectors have also been downsized over time – while already very high earners continue to enjoy accelerated pay rises.

This has led to too many low paid jobs, too many workers dependent on top-up welfare benefits, too much job insecurity caused by zero-hours contracts, outsourcing and self-employment, and overly limited pay and career prospects over the longer term.

These shifts both reproduce high level inequality and feed off workers’ unequal socioeconomic conditions. Furthermore, while low-income households have historically been worst-affected by poor labour market regulation, middle-income groups are increasingly feeling the negative impacts too.

Righting this going forward requires a radical change of mindset and political acceptance that workers require more than the ad hoc interventions of government.

If we are to move towards a fairer distribution of the rewards from work, we need meaningful government commitment to regulation of pay and working conditions, and greater support for workers attempting to negotiate fair deals with their employers.