One in a million - or why are UK employers getting away with third world conditions?

There can be a tendency to see problems with global supply chains as being about developing countries - Thailand say, or Bangladesh. But two recent reports show we should look closer to home.

The first is from the Resolution Foundation, a think tank, which looked at wages data used by the Bank of England - important stuff as decisions on interest rates are influenced by these figures. The problem was that the stats being used did not include earnings of the self employed. So the official statistics underestimated the fall in average earnings in recent years. 

Self employed earnings apparently fell by nearly 25% from the start of the crisis to 2011 -12. Earnings of employees, people who work for an employer, have declined by “only” around 9%.  

There are a number of possible reasons. First, regular employees are more likely to be protected by collective agreements and trade unions. They can resist downward pressure on earnings. Second, self employed workers are working less hours. And a third - and major - reason seems to be that self employed workers just have to keep lowering their rates.

What seems to be happening is a big growth of self employment, not because of a burning desire of people to be free of the 9 to 5 and become thrusting entrepreneurs; no, workers are being pushed out of standard employment into disguised relationships - and their earnings pushed down.

It’s not just bogus self employment. There has been a huge growth in various forms of non-standard work relationships.  The controversial zero hours is one example. There are a lot of names for this phenomenon -  precarious work, vulnerable employment, atypical work and so on. I’m currently writing a manual about the issue for the ILO, which has been discussing the issue this year, and I have got up to about ten different terms. That’s just the polite, English ones that I can use in a family publication like the ETI blog.

This phenomenon is not confined to the UK. The number of temporary and part-time  workers in Japan now make up over 30 per cent of the workforce, and tripled between 1999 and 2007. The use of contract labour in Indian manufacturing increased from 13 to 30 per cent between 1994 and 2006. In South Africa, labour brokers now supply over half the workers in many major unionised manufacturing companies, where they typically receive one-half or less of the wages and benefits of permanent workers but work alongside them performing the same jobs. The number of dispatched agency workers in China has doubled between 2008 - 2012, from 30 million to 60 million workers.

But back to UK supply chains. There are two areas of the Base Code of concern here - those dealing with regular employment and living wages.

The ETI Base Code says:

Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour-only contracting, sub-contracting, or home-working arrangements (...) nor shall any such obligations be avoided through the excessive use of fixed-term contracts of employment.

Let’s be honest; the reason for this shift to precarious work is precisely about “avoiding obligations”. 

And precarious work is leaving increasing numbers of workers very close to the minimum wage - and certainly below the living wage. Don’t forget, the ETI Base Code says: 

Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income.

Meanwhile, the Government sits back and makes no serious attempt to enforce labour laws.  Just my view? Not at all. A second report, by the government appointed Migration Advisory Committee, referring to the national minimum wage, says: “Inspection regimes are insufficiently robust and penalties too feeble. An employer can expect a visit from (inspectors) once every 250 years and a prosecution once in a million years.” 

There is no doubt that the UK is in breach of its commitments under the ILO Labour Inspection Convention, 1947 No. 81 That states that “Workplaces shall be inspected as often and as thoroughly as is necessary to ensure the effective application of the relevant legal provisions.” The UK ratified that Convention back in 1949.

That’s why this blog is called “one in a million”. A prosecution once in a million years. Not because everything is OK. But because employers will not get caught out breaking the law. These are the sort of figures which we would expect to see in Pakistan. 

The UK once led the world in many areas of worker protection such as labour law and factory inspectors. These were British values. We seem to be going backwards.  

Ethical trade, like charity, should begin at home.