Next year will mark 40 years since Harold Wilson set up his Committee of Inquiry into Industrial Democracy under Lord Bullock. The Inquiry’s report was pushed into the long grass, but the issues that Bullock was considering – the role of unions and collective bargaining, employee involvement, worker directors and European works councils – are just as relevant today. 

The world of work of course has changed a lot since the time of Wilson’s ‘Social Contract’. Typing pools have given way to computers, mining and manufacturing have given way to call centres and retail parks, trade union membership has fallen from 12m to 6m, and half the workforce today have participated in higher education, up from 15% in the 1970s. These are major changes which have been accompanied by advancements in individual employment rights, progress on equalities, reductions in extreme low paid work and some improvements in the work-life balance.

However, as the recently published Smith Institute’s report by Ed Sweeney, ‘Making work better: an agenda for government’, makes clear, despite the improvements we still have big problems in the world of work. And, they are problems which worryingly affect the majority of employees (white collar and blue collar), such as insecurity and injustice at work. They are also problems which in part explain the UK’s poor (and worsening) productivity performance. The report calls for a step change in employment standards, fair pay and more effective employment protection and regulation as the route not just to making work better, but to improving productivity. It also argues that low paid, low skilled jobs in low value business is costing the taxpayer billions in in-work benefits and holding back the recovery. 

The research found that people at work are not only angry about the squeeze on earnings and widening wage inequality, but are worried about their job status and anxious about unfair treatment in the future. Levels of stress at work were also shown to have increased since the recession, especially in precarious workplaces and in the public sector where services had been outsourced.

The report highlights the frustration that employees have with the way they are managed and how their potential is unrecognised and their skills under-utilised.  Many employees feel ignored and excluded; the YouGov polling commissioned for the report found that 40% of those surveyed said that they have no real say in how their work is organised and are neither consulted or involved in management decisions. Nearly half said their job does not make full use of their skills and abilities.

The report argues that management in the UK has serious shortcomings and that the gap between the best and the rest in terms of good employment practices has widened.. Several witnesses quoted in the report also made the connection between poor management and the decline in the HR profession, which the evidence suggest is generally and increasingly undervalued within firms. The report calls for major action on the skills mismatch, improvements in management training and the widespread use of better management standards, such as the HSE management standards.

Whilst the report acknowledges that there are particularly capability and capacity problems with small firms, it quotes evidence from leading businessmen, like Sir George Cox, who claim that management’s obsession with short-termism militates against good employment. The report also quotes from the public forums the Smith Institute held around the country on making work better. At these events it was often said that middle management have a very “British” culture problem, are often out of touch and revert to an “us and them” mentality.

The concept of ‘workplace citizenship’ presented in the report chimed with people’s sense that they should not surrender their rights as citizens at the point at which they cross their employer’s threshold.  The evidence gathered in the report from a wide range of workplaces revealed that people are loyal to their employer and understand the constraints on their organisation, but see work as much more than a mere transaction. The report quotes employees speaking about how work gives them meaning; how productive work is achieved by colleagues working together; how success requires workers at all levels having a say over their work; and how fair rewards and security require a better balanced power relationships at work. It also identified a genuine desire by workers to be heard and be involved, both individually and collectively.

The right to voice at work of course is not new and has long been enshrined. Nor is the evidence new that voice and engagement are good for business. Yet, the report shows many employees feel they do not have the means to make use of their rights to voice. This inability to be heard was a common complaint. It was said that “voice alone can easily become like a radio with employers able to turn the volume down if they didn’t like what they heard”.

The report observes that the lack of voice is also impacting the structural problems around pay, such as the decoupling of wage and productivity growth which goes back to the early 1990s and wage inequality which goes back even further to the 1980s and the erosion of collectivism (notably in the private sector). The report argues that we have to move away from becoming an entrenched low pay economy and recommends a package of solutions: including a new power for Acas to promote collective bargaining, changes to the Low Pay Commission, greater pay transparency, living wage contracts in public procurement and a new settlement on public sector pay.

The report notes that union support for works councils is far from overwhelming. However, Part of the solution to the lack of voice could come through reform of the Information and Consultation of Employees (ICE) Regulations, notably by lowering the relatively high threshold to activate the legislation. ICE could then be used to increase (or introduce) collective voice in workplaces, provided it is resourced properly. There seems to be widespread union support for this, although the report states that where unions are recognised, employers should not be required to establish new, parallel structures for information and consultations.

The report interestingly identifies growing public and union support for workers on company boards and calls for regulations to require effective employee representation on the remuneration committees of public companies. It also flags up some signs of growing interest among corporate leaders for employee directors, which would have pleased Lord Bullock. Indeed, if Bullock was conducting his inquiry today in hindsight of all that the Sweeney report tells us about the world of work, maybe we would have had a very different (and possibly better) employment relations system!

Making work better: an agenda for government’ can be downloaded free from the Smith Institute website