The case for a refreshed approach to unions and collective bargaining to support a stronger UK economy

Launched ahead of the Chancellor of the Exchequer’s 2018 Spring Statement A New Bargain: people, productivity and prosperity makes the case for a ‘New Bargain’ between employers, unions and government and is an opportunity for those who champion corporate reform and more responsible business, to seek institutional changes that place the role and value of people at the heart of successful economic activity.

The UK has a productivity and prosperity problem. The country languishes at the bottom of productivity indices with employees working longer but producing less. At the same time pay has fallen or stagnated for many as the economy has failed to create and share income and assets.

Lessons from other higher performing and advanced economies show a clearer pattern of employee engagement and a fairer distribution of prosperity. In this context, there is a renewed role for unions as workplace representatives, and for new forms of employee voice and collective bargaining.

Rethinking union models provides challenges, particularly within the Conservative Party, as unions have often been viewed in political not economic terms. Yet, what often goes unrecognised is that workplace and productivity improvement are the key focuses of union activity. This paper calls for a new approach to forge a consensus between government, industry and employees on the nature of work in a productive economy. This ‘New Bargain’ would establish a rejuvenated role for people in collective bargaining and provide a way to address productivity, pay and workplace change.

We recommend that employees should have new powers to be consulted on change, efficiency and fairness in the workplace. We propose a new ‘Workforce Yellow or Red Card’ warning system addressing issues like the Carillion collapse; ‘employee voice deals’ for non-oppositional bargaining;  ‘lifelong learning banks’, to support workforce skills and development; and an increase in employee ownership to help drive productivity and share prosperity.

In Partnership with Prospect Union

Phillip Blond, Director of ResPublica said: “It is to be hoped that the Chancellor’s Spring Statement will contain some new ideas and approaches on ‘worker voice’ and its relationship with productivity but we are not optimistic. If the Prime Minister and her Government are serious about tackling the UK’s productivity deficit then it must include Britain’s workers and trade unions in a new Grand Productivity Bargain.

In a modern service economy productivity gains will come through improving the engagement and performance of employees, yet inexplicably there is no national approach or agenda to achieve this. The Conservative Party and the Trade Union movement have a tortured and painful history – it is time however for the sake of the country to put the past aside and understand unions not as political opponents but as decisive economic actors.”

Jake Sumner, Report Author, said: “To help tackle our productivity gap and prosperity problem we need a new approach that harnesses the innovation power in people through a renewed role for unions. Too often unions are seen in political not economic terms despite the positive role they can play in spreading the proceeds of growth and productivity improvement – engaged workforces are generally more productive. The Industrial Strategy should promote this union economic role including with ‘employee voice deals’ – commitments to workplace voice in sector deals. Local areas could also seek to be employee voice exemplars as they have with the Living Wage.

While collective approaches exist, it is often to not with workforces, and government has to step in for the low paid. We need a rejuvenated role for collective bargaining and at the firm level to improve pay, productivity, and workplace change such as gender pay. A Productivity Partnership Fund should also be created for joint bids by unions and businesses to support productivity gains. Workforces should have new powers to be consulted on change and a ‘red card’ warning system against failures like at Carillion.”

Mike Clancy, General Secretary of Prospect said: “Britain faces a crisis in productivity, stagnating wages, and widespread concern about the distribution of wealth around the economy, and it is no coincidence that these problems have gone hand in hand with the decline in trade union membership and collective bargaining coverage.

“All political parties who want to address these challenges need to look again at the evidence showing that collective bargaining not only raises wages but improves productivity and skills.

“It is now time for a new bargain, one that challenges entrenched political, corporate and union views, which offers symmetry of power and real voice across our economy.”

Malcolm Hurlston CBE, Chairman of the The Employee Share Ownership (Esop) Centre said: “This is the kind of new thinking needed to bring the benefits of employee share ownership deeper into the economy.

 “Unions and employees can play a major role alongside employers, tax advantaged schemes and advocates. To reach ambitious targets we need to add a ‘pull effect’ to the push which has not got us far enough.”