Trade Union Bill : Dismantling Rights of Workers Is Not Good For You, Or For The Economy

By Alice Martin of NEF

The government’s plans to significantly restrict employees’ rights to defend their working conditions are currently being debated in parliament. The proposed legislation, which would apply a range of onerous constraints to the activities of trade union members, is being billed as part of an overall objective to make Britain “the most prosperous major economy in the world by 2030”. Here are four reasons why it risks doing the opposite:

1. Wages keep the motor of the economy turning – and unions are required to defend wages

One of the principle functions of a trade union is to be a line of defence against low pay. They provide a form of collective voice for employees to negotiate over how their employer’s revenue is distributed to the staff that collectively helped to generate it.

Today we’ve published research into how this function of trade unions benefits not just the staff in question, but the economy overall. Spoiler alert: the findings show that strong unions have a positive impact on economic activity.

2. Allowing employees to defend their pay and conditions makes economies more equal – and therefore better-off

In March the International Monetary Fund (IMF) acknowledged that in countries where unions are in decline, top pay is soaring and inequality is rising. Contrary to decades of mainstream rhetoric, evidence now overwhelmingly shows that inequality does not make economies grow – pointed out recently by the OECD – nor does it bode well for economic stability.

With the UK leading the race to be the most unequal nation in the G7, it seems that a more sensible objective would be to boost, not reduce, the capacity of workers to negotiate over their conditions.

3. Good working conditions takes pressure off welfare provision

Having a secure, decently paid job means you don’t need to rely on unemployment benefits or working tax credits – in other words: good jobs cost the taxpayer less. With growing numbers of people on contracts that provide irregular incomes and very little job security – for example through self-employment and casual, often exploitative, contracts – trade unions have an upward struggle to serve an increasingly broken up workforce.

With the recent budget hitting low income workers the hardest, the welfare system is under pressure to provide a safety net for people both in and out of work. Better quality jobs and strong institutions to protect them are essential components of building a pre-emptive, rather than crisis-led, welfare system.

4. GDP growth gives a warped indication of progress and should not be used to dismantle fundamental individual rights

If the aim is to boost GDP, then – as the last three points lay out – restricting the rights of working people is a failure on its own terms. But this also presents a distorted view of what a healthy economy would be. Recent decades have shown us that GDP rises do not equal better living standards for most people.

In the absence of economic policy aimed at delivering more concrete positive outcomes – such as a higher quality of life – the proposed changes to employment rights appear to be a political move based on ideology not evidence.

Not fit for purpose

The government’s plans put forward in the Trade Union bill are not based on sound economic evidence – so much so that it was recently deemed “not fit for purpose” by a government watchdog.

The new, onerous legal hurdles would undermine the ability of people to organise collectively to protect the quality of their working lives. What might look like an attack on trade unions is actually an attack on working people – which is most of us. The risks it poses for the UK workforce, and for the economy, should be taken seriously.

By The National Economic Forum

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