Making the Case for Trade Unions

Decades of growing inequality are tearing apart Britain's social fabric. The solution is clear: we need stronger trade unions.

In 1989, while Thatcher’s government decimated trade union rights and workers’ protections, concerned academics, lawyers, policymakers and campaigners established a new initiative to build the evidence-base that would counteract neoliberalism. Independent think tank, the Institute of Employment Rights (IER), was born. For the last 30 years, we have been dedicated to achieving its aims.

At Labour Party Conference this year, we were proud to see most of our recommendations for workers’ rights reforms adopted. The Labour Party now proposes a Ministry of Employment Rights, sectoral collective bargaining, equal rights for workers from day one, workers on boards, a Workers’ Protection Agency, the repeal of the Trade Union Act and many more pro-worker reforms. 

We were also delighted to speak to the delegates who visited our stall excited about our ideas, but many had one concern – how do we explain to a generation that barely knows what a trade union is, how supporting the labour movement benefits them?

The answer lies in setting the record straight. For the past four decades, most people have been bombarded with a one-sided narrative on trade unionism from the right-wing press, while hostile laws have made it difficult for unions to recruit young members. 

Most younger workers are not aware that the UK is one of the only European countries without a strong trade union presence, and many mistakenly think of trade unionism as a phenomenon of the past. In fact it is neoliberalism that is a relic — at 40 years old, we can see the harm it has done.

Back in 1989 we knew — as has been proven since — that neoliberalism would send the UK back to the Victorian era. Today, 50% of workers are paid less than £24,000 and 25% less than £15,000. Meanwhile, FTSE 100 CEOs take home 133 times the amount of the average worker, up from 47 times the average wage in 1976. 

The United Nation’s Special Rapporteur on Extreme Poverty, Philip Alston, has publicly declared that this inequality crisis — which has left four million children in poverty — is the result of a political choice.

The Bank of England has warned that higher levels of employment are no longer linked to wage growth for the first time since the pre-industrial era, demonstrating that the problem is not the number of jobs but the quality of work. 

It conceded — as is clearly illustrated in the graph compiled by John Hendy, QC below — that this shift has been driven by the decimation of trade union rights. The International Monetary Fund agrees, as does the Organisation for Economic and Cooperative Development. 

A lot has happened in the last 40 years, but the core values of Thatcherism did not end with her resignation, nor with the election of Blair in 1997. Employment law is still fundamentally founded in the principle of individualism, in stark contrast to the collective values of the pre-Thatcher years, which continue to hold strong in most other European countries. 

Across Europe, an averge of 60% of workers have their pay and conditions agreed through negotiation between trade unions and employers. In some countries this rises to 90%. In the UK, it is only 26%. 

The reason for this is simple: while European countries largely retained social democratic economies, the UK under Thatcher swung in the opposite direction, towards the unfettered capitalism of the US. Most of our international peers adopted Labour’s proposed reforms decades ago. They are hardly radical proposals, they merely raise the UK to international standards.

But the impact of such reforms would be transformative. While the UK is one of the most unequal developed economies, our European neighbours are among the most equal. As the graph below shows inequality continued to drop up in the social democratic countries until the recession. 

The difference is made by higher levels of democracy in the workplace, industries and government. When workers are treated with dignity and respect, given a voice at work and in the economy at large, their wages increase, their productivity increases, and irresponsible employers are no longer able to exploit their staff for personal gain, such as in the high-profile cases of Uber, Sports Direct and Amazon.

Much contemporary research has linked strong trade unions to higher economic productivity, lower economic inequality, and better social mobility. The result is a healthier population, a happier population, with lower levels of crime. 

In the 1980s, Thatcher told citizens that there was no alternative to austerity, privatisation and deregulation. But there always was an alternative, and it was adopted by similar economies which ended up far more stable and far more equal. 

As Brexit approaches, as climate change worsens, as automation spreads, things could get a lot worse for the people of the UK. Or, they could get better — if we drop Thatcher’s dictates and leave the past behind. 

Our recommendations, founded on decades of research, have now been adopted by the Labour Party. They have found support in the Scottish government. They are being implemented in Wales.  They have sparked interest within the Scottish National Party and the Green Party. We believe this is a sign that change is coming, but to secure it we must ensure the people know there is an alternative.