The Wage Theft Epidemic

In 2019, wage theft in Britain amounted to an estimated £35 billion. But unlike other forms of theft, it's hardly ever prosecuted – because it's a crime committed by bosses against workers.

Every society with a concept of property also has a concept of theft. They are mutually constitutive, as Proudhon argued in 1840. To privatise public land is a form of theft; to alienate an object from its rightful owner is a form of theft; to plagiarise another person’s idea is a form of theft. These actions are widely understood as morally objectionable and considered criminal in many jurisdictions.

Why then is there an ambivalence around the theft of an individual’s working time? Why do we accept it when employers pressure us to work through our breaks, to work beyond our contracted hours, and to not take holidays, all for no extra pay? And why do we allow the common data of society to be transformed into a private asset by tech overlords?

This reality of theft is obscured by the ideology of capitalism, which promulgates the idea that this is not exploitation, but rather an economically and legally justified appropriation. Underneath this fallacious veneer lies a disturbing truth—that theft is not a fault in capitalism, but inherent to the system itself.

John Locke, that bastion of classical liberal thought, made the point in 1690 that an individual’s labour is indeed their property, ‘The Labour of his Body, and the Work of his Hands, we may say, are properly his.’ If labour-time is an individual’s own property, then appropriation of surplus-labour-time by an employer in any form should be understood as theft.

One of Karl Marx’s central insights is that all paid work involves an element of unpaid labour-time. Marx made clear in Capital that our wages only partially compensate us for the entirety of the working day and each extension of this time, more surplus can be extracted.

In Capital, Marx draws extensively on reports from the Factory Acts to explain how the prolongation and intensification of the working day bolsters the pillars of the valorisation process. Indeed, the Factory Reports of the 1850s show employers constantly engaged in ‘small thefts… from the workers’ meal-times and recreation times’ and ‘petty pilferings of minutes’.

For Marx, the wage is essentially the equivalent of the value of labour, which is determined socially according to the cost of its reproduction. And yet workers are compelled to work an additional amount of surplus-labour-time not covered by the wage. It follows that the both the intensification and extension of the working day correspond to an increase in unpaid labour-time. Marx refers to each of these types as relative and absolute surplus value.

Fast forward to the twenty-first century and wage theft continues to be a pervasive problem in Britain today. Wage theft is formally understood in terms of the non-payment or underpayment of the legal wages to which workers are entitled.

Formal wage theft can occur through a variety of methods from the violation of minimum wages to unpaid rest-breaks and deductions for costs of equipment. In 2019, over five million workers put in a total of two billion unpaid hours, which amounts to £32.7 billion of free labour annually. When non-payment of holiday entitlements and non-compliance with the minimum wage are added, the amount owed to workers increases to £35.3 billion.

From 2014 to 2015, 28,000 claims were lodged with HM Courts and Tribunals Service for ‘unauthorised deductions from wages’ and 31,000 claims made under the working time regulations, mostly around unpaid holiday entitlement. In 2017, the Low Pay Commission estimated that between 300,000 to 580,000 workers were paid below the National Minimum Wage.

When multiplied by the average ‘arrears’ of £177 as identified by HMRC, this totals anywhere between £53 million to £100 million in unpaid wages. A report by the Resolution Foundation also found that at least one in 20 workers were not paid for their full hours. The report also noted that most instances of wage theft are likely to go unreported.

In contemporary UK law, section one of the 1968 Theft Act states: ‘A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it.’ If we conceptualise labour-time in a Marxist way, the appropriation of surplus-labour-time is indeed theft in the formal sense.

Under capitalist social relations, there is no honest appropriation of a workers’ labour time unless the worker shares in the ownership of what is produced, including the profits from its sale. Wage theft is thus not simply the result of the moral or ethical failings of individual capitalists, but driven by the system itself.

It’s clear that there is crisis of accountability on the part of employers whose actions range from small thefts of minutes to modern slavery in agriculture, even in the UK. This is not a problem that better regulation of capitalism can fix.

Standard liberal approaches assume that a fair day’s work for a fair day’s pay is indeed possible under capitalism. This notion obscures the fundamentally exploitative nature of capitalism and with it, the hidden epidemic of wage theft.

Against this liberal approach, it is important to formally link the unpaid labour-time of surplus-value to the direct theft of time and money, particularly in the context of the emergent platform economy. Wage theft should be understood as an appropriation of additional unpaid labour-time. It is additional, because it occurred over and above the normal ratio of paid to unpaid labour-time.

Seen through this Marxist lens, we can discern five forms of wage theft as integral to the accumulation of capital today.

The first form is the direct theft of wages through creating instances of unpaid labour-time within the normal working day as well as the unpaid extension of the working day. A second form is violations that constitute ‘unauthorised deductions from wages’ such as non-payment of holiday entitlements, sick pay, overtime, etc.

The complex manipulation of piece rates (including via opaque platform algorithms) and service charges/tips are examples of a third form of wage theft. The use of bogus ‘self-employment’ contracts, which displaces capital costs onto workers is a fourth form of wage theft.

For example, gig workers often must use their own means of production such as their car when working for Uber, bicycle when working for Deliveroo or computer and internet when working for Amazon Mechanical Turk. If workers do not own such means, they must rent them.

Finally, the datafication of everyday life and the expropriation of worker data to produce intangible assets such as AI and datasets constitutes a fifth form of wage theft. The platform model relies on such data to extract rents.

What can be done to change this sad state of affairs? In the UK, labour market enforcement is shambolic. In 2013, an employer could expect an inspection from HMRC once every 250 years and a prosecution once in a million years, and there is little evidence of significant change in nearly a decade of Tory rule.

Workers are often reluctant to contest wage theft because they lack collective power. Since the late 1970s, such forms of collective regulation have been undermined through successive waves of neoliberal labour market reforms.

The emergence of strong trades unions and collective bargaining over the course of the twentieth century was, at least in part, an attempt to regulate wage norms more precisely in different industries. It is no surprise, therefore, that those industries associated with low rates of unionisation and collective bargaining have been associated with increased instances of wage theft.

Labour organising is the most effective tool against wage theft we have, particularly for migrant workers who are disproportionately vulnerable. One study found that union members were three times more likely to pursue a case to recover lost wages.

Rigid migration regimes also contribute to wage theft for migrants. Eliminating borders or at least employer tied-visas and work permits (similar to Canada or Sweden) allows migrant workers to lodge grievances and freely pursue other employment when they are treated poorly by an employer.

Without the protection of unions and the threat of strike action, workers face additional thefts of time, money, and data. To this end, far-reaching reforms to existing trades unions and legislation aimed at shifting power to labour instead of capital and more open migration regimes will help workers fight back against wage theft.

We need to rebuild worker power and control to form a democratic socialist state in which wealth is redistributed and surpluses are shared by all.

About the Author

Matthew Cole is a post-doctoral research fellow at the Centre for Employment Relations, Innovation and Change (CERIC) at Leeds University Business School. He is also a research affiliate of Autonomy, coordinator of the IIPPE Political Economy of Work Group and a member of the British Universities Industrial Relations Association.