Warnings of a ‘race to the bottom’ on workers’ pay and conditions should concern us all
The number of people in the UK working on zero-hours contracts has risen sharply over the past decade, from 186,000 people, or 0.6% of the working population, to 896,000 or 2.7%. This sharp expansion of the gig economy, and concerns over workers’ rights in the Brexit debate, have prompted warnings that the UK is being dragged into a “race to the bottom”. But what is a race to the bottom? And are these concerns justified?
Essentially the notion of a race to the bottom describes a view of government deregulation of the business environment. A world where companies cut costs – and wages – in order to be more competitive. Some people see this as a business opportunity that creates a seedbed for entrepreneurship to flourish. But too often, away from the political debate, these moves mean workers tending to work longer hours for lower pay, fewer benefits and worse conditions, either to keep or attract business. The kind of working life portrayed in Ken Loach’s latest film, Sorry We Missed You, where the “bottom” is the poverty level, or lower.
Whether the “race” is between competing national governments, local authorities or corporations, the overall effect is the transfer of wealth from the poorest workers to business owners. It has a particularly detrimental effect on the lowest paid, making them increasingly desperate for ever more work.
A direct consequence of such a strategy is increased use of “numerical flexibility” – adjusting labour patterns and benefits either within the company (for example removing overtime and shift allowances) or via zero-hours contracts and outsourcing to maximise competitive advantage for the employer. Supermarket giant ASDA is currently introducing new contracts that are said to remove paid breaks and night shift allowances.
According to ASDA they need greater flexibility because of the competitive business market and state that wages will increase. However, its employees would end up effectively doing the same for less with little control over their working patterns.
Another result is the gig economy. Defined as a labour market with a prevalence of short-term contracts, this has doubled in size in the UK over the past three years. Likewise, the use of zero-hours contracts (with no guarantee of a minimum number of work hours), has increased from 0.6% of the workforce in 2010 to 2.7% in 2019.
The workers we spoke to in our research, all on zero-hours contracts or deemed self-employed, shared tales of getting by with “lots of little jobs”.
Virtually all of the participants found work through labour market intermediaries (LMIs) – commonly known as employment agencies, rather than working directly for the employer. These agencies link individual workers with organisations, but there is evidence of worker exploitation. The shifting of employee responsibility to LMIs is a common strategy in order to cut the wages bill and increase profit – by removing responsibilities around things such as pensions, holidays and sick pay.
Nevertheless, the first time people engage in this kind of work, the freedom, the knowledge that you can leave at any moment and try something else and the lack of a “traditional” boss can be exhilarating. But the uncertainty can eventually become exhausting.
A further consequence is the inequality that, according to a recent report from the social mobility commission, is “now entrenched from birth to work”. One of the causes cited is employment policy. An example from our research is illustrated by the experience of Leventica Marin, a self-employed Big Issue seller, living in poverty with no access to holidays, pensions or sick pay, who had to continue working even after a physical assault.
Leventica is one of many. “In work” poverty, where people suffer poverty despite being employed, has increased, with 14.2 million people in the UK in poverty and one in eight classified as working poor. This research by the Social Metrics Commission calls for organisations to understand the measurement and need to take action to tackle poverty.
Rhetoric and reality
The employers in the “race to the bottom” world, do not see themselves as equal partners to workers, contracting labour in the same way they hire an accountant or solicitor. The people who often end up in this kind of work are the economically vulnerable.
Such an approach gives flexibility and opportunity, and at the same time takes away flexibility and opportunity. It relies on an easily exploited resource, where in the words of Tracy Chapman’s song Subcity: “Government and big business hold the purse strings”.
It is true that there are legitimate and real benefits to the kind of flexibility afforded by the gig economy. For consumers it means more choice and convenience, a better customer experience.
But, as George Orwell observed in The Road to Wigan Pier (1937), the “machine civilisation” and its convenience was going nowhere. Orwell advocated looking at the machine age in ways that made it successful for workers, not just the factory and pit owners. What was needed was not a reversal of “progress”, but a solution to make it work better for people.
Orwell advocated a genuinely revolutionary socialist party as the obvious – and only – answer to the troubles of the time. Today, the real prospect of a race to the bottom is something that should concern as all.