In 1997, following years of Conservative-led deindustrialisation, mass unemployment and the decline of trade unions, the Labour Party had the opportunity to make the working class both the key drivers and beneficiaries of the national economy. Yet the new government resisted this option; a decision that would have major political and economic consequences over the next quarter century. Beyond establishing the Low Pay Commission, the introduction of the national minimum wage and some family-friendly employment initiatives, little policy was enacted to rebuild the dignity of labour.
The Labour government instead focused on welfare reform and supply-side alternatives to boost skills and access to higher education. In 1999, a system of tax credits was introduced that, by the time Labour left office in 2010, accounted for 1.9 per cent of GDP. The downside of this anti-poverty strategy was that it allowed employers to free-ride welfare payments and cap the earnings derived from work. Wages flatlined and productivity continued to stall. These realities festered and were cruelly exposed after the financial collapse of 2008. Working-class affiliations and allegiances shift, demonstrated by four Tory victories – despite a decade of austerity – and by Brexit.
Keir Starmer seeks a return to active industrial policy and state intervention to re-engineer growth through infrastructure and environmental projects, support for research and development, muscular regional policy, and a renewed focus on the dignity of labour. Rachel Reeves’ recent Mais Lecture could mark a major turning point in postwar economic policy.
But could more be done to boost the economic power of working people and resolve what 19th-century economists would call the “labour question”?
A new Department for Work could ensure that the dignity of labour defines the new administration. This would include establishing new employment standards and supply chain compliance in public contracts across national and local government. Such a department would overhaul the penalty regime within a new integrated Labour Market Enforcement body covering labour law, gig economy regulation, modern slavery, gangmasters and minimum wages.
Since the Labour Party was last in power, one of the most significant trends at the level of the state has been the network of What Works centres – independent institutions set up to help improve the implementation of government programmes. A new centre could be established to promote good work, and the government could set up a new “good work covenant” promoting fair rewards, decent conditions, human wellbeing and equality, lifelong learning, and rights to representation and support. The 2006 Companies Act could be reformed to place obligations on employers to provide good work.
Democracy at work could be one of the “big ideas” for a new Labour government. Changing how we understand the purpose of a company should inform any revival of social democracy whereby companies adopt a mission beyond the pursuit of shareholder value, including the interests of the workforce. Further reform could begin with new works councils in companies with more than 50 employees and experiments in industrial democracy across the public sector.
Owing to the rise of modern surveillance capitalism and the effects of digital Taylorism, new personal safeguards could include the right to mental privacy in employment, constraints on the use of personal data by employers without meaningful consent, and the ability to associate without surveillance.
We could reform the Human Rights Act and echo the Universal Declaration of Human Rights that “everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment”. We could enshrine a new right to work in legislation. The next Labour government could reorder our economy and society in recognition of the dignity of labour.
This article is part of the series “How to fix a nation”
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