The cost of living crisis – why unions are part of the solution
“The 21st century inequality, the fairness divide in our economy, [which] threatens to be about a division between the richest at the top who have been doing well, and the majority -lower and middle-income – who have been struggling to keep up: working harder for longer for less.”
Both his underpinning analysis and suggested policy responses are hard to fault. Growing wage inequality which saw wages for those at the top grow twice as fast as those in the middle; wages which for many struggled to keep pace with the rising cost of living and generated a demand for cheap credit; the need to reverse historic under-investment in skills and technology; the value of an active industrial strategy; and the need for a fairer tax and benefit system.
I would put my hand up for all of that – and its important that at a time when over 4m public sector workers face a two-year pay freeze, and wages more broadly are slipping well behind inflation, that the Leader of the opposition is prepared to speak up about the need to combat the ‘squeeze on living standards’ being faced by those on low-middle incomes.
But I thought one factor was conspicuous by its absence from the speech – namely, the impact of falling union membership (and, linked to this, the continuing decline of collective bargaining). The fact is that growing wage inequality in the UK (and indeed elsewhere, for example, the US) is inextricably linked to the decline of unions and the constraint of collective bargaining.
Weaker unions have meant those on lower and middle incomes have seen their wages stagnate – and the lack of any effective counter-balance has meant that while shop-floor pay has stalled the incomes of those at the top have spiralled (rising by 55% last year alone). The positive ‘union effect’ isn’t just restricted to dampening wage inequality either. As the TUC’s ‘Road to Recovery’ pamphlet set out last year, unions cannot only help to reduce wage inequality, they can also help to create and sustain the high-productivity, high-skill jobs and industries that Ed Miliband rightly believes could underpin ‘quality jobs and a better quality of life’. They can also help to make workplaces fairer, more equal and safer.
In short, any strategy for tackling the squeeze on living standards has to see unions and collective bargaining as part of the solution. The right get this, but from a wholly different political perspective – witness the assault on unions and collective bargaining in Wisconsin, or the Economist’s recent call to arms against public sector unions.
Of course, talking up the positive role of unions is easier said than done for any politician faced with a hostile press which likes easy headlines about policy being driven by the ‘Brothers’. But not to do so, means disregarding a potentially fundamental element of any serious strategy to improve the lives and living standards of millions of families. Yes, we need a fairer tax and benefits system. Yes, we also need a government committed to industrial activism and to investing in the ‘high road’ to economic success. But, our own history would also suggest, that unions have an important role to play in delivering the ‘British Promise, that the next generation would always do better than the last’.