Labour's two-year bill for the working class

Apr 1999

After two years under this Labour government, what is the balance sheet for the working class?

Since Blair got into Downing Street, the bosses' drive against workers' jobs, wages and working conditions has not slowed down, let alone stopped. Quite the opposite.

Indeed the disappearance of permanent, full-time jobs through closures and redundancy programmes has carried on unhampered. Last Summer, it actually accelerated with a huge wave of closures, mainly in manufacturing, highlighted by the closure of the Siemens plant in Blair's own constituency.

The real social cost of these closures is still difficult to measure due to the way unemployment figures are fiddled by the government. But the Confederation of British Industry's estimate, last August, that 100,000 jobs would have disappeared in manufacturing by the end of this year, gives some idea of the extent of this.

And no matter how hard Blair's ministers try to convince the electorate that "Labour is working" and unemployment is going down, even their own fiddled figures cannot conceal the reality: in January this year, there were still 4.2m workless people wanting a job. And this statistic does not take into account those who have given up looking, particularly in the regions which have been turned into industrial wastelands over the past decade.

Against this background of high real unemployment, the casualisation of labour has been increasing at an even faster rate than in the Tory years. Low-paid temporary and part-time working has spread across industries, far beyond its traditional sphere in retail, catering, construction, etc.. Meanwhile the introduction of flexible working hours is depriving permanent workers of the relative control they had so far on the hours they spend making profits for their employers, while at the same time reducing their real wages.

So it is no surprise that profits have been rocketing. No wonder Blair goes round the world, "selling" Britain to potential investors as the cheapest place in Europe for businesses, in terms of taxes but, above all, in terms of labour costs. Nor is it a coincidence if the directors of British companies pride themselves over having the fastest growing standard of living in Europe, while City share indexes are hitting record levels, yet again.

In all of this, Blair's Labour government has had an active part, by pursuing the very same policies implemented by Tory governments in the previous period. Brown's assertion that "Labour is good for business" is much more genuine than his hypocritical pledge to "defeat poverty". Indeed, to date, the share of national income going to the wealthy is still increasing at the expense of working people and the workless.

Over the past two years, Labour has introduced a whole range of measures which were open and direct attacks against one section or another of the working class. Single parents and the disabled were targeted for benefit cuts - for their own "good", of course, claimed Brown. Meanwhile the rolling back of public services, which had been initiated under the Tories, reached new heightq - whether in public housing, the NHS or education.

Even those so-called "reforms" which Labour claimed would benefit the working class - from their revamping of the benefit system to the 48-hour Bill and the Minimum Wage legislation - offer no solution to the growing deprivation of an entire section of the working class. Rather, they are part of the problem. In fact these "reforms" have an unwelcome resemblance to those thousands of mis-sold personal pensions for which insurance companies are now being forced to pay huge compensation. Behind the fine words which appear to favour workers, there are so many ambiguous clauses in small print, that they can invariably be used by bosses as loopholes in order to turn the screw even tighter on working conditions.

48 hours and then some

One of the "holiest" pieces of legislation that has come in under Labour is the "Working Time Regulations 1998" or 48-hour Bill. Of course introducing these regulations was neither part of Labour's manifesto commitment, nor was the content of this legislation entirely up to Blair. It came out of the so-called European Community Working time Directive 1996, which required all member states to set limits on the length of the working day and to set a minimum amount of paid leave.

At the time Major's government mounted a legal challenge against this EC directive. Though unsuccessful, Major still delayed implementation, hoping to find ways in which to widen the directive's already numerous loopholes. This delay was in fact "illegal", so it meant that the new Labour government was open to legal challenge. As a result, Blair had to usher in this law on the date set by the EU as the new deadline - the 1st October 1998. He did it by default rather than intent, but not without peppering his legislation with all sorts of new opt-outs designed to make it "acceptable" to British employers.

Not that the 48-hour week, in and of itself, should be considered "progress". After all, the demand for a 40-hour week in Britain goes all the way back to the 1870s and since then, productivity has increased enormously. But despite this, the 1997 Labour Survey showed that 2.7m workers usually worked more than 48 hours, with an average of 56 hours per week. Such figures were still only averages based on reported hours and there are numerous cases of incredibly long hours being forced on workers - and not just in cow-boy sweatshops. A hugely profitable car company like Ford, for instance, employs on-site contractors who have been working more than 11 hours a day, seven days a week, for years! Not to mention the fact that sections of the Ford workforce itself can clock up similar overtime during periods of increased production.

The Labour Force Survey also showed that as many workers again (2.7m) had less than 3 weeks paid holidays. And because of the large number of workers already employed under temporary contracts, or no contract at all for that matter, 12% of the entire workforce had no paid holidays at all.

So, in view of this situation, the 48-hour Bill should have brought certain gains for some sections of workers at least. It says that workers should not have to work more than 48 hours a week, including overtime; that night work should not exceed 8 hours; that everyone should have a daily rest period of at least 11 hours; and that all workers should be entitled to a paid holiday of 3 weeks rising to 4 weeks in November 1999.

However, the first catch is that the Bill allows weekly working hours to be averaged out over a 17-week "reference period". And there is a subclause which allows bosses to extend this reference period to 6 months or in some cases to a full year. The length of the "reference period" can also be increased through collective agreements.

This long reference period also means that the actual hours worked on a particular day can be almost any length. So when production enters a "busy" period, the working day can be extended accordingly. The only limit imposed is the entitlement to a minimum daily rest period of 11 hours. But even this is not necessary when a worker is changing over shifts at the end of the week. The maximum working day which is permitted, therefore, is "only" 13 hours a day, making a 78-hour week on the basis of a six-day week. And while the Bill requires a weekly 24-hour rest period, this is averaged over two weeks!

The idea behind all this is, explicitly, that workers' labour time is to be used in a flexible way according to "business needs" - and not according to their own choice.

Of course, such flexibility was already common practice in smaller and many medium-sized workplaces. But in larger companies, employers were having difficulty in forcing the concept of annualised hours down workers' throats. This Bill amounts to the introduction, through the backdoor as it were, of an embryonic form of annualised hours. Thanks to Blair, employers no longer have to worry about the principle itself - since it is now in the statute book. All they have to do is to get union officials to negotiate over the way in which this new flexibility is to be implemented. What this usually involves is the "banking" of hours (paid at basic rate) which are given as "time off" during slack periods. These hours then have to be paid back during busy periods in the form of longer working weeks - without overtime premiums. It results in a real wage cut for workers. And although the 48-hour Bill alone cannot be held responsible for the bosses' drive to impose such annualised hours agreements, it certainly helps them a lot.

Opt-outs and work-arounds

There is another important twist - one which, provides bosses with a legal way to avoid implementing one of the main provisions of the Bill in the first place! For this, employers only have to get their workers to sign an individual waiver, whereby in effect they give up their right to the 48-hour week! Employers did not waste time in using this loophole. Since last October, there have been numerous cases, particularly among subcontractors, where firms have put pressure on workers to sign away their rights under threat of losing their jobs if they did not. Theoretically this is "against the spirit of the law", and could be challenged in court, but the case would hard to defend once there is a signature which, by definition, is deemed voluntary. In any case, the provisions of the Bill have been designed precisely to allow employers to resort to such blackmail.

The 48-hour Bill also includes provisions concerning breaks and paid holidays. But none is as straightforward as it would seem.

Thus, if the working day is longer than 6 hours adult workers are entitled to a break of 20 minutes unless there is an alternative collective agreement on this. But workers on split shifts and security guards, among many other special cases, do not have this right. And there is nothing in the directive which says that rest periods during the working day should be paid time - which could result, for some workers, in a longer day, a wage cut, or both.

A paid holiday, which at first glance seems to be the one right that is unambiguous, is also conditional on a worker having worked at least 13 weeks for an employer. Thus, all of a sudden, contracts of work for some sections of workers - seasonal agricultural workers being a case in point - have suddenly shrunk to twelve weeks or less, so that paid holidays need not be given. And of course nothing stops an employer from terminating a contract of any length within this time period on one pretext or another. Nor is there any provision that stops companies from clawing back the cost of paid holidays by cutting hourly rates for instance - which seems to have been the immediate reaction of bosses in many small and medium-sized workplaces.

Another way that bosses can get round paying workers what they should for the hours worked is the matter of interpretation of what constitutes "working time". If a worker is present at work - but on call, this may not constitute working time. This is deliberately left open in the Bill. So that a shop worker or waiter (as in the infamous Burger King case) who is waiting for customers to appear and not actually serving anyone could still be considered as "not working" and therefore the time spent "waiting" not counted nor paid!

But the most scandalous aspect of this Directive is the huge numbers of workers who are totally excluded from its provisions. This list includes "air, rail, road sea, inland waterway and lake transport, sea fishing, other work at sea and the activities of doctors in training." That is, precisely those workers whose tiredness due to long hours of work could have catastrophic consequences for themselves and others - which is all the more cynical as the EU Working Time Directive was initially conceived as a health and safety measure! Of course, by exempting rail workers from the 48-hour Bill, are just showing how far they are prepared to go in order to please the shareholders of privatised railway companies. Indeed, train drivers, for instance, will carry on having to work 10 or 12-hour turns, with hardly any breaks. And if they pass a red light due to exhaustion and are lucky enough to survive, they can be sure to end up in the dock accused of negligence or even manslaughter!

And in fact the way the 48-hour Bill is meant to be enforced is just as cynical. Enforcement of working time limits is left to the good offices of the Health and Safety Executive inspectors or Local Authority Environmental Health Officers. But they are already totally unable to cope with their existing tasks, let alone with additional ones which, according to their own estimate, will increase their workload by 25%. As to individual entitlements, it is up to the workers themselves to seek redress! If they feel they are being denied their rights they can apply to an employment tribunal for compensation. This may well be a crumb offered to the union machineries, since in many cases they have shifted the main thrust of their activity to legal representation. But for workers this is a non-starter, given the pressures they can expect from employers and the time it takes to get anything done by employment tribunals.

It is little wonder, therefore, that employers should feel they can get away with just ignoring this Bill. This was illustrated by a recent test case involving RJB mining, the country's largest coal mining company, and NACODS, the union which represents pit deputies, who are in charge of safety in the pits. The pit deputies had worked more than their maximum hours before the 17-week reference period had ended. They argued that they were within their rights to refuse to work any more hours, having not signed an opt-out agreement. RJB, on the other hand, argued that the 48-hour Bill did not have to be automatically incorporated into everyone's contract. The High Court ruled in favour of the pit deputies. But, at the same time, they granted RJB the right to appeal.

Yet what RJB was really arguing was that it is up to the company to decide to whom the 48-hour Bill applied and to whom it did not. If the High Court itself, by giving leave to appeal, signals that there is a small chance that RJB might get away with this, simply because the Bill does not state explicitly the contrary, why shouldn't other employers try it on as well?

When are wages minimum?

Of course, long working hours are not worked because workers enjoy doing them. They are primarily the consequence of the pressures exercised buy employers in the present context of high unemployment and low wages. And this latter issue was meant to be addressed once and for all by the Minimum Wage legislation - or, at least, this was what Labour's election manifesto claimed in the last general election.

So, forty-seven months after Labour's return to power, on 1 April this year, the National Minimum Wage Bill finally came into force. Admittedly, the introduction of a minimum wage for the first time in British history is an event, specially considering Britain's reputation as the "sweatshop of Europe" because of its low wages. Whether it is such a positive event, is another question. As it turns out, the new legislation is rather similar to the 48-hour Bill - a little sugar on the outside, but all bitter inside.

Unlike almost all other industrialised countries (and even some Third World countries) Britain never had a statutory minimum wage. Not that there was no mechanism for minimum wage levels to be set. As early as 1909, after a campaign against sweated labour, Trades Boards were set up in some industries, which could fix minimum time rates or piece rates for wages. Then in 1945, these Trades Boards were renamed "Wages Councils" and their powers were broadened so that they could fix statutory wage levels for any work in a particular industry, as well as the length of paid holidays. However these Wages Councils were always confined to a few industries where union organisation was traditionally weak and collective bargaining non-existent - such as retail, hotels and catering. From 1979 onward, their number was progressively cut, as were their powers, until they were completely abolished in 1993.

In theory, the new legislation should reinstate at least the protection which Wages Councils offered, and in fact much more, since it covers all waged workers without exception. It should therefore signify progress. But does it?

The reality is that the minimum set is extremely low: none at all for young workers under 18; £3.00 per hour for those aged 18 to 21; £3.60 per hour for workers over 21; a reduced "development rate" of £3.20 for anyone over 21 who is either in the first year of apprenticeship or doing the first six months of a job that includes a minimum of training.

The fact that this should improve the lot of around 2 million workers - of whom over half-a-million are in retail and hospitality alone - does not prove that these minimums are adequate. It only exposes the appallingly low wages that employers have been able to get away with paying so far.

How does this National Minimum Wage compare with the minimum needed to live on today? A 40-hour week, on £3.60 per hour, means £144 gross a week. The cost of living may vary across the country. But it is unlikely that even a single young worker with no family to support would avoid getting into debt on less that £200 gross per week, unless he has no housing costs. So how could, for instance, someone earning the minimum wage for a 16-hour a week job survive? This is why some of the large unions which are trying to recruit low-paid workers are demanding a single rate at a higher level. For instance, the public sector union, Unison, proposes £4.79 per hour (half the median male earnings on current figures) and the Transport Union T&G, £5 per hour. But in fact, defining an hourly minimum wage without defining a minimum income, means that life will certainly not be made easier for the largest section of low-paid workers - that is part-time workers, who now make up 25 to 30% of the workforce, with many of them working very few hours.

Even if the minimum wage level was set higher, there are still many loopholes in the rest of the Bill through which bosses can slip. Workers who do piece work and whose hours are not easily defined are left to sort out some kind of "agreement", as to what constitutes their minimum working time, with their bosses. "Zero hours contracts" are not eliminated either, because if a worker is not on the employer's premises, his hours do not have to be counted as "working hours" - therefore workers who are "on call" or "spare" can be paid any rate, or nothing at all, as long as they are waiting outside the employer's premises. The same goes for rest breaks - which do not have to be paid at the minimum rate, or paid at all for that matter.

As in the case of the 48-hour Bill, the enforcement provisions for the Minimum Wage are remarkably vague - and lenient on employers. The enforcement "agency" will be the section of the Inland Revenue Department which already inspects the payment of NI contributions. According to the GMB leader John Edmonds, this means that, all in all, 115 inspectors will be responsible for monitoring the minimum wage for over two million workplaces up and down the country! And what is the penalty for a boss who has not paid the minimum and been caught? The maximum fine for wilfully bending the rules is only £5,000 - next to nothing, even for a medium sized company.

In fact there are no real mechanisms in place to enforce the minimum wage. Again, it is up to workers to go to the courts in order to recover underpayments - that is provided they realise that this is what is happening. Initially the recommendation in the draft bill was that all employers should give every worker a written statement of their entitlement. However the government excluded this from the final Bill after complaints from employers that this would impose too much of an administrative burden! So employers have only to keep "adequate records" of the hours worked by each worker.

If a worker requests a statement, then the employer has to give him one, but only if the request is based on "reasonable grounds". Then and only then can the worker go to an employment tribunal to make a claim. Which amounts to saying that he will need first to get his boss to agree to being taken to court! This is not the real world. And certainly not in a context where most workers are too wary of losing their jobs to take that kind of risk. Blair's ministers know this all too well. They designed their bill to make it difficult for workers to defend their rights, not to help workers to protect them! And even if eventually, the underpaid worker does get the courts to rule in his favour, what will it cost his shady employer? A fine of exactly £7.20 for each day he did not pay what he should have - merely two hours work on the minimum wage. If that is not an incitement to ignore the law, what is it?

The fact that this is no disincentive for bosses to try to get away with bending the rules, is demonstrated by many recent examples. They have been replacing older workers with under 18-year olds who are not eligible for a minimum wage. They have been forcing workers to describe one of their working days as "voluntary" and therefore unpaid. And they have, above all, cut the hours of workers (but not their workload) so that their wage bill does not increase.

Other bosses have been exploiting the exclusions and vagueness of the definitions. Supercuts, a chain of 16 London hairdressing shops, have been withholding the £3.60 rate from over-21s on the grounds that their work was "not good enough". A steward at a club near Leeds was told he would lose his free accommodation in order to receive the minimum wage. Pizza Hut staff will get it, but their taxis home will no longer be paid for when they finish very late. A Textile firm in Leeds, Daniel Illingworth, has in effect put workers onto "performance" pay, i.e. a productivity deal, thereby forcing them to "deserve" their minimum wage by working harder.

For the state, there is always an element of political risk in intervening openly in the relationship between the working class and employers. And setting a minimum wage is no exception, in that it may offer a unifying objective over which the working class could unite in struggle. Not to worry though, Blair has thought about that. It is not his government which has set (and will continue to set) the minimum but an "independent" body, called the Low Pay Commission. Of course, "independent" is a very dubious description for a body dominated by employers and academics and in which workers are supposed to be "represented" by two minor trade- union bureaucrats. If this body is "independent", it is primarily independent from the working class. Nevertheless it provides the government with a convenient cover behind which to hide, should workers find that the minimum wage is too low.

The small print, of course, says that ultimately it is the government which decides while the Low Pay Commission only submits recommendations. In fact, Blair's government has already overturned some of the proposals made by its "independent" figleaf, for instance by imposing the three different rates and by refusing in advance to increase the different rates by 10p an hour in June 2000.

A concerted drive against wages and conditions

For the Labour government to introduce a minimum wage at such a low level is not just a symbolic gesture towards the bosses. Especially not in the present context, when the level of unemployment and casualisation is so high (half-a-million workers rely on temporary jobs today) and when many employers, small and large, have been cutting the wages of their workforces. Sometimes this has been done across the board by ending local incentive schemes or bonuses. But more often this is being done through the introduction of special rates for new starters, specially in industries where employers want to replace "expensive" older workers with pliable and cheap young workers. In such a context, introducing a minimum wage at such a low level is a way of giving legitimacy to low pay and providing the bosses with a benchmark they can use to minimise wages. It is too early at this point to assess how large employers in particular, will use the minimum wage. But there is no shortage of examples of countries in which, in a similar context, companies have reduced their standard starting rate to the level of the local minimum wage over the past period. And if British bosses think they can get away with that, no doubt they will try their luck.

So this minimum wage legislation is an instrument to keep wages down rather than up. Just as the 48-hour Bill is a weapon for the bosses to extract more work out of the workers, and more cheaply, rather than less. In so far as they can be used to drive wages and conditions down, these two "reforms" complement another of Blair's policies, the so-called "New Deal", which is being used to force the unemployed, single mothers, disabled and, since April, the over-50s into low-paid, mostly casual jobs.

In fact, when it comes to casual work, the government agencies themselves, as well as local authorities have made sure they are doing their bit to keep insecure employment going. Ironically the unemployed are quite likely to be dealt with by temporary workers at their Jobcentres - as temporary workers make up 15% or more of the workforce in the Employment Service in some boroughs! And in Local Authority Housing, at times more than half the workforce is employed on a casual basis. Temporary workers are a permanent feature in these sectors. And these days, few workers get a job in the Post Office without starting first as a "casual".

Even the government's own figures show that the New Deal is dropping more unemployed off the dole register - and therefore the official count - than it is putting into work. This is not, of course, a big surprise. The name of the game was always to cut Social Security expenditure while forcing the unemployed into any jobs that could be found - but if no job can be found, claimants are still to be deprived of benefits, no matter what.

But even the government's figures on "jobs" provided through the New Deal are misleading. Thus, for instance, the nightmare of administrative "targets" imposed on the Employment Service, which result into misreporting. Placements in temporary jobs are reported as permanent placements so that the targets can be met. Or, in some areas, private employment agencies have been operating various rackets. Reed Personnel, for instance, offers New Deal jobs. They get the £60 per week subsidy and the £750 one-off payment for training, for "employing New Dealers" themselves. And then they hire out these recruits to companies as temps for £265-£385, pocketing the difference! Another "legal" loophole, which allows temporary jobs to be portrayed as stable New Deal jobs...

Labour's other major "reform", that Brown is so proud of that he called it a "revolution", is the introduction of the tax credit system. It is also aimed in the same direction - to make it easy for the bosses to employ workers on the cheap. From next year, parents on low wages who are in work will receive all their benefits (except housing benefit) through the tax system. The benefits themselves will not be much higher than in the present Family Credit system. The main difference will be, on the one hand, that they will be reduced more slowly if the family's income increases and, on the other hand, that they will be better adapted to the case of people changing jobs frequently.

At the end of April, Brown explained in a newspaper interview his "vision" for the future: how he intended to extend the tax-credit system to all wage-earners and to turn it into a top-up for the low-paid - for instance those earning the minimum wage in a part-time job. And in fact this is exactly what this tax credit system has always been about - making low-paid casual jobs a bit less unbearable by providing an incentive for workers to take them without it costing the bosses a penny.

When Blair proclaimed his indignation at the findings of an inquiry that 40% of children born in Britain were born in families living under the poverty line, he was cautious not to mention the implication of these figures - that just as many working class adults must be living in the same poverty, in a country which is still one of the richest in the world. It made his promise that within 20 years no child would be born poor in Britain all the more cynical.

But then Blair came to power with a commitment to continue the policy of his Tory predecessors by delivering "a flexible labour market" for the bosses. In fact, he should have said, but probably did not dare, "a cheap and flexible workforce". Because this is exactly what he has been trying to deliver for the past two years. This is what his so-called "reforms" are really aimed at, behind the gloss and the appearance of being designed to relieve the increasing social deprivation.

But what has been decisive so far, is not so much Blair's "reforms", nor his attacks against the working class, but the context in which they have taken place. It is a context in which the bosses have been having a free ride for over a decade, without having to face any significant upsurge of the class struggle. As a result, they feel confident enough to continue to push their luck against workers. The working class, on the other hand, is still overwhelmed by the degradation of its conditions, the rise in unemployment and the generalisation of casual labour. It is this relationship of forces that has been and remains decisive.

Without the lack of confidence that still prevails in the working class, Blair's derisory minimum wage would either be swept aside by militant strikes wherever it was implemented, or provide whole sections of workers with an objective for a common fight. Instead of being reduced to defending overtime premiums against the introduction of flexibility, workers would be fighting for decent wages which would allow them to ban overtime and force the bosses to create decent jobs. And the bosses would be much more cautious in risking more attacks against workers, even under the cover of new legislation introduced for that purpose.

In the coming months and years, the working class will need to change this situation, by rebuilding its confidence in its own strength. It will have to start reversing the unfavourable balance of forces in the class struggle which Blair and his Labour government are using today to allow the capitalist class to satisfy its greed for profit. Whatever Blair may say about the "end of the class struggle", we are, however, confident that he will soon be proved wrong.

4 May 1999