Success Through Fairness

There is a commonly-held myth that the Scottish Government does not retain sufficient powers to engineer greater social equality. Whilst it is true that measures such as a higher minimum wage, increased in-work benefits and credits and broader income transfers that reach poorer households cannot come from Holyrood. Unite, however, believes there is a golden opportunity to reform collective bargaining in Scotland to address vital social issues.

In April, just before the election, we launched our document ‘Making Devolution Work’ as part of our contribution to the ‘Better Way’ campaign. By any measure it wasn’t – and isn’t – the finished article but is designed to try and stimulate a discussion about what kind of economy we want.

An economy genuinely trying to move towards a more diverse base; focused on job creation; strategic about the future; fairer in terms of wages & how the state – in particular the Scottish Parliament – can perform a facilitating role to bring the technologies of the future to fruition. Not ad hoc policy proposals in isolation which may be beneficial but a common thread that runs through the fabric of our society.

Abstract goals are fairly non-contentious but the concrete policy measures of how we achieve these are the real litmus test. Whatever the phraseology we use ‘rebalancing’, ‘reorientating’ or ‘reindustrialising’, the aim is to create a fairer society – a better society.

The Scottish Government and Parliament has an opportunity to take the lead, to set itself apart from the Westminster Government’s savage attacks and economically illiterate agenda. We believe that part of the machinery that helps us weave this thread should involve the establishment of sector forums. These forums would help to combat inequality and assist in improving workers’ purchasing power – designed to foster strategic growth. The forums would do so by the promotion and active co-ordination of wage agreements throughout the economy, particularly as 77 per cent of all jobs in Scotland are outside the public sector.

It is a striking feature of the global economy that countries in the EU with stronger collective bargaining coverage, greater degrees of economic balance and greater degrees of regulation in the labour market have been able to manage the global recession at least as effectively as liberalised economies

Of course, we need to campaign for the Living Wage and ensure that this is rolled out throughout the public sector – something we must hold the Scottish Government and all parties to account on – but we also need to find a way to inflate the pay of people outside the public sector.

Although the main focus of sector forums would be on pay and other terms and conditions of employment it is important to emphasise that such bodies would have other functions as well. They should address other concerns, such as productivity, procurement, investment grants, competitiveness and the skills and training (including apprenticeships) needs within the sector in question. They must establish strategic and long-term responses to the needs of our economy rather than the blizzard of policy responses which do little to ensure we all rise with the tide.

We know wages are getting more unequal with average pay rising at 1.8 per cent while bank chief executives pocket a pay rise of 36 per cent and a 5.2 per cent rate of inflation is hurting hard. We know lack of consumer confidence is hampering the economic recovery yet there is strong evidence of a link between collective bargaining and economic growth in other countries and this should be applied in Scotland through sector forums.

It is a striking feature of the global economy that countries in the EU with stronger collective bargaining coverage, greater degrees of economic balance and greater degrees of regulation in the labour market have been able to manage the global recession at least as effectively as liberalised economies. Neoliberalism espoused at various times by all major political parties in the Scottish Parliament has failed – and failed spectacularly.

High levels of collective bargaining coverage and wage equality are not associated with the economic inefficiencies of the United Kingdom and the United States, for example. Indeed, there is a stronger case for collective bargaining fostering growth than lower rates of corporation tax which is a neoliberal economic approach that all progressives should oppose and the present Scottish Government thinks is a major plank in its narrative for further powers.

Let me be crystal clear – our organisation will oppose any neoliberal agenda irrespective of the political party articulating it and lower corporation taxes than England and Wales as the drive towards the levels of the Republic of Ireland will amount to little else than a race to the bottom, lower wages and the extraction of wealth from our country.

There is an alternative. The revitalisation of collective bargaining machinery is a key strategy in the revitalisation of the Scottish economy. But although this is necessary for reasons of economic recovery, the case for collective bargaining is not however a purely economic one. It is also about social justice. It is about ensuring that people are not treated like a commodity to be bought and sold at the lowest price in a Darwinian ‘labour market’. It is also about ensuring that everyone is entitled to a fair day’s wage for a fair day’s pay.

We know collective bargaining density in mainland Europe remains high (though under constant threat). Of the original 15 member states of the EU, the UK and Ireland are the only countries where the coverage of collective agreements is less than 50 per cent of the labour force. In some cases, density exceeds 90 per cent. The latter is three times the level of coverage in Scotland.

The benefits of collective wage regulation may be illustrated by looking at the UK’s two biggest economic competitors in the EU – Germany and France. In Germany 63 per cent of workers are covered by collective agreements yet it recently raised its growth forecast for 2011 to 2.3 per cent, with the Economy Ministry having previously forecast growth of about 1.8 per cent. The economy grew by 3.6 per cent last year, its fastest pace since reunification.

Similarly, in France 95 per cent of workers are covered by collective wage bargaining arrangements with the economy growing at 1.5 per cent in 2010 and forecast to grow to two per cent in 2011. Further examples of countries across Europe with high levels of collective bargaining and with projected stronger economic growth than the UK and specifically Scotland are the Netherlands and Sweden. Although due to the present crisis facing the Eurozone, these figures will undoubtedly be revised downwards.

Informed commentators outside the neoliberal orthodoxy prevailing in some Anglo-Saxon countries now see collective bargaining as a necessary route to economic success and refute the idea that it is an impediment to growth. According to the ILO Global Wage Report 2008/09, the connection between economic growth and wage growth was noticeably higher in countries with a correspondingly higher rate of collective bargaining coverage.

Despite the legislation introduced since 1997, trade union membership shows little sign of growth and there is evidence that trade union recognition continues to fall (although Scotland has recently bucked the trend). This is due in part to the complexity of the recognition procedure and the difficulties faced in making it work as intended.

Sectoral forums will provide another opportunity for trade unions to organise and represent the interests of working people, and an important step in ensuring that everyone has a right to be protected by a collective agreement. Unite believes that if this machinery were introduced, trade unions could increase their role and visibility within key sectors of the economy such as tourism. It is a low pay sector employing around 200,000 yet with union density of only 3.7 per cent and another area of the economy which the Scottish Parliament has under its jurisdiction.

We are asking that Scotland look at areas of the economy within the Parliament’s gift such as transport, the voluntary sector, renewables industry and not only retaining the Scottish Agricultural Wages Board but extending it to forestry and fisheries – a sector which employs 60,000 people but where union density is just 6 per cent. Finding a Scottish solution!

There is no room for complacency – these are dangerous economic times no matter the latest employment figures which show the number of people who were not in work falling by 10,000 to 207,000. Economic growth is anaemic – stagnation is live.

As the public sector cuts really begin to bite there will be a knock-on effect on the private sector, resulting in lower production and falling consumer demand due to less disposable incomes as inflation overrides pay levels. Scottish retail sales have suffered their worst fall since records began more than 10 years ago as total sales fell by 1.1 per cent in May before these cuts really hit.

There are choppy waters ahead but at the same time there are opportunities. We have a chance to re-design our economy, lay a plan for economic growth and create a more equal and fairer society. I urge all progressives to continue to raise their voices and to campaign together to find a Scottish solution.

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