Establish ‘wage boards’ to address low-paid workers’ earnings

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The government should introduce a ‘new settlement’ for low paid workers, giving them more control over the hours they work and improving their job security and financial position, a think-tank has said.

The Resolution Foundation said the government “should remember those who have steered the country through the crisis” as it looks to rebuild the UK economy, and go further than its commitment to set the national living wage at two-thirds of average hourly pay by 2024.

To do this, its new report recommends that “wage boards” – made up of employers, employee and independent representatives – are established in industries that desperately need an improvement in working standards and pay, such as social care.

Over half of the care workers are paid less than the real Living Wage, recommended by the Living Wage Foundation (currently £9.30 an hour outside London). Up to 160,000 do not even receive the legal minimum wage, the Resolution Foundation claims.

It says employees should have a right to a contract that reflects the hours they actually work and explains what happens if a shift is cancelled at short notice; should have the right to choose how regularly they are paid in large firms; and should see the qualifying period to bring an unfair dismissal case cut from two years to one.

These new rights should be upheld through a properly resourced “single enforcement body”, which has powers to proactively protect workers and sanction unscrupulous employers.

“Britain’s low-paid workers have been at the heart of the current economic crisis. They are the most likely to have lost their jobs, or to have put their own health at risk by working on the frontline,” said Hannah Slaughter, an economist at the Resolution Foundation.

“The appreciation now being expressed for these workers is in stark contrast to the fact that for too long we have offered them a world of work based on insecurity and exploitation, not dignity and respect.

“Rights must not only be strengthened but enforced. These are balanced, moderate proposals, that taken together would amount to a new settlement for low-paid workers.”

The A New Settlement for the Low Paid report says that estimates for those paid below the national minimum wage vary between 20,000 and 160,000 people, with many forced into self-employment and therefore denied the right to sick pay and other employment benefits.

It finds a third of workers in the bottom earnings quintile had lost their jobs, been furloughed, or had their hours or pay cut during the coronavirus pandemic – more than twice the rate in the highest earnings quintile.

The report also notes that low earners are effectively penalised for taking time off while they are unwell, because Statutory Sick Pay is not available to those who earn less than £120 per week. It recommends that this imbalance is rectified.

They are also less likely to be protected against unfair dismissal, because around one third of low earners have been in their jobs for less than the two-year qualifying period.

Other recommendations made in the report include:

increasing the fine for national minimum wage underpayment to act as a stronger deterrent against non-compliance
ensuring local authorities are properly resourced so they can carry out health and safety spot-checks on premises, to protect lower paid staff bearing great health risks
giving workers the ability to inform decisions about payroll regularity – the report suggests that weekly pay cycles may be beneficial for them
giving part-time workers the right to request a contract with longer hours.

The report concludes: “The nature and timing of any new settlement needs to take in to account the huge challenge of high unemployment in the years ahead. Our view is that this is not an argument against planning today for a better labour market, but it should be front and centre of plans for implementation.

“And, although this paper draws on evidence of the views of low-paid workers, including on the security of their hours of work and the prevalence of underemployment, the eventual focus of any new settlement should follow detailed engagement with the views and aspirations of lower earners.”