‘How the Employment Rights Bill will deliver higher wages and less stressful work’ – LabourList

Everyone should be able to earn to live a decent life, but that is not possible in the UK today. Workers have less bargaining power in a deindustrialised economy, which means they get lower wages, less training, and more stressful work. If we want everyone to earn a decent wage and gain more skills in the workplace, then governments need to act to raise the bargaining power of labour. And that is exactly what our Employment Rights Bill does today. It’s good for workers, good for firms, and for the economy.

Improving working rights is a matter of both ethics and empiricism. We want every worker to get paid enough to live a decent life (that is the ethics part). We get there, partly, by increasing their bargaining power of workers (that is the empiricism part). 

Strengthening workers’ rights gets wages rising for all workers and gets productivity rising for firms as well. When workers have more bargaining power, it means higher wages for them and other workers. When they have more rights at work, it means both workers and employers invest more in the relationship leading to higher productivity. When workers are less stressed, they produce more. That is why the Employment Rights Bill, which strengthens workers’ rights, is good for the economy

Here’s the really important thing about labour markets – you, as a worker, need your job a lot more than your employer needs you. There is an imbalance of power. And that imbalance leads to all kind of bad economic outcomes. It means workers get paid less than they would in a competitive market (where power is equally shared) and both sides invest less than they would if both sides had equal market power.

Our employment rights bill has a lot in it, the overall thrust of which is to increase the bargaining power of labour. There are four broad sets of measures:

1. Improve worker rights (e.g. banning exploitative zero hours contract, ending fire and rehire)
2. Implement sectoral collective bargaining (in social care and for school support staff)
3. Trade union legislation (making it easier for them to operate)
4. Improve enforcement of labour laws and regulations

These measures, taken together, will help to raise wages, training, and improve mental health.

Better pay and conditions

The key channels through which the Employment Rights Bill helps to raise wages are by implementing sectoral collective bargaining and making it easier for trade unions to operate. Sectoral collective bargaining means all workers in the sectors (social care and school support) will be covered by collective agreements rather than negotiations between individual employees/employers as is currently the case.

When workers are bargaining as a collective whole (rather than having a one-to-one negotiation with their employer), they gain higher wages. That is why trade union members get paid more than non-members.

But these channels also lead to higher wages for workers not covered by these agreements. Better pay and conditions in these historically low-pay sectors creates a floor that other sectors now have to compete with.

How collective bargaining can result in more worker training

The increase of sectoral bargaining and trade union presence also raises wages thorough another channel – more training. It is far easier for a collective body to clearly set out what training workers need to be productive and to work with management to change production practices accordingly.

Trade unions help to raise skills training both within firms and across the economy as a whole. As you can see below, countries with more collective bargaining, also spend more on worker training. Given our country has seen training fall by a fifth since 2011, this is a pretty clear win.

More broadly, greater worker rights means a strengthening of relationship between workers and firms, encouraging firms to invest in their people. Our current model of insecure work means workers who are ready to leave their jobs quickly and firms unwilling to invest in them for that reason.

Boosting the economy by reducing insecure work

This Bill helps to reduce insecure work by, for example, banning exploitative zero hours contracts and fire-and rehire. Unsurprisingly, insecure work where you don’t know your work hours or if you’ll suddenly be dropped means worse mental health. Banning these practices means better mental health.

Similarly, by strengthening worker rights around harassment (for example) the enforcement means less stress at work. Given we lost 17.1 million working days every year to stress, depression, and anxiety, this represents a significant economic boost.

The Employment Rights Bill is good for workers, good for firms, and good for the economy. By raising the bargaining power of labour, it helps to strengthen the relationship between employers and employees. This means higher wages for workers, more training, and less stress. It is not my bleeding heart that leads me to support more worker rights, it is my cool and calculating head. 

For more from LabourList, subscribe to our daily newsletter roundup of all things Labour – and follow us on  Bluesky, WhatsApp, Threads, X or Facebook .

• SHARE: If you have anything to share that we should be looking into or publishing about this story – or any other topic involving Labour– contact us (strictly anonymously if you wish) at [email protected].
• SUBSCRIBE: Sign up to LabourList’s morning email here for the best briefing on everything Labour, every weekday morning.
• DONATE: If you value our work, please chip in a few pounds a week and become one of our supporters, helping sustain and expand our coverage.
• PARTNER: If you or your organisation might be interested in partnering with us on sponsored events or projects, email [email protected].
• ADVERTISE: If your organisation would like to advertise or run sponsored pieces on LabourList‘s daily newsletter or website, contact our exclusive ad partners Total Politics at [email protected].

Value our free and unique service?

LabourList has more readers than ever before – but we need your support. Our dedicated coverage of Labour’s policies and personalities, internal debates, selections and elections relies on donations from our readers.

Support LabourList