Rethinking Recovery: Labour market exploitation and austerity in the UK

Judy Fudge  - Kent Law School 

Despite the government’s assurances that the Director’s ‘remit covers labour market breaches, and not immigration offences’, the Director and the enforcement bodies will work closely with immigration officials, whose mandate is to find, punish and deport people working in breach of their visa conditions. The GLAA will be conducting joint operations with the UK Border Force, which enforces immigration controls. This intermingling of the enforcement of labour standards and immigration controls will inevitably undermine the ability of the Director and the GLAA to enforce labour standards.  Undocumented workers who are at risk of labour exploitation will be unwilling to come forward to report violations of labour standards if they fear that they will be penalized for ‘illegal working’.  For this reason, organisations as diverse as the International Labour Organization, the Council of Europe, and the US Department of Labor agree that it is critical to erect a firewall between the enforcement of labour standards and immigration controls.

The Conservative government’s strategy is based on the following assumptions: that there is already an effective system of labour enforcement in place in the UK; that the vast majority of employers adhere to labour standards; and that the key problem is one of ‘organised labour market exploitation’. Although the government claims that the ‘UK has a strong legal framework in place to ensure that minimum standards are met for workers’, nothing could be further from the truth.

The UK has just 0.9 labour inspectors per 100,000 members of the workforce compared with 4.6 in Ireland, 5.1 in the Netherlands, 12.5 in Belgium and 18.9 in France, one of the smallest labour inspectorates in Europe. Moreover, under the guise of austerity, labour inspection agencies have seen steep declines in budgets since the 2010 Spending Review – including more than a 20% cut to the GLA.

Furthermore, since July 2013, when the government imposed hefty fees for bringing complaints to employment tribunals, many people have not been able to enforce their employment rights and claims to the tribunal have decreased by over 67% since July 2013.  Employment tribunal awards are not strongly enforced and many go unpaid.  A 2013 study by the Business, Innovation and Skills department found that only 49% of tribunal awards were paid in full, with a further 16% paid in part, and 35% of people awarded compensation received no money at all.

In its determination to reduce ‘red tape’, the Conservative government is also shifting away from the licensing system that was at the heart of the GLA towards voluntary schemes. The turn towards criminal investigation is likely to absorb huge resources and distract from the renamed GLAA’s core licensing and monitoring functions.

The assumption that UK employers adhere to labour standards is belied by the recent admission to a House of Commons Select Committee by the billionaire founder of Sports Direct, Mike Ashley, that his company had broken the law by failing to pay staff the national minimum wage by subjecting them to a harsh regime of surveillance and financial penalties for lateness. Since the UK has a very lightly regulated labour market, the government’s much touted labour market flexibility is a euphemism for the exploitation of insecure workers. Zero-hours contracts, agency working, and bogus self-employment abound in the UK labour market, and with it low-paid and insecure employment.  Even with such light-touch regulation, far too many UK employers still ignore basic labour rights.

There is little evidence that labour exploitation is caused by organised criminal gangs. In fact, the government does not define what it means by ‘organised labour market exploitation’, ‘serious exploitation’, and ‘labour market exploitation’. By focusing on organized crime as the cause of labour exploitation the government diverts attention from the abusive practices of employers like Mike Ashley and normalizes the poor working conditions of 4.5 million people (14% of the labour force) in England and Wales who are in insecure work.

If the UK government truly wants to crack down on the violation of employment standards and labour exploitation, it needs to renounce its commitment to austerity and bully-boy politics, and to stop picking on and scapegoating the weak and vulnerable, such as migrant workers, and hold employers to account for bad employment practices. Effectively regulating the UK labour market is the only way to stop labour exploitation.