This week the government responded with enthusiasm to the findings of The Taylor Review. Not only have many of its recommendations been taken on board, the Review also breathed fresh life into the good work agenda – something that will linger well into the future. Here are six lessons to heed.
As things go, it’s quite readable
In October 2016 the Prime Minister announced that Matthew Taylor, CEO of the RSA, would conduct a review into modern employment practices. Its remit was to explore how worker rights and regulations could keep up with a fast changing labour market, in particular the rise of self-employment, zero hour contracts and agency work.
Barely 18 months later and we now know the results of these efforts. The government’s response – a substantial 80 page report in itself – embraced both the spirit and the recommendations of the Review. “For the first time”, the response notes, “the government will be accountable for good quality work as well as the quantity of jobs”.
What does this mean in practice? While several more consultations have been launched, including on the crucial question of determining employment status, the government has also pledged to make immediate reforms. This includes giving all workers a right to request a more stable contract, quadrupling tribunal fees for employers showing malice, and cracking down on unpaid internships.
It is easy to dismiss the government’s plans as piecemeal. The TUC’s Frances O’grady described them as “babysteps”, while GMB Union said they were akin to "trying to put out a forest fire with a water pistol."
But think about what has been achieved in less than a year and a half. Insecure work, while previously enjoying the odd moment in the media spotlight, is now at the forefront of the political agenda. A Conservative government is committing to extra regulation, not less. The media is talking about dignity and meaning in the workplace, not just pay packets and dole queues.
Six lessons to heed
It shouldn’t have taken an independent review to remind us that good work matters immensely. But the Taylor Review did this nonetheless. It’s worth therefore reflecting for a moment on the themes that struck a chord and why the government responded in the way it did.
Here are my six highlights:
- The UK’s jobs boom is too precious to squander – It is rare for an independent inquiry of any kind to dwell on the positive. But the Taylor Review began immediately by emphasising the strengths of the UK labour market: an unemployment rate at its lowest for 40 years, more people who want to work fewer hours than who want to work more, and a long running decline in redundancy rates. Many of the new jobs created since the economic downturn have been poorly paid and precarious, as highlighted by two recent RSA reports. But the Review was right to state that we must build on our achievements, not squander them through rash policy decisions. Flexibility is a key reason why the UK has such low unemployment rates and this must be retained, albeit made to work for both employer and employee.
- Job type is a poor predictor of job quality – In recent years, economic commentators, journalists and think tanks have fallen into a bad habit of describing the labour market in black and white terms. An artificial division has been created between people in conventional jobs and those in atypical work, including zero hour contracts and self-employment. But as the Review makes clear, insecure and poor quality jobs can be found across all job types, occupations and sectors – and even income bands. In-depth polling by BEIS in 2016 found that 84 percent of the self-employed said they are happier working for themselves. Likewise, recent ONS research revealed that two thirds of people on zero hour contracts say they are not looking for extra hours. Instances of both good and bad work can be found across all job types.
- There are no magical solutions to bring about a better world of work – Many had criticised the Review’s proposals for being unambitious and timid. Why did it not recommend banning zero hour contracts? And where was the commitment to extending more welfare protections to atypical workers, like full maternity pay for the self-employed? Interventions like these are attractive because they are simple, categorical and easy to understand. Yet on a practical or financial basis they are not so simple to implement. Ban zero hour contracts and you deprive thousands of workers of a job that suits their lifestyle. Extend extra welfare protections to the self-employed without an attendant rise in their tax obligations and you risk creating a system that is unfair to employees (see below). Few of the Review’s recommendations may be game-changing, but radicalism is not always the best course of action.
- Enforcing old rules matters just as much as creating new ones – In the rush to protect workers from unscrupulous employers, it is easy to forget that much of what we’re asking for is already embedded in statute. For example, it is not well known that ‘workers’ (the category sitting between employees and the self-employed) have a right to be auto enrolled onto a pension, as well as to be paid the National Living Wage. This is why many of the commitments made by the government in its response are about improving enforcement and transparency of existing entitlements. Among the promises made last week are to ensure that all workers receive a list of their rights from day one on the job, and to give everyone the right to a payslip that clearly breaks down earnings and deductibles. As a next step, the government must ensure government departments have the resources to follow up on these duties.
- The good work agenda will always be incomplete without tax reform – The Taylor Review was only intended to investigate the shortcomings of employment law. Yet it would have been obvious to the team immediately that irregularities in the tax system are a fundamental cause of problems in the labour market. This includes bogus self-employment, with many workers being pushed into this line of work by employers who want to save on the expense of Employers NICs. Citizens Advice estimate that 1 in 10 of its clients could be falsely self-employed, depriving them of important rights including sick pay and holiday pay. Moreover, as long as the self-employed continue to pay a lower rate of NICs than employees, it will be difficult to make the case for them receiving protections such as full maternity and paternity pay, or a better deal under Universal Credit. The good work agenda must be underpinned by substantial tax reform.
- A mandate for serious reform is hard won but not impossible – The Chancellor’s U-turn on National Insurance last year taught every politician and civil servant an important lesson: that meaningful changes to policy cannot be sustained if they do not have legitimacy in the eyes of the public and the media. The decision to raise NICs for the self-employed was always going to result in failure because there was no consultation and therefore no time or space to lay out the government’s rationale. As a long-running investigation, the Taylor Review by its nature would have avoided the same pitfalls. But the team also took the unusual step of holding public hearings, conducting site visits to workplaces, and – in the case of Matthew Taylor – regularly posting blogs to update readers on early conclusions. This degree of honesty and transparency was vital in building a mandate for the Review’s final recommendations.
Both the Taylor Review and the government’s response are far from perfect. But there is a subtle success story here which is sure to play out for several years to come. The task now is to build on the momentum the Review has generated, as the RSA is doing through our new Future Work programme. Good work for all can sound like a lofty and even impossible cause to get behind, but it could also be the mission that unites an increasingly fractious nation. Let’s not rest on our laurels.