It’s time employers addressed the plight of the precariat, says Duncan Brown
An interesting piece of CIPD research published last month revealed a 70 per cent fall in employment tribunal claims since fees were introduced.
Given the government’s drive to cut the number of weak and vexatious claims and the apparent fall in the HR department workloads, it’s not surprising that 38 per cent of employers were positive about the changes. Yet the 36 per cent of respondents who oppose them, and the decision of business secretary Vince Cable to launch a fees review prior to starting his election campaign, suggests that the downsides of this approach may be too high, particularly for the low paid.
As Mike Emmott from the CIPD put it, “given the staggering drop [in employment tribunal claims] it must be the case that some perfectly valid claims have been discouraged” by the fee regime and he asked “are we putting too high a price on justice?”.
The fact that the number of mostly low paid women bringing equal pay claims shows an even greater fall, even though the number of equal pay cases is broadly stable supports the circumstantial evidence that the five million people earning less than a Living Wage are suffering the most from the way our labour markets and employment law framework have evolved since the recession hit in late 2008.
The cost of living and living standards debate, and how to help the low paid, has been a key issue ahead of the election, with policy proposals ranging from assistance for homebuyers’ from the Conservatives to tougher action on zero hours contracts from Labour. And the response of HR departments to motivating what LSE academic Guy Standing calls this growing “precariat” has generally gone under the heading of ‘total rewards’. Leading service sector employers in the UK such as McDonalds have shown the high levels of employee engagement and performance that can be created by providing a comprehensive package of excellent benefits and training opportunities.
But unless these packages are established on the foundation of a decent pay rate, then the evidence as Martha How and I have summarised, is that employee and employer suffer.
The majority of children living in poverty in this country have a parent in work rather than unemployed, while Princeton psychology professor Eldar Shafir highlights how their low “bandwidth” of resources and time mean that the majority of the low paid will stay low paid without outside help.
Hence all of our political leaders are cajoling business leaders to in the Prime Minister’s words “give Britain a pay rise” and share the proceeds of rising profits with their staff, not just their executives, which will be good for those employers, their low paid mostly young and female employees and also our low productivity UK economy.
Last month I saw University of Massachusetts economics professor Arindrajit Dube present his research showing the positive economic effects for US cities such as San Francisco and Seattle of adopting local minimum wage rates above the federal requirement, with improved staff retention and almost zero effect on employment.
The solution to retaining and motivating low paid employees has to be to pay them more. We need more employers adopting Pret a Manger’s philosophy of “good jobs for good people” and along with the in-house career development and training and team-performance-related bonuses, to “pay our employees as much as we are afford, rather than as little as we are able to”.