Britain needs innovative new labour market reforms to drive better working conditions – starting with a better deal for care workers

Major reforms are needed to tackle low standards, unsafe working conditions and minimal progression opportunities that affect too many of Britain’s 34 million workers – and the focus should be on innovative new sector-specific ‘Good Work Agreements’, according to major new Resolution Foundation research published today (Monday).

Innovation Nation – the 41^st report from The Economy 2030 Inquiry, funded by the Nuffield Foundation – examines how the UK’s labour market institutions can be reformed to help deliver shared prosperity for workers, maintaining the benefits of Britain’s flexible labour market, while solving the problems that remain.

The report notes that national employment protections, such as the minimum wage, play a critical role in delivering stronger pay growth and better conditions for workers.

But national regulation alone struggles to address some of the deeply entrenched problems facing workers in specific sectors or roles, such as the record number of people on zero-hours contracts, or the fact that three-in-four workers received no training aimed at building skills or progression in the past year.

New sector-focused institutions therefore need to be set up to complement our existing national frameworks, says the Foundation. This would require policy makers to rediscover the appetite for innovation that led to the National Minimum Wage and National Living Wage – widely regarded as a key policy success of recent decades, with George Osborne’s creation of the National Living Wage based on Resolution Foundation proposals. They can also learn from successful reforms in similarly flexible labour markets like New Zealand and Ireland.

The report proposes the creation of new Good Work Agreements (GWAs) that bring together worker and employer representatives to collaborate and solve problems within challenging sectors. These agreements would then be enforced on the same statutory basis as existing labour market regulation in order to give the agreements legal teeth.

While it would largely be up to those representatives to apply to the government for new GWAs, the Foundation says that a trailblazer agreement should be started in social care to enhance protections for the UK’s 1.7 million care workers.

Social care is blighted by poor pay – likely illegally so for domiciliary workers once travel time is factored in – unsafe working conditions in understaffed care homes, and inadequate training and progression across the sector, all of which contribute to an acute shortage of workers.

A GWA in social care should be followed up by agreements in the warehousing and cleaning sectors, delivering higher standards for 200,000 and 500,000 workers respectively. Both sectors have particularly high levels of insecure contracts or volatile hours – 28 per cent in warehousing and 17 per cent in cleaning.

The expansion of the warehousing sector has been accompanied by extensive use of agency workers to fill staff shortages, alongside intense workloads, while workers in the cleaning industry are affected by insufficient hours (20 per cent), and pressure to complete jobs in unreasonably short timeframes (and not being paid for the overtime required).

These sector-specific issues are ripe for addressing in GWAs, says the Foundation, because they can’t be addressed via the more traditional one-size-fits-all national regulation. A social care GWA alone could bring bigger pay rises, better training opportunities and more security for care workers across the sector – and would have wider benefits for the quality and availability of care by tackling staff shortages.

The report adds that some of the overly burdensome rules governing union recruitment and recognition should also be modernised, given their contribution to the decline in union membership from 52 per cent in 1980 to 22 per cent in 2022.

Hannah Slaughter, Senior Economist at the Resolution Foundation, said:

“Britain has seen national labour market regulations improve the quality of work in recent decades – most radically via a fast-rising minimum wage. But many of our most deeply entrenched problems in the world of work are specific to particular sectors and roles.

“We now need a new focus on innovative ‘Good Work Agreements’, bringing together worker and employer representatives in the most challenging sectors to set new legally-enforced minimum standards and improve the quality of work.

“There is no better place to start solving these problems than social care – where unlawfully low pay and unsafe working conditions have left damaging worker shortages, and a care system close to collapse.”