“My sister is a care worker. She was a care worker during the pandemic. Fourteen-hour shifts, often overnight. Unimaginable pressure. And the reward? A struggle every week – and I mean every week – just to make ends meet.”
So spoke Keir Starmer last month, drawing on experience close to home in his party conference speech to underline his determination to overhaul the cash-strapped social care sector.
At the heart of Labour’s plans to do so, is a radical proposal for state-backed collective bargaining that will mark a departure from decades of declining trade union power in the UK.
When Margaret Thatcher arrived in Downing Street in 1979, more than 70% of the workforce was covered by collective agreements, negotiated by trade unions. By 2019, that had fallen to little more than a quarter.
Starmer is not pledging to bring back “beer and sandwiches” summits with unions if elected next year to No 10, but Labour does have a clear commitment to increase their role in public life – staunchly upheld by his deputy, Angela Rayner, a former union organiser herself. The party’s “new deal for working people”, details of which were negotiated with unions, includes a long list of policies aimed at boosting employee power.
The UK’s underfunded, overstretched social care sector will be the testing ground for a key element of the package: the use of “fair pay agreements,” to boost pay and conditions for workers who have little bargaining power.
The government has already promised a series of reforms to the social care workforce, including a new career structure; but as a report by the National Audit Office (NAO) pointed out this month, these have been delayed by the political turmoil at the top of the Conservative party.
Statistics on the sector tell a stark story of staff shortages and poverty pay: a recent report by Skills for Care pointed to 152,000 vacant posts, and an average hourly wage of just £10.34 in privately run care. Staff turnover in the last year was 28%.
“It’s not that people don’t want to do the work: they love it, but pay and terms and conditions are so poor that people feel undervalued and are forced out,” says Natalie Grayson, the GMB’s national organiser for the care sector.
Meanwhile, ministers have increasingly sought to plug staffing gaps with overseas workers. The Home Office issued 78,000 visas for care workers in the year to June 2023 – accounting for more than one-third of all long-term work visas. There have been repeated warnings that many of these staff face exploitation – and their arrival has been a key driver of record net migration into the UK.
Part of Labour’s planned solution is a new state-brokered agreement on social care pay, terms and conditions, which it hopes will attract more UK-based staff, and help stem the exodus from the sector.
Much is riding on the policy. The shadow health secretary, Wes Streeting, sees it as central to tackling the parlous state of social care – which in turn has significant knock-on effects for the NHS. One Labour source described fixing social care as “mission critical”.
For the Labour-supporting trade unions, this first fair pay agreement would be a “proof of concept” that they hope could be replicated in other low-paid sectors.
Yet despite the policy’s significance, few details have been ironed out: which unions and employer groups would sit round the table, or precisely which issues would be covered, for example. Instead, Labour says it will consult intensively if it gets into power.
The broad approach is that government would bring together unions and employers to thrash out minimum wage rates, as well as policies such as pay progression.
Once a deal is struck, the government would give it statutory backing – so that it applied right across what is a highly fragmented workforce, with many thousands of individual employers. That would give the unions significant power, in a sector in which it is hard to recruit and organise members.
Labour sources acknowledge there would be a direct impact on the public purse, via an increase in the cost of providing taxpayer-funded care – but the party is not expected to cost such an increase in its manifesto.
Ben Zaranko, of the Institute for Fiscal Studies, suggests a rough estimate might be £1bn-£1.5bn a year for every £1-an-hour increase in social care wages – though the disparate nature of the workforce means it is difficult to calculate.
Social care employers pose a key question: is Labour prepared to fund the cost of any uplift, given that approximately 50% of social care is state-funded? Some providers have warned that the 10% rise in the statutory living wage announced by Jeremy Hunt in last week’s autumn statement will already strain their finances.
Chiara Benassi, of King’s College London, an expert on employment relations, says fair pay agreements look like a fairly mild policy by European standards. “The UK has the lowest standard of workers’ rights in western Europe. Fair pay agreements are the most moderate proposal that the Labour party could make.”
The Organisation for Economic Cooperation and Development recommended collective bargaining in a recent report “to help promote a broad sharing of productivity gains, including with those at the bottom of the job ladder, provide voice to workers and endow employers and employees with a tool for addressing common challenges”.
On the tricky question of who will sit on the employers’ side of the table, Benassi says fair pay agreements should give providers in the sector an incentive to find a collective voice.
Since the decline of collective bargaining in the UK, she says, employers’ associations have retreated into the role of lobbying. “This is really an opportunity for them to raise their profile.”
Even once the participants have been identified, however, the negotiation process is unlikely to be straightforward. Labour has not made clear the precise role it would expect to play – whether ministers would expect to be inside or outside the room, for example.
The fraught process of talks over this year’s NHS pay settlement – by far the biggest collective agreement in England, covering hundreds of thousands of staff – showed that unions can differ among themselves about the right way forward.
A similar policy, also called fair pay agreements, was introduced by the Labour government of Jacinda Ardern in New Zealand, and intended to apply across a large swath of the economy. But the relevant legislation was only finally passed a year ago, and the new National party-led government has promised to repeal it.
Since the law was passed, Richard Wagstaff, the president of the CTU union in New Zealand, explains, half-a-dozen sectors have begun working towards fair pay agreements, but “only one has got to the bargaining table: bus drivers. I’m the lead advocate for it, and we’ve only just begun bargaining.”
He adds: “We’re continuing until the law changes; but it’s not looking very positive.”
One lesson for the UK’s Labour party, Wagstaff suggests, is to press ahead with implementing its own version of the policy early on. “The key is to move reasonably quickly, so that it can become established and embedded before the next general election.”
However, with many key practical questions still unanswered, it is unclear how realistic that may be.
