Rethinking Recovery: Labour market exploitation and austerity in the UK

Stopping labour exploitation requires effective regulation of the labour market, not scapegoating migrant and vulnerable workers

judyfudge-100Explaining the Conservative government’s decision to appoint a Director of Labour Market Enforcement, Immigration Minister James Brokenshire declared: ‘Exploiting or coercing people into work is not acceptable.  It is not right that unscrupulous employers can force people to work or live in very poor conditions, withhold wages or mislead them into coming to the UK for work’.  Who could possibly disagree?  What could possibly be wrong with the government’s determination to ‘provide a coherent enforcement strategy to crack down on serious exploitation of workers by appointing a new Director who will oversee the relevant enforcement agencies’?

However, once the new Director of Labour Market Enforcement is placed in context, it is clear that this initiative is a classic bait and switch ploy. Instead of developing strategies to enforce employment standards, the government is bent on blaming undocumented migrant workers for the low pay and poor working conditions that too many employees in the UK endure.

Establishing a Director of Labour Market Enforcement is part of the Immigration Act 2016, which is designed tomake it harder for people to live and work illegally in the UK and to impose tougher penalties and sanctions on rogue employers who exploit illegal migrants’. The Act makes illegal working a criminal offence, with a maximum custodial sentence of six months and an unlimited fine. It also provides that the workers’ wages can be seized.  Punishments for employers who employ migrant workers without proper authorization to work in the UK have been increased; the maximum civil penalty for employing an undocumented worker has been raised to £20,000 per illegal worker and businesses that employ such workers can be closed down.  According to Brokenshire, ‘Illegal labour exploits workers, denies work to UK citizens and legal migrants and drives down wages’. The Conservative government points to an ‘increase in organised criminal activity engaging in labour market exploitation’ and illegal workers as the cause of the problem of low-paid, insecure and precarious work in the UK.

Although the government is using the Immigration Act to vilify illegal workers and criminal employers as the cause of the problem of labour exploitation, the Act also gestures towards enforcing employment standards through the establishment of the Director of Labour Market Enforcement and by expanding the remit of the Gangmasters Licensing Authority, now called the Gangmasters and Labour Abuse Authority (GLAA). The Director is supposed to provide strategic direction for three organisations responsible for regulating the UK labour market: the National Minimum Wage Unit in HMRC; the GLAA, which until October 2016 licensed labour contractors in specified industries with a history of abusive labour practices; and the Employment Agency Standards Inspectorate. The GLAA will be given additional powers enabling it to investigate abuse allegations across the entire UK labour market. Labour Abuse Prevention Officers, with a specialist investigator role within the GLAA, will be detailed to carry out enquiries into labour market abuse offences.

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.