Written evidence submitted by Carnegie UK Trust (COV0172)

This is Part 1 of our response.  We plan to submit a second response by the 31 August.

Introduction

At the Carnegie UK Trust, we seek to improve the lives and wellbeing of people throughout the UK and Ireland, with a particular focus on those who are disadvantaged. We seek to change minds by influencing public policy and change lives through innovative practice and partnerships. One of our thematic strands is ‘fulfilling work’. Our focus in this area recognises that vital aspects of personal, community and societal wellbeing, including income, sense of purpose, social connections and personal agency are all affected by work. Our experience of work can significantly improve wellbeing, but unfortunately this is not guaranteed and is not experienced equally by all, particularly given increases in job insecurity and the rise of in-work poverty rates during the past decade.

The current coronavirus crisis has significant implications for all aspects of our wellbeing and the effect of the virus on the labour market is profound.  This response summarises key learnings gained through our existing projects in the fulfilling work theme and describes a new research project that we are undertaking on the future of good work. We plan to submit a second response to this inquiry following full analysis of the research. 

Our Existing Work – Key Themes Relevant to the Inquiry

Low Pay

Within the Trust’s thematic focus on ‘good work’, we refer to dimensions of good work, including terms of employment, work life balance, and voice and representation.  Of course a crucial component of work is pay and benefits, and whilst there were record lows in unemployment prior to the COVID-19 crisis, there were also increasing numbers of people in low pay work. A majority (56%) of people in poverty now live in a household in which someone is in work.[1]  The growth of in-work poverty is due to a number of factors, including the long freeze on in-work benefits, which has reduced their cash value over time, and increases in housing costs.

Earlier this year, we published a report on the Future of the Minimum Wage, working in partnership with the Learning and Work Institute. The research asked workers for their opinions on and experiences of the minimum wage.  The report highlighted the impact of low pay and in-work poverty on workers; from the toll it takes on family life and on health and wellbeing, to the sense of insecurity and feeling ‘left behind’.  Some participants reported struggling to afford anything beyond their rent and bills, and on some occasions even struggling to afford those. Many also reported struggling to afford nutritious food, or even three meals a day. Travel was a particular cause of stress, with low paid workers describing being unable to afford travel fares, and having to walk miles to work. Many participants described having to rely on support from friends, family, the local community and foodbanks to make ends meet, with several describing feelings of shame and stigma relating to this.

The research asked people for their opinions on raising the minimum wage and the impact that this would have, and found strong and broadly based support for further increases in the minimum wage. This data was captured shortly before the onset of the COVID-19 crisis.  At that time, two in three (66%) adults believed that the minimum wage was too low and should be increased.  However, many expected that any increases in pay may be off-set by a decline in in-work benefits, and many felt that employers may respond to a higher wage floor through measures which would compromise other aspects of good work.  Respondents tended to favour a cautious approach minimising any risk of increased unemployment, compared to a more ambitious approach to raising the wage floor even if this risked a small rise in unemployment. Most adults supported having a single minimum wage irrespective of age, rather than having lower rates for younger workers, as we have at present. When it came to regional flexibility, a majority of adults preferred to maintain a single national minimum wage, rather than having a more devolved approach, which would allow local areas to set a higher wage floor.

Also relevant to our work on low pay, we have worked alongside the Living Wage Foundation and Living Wage Scotland to support the development of Living Wage Places.  Living Wage Places was launched in 2019, and is a scheme designed to harness the power of place, involving local employers, communities and people, to help extend the Living Wage to more workers and lift more people out of low pay.  It gives cities, towns, boroughs, zones and even buildings, a unique opportunity to come together and build a coalition of local organisations, from public, private and the third sector, to drive the uptake of the Living Wage in their area. 

As we move into a period of rising employment as a result of the COVID-19 crisis, we anticipate that the tensions around pay and benefits, and the pressures on businesses to reduce costs will intensify.  We intend to provide further evidence and analysis in relation to this issue in our second submission to the Committee in August, by when we will have a completed a new research study on the COVID-19 implications for good work.

Productivity and good work

In January 2020, the Trust published a collection of essays titled Can Good Work Solve the Productivity Puzzle?  Contributors come from policy, business, academia, and trade unions.  The essays reflected UK-wide perspectives and reflections on this agenda are being taken forward in Scotland, Wales and in North-East England.  Whilst there is debate about the concept and measure of productivity, there is also historical evidence of the relationship between productivity growth, higher wages and improvements in living standards.  The essays show that there are important connections between increased workplace productivity and good work, although of course there are many nuances to explore.  Some interventions, focusing on particular dimensions of good work, may deliver more substantial productivity gains than others. The strongest correlation between good work and productivity is found in the components of pay and benefits, followed by health, safety and psychosocial wellbeing; job design and the nature of work; and voice and representation. 

The overall correlation between productivity and good work is much stronger at the ‘bottom’ end of the labour market.  This means that if we are interested in improving productivity, then an effective course of action would be to apply effort to tackling ‘bad work’ and poor-quality work closer, at the very least, to the average level. Such an approach would align with the economic imperative of high workplace productivity – which will become ever more important in the recovery from COVID-19 - with the social justice goal of making work better for those who are currently least well served by the labour market.

A key theme that many of the essays explore is the interaction of technology and good work. The essayists expressed a common view that it is not pre-determined that technology must degrade the value of workers and diminish their experience.  Rather, there is potential for technology to enhance good work, but that this is far more likely in firms and sectors where good work is already established as a priority.  There is also discussion of the gig economy, and of the opportunities to improve the working practices of gig economy employers, without necessarily losing the positive gains of this style of working.  For example, flexibility that is genuinely two-way can be beneficial to employee wellbeing, as well as employers, and strengthening worker voice and collective action can increase employee’s sense of control and purpose, improving the likelihood of wellbeing at work.

Whilst the impact of coronavirus means that the labour market context has dramatically changed since we published the essay collection, many of its findings offer insight for how retaining and improving quality of work in the UK labour market will be increasingly meaningful and relevant in the context of the economic crisis.  We hope to say more about the relationship between good work and productivity in the COVID-19 economy in our second submission to this inquiry, following analysis of our new research.

Race inequality in the workplace

In March 2020, we published a report in partnership with Operation Black Vote and University College London Race inequality in the workplace, which explores the connections between work, ethnicity and mental health.  These are themes that have become even more significant given the context of coronavirus and the disproportionate number of people from BAME backgrounds impacted both in health and economic terms.

Our report utilises data from Next Steps, an extensive longitudinal cohort study, focused on the millennial generation in England, collecting data from more than 7,000 young people about many areas of their lives. Given the over-representation of ethnic minority groups in Next Steps, this data set is a particularly robust source for comparisons between ethnic groups.

The key findings report include that Black, Asian and Minority Ethnic (BAME) young adults continue to be at a greater risk of being unemployed than White young adults: BAME young adults are 58% more likely to be unemployed.  BAME groups are also more likely to be in some form of precarious work.  Those in precarious work include those on zero-hours contracts, those who are shift workers and those who have a second job.  The results show that BAME young adults are 47% more likely to have a zero hours contract than the white group (6.9 percentage points compared to 4.7 percentage points).

More specifically, those of Pakistani ethnicity are at a greater risk of being in precarious work. Pakistani young adults are more likely to be unemployed, working shifts, without a permanent contract and having a zero hours contract compared to White young adults.  Those who identify as Black African are also in a precarious position compared to the White individuals, having a greater risk of unemployment, shift work, and not having a permanent contract.

We also found significant links between employment status and poor mental health whereby being unemployed, a shift worker or on a zero-hours contract are all associated with a significantly greater risk of having poor mental ill-health.

Precarious Work, Coronavirus and BAME workers

Analysis produced by the House of Commons Library states that “workers who are low paid, on zero hour contracts, temporary employees and self-employed have been most negatively economically impacted by the coronavirus outbreak, as well as young workers, BAME workers, and women”.[2]  Meanwhile the Resolution Foundation estimate that there are 1.7 million self-employed workers facing major income losses because they work in the sectors that have been most affected by lockdown, or are parents affected by school closures.[3]

There has also been concern for the wellbeing of precarious workers in sectors which have continued to operate throughout.  Concerns have been raised by the Centre for Economic Policy Research (CEPR), the World Economic Forum and Fairwork at the University of Oxford, specifically in relation to gig economy workers and whether employers are being stringent enough in terms of protecting the health and wellbeing of these essential staff who are serving the rest of the population.[4] 

Given this context, we are concerned that the over-representation of BAME groups in precarious work means that those from ethnic minority backgrounds are at an increased risk of suffering negative labour market consequences during the COVID-19 crisis, with the range of negative wellbeing implications that this brings.

In addition, within the context of our Race Inequality in the Workforce report we highlighted that there are embedded structural and institutional issues of race inequality in the UK. Some labour market specific examples include evidence of an ethnicity pay gap, a lack of diversity amongst senior roles and the fact that BAME job applicants have to send around 60% more CVs in order to get an interview.[5]  Of course many of these inequalities have been given wider public recognition during the coronavirus crisis and in response to the death of George Floyd in Minneapolis.  

Given this context, it is important that due recognition is given to the potential for conscious or unconscious race discrimination to play a role in decisions that employers may take around furloughing and redundancies in the aftermath of the COVID-19 crisis, and we ask that government take active steps to mitigate these risks.

Young People

The Next Steps data that was used for the Race Inequality in the Workforce report was focussed exclusively on the millennial generation and the report described their experience of ‘a quarter-life crisis’.  The millennial generation faced a number of particular challenges as they entered the world of work: they were aged 18 at the start of the global financial crisis and confronted with higher than ever university fees and student loan debt, combined with the growing trend towards zero-hours or temporary contracts. As reported by the Resolution Foundation in their Growing Pains publication, many of this generation are over-qualified for their roles, have found routes of progression more difficult than previous generations, and have become stuck in low-pay jobs.[6]  There is already recognition that similar patterns may emerge for the current generation of school-leavers and graduates[7], and given the context of embedded race inequalities, those from BAME backgrounds are particularly vulnerable.  It is crucial that strategies begin to be devised now to support young people to find a secure footing in the labour market following the current crisis and prevent them from being left behind.

The future of good work in the post-coronavirus economy

The Trust is currently undertaking research project to understand the impact of Covid-19 and lockdown on the labour market, and the implications for the good work agenda.  The project is designed to explore the employment and job quality impacts of this crisis, and how they are affecting, or may affect, different groups of workers, different sectors and different jurisdictions.  It also intends to anticipate how the terms of the public debate about good work may be changed by this experience given that the crisis is likely to provoke new policy priorities or perhaps even enduring changes to how we organise our society. Whilst recognising the severity of the current situation, we also anticipate that there may be opportunities for positive change, building on issues as the recognition of low-paid key workers, a renewed focus on health and safety at work, or increased flexibility for some workers in working patterns for example.

The research includes a review of current literature on the topic and a series of interviews with senior stakeholders.  We are currently collating and analysing the research and plan to publish a report summarising the findings in late summer.  We plan to submit a second response to the inquiry offering analysis of our research.

Conclusion

Workers’ experience of key aspects of work, such as terms and conditions; pay and benefits; physical and mental strain; job design; support structures; voice and representation, and work-life balance, can vary enormously across the UK labour market. While good work has enjoyed a much needed increase in policy attention in recent years, there remains much to do.  In the post-coronavirus context, there is a risk that this progress will be compromised in the midst of tackling the economic crisis.  However, exploring and advancing the range of different levers that might be deployed to extend the availability of good quality jobs has the potential to help deliver both economic and social goals.   Ensuring and increasing quality of work should be part of our collective vision to build towards a productive, effective, fair and inclusive labour market in the UK.  Priorities include improving pay and conditions for the lowest paid workers, many of whom live below the poverty line; improving race equality in the workforce; and offering specific support to young people entering the labour market during the next few years.  

Recommendations

1. The government should commit to further examining the potential of good work and its constituent dimensions to play a positive role in the economic and social recovery from the economic crisis.

2. In order to allow for understanding and monitoring of race inequality issues in relation to employment and coronavirus, data on unemployment, furloughing and the claiming of benefits should be made available by ethnicity and published at regular, timely intervals, to ensure that inequalities in these areas are identified early and mitigating actions taken. 

3. Strategies must continue to be devised and enhanced to effectively support school-leavers and graduates to find long-term fair and decent work in the labour market following the crisis and prevent them from being left behind. 

July 2020