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Matthew Taylor: A question of quality

25 August 2017 by Henry Ker

Matthew Taylor: A question of quality - Read more

Matthew Taylor, head of the government's employment review, talks quality work, strengthening employer-employee relations, and making flexible working fair.

What is the core aim of the review?

The aim is to explore how we can fulfil the ambition that all work in the British economy is fair and decent, with scope for development and fulfilment.

The way in which we went about that was to look at three broad areas. Exploitation: where is it that people are being exploited and why and what can be done about it? Clarity: how could we bring greater clarity and consistency throughout regulation and taxation? Then thirdly, incentives: how do we address the underlying drivers to create an overall system that promoted good work?

Overall our labour market is strong and we have higher levels of employment than ever before. There are high levels of employment participation among most groups, although more needs to be done to help minority status groups such as BME [black and minority ethnic] and people with disabilities.

On an international level, broadly speaking the UK labour market is good. The really positive news is at the moment a combination of the living wage and the tightness of the labour market means that incomes are rising fastest amongst the lowest-paid workers.

But the current challenges include the need for better work. There are still people who are finding it hard to manage on their incomes and who, despite working hard, find it difficult to make ends meet.

At the very least we should offer those people decent work and the possibility for progression. Bad work is negative for health and wellbeing, and that is not just a problem for the individual but has a knock-on effect on the rest of society.

“There are still people who are finding it hard to manage on their incomes and who, despite working hard, find it difficult to make ends meet”

Then there is a relationship between good work and productivity. If we can improve the quality of work and management we would make some contribution to solving our woeful productivity record.

I also think that we need our work to reflect what we say about citizenship in civil society. We want citizens who are active and engaged and for them to take back control; employees who are trusted and respected and given autonomy.

The final challenge is that technology is going to make a huge impact in the years to come. It is important that we approach the opportunities and threats of technology with the goal in mind that it improves the quality of people’s work.

Was there anything surprising in the evidence you received for the review?

There was nothing that came up in the review that I had never heard before or arrived completely out of the blue.

Certain things were, however, confirmed for us. Among those things, is that one of the challenges of labour-market regulation and policy is that different people doing exactly the same job can have very different feelings about it.

Alongside that, flexibility is great for some and not so great for others. There is a problem with what we called in the report ‘one-way flexibility’; this was people who feel that the flexibility is all on the side of the employer and the organisation, and not on the side of the individual. We considered various things to try to address that.

I also began to see the connections between employment and education, health and welfare, and it emphasised to me the importance of a holistic approach to good work.

Are there key recommendations in the report you want to highlight?

It is important to say that if you are an organisation that employs people as ‘employees’ – to distinguish from other categories of workers, such as zero-hours workers, agency workers, gig workers and so on – there is little to nothing in our report that should increase your costs.

Because I actually think the ‘employment wedge’, the cost of taking people on as employees, is high enough already.

The two areas you might want to look at if you are the board of an organisation are, firstly, your labour supply chain. We have recommendations around this such as greater transparency; companies have to be more open and take more responsibility for what happens in their labour supply chain.

Secondly, we have recommendations about trying to make it much easier for workers to gain access to independent representation, information and consultation.

The bar for access to this has been set very high in the past and we want to significantly lower it. It is an important principle that all workers can have independent representation and have rights to information about company strategy and consultation over things that may affect their service and position.

You say in the report that ‘the best way to achieve better work is not national regulation but responsible corporate governance, good management and strong employment relations within the organisation’. Can you explain a bit more of the thinking behind this?

The key point is that sometimes people think a particular form of employment leads to a particular set of outcomes and I do not think that that is the case.

There is good employment and bad employment; there are good zero-hours contracts and there are exploitative zero-hours contracts. Gig employment works for a lot of people, but not so well for others.

What matters for people is whether or not the organisation they work for, or even an organisation that pays them as a self-employed contractor, treats them fairly and decently.

The way that we would improve the lives of the most workers in the economy is by improvement in the quality of management across the board. That is the point I wanted to emphasise.

And I share Sir Charlie Mayfield’s [chairman of the John Lewis Partnership and head of the new Productivity Leaders Group] view on productivity: if we could improve the quality of management in British business – and management of people is arguably the most important element – we could make a real difference to our poor productivity performance.

“If we could improve the quality of management in British business we could make a real difference to our poor productivity performance”

With looking to strengthen employee-employer relations, we argue for renewed emphasis on employee engagement. As I mentioned before, we specifically recommend that it should be much easier for people to have access to independent representation, information and consultation.

The ‘informing and consulting employees’ (ICE) regulations were introduced in 2005 and give staff a legal right to be consulted about certain issues at work which may affect them.

However, they have not been taken up very widely because the threshold to enact them is 10% of the entire workforce (or 15 employees, whichever is higher) of the organisation. That is a very high bar.

That is the same threshold as the bar for trade union recognition. Trade unions, who ordinarily might be the bodies who are trying to get workers an ICE agreement, will not bother when that 10% of employees might actually get them trade union recognition.

To counter that, we have recommended reducing the 10% to 2%, which hopefully will make it a lot easier for employees that want independent representation, better information and consultation to have access to it.

We also argue that – although this is not a recommendation for government to act, but a soft recommendation for companies – companies should undertake regular and robust independent surveys of employee engagement and satisfaction, and should have the courage to release those publicly.

Increasingly people look at websites like Glassdoor [a jobs and recruitment website featuring reviews of companies, as well as information like CEO approval ratings, salary reports and interview reviews] for information about employers.

There are quite a lot of companies that have done surveys but sometimes they are not that rigorous and are not published. We would encourage companies to see the publication of a robust and independent assessment of employee satisfaction as a good way of talking about what that company is and what they are trying to aspire to. That can be used to connect with consumers and investors.

You mentioned ‘the quality of people’s work’ as a major factor – how do you define something like that and how do you go about improving it?

It is important to remember different people have different motivations when it comes to work, however we offer one definition of ‘quality’ in the report.

Although we could have picked a number of frameworks, we settled upon the ‘QuInnE’ model. This seemed a good starting point and we then look at it in more detail in the report.

Of course pay and conditions matter in relation to quality, and they matter in particular for people who have poor pay and poor conditions. Once you think your pay and conditions are reasonable, then generally the things that matter to people are a sense of purpose and meaning, trust and autonomy; and a sense of teamwork and fairness within the organisation.

QuInnE

The ‘QuInnE’ model of job quality was developed by the Institute of Employment Research and others as part of a pan-European research programme.

It outlines six high-level indicators of quality: wages, employment quality, education and training, working conditions, work-life balance, and consultative participation and collective representation.

‘Fairness’ is also a word used a lot in the report. What does it mean to you in this context?

There are different ideas of fairness but an important one is intra-organisation fairness. That is the idea that an organisation is treating people properly and that is why we worry about the issue of one-sided flexibility – where companies are transferring all the risk onto the shoulders of workers and often the most vulnerable workers.

Fairness is about the just distribution of risk and reward in an organisation.

One-sided flexibility is a model where the organisation has a lot of flexibility but the employee has a lot less. It is when people on zero-hours or very short-hour contracts turn up for work but there is nothing available to them.

Or we have situations where people can work for years on a zero-hours contract and actually get plenty of hours of work every week but that work is never guaranteed, and that has a knock-on effect of preventing them from being able to get a mortgage or loan.

Then we have situations where workers feel because they have no guaranteed hours, if they have an argument with their boss or raise a matter for concern they could lose the hours that they desperately need – there is an imbalance of power.

“We have a responsibility to protect the interests of the most vulnerable in society and to ensure that people genuinely have opportunity throughout their working lives”

We are proposing the idea of a higher minimum wage for non-guaranteed hours in order to address some of the problems with one-sided flexibility. This would also apply to worker groups such as gig workers, and it is something that has been taken up in New York and Australia already.

The other issue of fairness is more at a societal level. We have a responsibility to protect the interests of the most vulnerable in society and a responsibility to ensure that people genuinely have opportunity throughout their working lives to develop, grow, and improve the quality of their work.

Beyond that higher minimum wage for non-guaranteed hours, we do not get into the issue of pay with ‘fairness’ as that is slightly beyond our remit, but it clearly does matter to people. There is, however, an existing commitment to increasing the living wage, and I think people have not really got their heads around how big an impact that will have.

Instead, we focus particularly on this question of quality. For us it is clear that the worst work tends to be the work undertaken by the people who are also the least privileged in society. Disadvantages cluster together and addressing this issue is one way toward a fairer society.

Technology is something you mentioned at the start. How is technology affecting the way we work?

One clear way is through gig working and platform-based models. We have a bit to say about that, and we can enable those platforms to offer proper flexibility while also protecting workers’ rights.

Here at the Royal Society of Arts, we are also doing a lot of work on automation and its potential impact. However, we do not cover the topic extensively in the report because this future impact of technology and automation is still too unclear.

However, we do think industrial strategy is too focused on the high-end, high-export sectors and not sufficiently focused on lower-skilled and lower-paid areas.

We need to think not just about technology but about interaction between technology and people. Some of the lower-paid sectors, most obviously retail and hospitality, are going to be strongly affected by technology and the Low Pay Commission should take a much more active role in thinking about how to promote better work in those sectors.

Is greater clarity needed around employment law?

One of the areas that needs clarifying is around categorisation of workers.

We are suggesting that people who are currently referred to as gig workers be classified under a new category as ‘dependent contractors’. We feel ‘dependent contractors’ would better reflect the particular employment circumstances they face.

However, employment law generally is an issue of contention. Some people argue that the law is clear, it is just about the implementation of it. But that was not the majority view of people I spoke to.

Because of this, we are recommending new primary legislation to help better define the distinction between self-employed people and workers. Over time this will also help align the distinction in employment law with the distinction between self-employed people and employees in tax law.

What would you see as success for this report?

I know it is easy to make broad recommendations; it is a very different matter actually implementing them in law. The government has now got to go away to consult, to consider, and will respond by the end of the year.

My intention is not to be a backseat driver in that process. What matters to me most of all is a broad commitment to improving the quality of work in the British economy and I will look with interest to see how the government responds.

“My intention is not to be a backseat driver in the government's response”

Of course I would like to see as many of our specific recommendations as possible implemented. I have spent my life working on public policy, so to have ideas that I have developed with my review team passed into law would be something I would feel very proud of. But obviously it is more important that a difference is made to people’s lives.

I would especially like to see some of the review’s broad strategic principles around issues like tax, employability and health enacted, because I think we need a joined up approach to improving the quality of work.

Since we published the report, I am delighted that the question around quality of work has entered into the public discourse.

If you were to ask me to choose one thing that I would hope for in ten years’ time, it is that we would still be focusing on the quality and the importance of good work, and that there was a greater recognition of this importance among policymakers, investors, consumers, employers and employees.

Interview by Henry Ker, editor of Governance and Compliance

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