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A Better Recovery

Learning the lessons of the corona crisis to create a stronger, fairer economy
Report type
Research and reports
Issue date
Chapter 1: Decent jobs and a new way of doing business


The coronavirus has shone a spotlight into the world of work, revealing strengths and significant weaknesses in the way that work is organised and rewarded in the UK. Responding to the corona virus has required huge changes for all workers and employers, but the vast gulf in pay, security and voice at work has made this a much easier process for some than for others. Workers have been affected in very different ways - with some losing their jobs, others furloughed on different amounts of pay, some working from home and others continuing to go out to work. The burden of the economic fallout has fallen unequally, in many cases mirroring existing inequalities of class, race and gender, in others creating new ones.

As a society, we have depended throughout the crisis on the workers in what have increasingly become recognised as our essential services. This of course includes the NHS, social care, refuse collection, postal and travel services and so on, but also includes those working in food production and sales and the vast array of jobs that support these and other vital sectors. It is an inditement of our economic system that many of these essential jobs are low paid and insecure; yet, we now find that we cannot do without them. It is time to re-evaluate the value placed on different jobs and recognise the inter-dependency that characterises every workplace and our society more broadly. We must never forget that many workers have lost their lives as a result of going to work to care for or keep services running for others.

Throughout the crisis trade unions have worked to give a voice to working people. They have defended the right of workers to work safely and with appropriate PPE, leading to safe working practices being implemented; they have successfully called on employers to place workers on furlough, rather than redundancy, saving jobs; they have agreed new ways of working with employers, helping to save businesses from going under. Without unions, more people would have lost their jobs and more people would have lost their lives. A voice at work is not a luxury, it is a necessity, an essential part of making work fair for all.

Delivering decent jobs means ending low pay, giving workers a stronger voice and tackling discrimination, disadvantage and insecurity at work. But we also need the development of new business models based on fair employment practices. This requires rebalancing the UK’s corporate governance regime away from shareholder primacy to support a long-term, sustainable approach to company success.

Ending the indignity of low pay

Workers shouldn’t need to risk their lives to be thought worthy of a decent wage. But the crisis has thrown the endemic low pay faced by many workers into sharp relief. Our analysis estimates that 38 per cent of key workers, some 3.7 million people, are being paid less than £10 an hour. [1]

This follows cuts for public sector workers (discussed more fully in Chapter 4) and years of pay stagnation in the private sector. The decade of austerity witnessed the longest pay squeeze in a generation, and real pay was falling before the pandemic hit.

We know that the most sustainable way to boost pay is to give people a greater say in pay negotiations through collective bargaining, allowing a fair distribution of rewards throughout the workforce. Research from the OECD shows that workers in firms where pay is collectively bargained receive a wage premium, and workers in countries with strong collective bargaining systems see less pay inequality. [2]

But alongside measures to promote collective bargaining, increases in minimum wages are an important tool to tackle low pay.

At present, the government has committed to raise the national living wage (NLW), currently paid to those over 25, to a level of two-thirds of median earnings by 2024, provided economic conditions allow. The age at which the NLW is paid will also be reduced following recommendations made by the Low Pay Commission, the National Living Wage, so that it applies to workers aged 23 and over in April 2021, with a target for it to apply to workers aged 21 and over by 2024. [3]

But low paid workers need a pay rise now.

  • The national minimum wage should be raised to £10 an hour for all workers.

Workplace pensions

Occupational pensions are an important part of workers’ remuneration. Just as workers are entitled to a minimum wage that gives them enough to live on, they should be able to expect a workplace pension that enables them to maintain a decent standard of living in retirement when combined with the state pension.

This means giving all workers automatic access to a workplace pension with a meaningful contribution from their employer. But many of the low paid and young workers now recognised and celebrated as vital lack these. This is because employers do not have to put workers earning less than £10,000 or under 22 years old into a pension and can exclude the first £6,136 of an individual’s earnings when calculating how much to pay in.

The government must:

  • phase out the lower earnings limit so that pension contributions are calculated from the first pound of earnings
  • scrap the earnings threshold and lower the age threshold to 18
  • set out a plan to increase minimum employer contributions from the current level of 3 per cent.

In recognition of the high number of low paid women and BME workers in key sectors, the government must also now commit to close the pensions gaps that mean these groups are significantly more likely to be ‘under-pensioned’. The income gap between men and women in retirement, for example, stands at 39.9 per cent.

The government must commit to comprehensively investigate and monitor pensions gaps and take concrete action towards closing them. This should recognise the impacts of caring responsibilities, disadvantages in the labour market and low pay on peoples’ ability to save for retirement.

But the TUC also recognises that increasing the amount of money going into retirement saving at this time will be difficult for many employers and employees. So it is important to ensure that workplace pensions are as efficient as possible to make the most of every pound saved for retirement. This means making sure charges are low and governance levels are high, and also allowing a higher degree of risk sharing between members. Pooling longevity risk in particular, would boost retirement incomes, and make them more predictable.7

The government must:

  • ensure legislation to enable the Royal Mail to set up a collective defined contribution scheme passes into law
  • commit to consulting next year on ways of allowing and encouraging a wider range of risk sharing pension schemes
  • make sure savers in individual defined contribution schemes have access to a well-governed default option for accessing their pension saving in retirement, with charges capped.

It is also important that any temporary measures implemented by individual employers to reduce pension costs – such as reduced contribution rates or deferred deficit recovery contributions – are not allowed to continue once the pandemic passes.

Security at work

The one-sided nature of the UK’s “flexible” labour markets has been exposed by the coronavirus pandemic.

Insecure workers, such as agency workers, those on part-time or temporary contracts and in low-paid self-employment have been left exposed by the outbreak and associated shutdown - but in contrasting ways.

The TUC estimates that 3.7 million people are in insecure work, one in nine of the workforce1. This includes one in five (20 per cent) of those classed as elementary roles, including kitchen assistants, security guards and farm workers; one in six (17 per cent) of those in caring and leisure roles; and one in five (19 per cent) of those working in skilled trades. Black workers, women and disabled workers are all over-represented in insecure work.

Their working lives are often characterised by instability, with many employers offering or cancelling shifts at late notice. Our polling shows that over half (51 per cent) of zero-hours workers had shifts cancelled at less than a day’s notice – and nearly three-quarters (73 per cent) had been offered work in the same time frame2. Among workers with no fixed hours more broadly, more than a third have had work cancelled with less than 24 hours’ warning3. This makes it impossible for affected workers to plan their finances or manage responsibilities such as childcare.

The stress and uncertainty created by this unpredictability blights the lives of insecure workers in ordinary times. But the Covid-19 pandemic has added a more deadly aspect to this lack of workplace power.

Some insecure workers have continued to work. Many of those filling key roles such as caring, in retail, warehouses or in food delivery are on insecure contracts. But they are reliant on their employers providing adequate equipment and working environment to enable them to work safely. Their insecure contracts make it harder for them to assert their rights for a safe workplace and appropriate PPE; to take time off for childcare responsibilities as schools have closed; and to shield if they or someone they live with is vulnerable. Their insecurity has increased their vulnerability, with all the risks to health and life that that brings.

Others have seen their workplaces close as many shops, offices, pubs and cafes have shut their doors. But, while employees in permanent work have often been put on paid furlough if their workplace closed or they had caring responsibilities, many insecure workers have been left with no income as their employer has opted to provide them with no work.

Despite some welcome recent improvements in rights for some insecure workers,45 much more needs to be done.

We need:

  • a ban on zero-hours contracts and bogus self-employment
  • a decent floor of rights for all workers and the return of protection against unfair dismissal to millions of working people
  • robust rules on notice of shifts and compensation for cancelled shifts
  • a statutory presumption that people are employed (to combat bogus self-employment)
  • penalties for misleading workers on their employment status.

A voice for workers – in the economy and in the workplace

The crisis has graphically demonstrated the importance of workers speaking together through their trade unions. Unions have played a crucial role supporting their members throughout the crisis, negotiating with employers to agree new ways of working and keep workers employed, while defending the right not to work in unsafe conditions or without necessary PPE. At a national level, unions successfully lobbied the government to establish the job retention scheme that has allowed millions of people to keep their jobs throughout the crisis and significantly improved the ‘return to work’ plans proposed by the government.

As workers lose their lives to the virus, the costs of not listening to workers are starkly exposed. Why have security guards and other vulnerable workers lost their lives in such large numbers in the crisis? Why have people in non-essential roles had work during lockdown without the equipment they need to work safely? As well as the deadly power of the virus, these tragedies also reflect the imbalance of power between workers and their employers.

For an individual worker, their relationship with their employer is fundamentally unequal, giving the employer considerable power over the worker. It is only through coming together and speaking with one voice that workers can reduce, if not completely remove, this imbalance of power. That is why workers in every workplace need the power and protection of a union. Every workplace must be democratised so that workers’ voices cannot be ignored.

The virus has demonstrated an overwhelming case for unions, but workers coming together in unions delivers benefits in good times as well as protection in bad times. Research shows that workplaces with collective bargaining have higher pay, more training days, more equal opportunities practices, better holiday and sick pay provision, more family-friendly measures, less long-hours working and better health and safety. Staff are much less likely to express job-related anxiety in unionised workplaces than comparable non-unionised workplaces; the difference is particularly striking for women with caring responsibilities6.

Employers benefit too. Collective bargaining is linked to lower staff turnover, higher innovation, reduced staff anxiety relating to the management of change and a greater likelihood of high-performance working practices7. And society benefits, with organisations such as the IMF to the OECD recognising the role of collective bargaining in reducing inequality and supporting economic growth. Our democracy is incomplete if it stops at the door of the workplace. Coming out of the pandemic, this must change.

Collective bargaining for workers

To ensure that all workers can access the support of a union at work and can speak with colleagues through a union to negotiate with their employer we are calling for:

  • unions to have access to workplaces to tell workers about the benefits of union membership and collective bargaining (following the system in place in New Zealand)
  • new rights to make it easier for working people to negotiate collectively with their employer
  • a broadening of the scope of collective bargaining rights to include all pay and conditions
  • reform of the Central Arbitration Committee (CAC) that adjudicates on union recognition requests, requiring it to take account of the benefits of collective bargaining in its decisions
  • the establishment of new bodies for unions and employers to negotiate across sectors, starting with hospitality and social care
  • the abolition of the Trade Union Act of 2016
  • unions to be permitted to use electronic balloting in votes including all internal elections and votes on industrial action.

A voice for workers at the heart of government

Working people need a voice at the heart of government at UK, devolved nation and regional level. They must be represented in the development and delivery of the key interventions required to protect employment, stimulate the economy and ensure work is safe.

Addressing the UK’s social and economic inequalities must be an essential part of any recovery strategy. The Covid-19 pandemic has brought the long standing and deep-rooted regional inequalities into sharp focus, with the North West and North East having the highest proportion of jobs at risk of being lost due to Covid-19. [4] Austerity has eroded the resilience and capacity of local public services to coordinate emergency responses swiftly, further exacerbating many of the existing challenges faced by our regions and nations. It is clear that ‘levelling up’ must go beyond the typical ‘North-South’ divide narratives. As we are seeing from Covid-19 data, mortality rates and levels of deprivation, inequality exists within regions as well as between them.

Regions and devolved nations, in partnership with unions and employers, are essential in delivering a just transition, rebuilding the industrial base and ensuring all workers have the skills they need to do this. We outline how this could be achieved in Chapter 5.

We are calling for:

  • the establishment of a National Recovery Council, bringing together government, unions and employers, to develop plans for the recovery across the UK
  • regional and devolved nation recovery panels, representing unions, employers, Job Centre Plus, relevant civic partners and local and regional governments, to feed into the planning and delivery of recovery strategies at local and devolved nation level
  • these structures – representing key social partners in each region, devolved nation and UK level – to be sustained as we transition beyond the immediate economic impacts of the pandemic, making sure that regions and devolved nations are at the heart of our longer term plan to build a better economy
  • the Wales National Recovery Council to be based on existing social partnership arrangements as already established by the Welsh government – this would build on the work of the Social Partnership Council.

Sectoral initiatives

Unions and employers have worked together on sectoral initiatives throughout the crisis. In social care, for example, unions and employers wrote a joint open letter calling for a new settlement for paid and unpaid care workers that recognises and adequately remunerates their crucial work. In developing its return to work proposals, the government has brought together unions and employers on a sectoral basis, recognising the need to involve representative of both workers and employers in these plans.

As we work towards recovery, unions and employers should continue to work together at sectoral level to agree workforce pay and development strategies, especially in sectors characterised by low pay and poor working conditions. In addition, the government must continue to engage unions and employers in developing sectoral recovery plans, and should establish formal sectoral panels with representation from unions and employers for this purpose.

  • Unions and employers should work together to agree sectoral workforce pay and development strategies, especially in sectors characterised by low pay and poor working conditions, such as social care.
  • Government should establish formal sectoral panels involving unions and employers to develop sectoral development plans.

New business models to deliver fair employment

Delivering decent jobs means ending low pay, giving workers a stronger voice and tackling discrimination, disadvantage and insecurity at work. But it also requires the development of new business models based on fair employment practices. This means rebalancing the UK’s corporate governance regime to give the workforce a voice in corporate decision-making and to remove the priority currently given to the interests of shareholders in company law.

The dependence of business – and the public – on frontline workers has been graphically illustrated by the crisis, as workers in warehouses, supermarkets, transport, security and many more have continued to work to keep the country going. Some have paid with their lives. Listed companies are already required to put in place mechanisms for workforce voice in corporate governance but many have to date chosen weak and ineffective methods for doing so. If companies expect their staff to go to work while others (including company directors) stay safely at home, they must reward this contribution by giving their workforce a proper voice in the business and putting in place fair pay plans that redistribute company resources to reduce pay gaps and eliminate low pay.

The traditional perspective that the private sector supports the public sector through tax contributions has been reversed and the recovery of whole sectors of the economy is dependent on government funding and support. These businesses can no longer argue that they are accountable only to their shareholders – it is not their shareholders that ensured their survival through the crisis. They are dependent on the society that has enabled the government to give them the support they have needed and continue to need. This can only be justified if business adopts a different business model going forward which takes a long-term, sustainable approach to business success with the interests of workers and stakeholders at its heart.

In the challenging economic environment ahead, the government will be called upon to offer support to companies or indeed whole sectors faced with reduced demand or unable to operate at all due to requirements of social distancing and other measures.

The government has already played a vital role in keeping businesses from going under and saving jobs and the TUC understands the importance of government support for business at this critical time. It is imperative, however, that this support leads to changes in corporate priorities and practice going forwards.

Ongoing government support must be conditional on businesses putting in place fair pay and employment plans and bailouts for companies delivered in a way that enables the government to influence corporate behaviour going forwards. The government should take equity shares in exchange for its support and should use its influence to ensure that companies put in place fair pay and employment plans that ensure company resources are used responsibly and fairly going forwards.

Corporate governance reform

Company law should require that worker directors comprise one third of the board in companies with 250 or more staff9.

Corporate purpose must be reformed by revising directors’ duties to require directors to promote the long-term success of their company as their primary aim, taking account of the interests of workers, shareholders, other stakeholders and environmental impacts.

The regulatory regime for mergers and takeovers should be reformed to ensure that they do not destroy economic and social value.

Fair pay plans

  • Companies should radically overhaul their approach to pay. They should re-evaluate their pay scales and redistribute company resources to reduce pay gaps and eliminate low pay. This should be a requirement for any company receiving government support.

Government support for business must promote fair pay and employment

  • Government support for business should be conditional on business putting in place fair pay and employment plans.
  • The government should take equity stakes in companies in exchange for financial support in order to influence corporate behaviour going forwards.
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