Building working class power

When talking about working class jobs in this section, we look at class through the lens of both occupation and pay, looking at the experiences of people in jobs paid above and below the median, and at the low and high paid, as an approach to thinking about working class experiences today.

The seven million employees in jobs that earn less than median wages (£12.70 an hour in 2018) but aren’t in low paid jobs (defined here as 75 per cent of the median, or £9.60 an hour) have seen their pay flatline over the decade.

The minimum wage has helped push up pay at the very bottom – but without strong trade unions to ensure gains are widely shared, pay for those in jobs paid below the median is stagnating.

In contrast, those in the highest paid jobs, earning more than twice the median UK wage (over £26 an hour) have seen their pay packets increase by £1.26 an hour, a rise of four per cent, over the same period. For someone working a 35-hour week that would add up to a pay rise of £44 a week.

The chart below breaks this down further to look at the experience of different groups in the labour market, as set out above. It shows that:

• Prior to 2010, pay growth was fastest in percentage terms for the lowest paid jobs
  • Pay for those in jobs paid less than 75 per cent of the median grew by 10 per cent (£0.76)
  • Pay for those in jobs paid between 75 per cent and the median wage grew by 7 per cent (£0.73)
  • Pay for those paid between the median and twice the median wage grew by 6 per cent (£1.16); and
  • Pay for high earners – those paid twice the median wage grew by 4 per cent – though this was the largest in cash terms at £1.27.
     
• After 2010 both middle paid groups have seen their pay fall, with only the bottom and top paid groups seeing rises in pay.
  • The lowest paid jobs have seen pay increase by 5 per cent (£0.43)
  • Pay for low-middle earners has been basically stagnant – and is in fact now £0.14 below its 2010 level.
  • Pay for jobs between the median and twice the median has also fallen – by 3 per cent, or 61 pence an hour.
  • Pay for those jobs paid at twice the median wage has risen by 4 per cent – the largest cash rise again at £1.27.

Chart 2: Average real hourly pay in jobs at various parts of the pay distribution, 2002-2018

What are working-class jobs, and who’s working in them?

Working-class jobs have changed; with retail and care workers now the largest occupations for those earning less than the median wage.

Looking at those in the worst paid jobs, both Black and minority ethnic (BME) workers and women are overrepresented, whereas these groups are both under-represented amongst the higher earners.

Chart 3: women are overrepresented in the lowest paid occupation and underrepresented in the highest paid.

Chart 4: Percentage of Clack and minority ethnic (BME) employee in different occupation groups.

Boosting working class pay

The best way to get sustained pay rises in working-class jobs is by working people having the ability to collectively negotiate pay and conditions through our trade unions.

This is increasingly a view shared by international institutions examining economic growth: The IMF in 2015 published research showing the role of trade unions in tackling inequality, with “strong evidence that lower unionisation is associated with an increase in top income shares in advanced economies during the period 1980–2010”^[9]. The OECD’s 2018 Jobs Strategy argues that collective bargaining can “foster skills development and skills use in the workplace, and allow for the effective dissemination of good working practices”, while helping to “promote a broad sharing of productivity gains” ^[10].

Working class interests have been harmed by the decline of collective bargaining in the UK. Immediately after the second world war, collective bargaining coverage in the UK stood at 85 per cent.  In 1979, before the election of the Thatcher government, 82 per cent of UK workforce had their pay and conditions determined by collective agreements or wage council orders.  By 1996 (when currently comparable statistics start), coverage had fallen to around 35 per cent, falling further to stand at 26 per cent today.

Our first priority is therefore to boost working people’s ability to boost their pay and conditions through collective bargaining. Alongside this note we have published a new report^[11] setting out a comprehensive agenda for how to boost collective bargaining in the UK, including:

• 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, including simplifying the process that workers must follow to have their union recognised by their employer for collective bargaining and enabling unions to scale up bargaining rights in large, multi-site organisations.
• Broadening the scope of collective bargaining rights to include all pay and conditions, including pay and pensions, working time and holidays, equality issues (including maternity and paternity rights), health and safety, grievance and disciplinary processes, training and development, work organisation, including the introduction of new technologies, and the nature and level of staffing.
• The establishment of new bodies for unions and employers to negotiate across sectors, starting with hospitality and social care.^[12]