The UK labour market and the visible hand of George Osborne.

George Osborne’s 2016 budget appears to have been a much less successful political exercise than his immediate post-election efforts. This is perhaps unsurprising given the contradictions involved in the joint pursuit of austerity, traditional Conservative instincts, and the attempt to manage party tensions on Europe through the mechanism of a referendum on European Union membership at a juncture where populist anti-elite pressures of varying political stripes are widespread and growing.

As an employment relations researcher, contradictions are particularly evident in the labour market sphere. In particular, it is worth thinking about the relations between the legislative attack on trade union freedom of the Trade Union Bill (which coincidentally sustained non-fundamental, but non-trivial damage in the House of Lords on the the day of the budget), the National Living Wage, the continued confusion around the introduction of an Apprenticeship Levy, and the wider approach to political economy of the current government.

Of these, the Trade Union Bill is the simplest to decipher, representing as it does a straightforward continuity with Thatcherism. Nobody with experience of the 1980s and 1990s history of regulation of industrial relations would be particularly surprised that a Conservative government would pursue such policies. In industrial relations terms most initial academic commentary seems to have concentrated on the increased balloting thresholds for strike action, and to a lesser extent on the issue of trade union facility time. Important as these are, it is regrettable that the proposal to lift the ban on using agency workers to replace permanent staff during strikes, which represents a fundamental challenge to the right to strike as understood in ILO conventions, has not taken greater prominence in the debates on and opposition to the Bill.

The National Living Wage and Apprenticeship Levy, however, need somewhat more thinking about. Having worked as a researcher on wage protection at the time that the National Minimum Wage was proposed and introduced by the first Blair government, and witnessed the extent of Thatcherite-Conservative opposition to the “interference” in the labour market that statutory wage protection represents, it is clear that Osborne represents something of a departure here from Keith Joseph.

The current upgrading of the minimum wage, while welcome if taken on its own, does not represent a progressive policy, coming as it does in the context of a shrinking of the benefits system that of course is profoundly regressive. It is also worth noting in passing the “National Living Wage” is nothing of the kind – any basic or minimum income level, however calculated, clearly has to be expressed on a weekly or monthly basis. Very obviously, if sustenance comes from waged labour, then an hourly rate is only as good as the multiplier of how many hours of work are paid for. Given those at the bottom of the labour market are generally on marginal part-time or zero-hours contracts, a vocabulary of “living” wage is not appropriate. That George Osborne is prepared to use this language for political reasons is one thing, but those in favour of redistribution to the working poor should not.

Nonetheless, proposing non-trivial increases to minimum wages, in the context of austerian governance, does represent something of a change of thinking as to how the right goes about shrinking the state. The Thatcherite position of avoiding ‘constraints’ on employers in order to encourage the free market to clear has morphed into a position where the over-riding imperative is that the poor are not sustained by the state, even if this involves what a previous generation of Conservatives would have termed “interference” in labour markets. Whether George Osborne is a convert to established social democratic arguments that increasing minimum wages has positive effects on productivity is unclear. Still, to some extent, austerity seems to have trumped the “old school” brand of neo-liberalism of the Thatcher/Major era.

This is also the case with the apprenticeship levy; essentially, a pay-bill tax on large employers to be dedicated to apprenticeship training, sweetened in the Budget by a government top-up. How this will work, in particular what the resources raised will be used for in an, at-best, confusing system of initial vocational training (see the work of CROWE colleague Jonathan Payne) is unclear. However, some of the motives are not dissimilar to the minimum wage increase; vocational training needs to be improved, and the state does not want to bear the financial or coordination costs, notwithstanding the exceptionally poor degree of coordination between firms on skills and training in the UK. It is worth noting that in my conversations with practitioners aiming to attract foreign direct investment to the UK, it is clear that the idea of a levy has a substantial degree of opposition from mobile firms, including many that do require advanced skills. Again, while individual labour market policies need to be looked at within the context of the overall political economy and distributional policies of the government, it remains interesting that the Osborne strategy does in places require a fairly visible hand.


Phil Almond is Professor of Comparative Employment Relations at DMU. His research interests are in the theoretical and practical challenges of the governance of work and employment in contemporary global capitalism, with specific expertise on the social relations of multinationals.