It’s good to focus on overtime, not just Uber

Published on Jobs, Skills and Pay

 

When a government publishes a Big Review – and at 115 pages the Taylor Review certainly fits that bill – the temptation is to rush into the weeds of its very many recommendations. But before we do that it’s worth stepping back and considering how remarkable it is that we’re even here in the first place.

It wasn’t so long ago that the Tories fiercely opposed the National Minimum Wage and New Labour angsted over implementing the Agency Worker Directive in a way that wouldn’t offend business. In an era of deep divisions in politics, we should celebrate the fact that improving the world of work is now on the to-do list of all major parties.

The motivation for this new focus on the world of work is painfully clear. Almost a decade on from the first queue outside a Northern Rock branch, pay is still 3.3 per cent below its pre-crisis peak. For the under-40s it remains 10 per cent down. Those statistics speak to the lived experience of millions of families paying the price for the financial crisis and our slow recovery from it.

But it’s not just the pay squeeze that has put work on the front pages – it’s tech too, from robots to AI and most visibly the gig economy. Uber and Deliveroo don’t just deliver people to food or food to people, they have given people something to talk about over all that food. Are those driving the cars and peddling the bikes lucky recipients of flexibility or exploited low paid workers stripped of the minimum employment rights that workers should be entitled to?

But as well as seeing the picture on how the review came about, we also need to see the bigger picture on what it says. And to do that we need to step away from an Uber cab and into a supermarket, a hotel or perhaps even a care home.

Because while it’s good that tech has got everyone talking about work, in truth the really interesting parts of today’s Taylor Review are not about the gig economy. Yes there are ‘gig’ proposals, with welcome calls for more clarity from Parliament to less welcome proposals to treat gig economy workers differently when it comes to the minimum wage (even when the courts have found that they are in fact workers).

But alongside things that are relevant to the 40,000 drivers said to work with Uber, the Review also matters for the 800,000 agency workers and 900,000 people on zero hour contracts (ZHCs) in 21st Century Britain.

So what does the Taylor Review have to say to those workers? Let’s get the disappointment out of the way quickly – on zero hour contracts the Review ducks the issue. Where someone is on a zero hour contract but is in practice doing regular hours there is no reason why they should not have a the right to a contract that reflects that reality. Instead the Review says they should simply have the right to ask for one, which history teaches us is a very different thing.

In contrast, the Review proposes to abolish the most controversial part of the current regime for agency workers – the so-called ‘Swedish derogation’ that allows firms to get around the requirement to pay them the same as directly employed workers doing the same job in some circumstances. Business will oppose such a move, but trade unions (who could have featured more heavily in the report) would rightly note that there is evidence of the derogation being abused in ways that were never intended.

The big new proposal is something that we hardly ever talk about in the UK but which is very important to the living standards of many workers: overtime. The availability of extra hours, and in some cases the ability to be paid slightly more for doing those hours, can make a big difference to low paid workers. The Review proposes a new, higher, minimum wage for ‘non-guaranteed’ hours. This matters for at least three reasons.

First, and the main reason Matthew Taylor seems to be calling for it, is as a form of nudge to encourage employers to rebalance away from the use of zero hour or very short hour contracts by raising the cost of that flexibility. If they want to keep a low-paid worker on a zero hour contract but in practice have them working 16 hours a week the firm will end up paying a higher minimum wage for the privilege.

Second, it’s a big deal because we’re talking about a lot of people and a lot of overtime hours. Almost one in seven workers (4.3 million in total) were down to work overtime last year and there was an average of around 22.5 million hours’ worth of overtime a week worked in Britain. Lots of these workers are low paid, and very few are in the gig economy with a third of all of the paid overtime hours worked over the past year being in retail and health & social care alone. Crucially for a proposal for a minimum overtime wage, employees who work paid overtime are around 30 per cent more likely to be earning at or near the minimum wage than average.

Third, the proposal opens up a whole debate on the nature and reward for overtime that has been largely absent in the UK. This is in contrast to many other countries, where overtime policies are a tool at the disposal of law makers wanting to boost worker’s pay.

For example, in the US overtime rules stipulate that (with exemptions) all employees earning less than $23,660 a year should be paid at least 1.5 times their usual wage whenever they work more than 40 hours in one week. In the face of deadlock on the federal minimum wage the Obama administration proposed a doubling of the threshold to over $45,000, affecting over 13m workers. While courts have subsequently overturned Obama’s move, it demonstrates the role that overtime can play in debates on low pay.

It also demonstrates that this proposal could end up being much more radical than its form in the Review. The experience of other countries shows that once you start requiring higher rates of pay for overtime you quickly get into the difficulty of limiting it to workers earning close to the minimum wage with, opening up debates about overtime pay for workers further up the pay scale.

The truth is we know very little about how firms, workers and our labour market would respond to this proposal exactly because to date it has barely registered in UK labour market discussions. But it’s a big deal. For every Uber driver in Britain, there are 100 workers doing paid overtime.

Starting to examine detailed options in this space is one big thing we could take-away from today’s report. And doing so would also recognise the important truth that even if you have no intention of ever ‘gigging’ we care about the work you do.