BBC interview with Dr Liz Oliver on Uber driver row

Dr Liz Oliver was invited to BBC Breakfast to talk about Uber’s appeal to the Employment Tribunal decision that a group of current and former Uber drivers should have been classed as workers rather than self-employed contractors.

Liz took part in an interview alongside Mr Farrar who was one of the claimants to the employment tribunal claim. She explained that the key issue was the identification and classification of a contract between Uber and the drivers. She pointed out that three contract forms are important to employment law: a contract DSC_4741of employment where the individual is an employee and has access to the full body of employment protection, a ‘worker’ contract which places the individual within the scope of some but not all employment protection (a kind of “employee-lite”) or self-employment where the service provider is in business on their own and falls outside of the scope of employment protection. At Employment Tribunal the claimants successfully showed that they were workers and that placed them within the scope of The National Minimum Wage provisions and the Working Time Regulations 1998 (which includes limits to working time and access to paid holiday). The key question was whether the way that the working relationship has been characterised by Uber companies within the written terms of their agreements with drivers and with passengers matched up to the ‘true relationship between the parties’. Uber describes the relationships in terms of agency. Rather than contracting with drivers to provide services to passengers, Uber describe their role is as an agent or broker; they simply bring drivers and passengers together. Ultimately the contract to take and provide a ride is between the driver and the passenger. The structure of these contractual relationships is at the heart of the Uber business model and the company has shown keen to defend its position. They were given leave to appeal to the Employment Appeal Tribunal and the hearing begins today.

A number of similar claims have been made by people who provide services through platforms so this decision will be watched closely by those who ‘participate in the platform economy’.  In Liz’s view the argument that Uber drivers are workers is a valid and strong one. However a favourable outcome for drivers would by no means end they story. An important question for examples is when drivers be considered to be workers, throughout the whole time that they are logged onto the App and ready to receive rides or only for the duration of the ride itself. Bottoming out questions such as these will test the how the architecture of existing regimes such as the framework of the national minimum wage accommodates the opportunities that platforms provide for flexible ways of working. Another question is how platforms would respond to further pressure to contract with service providers as workers. Would they seek to place more risk onto service providers to emulate self-employment more closely or would they assert more control over service providers in a manner more akin to employment? The growing body of litigation in the area of contract form is clearly playing a catalytic role in finding an appropriate way to combine flexibility and fairness. Here it seems that service providers themselves are pursuing a more ambitious set of outcomes than those proposed in the recent Taylor review of modern working practices.  Nevertheless litigation is a blunt tool when it comes to finding imaginative solutions. Could the key actors in the world of platform service provision find a space outside of this high stakes context to grapple with these issues? Innovation is, after all, at the heart of the development of the platform economy.

You can watch the interview through BBC iplayer although the programme is only available for 24 hours. BBC One (from 1h11m) 27th September – Broadcast

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Out of work and low on enthusiasm: young Germans are tuning out of politics

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Every third German between 18 and 30 years old considers themselves to be in a “precarious” position, engaged in temporary, unstable or non-standard employment. This is happening against the backdrop of the glorious reputation of the German training and education system, low unemployment rate and comparatively generous welfare state.

And with an election just days away, question marks remain over this group. Will they radicalise, and support populist parties? Will they stay away from the polls altogether?

Economic uncertainty has disproportionately affected young workers, who are far more likely to find themselves in unstable employment than their older counterparts. Overall, 54% of employees between 15 and 24 work in atypical employment – 53% are on temporary contracts while a further 4% are self-employed.

We surveyed 1,000 Germans between the ages of 18 and 30, and found that economically insecure young people are more at risk of feeling estranged from politics. People in insecure employment are significantly more likely to be an undecided voter or to not vote at all.

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Question: How interested would you say you are in politics? Author provided

They are almost twice as likely to be uninterested in politics as young people in secure employment. And they are more frustrated: up to 40% of them say they can’t change anything with their vote – compared to only 16% of young people in secure work.

Support for Angela Merkel’s CDU is lower among young people in insecure work than among the general German population. However, 26.8% said they still intended to vote for her. That compares to the national estimate of 37%.

The social-democratic SPD is still the second strongest party. Yet its support is on the wane thanks to its “Agenda 2010” – a policy introduced when it was in government that launched labour market reforms enabling precarious forms of work in Germany. Only 14% of our group of young insecure workers would vote for SPD compared with the 20% projected share among the general population.

Not into smaller parties

The German election system is representative. Parties with more than 5% of the vote get seats in the lower house of parliament. This year, four additional parties are likely to make it into parliament.

Alternative for Germany (AfD), a right-wing nationalist party is expected to secure 12% of the vote. Our survey shows AfD enjoys only a modest 4.3% support among young Germans, a share that does not increase among those out of stable work. The Liberals (FDP), who were absent from the lower house during the last legislative period, may get 9% of the youth vote, matching the predictions of the general vote – though we see much less support among young people in precarious work.

Left parties like the DieLinke or Greens get slightly higher shares of votes among young people in precarious work compared to people in stable work. Together, the smaller parties do get 5% of votes among young people but none attracts enough support to make it into parliament alone.

Reluctantly backing the status quo

Young Germans in precarious positions can’t seem to find a political party that represents their interests so they are likely to stay away from politics and elections. Surprisingly, if they do vote, they do as a majority support centre-right parties.

Politically, Angela Merkel has attracted a lot of support and respect for her open borders policy towards refugees. She is also credited with modernising the CDU, enabling the right to same sex marriage and making it legal for same-sex couples to adopt. Merkel’s CDU is a less conservative party than that of Helmut Kohl, which may be why it appeals to our group when they do vote.

At the same time, the Social Democrats have moved towards the middle and lost their distinct profile as a workers’ party committed to social justice.

A sociological explanation for this situation would be that precarity has already become part of an accepted new normality that the young generation does not rebel against. Rather than trying to change their lot with their vote, they turn their back on politics. They may come to change their minds on this point, but it doesn’t seem likely for this election.

Authors: Dr Vera Trappmann, University of Leeds; Dr Danat Valizade, University of Leeds
Originally published on The Conversion, 21st September, 2017

Alternatives to punitive workfare systems: evidence from the Parisian suburbs

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Dr Charles Umney, University of Leeds

Charles Umney, Ian Greer and Lisa Schulte reflect on their research into differential approaches to addressing social exclusion in the Seine-Saint-Denis suburb of Paris.

Across Europe mainstream recipes for combatting poverty and social exclusion have failed. A recent Eurostat report put it this way:

The EU has not made any progress towards achieving its ‘Europe 2020’ social inclusion target, adopted in 2010, of lifting at least 20 million people from poverty and social exclusion by 2020.

This has happened as governments – British, German, and Nordic alike – have cut cash benefits and support services while rolling out strict job-search requirements and withdrawal of social benefits for noncompliance: all measures which were supposed to, in the UK government’s language, ‘make work pay’. Evidence mounts, however, that the people who are actually made to pay by these kinds of policies are the vulnerable groups they push into destitution.

‘Work-first’ social policy reflects an international consensus that is influenced by US-style workfare. It emphasises a more coercive and punitive approach to welfare recipients, the use of for-profit contractors to deliver welfare-to-work services, and market-based funding systems emphasising payment-by-results and more standardised service models. But as we have found from our field research in Seine-Saint-Denis, the relatively deprived banlieues North-East of Paris, there are holdouts against this drift toward workfare.

We examined insertion (‘integration’) services. This term denotes specific social services targeted at vulnerable groups (such as recovering drug addicts, single parents, young people from ‘sensitive urban areas’), with the aim not just of finding them a job, but also for helping to meet their wider needs such as secure housing or accessing welfare entitlements. In Seine-Saint-Denis – our fieldwork site – these services were delivered by a complex network of specialised small organisations, for-profit enterprises and charities. They offered traditional kinds of social work and had added employment-related training and employer-engagement schemes, aimed at specific groups of clients. Public funders stabilised this network through a preference for funding incumbent organisations on the ground, rather than creating an open market with commercial work-first provision. We interviewed front-line staff in various organisations charged with delivering welfare-to-work services (public, private or non-profit) as well as the funding organisations with whom they worked, examining up-close the business of delivering insertion services and the street-level consequences of policy change.

Provision of services for the unemployed by private for-profit organisations are controversial in France. But attempts have been made to expand the role of large for-profit enterprises: Multinational firms such as Australian-based Ingeus and Yorkshire-based A4e have sought to establish commercial provision, and also larger nonprofits such as Groupe SOS have emerged as vocal critics of the ‘small is beautiful’ ethos in French social services. In the new President, Emmanuel Macron, such organisations will likely find a highly sympathetic ear. Indeed, Macron’s party, En Marche!, has promised to:

encourage cooperation and mergers which will allow businesses in the Economie Sociale et Solidaire [i.e. nonprofits] to insert themselves into the value chain, to change scale to “better” respond to social and environmental needs, and to respond to the requirements of public orders, notably in terms of volume.

Our findings indicate that such a change of scale might be a disservice to those who need support the most.

While Pôle emploi (the French equivalent of Job Centre Plus) has adopted some of these characteristics, the employment services targeted specifically at disadvantaged populations continue to operate very differently. These services are usually provided by smaller non-profits which do not have the power or inclination to sanction service users. Front-line staff tend to approach their work with the ethos of social work, and service users’ progression through different organisations is handled by long-established informal contacts between associations rather than competitive contracting between government and firms.

In Seine-Saint-Denis we asked: why do these kinds of systems for these kinds of service users remain strong in France, while they have been integrated into workfare-type systems in many other countries?

One part of the explanation is that the people involved in delivering these services – i.e. those charged with overseeing the implementation of public policy at ‘street level’  — see obvious advantages to the insertion approach. It means that local services evolve in tandem with local needs, and interventions are adapted to problems that they observe on the ground, rather than being purely determined by the priorities of national policymakers. Staff in insertion providers can provide a more tailored and in-depth service to individual service users. Under these circumstances a much less coercive and sanctions-centric approach to service users becomes possible and the undesirable consequences of for-profit provision are mitigated, such as ‘creaming and parking’, where front-line staff systematically focus effort on the least needy.

The resilience of this landscape can be seen in the attempts to impose greater private provision through initiatives such as the Sarkozy-era contrat d’autonomie. For-profit organisations have found it difficult to enter this terrain. To recruit service users, they needed to penetrate the pre-existing network of providers, but there was often suspicion that an organisation with a profit motive will not share the ethos of the insertion network.

In Britain, such resistance has been overcome through authoritarian and centralising means: central government extending its authority over local welfare-to-work networks, marginalising existing networks and forcing through the entry of large multinational for-profit organisations. The abolition of the Regional Development Agencies and regional Learning and Skills Councils, along with severe cuts to local authority budgets reinforced this centralisation trend. As a result, services for the unemployed are increasingly the domain either of Jobcentres or large firms, with local customised services on the decline.

In France, by contrast, local control has been maintained, protecting insertion providers. The Pôle emploi – which is responsible for enforcing job-search requirements for the unemployed – is only one player among many in local networks of funders, planners, and providers that carry out insertion. In some regions, it is local government rather than the Pôle emploi that pays the minimum out-of-work benefit. This administrative fragmentation enhances local control, thereby reducing the state’s capacity to implement harsh workfare policies.

It remains to be seen how insertion will fare under Macron, who has a clear preference for neoliberal international policy orthodoxies. But greater private provision and a more sanctions-centred approach would be both difficult and counterproductive. To forcibly marginalise non-profit insertion networks the French state would have to reverse its long-term shift towards decentralization, and this disruption would jettison what is good about insertion and replace it with a model which has, in other countries, inflicted large amounts of misery on vulnerable people. If Macron is serious about ‘reforming’ French welfare-to-work systems in this direction, the result is likely to be a lot of pain for negligible gain. However, it would be a neat parallel of the wider package of austerity measures that have been imposed across European economies more generally in the last decade.

For the wider world, insertion offers an under-appreciated alternative to the largely failed project of marketised workfare systems. They also provide a reminder that public policies are to a large extent made at the street level, and that any policy to punish the poor will need to go hand-in-hand with the extensive state-led reordering of public services and the marginalisation of professional staff on the front line.

Kate Hardy launches ‘Housing and mental health network’

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A major research finding from a recent study into displacement from London during the housing crisis found that 89% of respondents mentioned worsening mental health as a result of their unstable housing situation.

Kate and her colleague from the University of Manchester, Tom Gillespie used their findings to hold a “Housing is a Mental Health issue” event on Wednesday 26th April in East London. The event brought together scholars, activists and practitioners working on issues relating to local housing policy, austerity and its links to psychological distress.

Over 80 people attended the event, including local residents, members of The Mental Health Resistance Network, NHS workers, Psychologists for Social Change members, CAB, local academics and many other organisations. Bringing together so many people with a wealth of experience and knowledge, including both lay experts and professional practitioners raised the possibility of using these findings influence real change in the area of housing and mental health.

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Following presentation from the report authors and researchers from Focus E15 campaign group, as well as a speaker from Debt Resistance UK, participants were invited to think together about the ways in which we could use the shared knowledge in the room to tackle issues of housing and homelessness. This raised various issues including a desire to unlock services, link up professionals, safe spaces and community control, as increasing the availability of high quality social housing as solutions to the combined mental health and housing crisis.

The event also enabled us to officially launch the “Housing and Mental Health Network”. This will be a partnership between local communities, homeless charities, mental health charities, community/clinical psychologists, artists, social workers, community workers, teachers and academics addressing issues of mental health, austerity, housing and homelessness. Through the establishment of the “Housing and Mental Health Network” we hope to generate new partnerships which will address this issue in the long term. We will do this by developing research projects, undertaking advocacy work and raising awareness through events, artistic productions and informational material.

Watch a video about the project here: http://business.leeds.ac.uk/research-and-innovation/blog/article/video-homelessness-health-and-housing/

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Dr Kate Hardy is an Associate Professor in Work and Employment Relations at the University of Leeds.

The key to a solicitor’s career success? Creating connections

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By Juliet Kele, Doctoral Student and Teaching Fellow, WERD

Employment lawyers regularly counsel and advise both employers and employees on a diverse matter of workplace related issues, but do they ever reflect upon the employment relationship, and inclusive working practices within their own firms? Historically, the legal profession has been perceived as an ‘old boys club’ – and can still be argued as such in modern times. The senior positions in most law firms are filled with middle-aged, white men (‘male, pale and stale’). These issues have animated my research in aiming to discover whether a smaller law firm size has a favourable impact upon the career progression of female and ethnic-minority lawyers.

The findings of this research reveal that while smaller law firms were thought to have a more supportive culture than larger firms – in terms of implementing flexible-working initiatives and being ‘family-friendly’ employers – lawyers with high levels of social capital were looked upon more favourably at each career progression round.

Using interviews conducted within Yorkshire small and medium-sized legal practices (firms with fewer than 250 employees), my research considers how career progression is experienced by a diverse range of employees and the factors perceived to influence career progression in this context. My analysis shows that a crucial factor perceived as having a positive effect upon career progression – regardless of the smaller firm size – was that of having high levels of social capital: favourable connections and networks.

Some individuals acknowledged their ‘luck’ of good connections – for example, paralegals being able to move companies with their supervisors – and individuals gaining their current position through connections or recommendations. Moreover, it was felt that in smaller law firms, competing against fewer colleagues, individuals may be able to foster a closer mentoring and sponsorship relationship with supervisors than in larger businesses. This, in turn, may be beneficial to career advancement as management come to recognise and acknowledge the efforts of their staff.

Part of a solicitor’s work responsibilities is the development of connections and constant networking. These are highly-desirable skills, not only for the business interests of the company but are also for accelerating the speed of career progression. However, my research demonstrates this may be easier for some groups than for others.

While the smaller law firms were considered to have more supportive cultures than larger firms, for female lawyers aspiring to progress their careers, as reported by the Law Society Gazette, one main stumbling block endured: the choice between career and family. The general impression was that there were still ‘fairly limited opportunities’ for progression in law firms for female employees who wished to have families. Due to familial responsibilities, they felt unable to commit to the extensive demands on their time in terms of networking in connection to both servicing existing and generating new clients, often known as ‘rainmaking’.

Female employees admitted that being a woman in the legal profession was ‘difficult’. Although they had invested heavily into their legal education, they still felt that their colleagues expected them to have children. While some female employees thought that they should not have to choose between prioritising family and work, others said that there was still a ‘sacrifice’ to be made for women in the legal profession. Moreover, two female solicitors directly stated that being pregnant was a career obstacle and disadvantage they had experienced.

Similarly, minority ethnic lawyers also had greater levels of commitments outside of work; either relating to religious observations, responsibilities to both their close and extended families and in assisting their wider communities. The legal profession itself was criticised: with long-working hours and frequent late-nights, networking and weekend work, maintaining a work-life balance was challenging – as one respondent said: ‘something’s got to give’. The opportunity cost here is deciding whether to dedicate more time to family life or to career advancement.

Working-fathers also made sacrifices, but they came at more of a personal than career cost. Work-life balance was important to them, as their ‘biggest career driver’ were their new families. Some working-fathers also criticised the legal profession stating it was ‘a younger man’s game’ – they said that their priorities now shifted more towards a family-focus and being at home with their families; rather than rain-making for their employers.

In sum, from my research, these smaller law firms and their workforces recognise the importance assigned by its valuable ‘knowledge workers’ to maintaining a ‘work-life balance’. These legal practices thus awarded more prominence to the implementation of flexible-working practices than larger companies.

This smaller company size was felt by employees – especially those with external commitments – to have a more accommodating organisational culture than larger law firms. Despite this, with importance continuously placed on a long-hours culture, building connections and constant networking, lawyers with the highest social capital levels will make the most advances in their careers. These lawyers continue to be of the ‘male, pale and stale’ variety.

Industrial Strategy and Steel

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Dr Ian Greenwood, Leeds University Business School

With the restructuring of its former ministry for Business Innovation and Skills (BIS) into the ministry for Business, Energy and Industrial Strategy (BEIS), led by Minister Greg Clark, the government looks to have accepted the idea that an element of coordination of the economy is necessary in order to be able to compete with other industrial nations. The Green Paper on industrial strategy, the consultation period to which ended on 17th April 2017, appears to have consolidated this position.

Although the Green Paper, ‘Building our Industrial Strategy’, proposes that industrial strategy is not about directing the economy, it does, nonetheless, suggest an intent to intervene in the working of the economy. This is in somewhat stark contrast to the position in July 2015 when the then Secretary of State for Business Innovation and Skills, Savid Javid,  informed those desperate for the government to engage with the crisis engulfing the UK steel industry, that he believed in an ‘industrial approach’ for the UK industry rather than an ‘industrial strategy’. It was the deep crisis in steel, that in large measure, through the work of the All Party Parliamentary Group (APPG) for steel, that propelled the government to think again about the extent to which strategic intervention in industrial is necessary.

The proposed industrial strategy is to be based on 10 pillars. These are science, research and innovation; skills; infrastructure; business growth and investment; procurement; trade and investment; affordable energy; sectoral policies; driving growth across the whole country; and creating the right institutions to bring together sectors and places. Within an overarching ambition of improving living standards and more balanced growth by increasing productivity, the government sees industrial strategy as necessary for a stronger economy, ‘fairer society’ and development of ‘high paid, high skilled’ jobs. The strategy will, furthermore, reflect active government that moves beyond short term thinking. It will, ‘build on strategic strengths’ and ‘tackle underlying weaknesses’. Industrial strategy is though, to be ‘modern’. This, Clark explains. is not about directing the economy and 1970s style industrial strategy, ‘mistakenly focused’ on existing industries and the big firms within them. New industrial strategy will act to nurture new industries that will ‘challenge and in some cases displace’ existing industries, not to privilege the protection of incumbents. Picking losers as much as winners seems central to this philosophy. In the absence of key supports for manufacturing and energy intensive industries, this might well become a self-fulfilling prophesy.

What might also be cause for concern, however, is that apart from reference to advanced engineering, the aerospace and auto sectors, mention in the Green Paper of the wider manufacturing sector and primary such as steel is scant. Yet an industrial strategy in which industries such as steel are manifestly part, is precisely what is required. This is the case in respect not only of the intrinsic value of such industries, but also precisely because of the vital part played by, for example, steel, in the up and down stream viability of the aerospace and particularly automotive sectors. It is generally accepted that if car manufacturers cannot source around 40% of its materials and components domestically, they will look to relocate offshore. The consequence of this for the UK economy would be calamitous.

Although the importance of the steel industry to the UK has declined, it possesses attributes that are significant for the economy. The industry produces a trade surplus. Its productivity, investment in R&D and training per employees are higher than the general UK economy.  Crucially, the supply value added multiplier is greater than 3, and the employment multiplier is between 2 and 3. The industry has, hence, an important impact on skills, economic demand and employment levels for the country in general and for specific regions in particular.

The steel industry is categorised as a ‘Foundation Industry’. Such industries have been generally characterised as those that underpin the web of strategically important manufacturing and construction supply chains and whose output is largely for supply chain inputs rather than final consumption. As with the steel industry, Foundation industries are essential for the generation of primary value for an economy. They have been assessed to account for 17% of UK manufacturing GVA and 20% of manufacturing employment. Crucially, again as with steel, these industries have higher productivity than the UK economy norm, have relatively high levels of R&D and training per employee.

Academic research explains why it makes economic and social sense for a government to support Foundation industries through a strategy for industry. The reason why economies such as the USA and UK suffer from a defect in R&D and competitiveness, is because of the neglect and outsourcing of these basic industries. Commentators explain how manufacturing industries provide the infrastructure through which skills, R&D and the ability to innovate are nurtured. These are simply crucial for the international competitive success of advanced economies. The outsourcing and decline of manufacturing sets off a chain reaction that is ultimately destructive to the ability of the macro economy to innovate and compete. To address this potential crisis, it has been argued that, ‘government and business must work together to rebuild a country’s ‘industrial commons’, the collective R&D, engineering, and manufacturing capabilities that sustain innovation [and that depends crucially on the existence of a vibrant manufacturing base]. Yet funding of research and encouragement of collaborative R&D initiatives to tackle society’s big problems need to be stepped up. Companies must, furthermore, overhaul their management practices and governance structures in order to avoid making destructive outsourcing decisions.

Geographically skewed to industrial areas of the country such as Wales, the Midlands, Yorkshire and the North East, the steel industry is responsible for the retention of relatively high paid, high skill jobs in areas that are deindustrialising – often with devastating social consequences. When steel plants close or contract, a negative economic equilibrium around a low pay, low skill, and low value added economy is likely to evolve. The economic multipliers associated with the industry are relatively well understood, but what I term the ‘social multiplier’ is no less critical. has clearly demonstrated the negative psychological impact of job loss on steel workers many of whom have spent most, if not all, their working lives in the industry. Transition into work that is often comparatively low paid and low skilled, can be unnerving and demoralising. The strong sense of self-esteem, camaraderie and collective support that typifies steel work is rarely rediscovered.

The Industrial Communities Alliance (ICA), an organisation attempting to develop public policy for the deindustrialised, regions of the UK, such as steel and coal, points out that Britain’s older industrial areas contain around a third of the UK population. These are, though, largely communities ‘left behind’ and getting by on low paid work and benefits. The Alliance therefore supports an industrial strategy designed to rebalance the economy through a shift towards industry, production and exports. The perspective of the ICA is echoed in the analysis presented in the Green Paper which accepts that regional disparities are now wider in the UK than in other western European nations. An industrial strategy is necessary, the Paper contends, to spread growth and wealth more widely across regions, hence creating a fairer society that, in the words of Theresa May will engender, ‘a stronger, fairer Britain that works for everyone, not just the privileged few.’

Research provides strong evidence that wholesale deindustrialisation is not an overdetermined economic phenomenon. Governments can act to shape the nature of their economies. From the coordinated market economy of Germany, to the Developmental State model of Singapore, to the way in which the USA actively intervenes in its trade defence mechanisms, across a range of capitalist economies, evidence for this is clear. What is required is a holistic strategy that endures and connects Foundation Industries to other sectors of the economy – high tech, the service sector and through procurement policy, the public sector – and which involves both employees and their trades unions. Industrial strategy can work. The ideological shibboleths of the political Right cannot be allowed to extinguish this, possibly final chance, for some basic industries, their workers and their communities, to survive and flourish.

Why so-called ‘Barista Visas’ won’t help UK Hospitality Workers

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Matthew Cole

Home Secretary Amber Rudd has recently introduced the idea of a so-called ‘barista visa’, undoubtedly to militate against the potentially disastrous effects of Brexit for UK businesses. The proposal was suggested by Lord Green, chairman of the right-wing think tank Migration Watch UK, who claimed it would, “kill two birds with one stone” by meeting employer needs while “maintaining links with the EU”. By links, he must have meant links to a highly exploitable workforce with no rights. The ‘barista visa’ would allow young European citizens to migrate to the UK and work in the hospitality industry for up to 2 years; however, it would deny them access to benefits, schooling, housing or any possibility of extending their stay. The proposed visa would be modelled on the Tier 5 (youth mobility scheme) visa, which currently allows 18-to-30-year-olds with at least £1,890 in savings from non-E.U. countries such as Australia, Canada, New Zealand, South Korea, and Taiwan to work in the U.K. for up to 24 months. Despite the government’s optimism, the ‘barista visa’ would not only fail to offer adequate solutions to Brexit, it would exacerbate issues in the industry for both employer and employees.

The hospitality industry (including hotels, bars, cafes and restaurants) makes a significant contribution to the UK economy. The industry added an estimated £57 billion to the economy in 2014, roughly 4% of GDP and it employs around 3 million people in the UK.  Since 2011, it has grown by 13%, more than double the employment growth of the economy overall. Yet in the context of this dramatic growth, working conditions remain poor. Average gross earnings for full-time workers in the hotel industry are the lowest in the UK and the industry has the highest incidence of low-paid workers. Added to this is its dubious status as one of the least unionised sector of the economy.

Today, the hospitality industry is experiencing increasing instability and pressure as a result of Brexit. Britain leaving the EU will no doubt have serious and lasting impacts on the UK labour market and workers rights. According to the ONS, E.U. nationals make up 7% (2.2 million) of Britain’s total labour market of 30.3 million. However, some industries will be more affected than others and the hospitality – with over 60,000 workers per annum working in this sector – is likely to be one of those feeling the impact of the referendum result. A report by KPMG indicates that hospitality is the largest business sector employer of EU nationals as a proportion of total workforce. Hotels and restaurants employ the highest percentage of EU migrants with certain roles such as waiters and waitresses (75.3% EU nationals), housekeeping staff and chefs representing a particularly high portion of migrants. Based on current projections, the absence of an annual inflow of new EU migrants into the hospitality industry each year would generate a significant recruitment gap, which would increase over time.

Despite it’s moniker the ‘barista visa’ scheme would fail from a business standpoint .The two-year limit alone is reason enough to anticipate this, since it forecloses incentives for training and retaining workers in an industry that is experiencing serious problems with skill shortages and turnover. According to People 1st, turnover in the hospitality industry is estimated at 20 per cent, while the KPMG survey of BHA members puts the estimate even higher, at 50.2 per cent. This costs the industry approximately £274 million annually. The Financial Times, reported that the ‘barista visa’ would also be open to other sectors that are heavily reliant on low-wage migrant labour, such as social care, agriculture, and construction. While the numbers of migrants for each industry will be restricted with an overall cap, there is no guarantee that there would be enough EU migrants who meet the proposed criteria and aim to work in hospitality. Last year, The Times reported that only 40,000 people applied on the existing Tier 5 youth mobility scheme for all industries. This is 20,000 less than the number of EU migrants who gained employment in the hospitality industry alone. Given the strict criteria of the ‘barista visa’ and the fact that the hospitality industry is expanding rapidly the number of EU migrants is likely to fall woefully short of the needs of employers. Combine this with low wages and the rising anti-migrant rhetoric of mainstream political parties and the situation looks dire indeed.

To attempt to lessen the impact of Brexit, BHA members have petitioned the government to retain EU workers and openness for tourism. They recognise how important migrant labour is for their businesses even if they have not necessarily recognised the rights and economic rights of migrants as a whole. The BHA’s focus on the business case for hospitality ignores the concerns of most of its labour force. Historically, they have opposed legislation designed to protect workers’ interests such as the minimum wage legislation in 1999 and tips legislation in 2009. They have also avoided addressing criticisms from trade unionists about issues in the industry. Last year, Unite regional officer Dave Turnbull offered a different explanation of why the industry cannot recruit and retain the type of workers it needs. He cited a fundamentally “flawed, low cost and exploitative business model” in an industry where “low pay, insecure working, exploitation and institutionalised bullying are rife”[1]. The ‘barista visa’ will only exacerbate these problems. It would further entrench divisions in the labour market and further undermine the collective rights of workers. The scheme denies migrants a social safety net and offers no chance to progress in a career or build a life in the U.K. long-term.

The ‘barista visa’ also fails from a worker’s perspective. Labour Force data shows EU nationals are already concentrated in low-paid and lower-level occupations, especially in the hospitality industry. As of 2016, less than 1% of EU nationals in the hospitality industry were employed in the ‘higher managerial and professional’ occupation grouping. The current state of UK labour law weaves issues of migrant rights into the employment relationship, leaving open the potential for employers to terminate their contract which could effectively leave them exposed to deportation. The ‘barista visa’ ultimately will keep EU migrants in a legally subordinate position to nationals, exacerbating the ‘migrant division of labour’[2] and further undermining all working conditions. The further precarisation of migrant labourers in the hospitality industry will at best allow business owners to continue exploitative practices and at worst, further divide workers.

[1] Unite, 2016. Unite in direct plea to London mayor to tackle exploitative work practices in London’s hotel industry. Press Release. http://www.unitetheunion.org/news/unite-in-direct-plea-to-london-mayor-to-tackle-exploitative-work-practices-in-londons-hotel-industry/