PCG Policy Officer John Kell said: "The Prime Minister discussed the workforce exclusively in terms of the outdated concept of employers and employees. His speech made many references to the need for flexibility in the labour market but did not at any point acknowledge that people who work for themselves on a freelance basis are a key source of that flexibility.
"Freelancers make an annual contribution to the UK's GDP of Â£100 billion. They are a highly skilled, highly flexible workforce. The Prime Minister spoke repeatedly of the desirability of empowering individuals and improving the quality of work yet failed to acknowledge that people who chose to freelance represent the best example of empowered workers who are extremely satisfied in their work" he added.
PCG says it is the second snub this week from the Government after the Chancellor, Gordon Brown, told a committee of MPs that he had raised tax for small firms in order to counter East European scams.
Deputy Chairman of PCG Chris Bryce said: "This is very disappointing. Not only do we have a Prime Minister who fails to acknowledge the millions of people in this country who chose to be neither employees nor employers, we also have his heir apparent prepared to attack the majority of decent, hard working people rather than deal with the particular issue of some Eastern European tax fiddles."
Our Nation's Future - the role of work
30 March 2007
The PM focused on the changing nature of work and the ways in which our economy has evolved since the Government took office a decade ago.
It is time to put "work" back at the centre of the political debate. Of course, 20 years ago, it was. We had 3 million unemployed. But the debate was about the number of jobs; and the despair of unemployment.
In the last 10 years, with over 2 and a half million more jobs, that debate and all its attendant political clash - overwhelming at the time - has virtually disappeared. The debate about work more recently has been about work/life balance.
I use the term myself. I know what it means and I know what it is getting at. But the more I reflect on it, the more unsatisfactory or at least limited I find it. It is fashionable to use it almost to define the policy quest of today: to enhance the quality of our lives, not just what we earn but what we enjoy, not least with our families. The Conservative leader made a speech not so long ago, following this fashion, where he said happiness was more important than mere wealth or work. And, naturally, at one level, that is obviously true, though it's a lot easier to say happiness is more than money if money is not a problem.
But the assumption running throughout this line of argument is that "work/life" balance is about a balance between "work" - the necessary drudgery to keep hearth and home together - and "life" which is about personal fulfilment, pleasure and contentment. In fact, for many people, if still too few, part of our fulfilment is through work that is fulfilling, exciting, interesting. We don't see our "work" in one compartment. Our "lives" in another. Work is part of our life and we want it to be so.
The issue is actually rather different. It is not about balancing something we do because we have to; with something by contrast we want to do. It is about taking control over our own lives, at work and at home and managing both to our own satisfaction - job and family life.
It is about personal empowerment: a fulfilling job done and organised in such a way as to allow us the chance of fulfilling the non-work parts of our life.
None of this means that there is not work that is indeed dull, dead-end, even wretched; or that people don't work primarily to earn money. Of course they do. But it is to say that today's generation want more than a job, more than to earn simply to enjoy. They want a good job. They want a career. They want to develop as individuals through work as well as through the hopes and fears of family life. Our purpose should be to help them achieve that ambition. From the education system that should be about opening up aspiration to all our children, not simply those of the comfortably off: to our policies for work, skills, training, re-training, and family: the purpose should be to give people greater power over what they decide for their own lives. This is indeed the hallmark of the coming generation. They want the power. They believe they can do what they want to do. For all the pressure, insecurity and change, they know the world is far more open, rich in possibility and opportunity than ever before. Our task is to help them explore and exploit these opportunities.
What's more, this ties in completely with the demands of the modern labour market. Today's goods and services require individual specification. Today's employers need employees who are creative, good at communicating, not cogs in the great machine but individual turners of the wheel. For that to happen, employers need satisfied employees who make for satisfied customers.
What this means is that it is time to move on from the debates of the 1980s or 1990s. I was Employment spokesman for the Labour Party at the end of the 1980s and first came to notice when I dropped our support for the closed shop. All through that time the political debate was about the flexibility of the labour market in the sense of the employers right to hire and fire. It was very much a notion owned by the political Right.
New Labour was, in part, about releasing us from an old fashioned view of the labour market. The truth was: the world was changing; job protection through regulation was becoming outdated; industrial restructuring was inevitable. The difficulty was that the fallout from all this happened when unemployment was high, recession was biting, there was no minimum wage, no tax credits, very little support for those displaced.
But something else was happening too, which was much more to the liking of progressive politics. Human capital was becoming the key determinant of corporate and country success. Education that for so long had been a social cause became an economic imperative. Then, as the jobs have risen and the numbers of unemployed have fallen, the employee's position has strengthened. They can change employers.
The challenge today is to make the employee powerful, not in conflict with the employer but in terms of their marketability in the modern workforce. It is to reclaim flexibility for them, to make it about their empowerment, their ability to fulfil their aspirations.
Work should go back to the top of the agenda but in a different way. This requires quite a different mindset. It is not about work alone but the quality of work. Let us recap a bit of the history for a moment.
I lead a party that is, after all, called the Labour party. Great political struggles were conducted over how much work was available and the poor conditions that prevailed. Unemployment was once the great radical issue of the day. In 1932, more than a fifth of people were unemployed.
If industrialisation made this country prosperous, it did rather less for its workers. Wages in the factories were often poor and conditions worse. Industrialisation did more to radicalise the working man, through the trades unions, than anything else. Anyone who has read the account by that great Manchester factory owner, Friedrich Engels, of the condition of the working classes in England, will be under no illusions about who held the whip hand in the conflict, for that was what it was, between capital and labour.
If some of those questions now seem decidedly old-fashioned, it is a mark of how far we have come.
From the point of view of organised labour, the 20th century was a long march forward. From the establishment, in 1909 by William Beveridge, of labour exchanges to combat unemployment, the state, encouraged by trade unions, began to recognise the importance of work in law and regulation. The seeds of the welfare state were sown with Lloyd George's 1911 National Insurance Act which introduced compulsory health insurance and contributory unemployment benefits for high-risk industries. The story of unemployment benefits merits a speech on its own, from the 1934 Unemployment Assistance Act onwards.
There is no better example of the changes than this city of Manchester. In 1761, the access to cheap coal put Manchester at the centre of the first industrial revolution. Forty years later Manchester, "Cottonopolis" as it was known, had more than 50 spinning mills. This city, the one that Disraeli once called 'the most wonderful city of modern times", was also the crucible of free trade. Indeed, I am staying in a hotel on the site of the old Free Trade Hall.
But, if you look around this city today, you are looking at a different world. 38% of the workforce here in Manchester is employed in the knowledge economy. There is a successful financial sector, a life sciences sector and a host of industry based on information technology, culture and creativity. These sectors are all growing faster than the economy as a whole. By adapting to the modern world, rather than retreating from it, Manchester has reinvented itself and revived itself.
At the start of the 20th Century 28% of people in Britain were employed in manufacturing; by the end of the century that had halved. Agriculture's share fell from 11% to 2%. Services now account for more than 80% of employment. Recently, the gradient of change has steepened. Jobs in the service industries increased by 45% between 1978 and 2005. Those in manufacturing fell by 54% over the same period.
The workforce is different too. There are more old people in work than there were, reflecting the less physically demanding nature of work.In 1950 less than 20% of people aged 50-64 were working. Now, more than 65% are in work.
At the beginning of the twentieth century, around five million women worked, making up 29% of the total workforce. The expansion of education for women, an increase in service-related jobs and the growing flexibility of the labour market, particularly an increase in part-time work, have meant that this figure has now risen to over 13 million, 46% of the total workforce.
In a sense, a whole economy has passed away. The central economic idea of New Labour - that economic efficiency and social justice ran together - was based on this fact. In the new knowledge economy, human capital, the skills that people possess, is critical. Work, the fact of work and the changed nature of work, was thus central to the Government's economic and social policy from the beginning.
The last ten years have done well by the original mission of the Labour party. For people at the bottom of the income scale, the work-pay balance is the thing that has always concerned them most. We now have a National Minimum Wage, that by October 2007, will have risen by over 50% since its introduction. Since 1997, employees at the lower end of the pay scale have received larger percentage increases in their income than the average, particularly in the low paying sectors. From 1979-97, the income of the bottom 20% of the workforce rose on average each year by 0.8%, the top 20% by 2.5%. Since 1997, the income of the bottom 20% has risen on average each year by 2.2%, more than the top 20%.
Trades unions have won the right to recognition; workers have new rights to request flexible working, a right to four weeks paid leave and improved rights over unfair dismissal and compensation and a host of other individual entitlements inconceivable in the previous 20 years.
The recent Fourth European Working Conditions Survey of 30,000 workers in 31 countries confirmed that UK workers have the second highest level of job satisfaction in the EU. Job insecurity here is the second lowest in the EU and people are less likely to feel that work affects their health adversely here than in any other European nation.
The changes we have overseen are material and welcome. But they have been implemented against a backdrop of profound and rapid change.
In recent years we have seen the opening up of the world's developed economies, a huge expansion in trade and far greater mobility of, first, capital and, more and more now, labour. The revolutions in media and mass transport have transformed the world economy. Some sectors are exposed to low wage competition and a shifting of production eastwards. Firms are forced into constant restructuring by affluent consumers with differentiated tastes who require firms to develop niche products, to customise and specialise, with quick turn-round times.
What all this means is not that the role of Government, of the collective, of the services of the State is redundant; but changed. The rule now is not to interfere with the necessary flexibility an employer requires to operate successfully in a highly fluid, rapidly changing economic market. It is to equip the employee to survive, prosper and develop in such a market, to give them the flexibility to be able to choose a wide range of jobs and to fit family and work/life together.
In our schools, this revolution in thinking is well underway.
In time to come, every secondary school is likely to be a trust or academy school. It will be the norm for schools to have outside partners. The new vocational stream from age 14 onwards, announced this week, will open up a whole new array of practical, work based education. At a seminar last week, the first Academy sponsors stepped forward with ideas to incorporate primary schools into the Academy programme. Many of these will be run by large charitable, educational institutions who will operate a mix of independent private and state schools. But business and education will move even closer together and rightly so.
The enormous challenge, however, will be in respect of those that are already in work. Though there has been significant improvement, as ever, largely unnoticed in the past decade, there is a frighteningly long tail of poorly educated and skilled in our workforce.
Over a million and a half adults have gained basic skills qualifications since 2001.There are three times as many apprenticeships now as there were ten years ago. Up to 250,000 from 75,000. We aim to have 400,000. Train to Gain is reaching new employers. Twelve Skills Academies will be open by the end of next year and we have created 400 Centres of Vocational Excellence.
This week we announced 40,000 places, to be available from September 2008, for new Diplomas in construction, society and development, IT, creative industries, health and social care and engineering. By 2010 seven more subjects will be added.
But the UK is still 18th out of 30 OECD countries in terms on the working age population with low skills.
We are making a substantial investment in adult skills - over £3billion a year. But in my view, having concentrated on the pursuit of qualifications, it is time to do more on the wider idea of capability. Our definition of the relevant skills has been too narrow. The economy of mass production required specific, rule-bound skills. The post-industrial economy requires people who are versatile, personable and able to communicate - what, in the jargon, we call non-cognitive skills.
So in response to Lord Leitch's recent report we need a much bolder approach. We set out two weeks ago, in the Public Services policy review paper, how the idea of personalisation should govern the next phase of reform. A fully personalised service requires a multiplicity of choices for citizens, a diverse set of providers with the autonomy to innovate and funding that rewards good results and puts people in charge. We should follow the same conceptual framework for adult education.
We need to personalise the provision and funding of vocational qualifications. At the moment the system does not allow people to chart their own course through it. We will pilot what we will call Learner Accounts. The new Learner Account will not give people a direct payment. But it will give the entitlement to government subsidy direct to the individual rather than to the institution. People will be given help to choose the right course but it will be their choice.
We will allow reputable companies to accredit their own training. Up to now, there has not been any great incentive for companies to do so. Most of the benefits accrue to employees and the administration costs are high, especially for smaller firms. But we have cut out a lot of the paperwork and companies like Tesco, Asda and Sainsbury are already more positive.
We will extend the National Skills Academies. In addition to the Fashion Retail Academy, which is up and running already, we are aiming to have a further 12 operational by the end of 2008.
The Sectors Skills Councils are playing a far bigger role. The £3 billion budget will in the future be largely distributed through Train to Gain and the Learner Accounts. One hundred and thirty thousand employers are already involved in the new apprenticeships.
All of this will help radically to upskill the adult population. But it is only one part of what needs to happen.
It is not surprising for the party of Labour that work has been central to its social policy. The founding purpose was to improve the lives of working men and women. For most of the wider labour movement, for most of its history, the idea of people not working when they could was thought of as bizarre. The earned wage was always thought to be the best insurance against unearned misfortune.
It was obvious to the founders of the Welfare State that work was the best form of welfare.
However, unwisely, the two ideas became detached and we allowed ourselves to think that improving the welfare of the poor was principally about raising benefit levels. In putting work and welfare back together again we have returned to the original idea. It involves an active Welfare State seeking, above all, to get people back into work.
The New Deal and earlier measures have already helped 1.5 million people back into work and cut the flow of new Incapacity Benefit claimants. The Freud proposals together with the Welfare Reform Bill mark a radical new departure in getting people off benefit into work.
However, we should look at a modern welfare state as more than just providing a route from benefit to work. Sure Start began as a service to help children. It is now equally helping adults with new skills and job opportunities. There will be 3,500 Children Centres. In time, all secondary schools will become extended schools meaning they will be open up for the community after school hours. They are a huge resource in facilities, computers, hubs for training and skills. Since 2000 Learn Direct has helped more than two million people, the advice line has taken 8 million calls and the website has had 20 million hits. Job Centre Plus is becoming far more of an employment and career agency, not a benefits agency. Now, where there are major group redundancies, there is a discrete, broad-based package to help people into new jobs and skills.
We should be looking to bring the technology and capacity right into the heart of the poorest communities, not waiting for them to emerge into the mainstream.
All of this is about the quality of work, not just the fact of it. In turn this depends crucially on the ability to work in the way you want.
Precisely because people lead such busy lives and want to lead them, flexibility in respect of where you work, what hours, whether part-time or full-time - is of huge importance. And technology is enabling ever greater choice.
The number of homeworkers in the UK is now well over 3 million. The numbers of teleworkers - using a phone and computer to carry out their work - has almost trebled in the last 10 years. Yesterday I spoke with one young woman - a single mum working for BT - who works from home putting together multi-million pound global corporate deals. Another - without children - likes to live in the North West even though much of her work is London based. Homeworking through the computer allows her to do so.
I met employees at the Co-op able to choose their hours of work. The most recent survey across Britain showed that around a third of employers now offer flexi-time or homeworking. Trade unions have a major opportunity here. Yesterday also, I saw how AMICUS have worked out an agreement with the Cooperative Insurance Services to look after staff who were outsourced, as well as getting the best working environment for all staff. Rather than trying to stop change, this was unions and employers working together for the benefit of the company - and the employees. And that surely is now the key role for trade unions, to work in partnership with employers to ensure profitable companies that take care of their staff.
But there is still a long way to go. This is not incidentally just about the number of hours worked. Again there is much mythology here.
The average manual worker in 1943 did 53 hours a week. An average full-time worker today does about 37 hours a week.
Now, not only is the average number of paid hours worked in the UK every week the second lowest in the European Union, but the 11% of people who work more than 48 hours a week is close to the EU average. The Spanish, the Belgians and the Czechs, for example, all have more employees working long hours than we do in the UK. 85% of UK workers said their hours fit very well around their family and social commitments.
But the flexibility of the hours does matter. The law can help. We have introduced a right to request flexible work for employees with children under six or disabled children. 22% have requested to work flexibly. There is now a right to time off for family emergencies, and three months' parental leave. Part timers have been given same rights as full timers.
Ten years ago women were permitted 14 weeks paid maternity leave worth £55 a week. There was no paternity leave or right to request flexible working.Now there is an entitlement to 26 weeks paid maternity leave at over £108. Fathers get 2 weeks paid paternity leave.
Now, starting from 1 April, we will extend maternity and adoption pay from six to nine months. We hope to extend this to a year's paid leave by the end of the Parliament.
But this is not just about legal entitlements. It is also about spreading best practice, educating employers and employees alike about the possibilities. The North West Flexible Working Group, bringing together North West employers is an outstanding example of what can be done. But we need to support such initiatives, learn lessons from them and apply it across the board.
The benefits for employees are clear. But the benefits for employers are also immense. They can attract and keep the best workforce. The have fulfilled and happy employees. The best business works today as a partnership. Greater personal empowerment enables such a partnership to function.
None of this detracts from the very real challenges the modern labour market poses. New migrant workers, many from Eastern Europe make the jobs market intensely competitive. Issues around temporary and agency workers can be very controversial. Globalisation and technology are changing working patterns, and skills constantly. Outsourcing can be overestimated as a threat. But it is nonetheless real.
But the important thing to recognise what is the reality we cannot change; and the reality we can. That modern world of flux and adjustment, a kind of permanent revolution in the way we work, that is here to stay, at least for the foreseeable future. It won't change. It will intensify.
The reality we can change is how we prepare people for the reality we can't.
In this, as so often, the challenge is to apply ageless values to the new age we live in. The policy reviews we have been conducting across government have one recurring theme: the personalisation of services and of the functions of the state. The collective will and power of society acting together is still necessary for the advancement of the human condition. Without it, those with the worse start in life end with the worse finish.
Without it, only the elite fulfil their dreams.
But the character of this new age is one of individual empowerment. People want society and the state in support not in control. They want to be in control: in their time spent in leisure; in their family time; and in their work. A job is not enough. So let us put work back at the top of the agenda, reclaim flexibility for the employee, recognise that our nation's economy, as well as the people who work in it, need employees whose individual potential is developed to the full; and reshape policy around such a vision.