Congress 2014: the Economy

The following speech on the economy was delivered to STUC Congress 2014 by Pat Rafferty, Scottish Secretary UNITE on behalf of the STUC General Council:

Congress,

We meet here today at a time when the eyes of the world are looking at Scotland and its democracy.

Questions are being asked about Scotland’s economy;

Scotland’s currency:

And it’s position within Europe.

But Congress - whatever the outcome on 18^th September, I want a Scotland that will deliver fairness for its people.

A Socially Just Scotland

An economy - where the work you do is paid at a fair rate - where the minimum wage is the Living Wage;

An economy where we have decent homes for all - and the abolition of the despicable bedroom tax;

A country that protects the most vulnerable in society;

And of course – A country that protects our public services and our beloved National Health Service.

But Congress – This UK government’s austerity measures are damaging the most vulnerable in our society and pitching one against the other:

The young against the old

The abled bodied against the disabled

And the employed versus the unemployed   

And Congress,

I am bitterly disappointed with a Labour Party which has sided with the Con-Dem government to support a cap on welfare benefits – they should hang their heads in shame

The UK government says - that its deep rapid cuts cannot be avoided – and you need to accept that.

Ministers claim this is the only way to deal with the deficit - and of course - we’ve been told there is more of the same to come, £25 billion worth to be exact.

They also want us to think that the only choice is between cutting spending and increasing tax rates. 

However the cuts that have been made have slowed the recovery.

Instead of forcing banks to lend to small businesses - which would create jobs as well as offering opportunities for young people to work - this UK Government is focusing its plans on cutting welfare benefits and public services. 

With 900,000 unemployed young people, we urgently need a strategy to prevent another lost generation. 

We need to incentivise employers to employ our young people by providing more apprenticeships and tax incentives.

We need to defend the collective bargaining agenda from further attacks by a UK Government set on reducing workers collective strength - but also to restore justice at work by halting the decline in real wages.

And we need a strategy for growth which will get Britain back to work.  But these need to be quality jobs. Not the low skill, low wage jobs we see being created.

People need job security - not zero hours contracts - with workers not knowing if they have work from one day to the next and unable to make any plans for their future.

There is only one winner in that contractual arrangement - and it’s not the workers or the economy – It’s the greedy employers.

We know only too well the individual hardships people face as they are told their job is redundant.  We see the impact this has on them and their families as they desperately look for something else in a job market which is offering low paid, insecure work. 

All of us here today will have first-hand experience of the huge increase in casework as rogue employers take advantage of the UK Government’s attacks on ordinary workers’ rights - by meting out unjustified punishments to workers, and their representatives, who are striving to do their best in very difficult times. 

Since the late 1970’s, the share of GDP going to workers’ wages has fallen from 65% to 53%, with those in the middle and the bottom hit hardest.

At the same time - the proportion going to profits and to the wealthy has risen sharply. 

As wages have stagnated - debt has soared and incomes have been squeezed further.

A recent report by the Joseph Rowntree Foundation shows that during the recession - the number of households that cannot afford a decent standard of living have increased by a fifth – from 3.8 million to 4.7 million.

That is why we are seeing more and more people using pay day loan companies and food banks to get by from one week to the next.

The Office for Budget Responsibility expects household debt in the UK to reach over £2 trillion by 2015.

But Congress - there is a better way.  One based on social justice.

As trade unionists we must galvanise the support of our sisters and brothers,

Our friends and family - and the communities we live in.

We need to ensure proposals for sustainable economic growth are delivered - which are tied to an industrial strategy based upon a trade union agenda,

One of - fairness - equality - and respect.

I move.

Congress 2014: Collective Bargaining

On the first morning of STUC Congress 2014, the following speech was delivered by STUC Vice-President June Minnery (GMB) in moving a composite motion on collective bargaining:

Congress, collective bargaining is about more than obtaining a fair day’s wage for a fair day’s work, protecting terms and conditions and safeguarding our members’ health and safety.

It is about equality. It is about building and sustaining workplace democracy. It is about the development of a society which is fairer, more equal and democratic - and where economic power is more evenly distributed.

The sorry truth is that for far too long now, successive governments have refused to acknowledge any kind of positive role for collective bargaining. It has been considered an unwelcome rigidity which prevents the otherwise flexible labour market from adjusting to meet changes in demand for labour. The wider benefits of collective bargaining have been deliberately obscured and diminished. For flexible labour market read low wage, low regulation, and low valuation of a disposable workforce.

But if politicians do indeed want to tackle economic insecurity and income inequality – and, yes, that is a big ‘if’! - then government at all levels must urgently reassess the benefits of collective bargaining.

During the referendum campaign we have heard an awful lot about the superior economic and social performance of the Nordic nations. But this rarely includes reference to the high levels of trade union membership and very wide collective bargaining coverage which are at the very centre of their models:

In Norway 72% of workers are covered by collective agreements. This rises to 82% in Demark and to 90% in Finland. In Sweden the pay, terms and conditions and pension rights of 92% of all workers are safeguarded by collective agreements. It is no accident that womens’ participation in the labour market is higher in these countries and that the gender pay gap is lower.

The income distribution in these countries is – hardly surprisingly – much more fairly distributed than in Scotland and the UK. Indeed, across all the developed nations, higher collective bargaining coverage is positively correlated with lower income inequality. More workers covered by a collective agreement leads to a fairer distribution of income; end of story.

As with the Nordic nations, few of the politicians currently in thrall to the German industrial model have talked about the collective bargaining which helps drive a long term ethos throughout the system. It appears that when studying the experiences of other countries people often see only what they want to see.

It’s also revealing to track over time how the decline in union membership and collective bargaining coverage is accompanied with the top 1% grasping an even bigger slice of the cake for themselves.

In 1970 with trade union membership and collective bargaining coverage at an all-time high in the UK, the income share of the top 1% was only 5%. As bargaining coverage declined over the following three decades the income share of the top 1% tripled. The less workers are covered by collective agreements the greater the ability of those at the top to loot the gains produced by all.

Congress, this composite includes a range of proposals which if implemented would go a long way to ensuring more people benefit from the higher pay and greater security provided by a collective agreement. The benefits of collective bargaining are confirmed by a large and accumulating body of research. Politicians, who tell us they want policy to be evidence based, should really start acting on it. The Scottish Government now has an opportunity to do exactly that through the Mather Commission in which the STUC is heavily involved.

And Congress it is essential that free, independent trade unions are at the core of any new efforts to extend and improve collective bargaining across the economy. The last thing Scottish workers need is for their pay, terms and conditions to be negotiated by ‘employee representatives’ who haven’t been democratically elected and are usually captured by management. Scotland doesn’t need ostensibly progressive but practically weak models of workplace relations imported from elsewhere.

This composite is a litmus test for Government at all levels: seek to support an agenda for collective bargaining or cease with platitudes about inequality, low wages and decent work.

But let me make clear that the STUC General Council knows that increasing the number of people in Scotland covered by a collective agreement ultimately depends on the effectiveness of trade union organising agendas. We’re not looking for anyone else to do this for us. All the measures outlined in this composite seek to achieve is the creation of a level playing field for union organisers to do what they do.

It is right that Scotland’s trade unions are at the forefront of the living wage campaign. The national minimum wage which has done so much to help the very lowest paid was also one of our great successes. However, in supporting fair wages across the economy, protecting hard won terms and conditions and underpinning a better society it is collective bargaining which really matters.

Congress, I ask you to support this composite.

The Living Wage and EU procurement law

A short Twitter exchange this morning, ended with the suggestion that I blog on the issue of Procurement and the Living Wage.  It won’t be the first time I have done this, but it’s no problem to do so again. 

Pat Kane @thoughtland tweeted:

I am interested in BoJo London living wage. In 2012, re: EU procurement, law WAS threatened: http://ow.ly/3im5lA  Info on situation now?

The article in question suggested a Westminster Government view in 2012 that the London Living Wage (or at least its application through procurement contracts) might be in contravention of EU Procurement Law.  This is not a novel view, and is essentially repeated in Scotland by the Scottish Government.  Boris Johnson, Ed Miliband and others disagree.  The short answer to the twitter question would have been.  'The situation is the same as was then.  London continues to implement a number of Living Wage contracts and there has been no legal challenge'.

In 2012, the Scottish Government sought the ‘clarification’  of the European Commission on the  possibility of requiring contractors, as part of the public procurement process, to pay their staff a 'living wage', higher than the minimum wage.  It has to be said that, assuming the Scottish Government would like it to be the case that the living wage can be stipulated through public contracts, it was not a very sensible or helpful letter to write. 

The response from the European Commission enabled the Minister Alex Neil to conclude:

“This clarification confirms my understanding that it is not possible to require contractors to pay their employees a living wage as part of a public procurement process.”

First off, we should deal with one common misapprehension. The proposal to include Living Wage provisions within the Procurement Scotland Bill is not about requiring contractors to become Living Wage employers in all of their business activities – nice though that would be.  To say that (for example) SERCO, which isn’t a Living Wage employer, was barred from tendering for, or being awarded, any public contract because it isn’t a Living Wage employer in general, would be illegal under EU law.

The more interesting question is whether public bodies can stipulate as a contract performance clause that the Living Wage should be paid in the delivery of a particular contract.  This is essentially what the amendment to the Procurement Bill we have been supporting seeks to do.

To be fair to the Scottish Government, they did explore this issue to a degree with the EU Commission.  The EC response was that such actions were possible, providing that the payment of the Living Wage was compliant with the Posted Workers Directive, and in particular with interpretation following the judgment in the Ruffert case. What this judgment signifies, in a nutshell, is that in certain circumstances there are restrictions on the setting of wage levels for contracts above national minimums if the likely effect on other EU companies is to introduce “an additional economic burden that may prohibit, impede or render less attractive the provision of their services in the host Member State”.  In this respect the key issue, whether in relation to the Ruffert judgment or the more general clause 56 of the Treaty of the Functioning of the European Union, is whether companies based in other EU members states would be commercially disadvantaged by a Living Wage stipulation and , if that were the case, whether it could be justified in terms of the social provisions within EU Procurement Law.

In the Ruffert case, the action which was ruled illegal was to set a contract condition that the successful bidder should adhere to wage levels set through collective bargaining agreements in a specific part of the construction sector.  This was action was defended by Lower Saxony on three grounds, the key one being that the state measure was justified by the objective of protecting workers.

The European Court of Justice found against Lower Saxony on the grounds that the wage stipulation was not necessary to protect workers citing the fact that the provision was not necessary, was not universally applied (only to public sector construction contracts) and because the rate was higher than provided for by national legislation.

It should be said that trade unions across Europe have plenty of reasons to dislike the Ruffert case but that does not mean that its implications can be ignored and  on the face of it, it appears to pose some difficulties for Living Wage and procurement in Scotland,. But before jumping to that judgment, the following should be considered.

1)    In the Ruffert case the potential for the wage stipulation to be to the detriment of companies based in other member states was effectively agreed by all parties.  That is to say that no one questioned that the effect of the Lower Saxony approach to contracting would be to restrict the ability of companies based in other EU to member states to successfully compete.  In construction, workers are routinely paid at rates considerably higher than the minimum wage. Thus there is the potential for a company to pay posted workers above the legal minimum, but below the industry standards and still absorb other costs (travel, accommodation etc) implicit in posting workers.  As we will see, it is far more difficult to argue that a Living Wage stipulation for contracts such as in social care or cleaning is comparable.  Whilst it was difficult in Ruffert to deny that there was any protectionist element in Lower Saxony’s actions, it would be much easier so to do in respect of a Scottish Living Wage provision.

2)    There was no actual set wage rate identified by Lower Saxony in the Ruffert case.  The wage rate being set by collective sector agreements in part of the construction industry.  This makes it harder to a) judge the potential detriment to a contractor b) to argue that the different wage rate was set by “laws, regulations and/or administrative provisions” as is required by the Posted Workers Directive and c) that the wage rate was necessary for the protection of workers.

The legal opinion we have been provided with, and is a matter of public record, suggests that it is possible to legislate in Scotland in a way that avoids these problems.

Firstly an objective analysis could be undertaken to assess the potential impact on companies based in other member states of introducing a Living Wage contract performance clause.  A possible question might be.  Are there any companies from other EU member states currently delivering any Scottish procurement contracts, employing posted workers and paying less than the Living Wage?  I’m fairly certain the answer is No.  The vast majority of procurement contracts are in the field of health and social care.  Some of the Scottish based companies and voluntary organisations pay between the Minimum wage and Living Wage, and the difference between the two rates is currently £1.14 per hour.  To quote Unison's Dave Watson in his evidence to the Scottish Parliament

“Let us think about this: that directive is a European piece of legislation governing cases in which a company, presumably from a low-wage eastern European economy, posts workers to Scotland to deliver a particular public service contract. One could imagine certain high-level, high-wage areas—for example, the offshore areas where the people Pat Rafferty represents work—where a company might want to bring workers over, accommodate them and so on. Can you really see the same thing happening in a cleaning or hospitality contract, where the difference in wages will be between the national minimum wage and the living wage? Is that profit margin enough to pay for the accommodation of hundreds of Polish, Romanian or Bulgarian cleaners or hospitality workers? Clearly it is not, which is the reason why there have been no challenges.”

Secondly, the Scottish Government can go further in its justification for stipulating a Living Wage than Lower Saxony did in the Ruffert case.  It can argue that the protection it suggests is a question of ‘human dignity’.  Our legal advice says that attaching more weight to the employment protection issues such as describing the Living Wage as a matter of human rights protection makes the courts apparently more willing to accord them greater weight.  Could such a description be justified?  Of course it could.  Firstly, the Living Wage is significantly lower and 'more basic' than the likely wage rates being suggested in the Ruffert case. Also, unlike the UK Minimum Wage which is essentially a negotiated rate set by government based on the balancing of both fairness and commercial considerations, the key processes involved in setting the Living Wage (Minimum Income Standard, participatory budgeting etc) have a meaningful read across to human rights.

Thirdly, the Scottish Government could set the Living Wage rate in (probably) secondary legislation and provide a note on how the future rate would be calculated.  This would do two things.  It would avoid the ‘Ruffert problem’ of the rate not being set by ‘laws regulations and/or administrative provisions’.  It would also provide the potential to quantify any potential detriment to companies bidding from overseas on the basis of posting workers (not that we believe the need would ever arise).

Would one final problem remain?  Would a court rule as sufficient cause for overturning a contract the fact that the Living Wage rate is not universal (i.e. only applied to public sector contracts) and that the rate of pay guaranteed is greater than that provided for in the national legislation? It seems to me that this is unclear.  Firstly it is uncertain whether this would be a defining issue given that the other problems arising from Ruffert could be dealt with and particularly important in this might be the different criteria adopted for setting Minimum Wages and Living Wages  (with the second being more grounded in human dignity considerations). Secondly, and perhaps quite importantly, the Scottish Government does not have the legislative competence to change the level of the National Minimum Wage even if it wanted to.

I am certainly no legal expert.  But what I do know is that significant advances on procurement and social and environmental policy have been achieved precisely because European Governments and other public authorities have taken a proactive approach to exploring the boundaries of EU procurement law- A6.1.2 C-225/98 Nord-Pas-de-Calais Region (Commission v the French Republic) is a frequently quoted example.  It is also the case that there has never been a legal challenge to the use of Living Wage contracts in London.

So, to return to an important point. Not only, would the Scottish Government have a strong case, but it is very hard to imagine the circumstances in which its case would be tested by a commercial company in court. 

It is for these reasons that I am tempted to conclude that there are other considerations, chiefly financial ones, which are at play here. That’s a debate we should be prepared to have openly rather than relying on a single and questionable interpretation of EU law.

 Dave Moxham

 

 

 

 

 

 

 

 

 

 

 

 

Scottish Labour Market: March 2014

Scottish Labour Market

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Why so meek on Procurement and the Living Wage?

The silence from too many MSPs on the Scottish Living Wage is becoming increasingly hard to accept.  The Scottish Government has made important moves to deliver a Living Wage for directly employed public service workers but has shown little passion or even curiosity in terms of what might be possible for it to deliver through the near £10 billion spent annually on public procurement.

The Living Wage is an unusual case wherein a number of Scottish political parties are seemingly less progressive, or at least less vocal, than their UK counterparts or equivalents.

It is true to say that the position of the Scottish Greens and Scottish Labour are both consistent with those of their UK organisations and the independent MSPs have been stalwart supporters of a Living Wage. But contrast the relative quietness of the Scottish Tories with the position of Boris Johnson who loudly champions the Living Wage whenever the opportunity arises.  Or the Scottish Liberals’ reticence whilst Nick Clegg’s calls for a “compulsory Living Wage for government workers”. 

And whilst it’s hardly fair or accurate to describe Plaid Cymru as the exact Welsh equivalent of the SNP, their leader Leanne Wood has gone significantly beyond support for a Living Wage for directly employed public servants and argued for a Procurement Bill in Wales to ensure fair pay for those employed under government contracts.

Just to recap.  The Scottish Living Wage Campaign, comprising STUC, Poverty Alliance, SCVO, Oxfam, Scottish churches and public sector unions Unison, Unite, GMB, PCS, along with a whole host of care sector employers including their umbrella body CCPS, have all argued that the Scottish Government could and should include within the Procurement Reform Bill a stipulation that public contracts should pay the Living Wage.  The Scottish Government argues that it cannot do so, having sought advice from the European Union.

Our legal advice says they are wrong and STUC believes that if the Scottish Government were to ask the right question of the right people in the EU, this would become clear. A full Living Wage Campaign briefing is available here.

As long as the Bill clearly defines that the purpose of a Living Wage stipulation is to guarantee human dignity and provided that the stipulation is specific to the performance within specific contracts, the Scottish Government would be in strong position to defend its case.  Here is the amendment to the Procurement Bill we are supporting.

36 In section 8, page 3, line 33, at end insert <, and

( ) the Scottish living wage duty.>

39 After section 9, insert—

Scottish living wage duty

(1) For the purposes of this Act, the Scottish living wage duty is the duty of a contracting authority to specify in the contract notice relating to a regulated procurement that it intends to impose a condition relating to the performance of the contract that the economic operator who is the successful tenderer must pay the Scottish living wage.

(2) An economic operator pays the Scottish living wage if the remuneration of each of its employees who undertakes any activities related to the performance of the contract is at least the Scottish living wage.

(3) The Scottish Ministers must by regulations define the Scottish living wage for the purposes of this Act, and may from time to time as they see fit revise such definition.

 

Just for the avoidance of doubt.  The Greater London Authority which, under the leadership of Boris Johnson, is currently rolling out the Living Wage through procurement.  It said in February:

3.14. Public bodies can follow clear steps to protect themselves as they procure. To ensure compliance with European legislation, procurement decisions should be considered individually, rather than as a blanket policy. Within this context, the Mayor’s office has rightly been clear that a Living Wage standard in procurement is legally possible, and this standard is applied within the GLA group. 75 Some boroughs are confidently pursuing a proactive Living Wage commissioning policy.

3.15. Organisations need to seek their own legal advice when deciding to apply a Living Wage standard to procurement. The Mayor’s support for Living Wage contracting across the GLA group and encouragement of Living Wage procurement by others certainly helps to reassure employers that this is possible.

Just about everyone I have spoken to agrees nthat there is absolutely no prospect of the use of the Posted Workers Directive as the basis for a challenge to Living Wage contract performance clauses.  There is also absolutely no impediment under the existing powers of the Scottish Parliament to it enacting suitable legislation, nor any suggestion that independence would make it any easier or harder to pursue.

If it’s good enough for London, it’s good enough for Scotland, and it’s a time a few more of our MSPs started saying so.

 Dave Moxham

 

LGBT HUMAN RIGHTS IN UGANDA AND NIGERIA

The last seven days have seen events unfolding around the world which present a challenge and stiff test for the LGBT community and activists.  Nowhere more so is this the case than in Uganda.

The tragic death of teacher and LGBT activist David Kato in 2011 shocked the world and finally drew attention to the unacceptable discrimination and persecution of LGBT people in that country.  A country where the state is often happy to overlook gang beatings, “corrective” rape and even murder of individuals on the basis of not only their sexuality but also their perceived sexuality and gender identity.

The pressure that was brought to bear by the global community at that time was sufficient to supress the initial attempts to pass an Anti-Homosexuality bill through Uganda’s parliament.

Sadly, on the 24th February 2014, Uganda’s president Museveni signed a new Anti-Homosexuality bill into law having been satisfied by “experts” that being LGBT was unnatural.  This further stiffens the level of punishment in Uganda to a level just short of death.

The STUC LGBT Workers’ Committee strongly condemns this further infringement of individual human rights and is equally concerned with similar developments in Nigeria and Zimbabwe.  We would urge all our affiliates to lobby the Foreign and Commonwealth Office to express our opposition to developments in Uganda and would also encourage individuals to write to their local MPs.

As a show of support to LGBT in Uganda and all around the world where they face discrimination, violence and imprisonment, the Equality Network is holding a rally on The Mound in Edinburgh on Friday 7th March between 12.00 pm and 1.30pm.  We would urge trade union activists to show their support by attending this rally and send a clear message that Human Rights are to be protected.

Craig Cameron

Chair

STUC LGBT Workers' Committee

A Just Scotland Deserves Just Reporting

On Thursday the STUC launched its second A Just Scotland paper (AJS2). It is the product of extensive consultation with our members: a detailed, thoughtful piece of work which we hope will be a constructive contribution to the debate on Scotland’s Constitutional future.   

It addresses serious issues in a serious way, and reflects as far as is possible the questions that union members want answered before September - questions for the Scottish and  UK Government’s; the Labour Party; and the official Yes and No campaigns and their constituent parts.

The paper does not reach a conclusive view on whether the STUC should recommend a ‘yes, or ‘no’ vote and recognises that whilst individual unions may reasonably take a view based on their own priorities, it is entirely possible that STUC will not.  

It also recognises that for many, including a significant number of trade unionists, the answer to the questions posed by the referendum ‘isn’t obvious’.  They are in the process of balancing the pros and cons of Independence and the maintenance of the Union.  Presenting a binary view in which there are no positive aspects to the alternative position or weaknesses within one’s own is neither helpful to those who are still undecided or to the quality of debate generally.

When we launched AJS in September 2012 our hope was that we could create a space to have an open and honest debate, where the issues can be explored and the evidence examined, so that individuals and organisations can make up their own minds, and where people can ask questions and express views without fear of being labeled as a lackey of one campaign or political party.

And I said at that time, that the Scottish media have a responsibility not to report everything in relation to the Referendum with reference to the views of one or another political party or Government, the BBC and others having reported the STUC’s response to UK Government’s consultation on the Referendum in early 2012 under the headline ‘STUC supports SNP’.

Unfortunately, it appears that my plea to the media has fallen on deaf ears.

Having launched AJS2 on Thursday I was astonished to discover that the Scotsman online reported our paper and my comments at its launch under the headline ‘STUC backs Independence’. When it was pointed out how ridiculous this was the headline was changed. Unfortunately the article remained as a partial (and by that I mean incomplete rather than biased  - I would never accuse a journalist of bias-) report of both our paper and my press conference comments.  

What was reported as my claim that union members were 'more attracted’ to the campaign for Independence was a comparison I said was being made by our members of the respective vision for social justice presented at this point by both sides of the debate. 

What I said (and I know this is what I said as I wrote my remarks beforehand and presented them word for word) and what wasn’t reported, was that: 'while attracted to some of the vision presented by Yes and the Scottish Government some questions remain about it credibility - how it can be delivery - is it consistent with the broader economic model presented by the Scottish Government of low corporate and personal taxation and deregulation?'. 

What I also went on to say ( and again not reported) was that: 'there also remain concerns that the Scottish Government's proposed macroeconomic approach will make it more difficult for that vision to be achieved' and that 'the Scottish Government needs to be more convincing that as a junior partner in any currency union with rUK it will not be subject to the sort of fiscal and monetary constraints that would make the public spending that our members see as necessary to reduce inequality, provide a fair welfare system and quality public services impossible. Monetary union may well be the best option for an Independent Scotland, it will have consequences and more frankness on these consequences from the Scottish Government would be welcome as it would be for these in the Yes camp who advocate a separate Scottish currency’.

When asked directly by the journalist in question whether the STUC was leaning more towards Yes I said ‘No!’. 

AJS2 in intended to raise questions for both sides and not to favour one over another.

On the No campaign I said that many of our members ‘have been largely disappointed at the lack of vision presented by the devolutionist/unionist parties. It is not enough for them to say we will present our vision for social justice if indeed they have one in their manifestos for the 2015 UK Election or the 2016 Scottish Election – the Referendum is in 2014’.

I went on to say that ‘if George Osborne, Ed Balls and Danny Alexander can be definitive that an Independent Scotland will not be allowed to use the Pound, the unionist/devolutionist parties should be able to give a definitive commitment that any block grant funding formula would not would not place Scotland in a worse position relative to rUK if we vote No and should make firm commitments on the further powers that will be devolved to Scotland in that event’.  

At least the Scotsman journalist attended our press conference. The Daily Record reported what I was supposed to have said without the journalist having been in attendance or without having spoken to me either before or after! .By a strange coincidence, the Record’s report contained the same quotes attributed to me and presented the same misrepresentation of my remarks and the STUC’s position as did the Scotsman!   

It is little wonder that few in civil society and in industry are willing to put their heads above the parapet and engage in the debate on Independence when the media persist in reporting (or indeed misreporting) what is said within a binary (yes/no) paradigm.  

The STUC will continue to be open about our position. We will take on the debate and any criticism that comes with it.

However, when we are all seeking a higher quality debate, higher quality reporting would certainly help.

Grahame Smith
STUC General Secretary

Challenging Russian homophobia as the world prepares for the Sochi Olympics

It’s been a momentous and historic week for equality in Scotland.  The passing of the Marriage and Civil Partnership (Scotland) Bill represents a significant landmark in Scottish legislation and mirrors changes in social attitudes which have been on an upward curve since the early 1980’s.

Within a few short decades we have moved away from the criminalisation of homosexuality to accepting LGBT people as being rightfully able to express their love in marriage just as other couples have long taken for granted.

Quite rightly it is a time for celebration. 

Yet, whilst we reflect on a victory, in many parts of the world Human and Equal rights for LGBT people are not advancing and in many worrying developments gains that had been made are being rescinded with devastating consequences.

The eyes of the world are now focused on Russia as it gears up for the winter Olympics in Sochi and with this come the added scrutiny of Russia’s duplicitous human rights record.

The introduction of a federal law banning the “propaganda of non-traditional sexual relationships” to minors has made it virtually illegal to place same-sex relationships on a level footing with heterosexual ones or to even promote  LGBT rights.

The affect has been to further isolate the LGBT community whilst reinforcing an underlying intolerance towards homosexuality, a trend which has been on the rise.  This coupled with reports of increased arrests of activists and a stark rise in hate crime motivated by homophobia has served to make an already deteriorating situation worse for LGBT people in Russia.

The STUC LGBT Workers Committee shares the concerns of civil rights groups and campaigners in expressing our disgust at the scenes of violence, reports of torture and ultimately deaths of LGBT individuals and activists.

We cannot allow Sochi and the winter Olympics to be used as a mechanism for the Russian authorities to attempt to sanitise its human rights record.  It is vital that we show support during and after the games to enable the LGBT community in Russia to fight this legislation whilst encouraging the Government to refrain from propagating a hostile public perception based on prejudice.  To this end we support the actions of activists and those athletes who are openly questioning this repressive legislation and ask that supporters in the UK contact their MP to lobby the Russian ambassador.

 

Craig Cameron

Chair of the STUC LGBT Workers Committee.

 

Economics of the White Paper Pt 2: Industrial Strategy

The White Paper (and the Economic PolicyChoices paper publication which preceded it by a week) is heavy with references to ‘industrial strategy’. This is, in general terms, a good thing.

After all, until the latter part of the last decade uttering the words ‘industrial strategy’ risked banishment from mainstream policy debate. It was widely accepted that Government’s role was limited to horizontal supply side measures; to ‘creating the best business environment’. Active intervention of any shape or size was scorned. Now it seems everyone – even George Osborne - is cheerfully riding the industrial strategy bandwagon.

But what does it mean? Is the phrase consonant with ‘manufacturing strategy’? It often appears so at UK level. But manufacturing policy is addressed separately in the White Paper though the distinction isn't clarified. Maybe active support for manufacturing is part of a wider industrial policy? Or is industrial strategy simply another way of framing the Scottish Government’s current key sector led model of economic development? Reading the papers it looks like the latter to me but let’s take a step back…

In a recent paper the consistently provocative and really rather brilliant Centre for Socio-Cultural Change (CRESC) at Manchester University attacked the thinking behind what they call ‘new industrial strategy’:

“…debates about the new industrial strategy’ are structured so that there are commonalities or motifs and important absences in the collective conversation about what to include in an industrial policy. The preoccupation with adding new high tech sectors (without rejecting neoliberal structural reform) makes new industrial strategy a politically and intellectually non-disruptive form of policy innovation”. (my emphasis)

By focusing on the external restraints on production, CRESC argues that new industrial strategy suffers from two key problems:

1. Assumption that problems of business models and supply chain dynamics don’t’ matter/exist: “business problems are largely assumed to be exogenous, stemming from environmental conditions”, and;
2. An absence of geography: “new industrial strategy policy proposals are for the UK economy as a national entity, and there is an unwillingness or inability to explain how these policies relate to the differing needs and capabilities of the UK’s regions”.

I think the Scottish Government’s thinking as expressed in the White Paper and Economic Policy Choices certainly reflects the first problem and until a couple of weeks ago I would‘ve had little hesitation in accusing them of the second.

However, Economic Policy Choices includes a paragraph with fascinating and potentially far reaching consequences:

“8.48 Other parts of the country face different challenges with some less well placed to immediately take advantage of growth sectors – and areas of Scottish comparative advantage – identified throughout this report. In these cases, a broader approach is required. For example some areas are particularly well placed to benefit from sectors such as health, education and utilities (for example foundational economies) and appropriate policies to support the spatial concentration of such activities can lead to more sustainable and balanced levels of growth at the national level”.

Two things stand out here: a welcome if belated recognition that some areas simply don’t have the assets to grow activity in the Scottish Government’s key sectors and a commitment to the foundational economy. This commitment maybe poorly expressed and based on a misunderstanding of what is meant by the term but it would be churlish to doubt its sincerity at this stage. So what is the foundationaleconomy?

CRESC again:

“The UK has lost much of its manufacturing. But it retains its 'Foundational Economy'. This is the network of institutions and employees that work in health, education and welfare; and in 'mundane' but essential activities such as infrastructures, utilities, food processing and retailing, and distribution. The 'foundational economy' is often unglamorous but necessary to everyday life. It's used by everyone, regardless of income or social status. On a broad definition it employs around 10 million. It's often neglected or underemphasised by the policy makers. But this is a mistake. As part of …industrial policy there's a strong case for supporting and developing it”.

This might all seem very mundane but it's potentially transformational in the development of future industrial strategy/economic development strategy. By all means continue to try to develop new sectors – for too long this has been beyond the scope of Government thinking - but please pay attention to those where people work now and are likely to work in the future.

With all the above in mind, here are some recommendations for a new approach to industrial policy (like CRESC, I prefer 'policy' to 'strategy' – it suggests a propensity to action) which might start to fill in some of the gaps left by the White Paper:

• Don’t pretend this stuff is easy, obvious or straightforward. Industrial policy is difficult, the payoffs are uncertain and long-term and some investments are bound to fail. Government can expect to receive little if any credit for the successes of industrial policy but it certainly won't avoid scathing criticism for its failures. It’s the way of the world. 
• Be careful with loose terminology: where do manufacturing, industrial and economic development strategies/policies begin and end? The potential for damaging confusion is high and I’m sorry to say that’s where the White Paper seems to lead. If industrial strategy is to achieve anything at all then a minimum requirement is that people should know what’s being talked about.
• (with reference to point 1 above) Don’t assume that industrial strategy must necessarily focus only on external constraints on production – I know it’s difficult for politicians to acknowledge but too many companies (whole sectors?) operate lousy and/or damaging business models. Such models may succeed in providing the quarterly growth in earnings demanded by the City while actively reducing the systemic capacity to replicate the skills the firm/sector needs to sustain and improve production. Even if government got its supply side interventions exactly right, Scotland’s private sector manufacturers could not and would not morph into a Caledonian Mittelstand overnight.
• It’s a similar story with supply chain power relations. Think of supermarkets and food processors. A handful of very powerful monopsonistic buyers forcing prices down prevent the type of patient investment in skills and capital equipment necessary for the supplier to thrive in the long-term. CRESC again: “let us suppose that the problem is the stock market together with Sainsbury and Tesco and their effects on food processing which is our largest manufacturing sector. The new industrial strategy literature contains no clear answer as to what should be done because it is concerned mainly with adding new sectors and sources of finance and has proposed nothing more than talking shops for different interests in the food chain as the means to ‘win-win’ supply chain improvement”
• Put geography right up front – I recently attended a meeting in a market town in one of Scotland’s local authority areas not long since described as having a soviet style economy (which was of course palpable nonsense). Having recently suffered the demise of two major private sector employers a new economic development plan was being developed for the area based on 1) using local assets to engage with Scotland’s key sectors and 2) growing the local business birth rate. A highly orthodox approach and one doomed to failure. The area has no such assets and creating more marginal under sized poorly performing enterprises (step carefully with the acronyms) is likely to reduce rather than increase local employment. A foundational approach here will involve using every tool at Government (at all levels) to drive up the economic and social return from sectors like the privatised utilities, supermarkets and retail banking. National action (e.g. living wage) will also be necessary to drive up private sector employment standards and returns to the local economy. 
• Get real about structural reform of finance: the White paper just doesn’t go there and the Scottish Government’s recent banking strategy paper is very weak. There’s simply no point promoting a new approach to industrial policy while continuing to treat finance as a priority sector i.e. promoting growth in the sector as an end in itself. This is bad not just for the economy’s productive sector but also I would argue for equality and democracy. If an independent Scotland wants to be less fair, equal and democratic while growing an economy that is inherently unstable then, yes, continue to pump up big finance;
• Innovation policy and industrial policy should be developed and implemented as intimately as possible. It was, I believe, a mistake for the Scottish Government to recently publish a joint entrepreneurialism and innovation strategy thereby further embedding the notion that private entrepreneurs are always and everywhere the key driver of innovative change. I’d start again from an Entrepreneurial State perspective.
• Drop all the silly stuff about the pivotal role of very small firms. As Mazzucato notes, 'the majority of start-ups end up as marginal, undersized, poor performance enterprises that can drive down profits, increase factor prices for high-potential firms, confuse investors and fail to generate benefits commensurate with the amount of public support they receive'.
  
  
• Finally, if done properly, industrial policy is potentially expensive and Scotland already spends much more than rUK on direct economic development. Corporation tax cuts are expensive and could – if paid for by removing allowances which favour manufacturing – actively undermine the purposes of industrial policy. It’s also essential that the Government captures at least some return from its investments to reinvest back into the system.

Let’s hope the White Paper starts a proper debate about industrial policy for its remarkable how economic development policy in general has been lost from public discourse over the last decade. Remember the fuss A Smart, Successful Scotland caused on publication? The current Scottish Government’s economic strategies received much less coverage. This is depressing because economic development policy should serve the needs of every citizen. We should talk about it.

Stephen Boyd

STUC

A Just Scotland: fiscal sustainability and income inequality

Today at the STUC we held a small conference, one of a series to help inform our next A Just Scotland report due for publication early in the New Year.

David Comerford, Stirling University asked a highly topical question: is the IFS report consistent with the Scotland's Future White Paper? The slides from this excellent presentation are available here and I'd encourage you to read them. What really struck me was the contrast between this patient and effective critique of the IFS report and the hyperbolic ad hominem nonsense which followed its publication. There are many on both sides of the referendum debate who could learn from Comerford's analytical approach.

David Eiser (chaired by Dave Moxham this was one helluva Davefest), also Stirling University, then presented on Income Inequality in Scotland; a subject much discussed but tragically under-researched. The slides are available here and I'd also recommend the important paper written by Eiser and David Bell on which it was based. There has I think been a laziness about the inequality debate in Scotland; a tendency to assume that 1) the trajectory of inequality in Scotland has closely imitated that of the UK, and 2) the trajectory has followed a relentlessly upwards path. Eiser punctured these canards. I'm also far from convinced that people understand the role of working hours (rather than hourly pay) in driving inequality. The presentation concluded with some slides which described the stark difficulty of tackling inequality through tax policy changes alone. Much food for thought.

The conference finished with a debate between John Foster of the Red Paper Collective and Robin McAlpine of the Jimmy Reid Foundation but on this it would be very difficult to comment without preempting the next AJS paper. And I'm not going to do that.

Stephen Boyd
STUC

Storify: Regional GVA stats

Economics of the White Paper: Manufacturing

This is the first in a series of short blogs around the economics of the White Paper. 

It might often be exaggerated but the steeper decline of manufacturing in the UK relative to many other advanced nations is real enough. Unit wage costs are significantly higher in nations like Germany, Sweden, Finland and France where labour and product markets are also more stringently regulated.  

So, if it’s not the usual suspects of wage and regulatory costs to blame, what is it about the UK economic model that’s so hostile to manufacturing? In a recent paper on manufacturing and constitutional change for the Red Paper Collective I argued that the following factors surely apply: 

1.    Lack of political support: UK political class has been hugely complacent about the decline of manufacturing and ability of services to sustain growth and create decent jobs. Industrial policy has been inconsistent and erratic. Indeed, for years prior to the financial crisis, simply using the term risked the ridicule of senior policymakers. Monetary policy has tended to be set to benefit the City and at times – the early 1980s in particular -  has simply been disastrous for manufacturing;

2.    Short-termism: the short-term nature of the UK financial system disadvantages manufacturing firms who are unable to access the patient, committed capital necessary to sustain crucial investment in R&D, capital equipment and people.

3.    What Robert Skidelsky describes as the ‘imperial overhang’: UK firms, used to exploiting captive markets, were wholly unprepared for, and unable to deal with, globalisation; and,

4.    Ownership and control: among advanced nations, the UK is quite unique in its relaxed attitude to ownership. Other nations identified by the current Chancellor as ‘more competitive’ operate regimes less accommodating of foreign purchases of indigenous firms. Migration of ownership leads to loss of control and decision making and key functions such as R&D. It also leaves workers more vulnerable to redundancy as it’s much more difficult for owners to close domestic workplaces.

 In short:

 “Other nations have been much more successful in building models that support long-term investment; workers have direct input into decision making, finance is more knowledgeable and supportive, political commitment is strong and enduring.  Other EU member states retain much higher proportions of procurement spend domestically and give more to manufacturing in state aid”.

I went on to argue that:

“…there are no quick fixes under any constitutional scenario. The factors explaining Scotland’s relatively steep decline in manufacturing are systemic, with deeply embedded economic, institutional, historical and cultural roots. At risk of stating the obvious, it is how additional powers are patiently applied to overcome these problems that will determine manufacturing’s long-term future in Scotland.

 “It’s not credible to assume that constitutional change in and of itself will boost manufacturing output and jobs. Global economic forces have acted to reduce manufacturing’s share in all advanced economies. These forces, particularly the rate of productivity growth due to technological and process innovation, will continue to constrain jobs growth whether Scotland is independent or not. Bad domestic policy may help explain Scotland and the UK’s relative performance but it’s very far from the whole story.

 I then noted that:

“Under current devolved powers, the Scottish Government already possesses the ability to support the long-term future of manufacturing in vital areas such as skills (where it holds full powers), public procurement (powers limited only by EU Directives) and finance (powers are available as the establishment of the Scottish Investment Bank testifies, but it can be reasonably argued that budget constraints seriously limit effective action)”.

 

After citing a number of areas where policy could be more supportive of manufacturing, I concluded by arguing that:

 
“Maybe the greatest opportunity is constitutional change precipitating radical change in Scotland’s business culture. Freed from the dead hand of the City, it’s possible to see a new manufacturing and innovation eco-system developing in which firms can grow organically with committed – public and private – funding partners.  As investment horizons widen, management and policymakers may start to see the benefits in an approach which works for employees, communities, suppliers and customers as well as shareholders.”
 

I guess this is why I find both the Scottish Government’s White Paper and the Economic Policy Choices paper that preceded it ultimately disappointing on the issue of manufacturing.

 

They do promise much: in the chapter in Policy Choices entitled ‘Boosting Competitiveness and Reindustrialising Scotland’ the case is set out for why ‘Scotland like the rest of the UK needs to rebalance…creating a greater role for manufacturing and securing more private investment’. The importance of manufacturing to quality employment, economic stability, equality, innovation and regional growth is correctly emphasised. The commitment seems genuine and strong.

 
However the analyses of why industrial decline has been steeper in the UK than other nations and what might be done to reverse the trends are pretty inadequate. More words are expended on the benefits (all justified) accruing from a ‘strengthened’ manufacturing sector than on how it might be strengthened in the first place – and, pertinently, exactly how additional powers flowing from independence might be applied in this respect.
 
But it’s the refusal to take on the role of finance that’s most problematic. Although Policy Choices argues that the interests of the City have been catered for to the detriment of manufacturing, there is no developed assessment of the failure of UK finance to support industry or of the disproportionate amount of resources (e.g. STEM graduates) it absorbs.

The White Paper could have been much, much bolder on structural reform of the banking sector, new public investment vehicles and how they might be funded and corporate governance reform. Models of independence or enhanced devolution which seek to retain or replicate essential elements of the current system (e.g. predominant role of finance) are very unlikely to deliver manufacturing growth. It’s interesting that one of the few clear policy priorities of the Scottish Government remains cutting corporation tax; a policy that’s likely to prove actively detrimental by further embedding short-termism and pressurising the investment subsidies which benefit manufacturing over finance.

Stephen Boyd - STUC

[STUC discussion papers on manufacturing 2007 and 2011. Presentation to National Economic Forum 2010] 

Next post: industrial policy – what does it mean?