The Pandemic, Key Workers: Value and Wages

The Pandemic and its impact on the economy has demonstrated to a high degree what the essential work required to keep a society from breaking down. This also shines a light on value and wages. The labour theory of value argues that the economic value of a good or service is determined by the total amount of “socially necessary labour” required to produce it.

Under “normal free market” conditions the orthodox narrative generally is postulated that the terms and conditions including pay will be largely determined by the skill factor of the job being done in terms of added value.

This has led to the bargaining theory of wages which holds that wages, hours, and working conditions are determined by the relative bargaining strength of the parties to the agreement. Trade Unions and management tend to hold to this theory under which it is generally recognised that employers had greater bargaining strength than employees.  

This has had an influence on areas which include minimum wage legislation.  Over all the rate or rates are determined by relative bargaining power with the skills of the given worker being seen as a central feature of the pay, terms and conditions offered to the worker in given market circumstances.

In the neo- liberal world this has largely been used as cover for feed the rich policies so for example the Resolution Foundation notes in 2011 that “In the UK, the share of every £1 of value generated in the economy being paid as wages to workers in the bottom half of the earnings distribution fell by a quarter between 1977 and 2010, from 16p to 12p. If we include bonuses in this calculation, their share falls to just 10p. The conclusion is simple: in recent decades the UK economy has become less effective at sharing the proceeds of economic expansion through the mechanism of wages.” (The Breakdown in the Relationship between Economic Growth and Pay)

However, the Covid 19 Pandemic has raised the issue of what is essential and with that what the notion of the creation of value and who should be rewarded and how.

The economy has been severely restricted because of the pandemic yet society still needs to function; services still need to be provided; food still needs to reach the shops and sick people still need to be looked after.  To this end the Johnson government has defined who the key workers are. 

Who Are The Key Essential Workers

So the low pay / status is well known among this cohort of workers but who exactly has been defined as key workers? 

The government has published a list of key essential workers whose children will be prioritised for education provision following the outbreak of the coronavirus.

The list has been separated into eight sectors:

– Health and social care

This includes frontline health and social care staff – such as doctors, nurses, midwives, paramedics, as well as support and specialist staff in the health and social care sector. In addition, those working in supply chains, including producers and distributors of medicines and personal protective equipment are included.

– Education and childcare

This includes nursery, teaching staff and social workers, as the department said these workers are required to deliver their plans.

– Key public services

This includes those required to run the justice system, religious staff, as well as those responsible for managing the deceased and journalists providing public service broadcasting are on the list.

– Local and national government

The list “only includes administrative occupations essential to the effective delivery of the Covid-19 response or delivering essential public services”, including payment of benefits.

– Food and other necessary goods

The list includes those involved in the production, processing, distribution, sale and delivery of food.

– Public safety and national security

Police, support staff, Ministry of Defence civilian staff and armed forces personnel are on the list, along with fire and rescue staff, as well as those responsible for border security, prison and probation staff.

– Transport

The list includes those who will keep “air, water, road and rail passenger and freight transport modes operating during the COVID-19 response”.

– Utilities, communication and financial services

Staff required to keep oil, gas, electricity, water and sewerage operations running are on the list, along with those in the civil nuclear, chemical and telecommunications sectors. Those in postal services and working to provide essential financial services 

Who is more likely to be a key worker?

According to the TUC key Workers are : more likely than average to be from a BAME background; be women; be born outside the UK and be paid less than the average UK income. 

Key workers by household type

45% of households with dependent children include at least one key worker. 

In households with dependent children and at least one adult key worker: 19% of households have both parents as key workers, and in 14% of households the key worker is a lone parent.  

Source: ONS, Key workers May 2020

Key workers have lower rates of pay

According to the Institute for Fiscal Studies, 33% of key workers earn £10 or less an hour, compared with 28% of workers in non-key sectors. 

The median key worker earned £12.26 per hour in 2019, 8% less than the £13.26 per hour earned by the median earner not in a key worker occupation. 

Workers in occupations with a high number of Covid-19 deaths

Workers in occupations with the highest number of Covid-19 deaths – such as care workers, taxi and cab drivers, security guards, and sales and retail assistants – are also more likely to come from a BAME background, be women, and have lower than average rates of pay.

According to the ONS, within the 19 individual occupations with the highest number of Covid-19 related deaths, 1,088 workers aged 20-64 died in England and Wales between 9 March and 20 April 2020.  

Our analysis of the Labour Force Survey shows that of the workers in the occupations: 

• 13% are from BAME backgrounds, compared to a workforce average of 12%. 

• 55% are women, compared to a 48% workforce average. 

• 15% are disabled (as defined by the Equality Act 2010), compared to a 14% workforce average. 

Source: Labour Force Survey, Q1 2020

Occupations with high levels of Covid-19 deaths have lower rates of pay

10% of workers in these occupations earn £10 or less an hour, compared to an 8% workforce average.  

Occupations with the highest number of Covid-19 deaths varies by gender 

Among women, care workers and home carers are most at risk, with 66 deaths between 9 March and 20 April, followed by nurses and nursing auxiliaries and assistants, with 31 deaths. 

Among men, taxi and cab drivers and chauffeurs are most at risk with 76 deaths in this period, followed by security guards and related occupations (63 deaths), and care workers and home carers (32 deaths).  

Source: ONS, Coronavirus (Covid-19) related deaths by occupation, England and Wales, 11 May 2020

Read TUC key workers report  Download full report (pdf)

Policy Shift?

In many ways the pandemic has shifted the normal political process, encouraging a degree of policy innovation as a means to combat the recession.

But as policymakers reach for new tools in these uncertain times, those policymakers should also consider the value of old tools. 

People finally understand that low-wage workers need to be appreciated and valued and that they are the ones who allow our society to continue to function. 

None of us, at this point in time are worrying about what non essential workers are doing during this crisis. The workers we are concerned about are those key workers – the supermarket workers and other low-wage workers who have continued to work during the crisis. These are the workers who are essential for us to be able to get through to the other side of the pandemic. These are the workers who have demonstrated the real value to us all as a society. 

We should expect in the future that the way they will be treated in the workplace, and the way they will be compensated in the future, will reflect the intrinsic value of what it is they are contributing to society.

The TUC has made the following Recommendations:

The government must:

• raise the minimum wage to improve the pay of 2 million key workers;
• give meaningful pay rises to over 4 million public sector key workers;
• ban zero-hours contracts which particularly affect key workers in health and social care, and wholesale and retail.

Other Areas for Consideration

• Making wage and terms and conditions bargaining in the Care Sector National – The Scottish Labour Party did try to have the latest Covid regulations in Holyrood amended to include national bargaining but this was deemed impractical by the SNP – this needs revisited by all of the Labour Movement but the Labour Party in particular.

• National pay evaluation schemes in the state sector NEED TO BE AMENDED  with a weighting for essential workers/key workers.

• There needs to be action which Extends bargaining rights for workers in the service/ distribution sectors.

• Investigate a policy of pay compression with pay deals being bottom loaded over a period of years. 

Conclusion

The Chancellor of the Exchequer Rishi Sunak has announced a public sector pay freeze with the exception of Health Service workers and those earning less than 24k to receive £250. 

 Essentially this looks like the public sector will be expected to pay for the pandemic and is already showing the strains of austerity policies from the financial crash in 2008 with pay being significantly eroded from 2008. 

Care workers, supermarket employees and refuse collectors all play their part in what has been described as the “foundational economy”.

Along with teachers, utility workers, bus drivers and librarians, they provide the services and social glue which any community needs. They are the key workers of this crisis. Yet their jobs are low-paid and often chronically insecure.

Some of that is down to the austerity-driven assault on local government finance during the past decade, which has prompted jobs to be lost and services to be greatly reduced or lost entirely. 

The trend for the private delivery of public goods, from refuse collection to street cleaning, long predated the 2008 crash as we all know. This is being driven by an assumption that the pursuit of shareholder profit would maximise efficiency of the delivery of services and that private sector methods should be institutionalised within government through such initiatives as New Public Service Management methods. 

Instead, in institutions such as care homes, it has led over-leveraged companies to cut corners and underpay staff in order to pay down debt and satisfy shareholders. 

It is heart-warming and right that the jobs which have carried little social status are now being seen in a different light. 

But as Britain learns the myriad lessons of a crisis that has exposed our assumptions to the harshest scrutiny, the need for a new deal for workers in the everyday economy should be high on the list.

This has exposed an uncomfortable truth: the people we need the most are often the ones we value the least.

Once the economy has recovered, these jobs need to be made better. Insecure contracts and loopholes should be replaced with permanent jobs, better wages and more training and accreditation. This would not be costless of course.

Admittedly, some companies in low-wage sectors such as food, care and logistics would simply make less profit but the profit to wage ratio in companies is long overdue a revisit as part of both public debate and policy formation.  

 It is likely, then, that we would have to pay more for some things. Food would become more expensive; higher taxes would be required to fund social care and childcare; home delivery might no longer be free. Some will object that higher prices would push those on the breadline into deprivation. But the answer is not to keep these goods and services unfeasibly cheap, it is to use the tax and benefit system to make sure nobody is so close to poverty to begin with. 

A look at Scandinavia shows that a different balance between wages and prices is perfectly possible.  Coronavirus has forced us to rethink who we value and how. Some of the workers we have left to languish in low-paid and insecure jobs are the very ones we cannot live without. It’s not just time to be grateful. It’s time to make amends.

When Keir Starmer accepted the Labour leadership he made a “call to arms” statement about all key workers, cleaners, paramedics, carers, porters: “For too long they’ve been taken for granted and poorly paid. They were last and now they should be first.” 

It time now for Starmer to engage in the real politics and struggle to make his high rhetoric a reality. It will be for the rest of us in the Labour and Trade Union Movement not to get way laid by sectional interests, rather we need see this as an opportunity to make real structural change. 

It is time to embrace and reward keyworkers. It is time to rediscover the dignity of Labour!