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I mentioned the Governments achievements, and I shall come back to praise not the Minister but the Government, of whom he is a representative and we are, too. They are all good, solid achievements, but they are not enough for the most vulnerable in our work force. At this point, I shall give the Minister a chance to assert his independence, because I was somewhat disappointed to hear my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform say to the Fabian Society last week that the Government had
reached the end of the era on considering major new regulation as the best way to improve standards.
I am sure that the Minister agrees that, perhaps, his superior has got it wrong, so I shall give the Minister a chance in his summing up to say, Yeah, on balance, the Member for Elmet is right and the Secretary of State is wrong. Any suggestion[Interruption.] On balance, yes. Any suggestion that this, or any, Government could have sealed the end of the era for new laws to protect workers is very worrying, and such a move would be incredibly short-sighted in these turbulent times. On a serious note, I ask the Minister to respond to those particular comments when he sums up.
Todays debate should be seen in the context of the recent publication of two important reports, to which I have already referred, relating to low pay and migrant labour in the UK. They are the TUCs Hard Work, Hidden Lives report and the House of Lords Select Committee report The Economic Impact of Immigration. Whether we like it or not, the Lords reportdespite the overwhelmingly negative comments in the media and in this Houselends weight to the objective conclusion that increases in net migration have contributed to the creation and expansion of a low-pay economy. By enabling employers to hold down wages at the lower end of the labour market and facilitating a net expansion of low-paid jobs, migration has been an important contributory factor in shoring up a status quo that is unacceptable to low-paid residents and migrant workers alike.
Let us consider the effects on the resident population. A core conclusion of the report is that increases in net migration to Britain have resulted in winners and losers among the resident population. The report cites evidence that while migration has had a positive absolute wage effect on native residents of the UK, recent studies suggest a negative effect on the wages of the workers employed in the lowest-paid jobs, and those most in need of Government assistance. Evidence submitted to the Committee by Professor Dustmann and others suggests that every 1 per cent. increase in the ratio of migrants to natives in the working-age population ratio leads to a 0.5 per cent. decrease in wages for the lowest 10 per cent of wage earners. For example, evidence submitted to the Committee by the City of London Corporation stated that a concentration of immigrants in low-paid jobs in the capital had led to
significant downward pressure on wages at the bottom end of the market.
Mr. David Anderson (Blaydon) (Lab): The incomes policy does not affect only low-paid workers, but all public sector workers in this country. Effectively, public sector workers are under pay restraints at this moment in time and have been for at least two years.
Colin Burgon: My hon. Friend is absolutely right. Yesterday, The Times reported that a large number of migrant workers are now employed in the care sector, which has massive repercussions for workers in that sector. In the Lords report, Professor Nickell says that negative wage effects are felt in the social care and cleaning sectors, in which low hourly-paid work is most concentrated. That reflects the existing economic theory as presented to the Committee. The report notes that it is typically assumed in conventional models that in
a simple short-run model of the labour market, immigration lowers the wages of local workers
Importantly, immigration creates a positive income effect for the resident population in aggregate only if immigrants are, on average, different from existing residents in terms of their skills and human/physical capital.
The report notes that the bulk of recent immigration in the UKmore than 75,000 are workers from the A8 EU nations who gained free access to the UK labour market in May 2004are employed in jobs that offer roughly the national minimum wage. Often those jobs come from employment agencies. As Professor Dustmann and Professor Ian Preston say,
immigrants appear to be most concentrated at precisely the same points where we find the most negative wage effects.
Jim Sheridan: My hon. Friend is right to raise the issue of the minimum wage. Although the minimum wage went some way towards easing poverty pay, some would argue that it did not go far enough. I should like to answer the point raised by the hon. Member for Buckingham (John Bercow) about the evidence that suggests that people are being denied the right to a minimum wage. He will be aware that people in the service sector are being denied the national minimum wage because their tips are included in their pay. Therefore, the public are subsidising unscrupulous employers and helping to pay service workers the national minimum wage.
Colin Burgon: Once again, my hon. Friend makes a very telling intervention. As I progress, I want to discuss the possibility of inspecting the average employer on the issue of the minimum wage, given that we have a regime in place to enforce it.
The report provides evidence to suggest that the bulk of net immigration into the UK has led to short-term competition between resident and migrant workers for low-paid work. Crucially, the report suggests that the downward pressure on wages at the lower end of the labour market has, over the long term, encouraged growth in the number of low-paid jobs. The number of low-paid jobs as a proportion of the British economy has increased and continues to do so. If that is the effect on resident workers, what is the effect on migrant workers, because they should not be left out of the equation?
In addition to highlighting the potential negative effects of increases in net migration on resident low-paid workers, the Lords report offers substantial evidence
regarding the plight of many migrant workers in the UK who face insecure employment conditions and wages that often fall below the legal requirement stipulated by the national minimum wage. The report cited evidence that vividly illustrates the unequal employment conditions associated with employment in employment agencies, in which intermediary companies perform services on behalf of the user company. Current estimates suggest that there are 1.4 million agency and temporary workers in the UK, but the lack of reliable data means that the true figure could be far higher. Hopefully my colleagues will agree that such agencies have been a key means for employers to hold down wages at the lower end of the labour market. The report also cites evidence confirming the widespread abuses of minimum employment standards associated with many employment agencies.
Jeremy Corbyn (Islington, North) (Lab): I congratulate my hon. Friend on the debate. He must be aware that a major factor is the way in which the Home Office does not process wholly legitimate applications for long-term residence and family reunion in this country, which means that many migrant workers are grossly exploited, their children are denied access to health care and all the other services that we believe to be right, and also many are working in a twilight sector way below their skills and capacity, which increases the pressure on the cleaning and the catering sector. Does my hon. Friend not think that the Home Office needs to be brought into this debate to ensure that all workers in this country are legal workers and recognised as such?
Colin Burgon: My hon. Friend makes a valid point. Coming as he does from the London perspective, in which this issue is seen in a much harsher light than most other parts of the country, he speaks from experience.
David Taylor: I hate to disrupt a superb opening speech, but does my hon. Friend agree that one of the industries where the abuse of migrant workers is particularly rife is the food processing industry? If he ever saw the film Ghosts, which talked about the cockle picker deaths in Morecambe bay, he would have seen clear evidence of gangmasters who were providing accommodation at exorbitant prices and transport to work at super-exorbitant prices. That is the way in which they are getting round the minimum wage legislation.
Further to what was said by my hon. Friend the Member for Paisley and Renfrewshire, North (Jim Sheridan), whose work on gangmasters has rightly been paid tribute to by hon. Members in this Chamber this morning, the Gangmasters Licensing Authority needs resources and needs a political priority coming from the very top. I hope that the Minister will announce some initiatives in that regard later on.
Colin Burgon: Once again, my hon. Friend has raised issues that the hon. Member for Buckingham was edging around asking me to address. The report cites practices whereby agencies impose various charges on immigrants salaries for such things as accommodation, uniforms and, as my hon. Friend said, transport. That brings their salaries well below the hourly requirement stipulated by the national minimum wage.
The evidence from the House of Lords is supported by evidence from the TUC commission on vulnerable employment and the Governments vulnerable worker enforcement forum. Government measures coming into
force in April 2008, which aim to halt such abuses by allowing agency workers to opt out of services provided alongside a job, may just remedy such abuses. We discussed that matter with a Minister in Committee. Again, the take-up of such provisions is likely to be hampered by the widespread ignorance of labour rightswe have raised the issue of language problems and so onin the immigrant and resident communities who staff the employment agencies.
Again, I reiterate that I welcome the move on agency worker legislation: I hope that it is the beginning and not the end, as the Secretary of State seemed to indicate. But unfortunately, it is by no means clear that the recently announced Government commitment to give greater rights to agency workers will make anything like a significant difference to the suffering of migrant workers caught in the trap of the widespread two-tier employment system, which has depressed wages for resident workers, and the associated social tensions that are often exploited by the far right. The far right chooses to mobilise opinion against Poles or Latvians. We on the left say that these people are driven by huge economic forces and that we should be trying to understand the forces that drive these people and then to frame policies to address some of the issues.
John Bercow: I am grateful to the hon. Gentleman for giving way. He is making an excellent speech and has been generous in allowing colleagues to intervene. I confess that I am wary of highly burdensome regulation, but I do believe that once Parliament has passed legislationI think that the minimum wage legislation is good legislationit ought then to enforce it. Does the hon. Gentleman agree that Madeleine Bunting in The Guardian effectively summed up the problem when she said:
Poor pay is inextricably bound up with a culture of institutional negligence: no one ensures workers know their rights or how to find out about them; a myriad of enforcement agencies with tiny budgets confuse everyone?
Is it not unsatisfactory that while millions of pounds are devoted to advertising for benefit fraud, the amount allocated to advertise the national minimum wage was, until a recent increase, one sixth of the sum spent on a Government campaign urging people to use tissues when they sneeze?
Returning to the agency workers legislation, which we will be dealing with, I understand that after 12 weeks in work, temporary and agency workers will qualify for the same pro rata pay and conditions as full-time workers, but will they qualify for the other in-work benefits, such as sick pay and pensions? I should like some clarification from the Minister on that point.
Half of agency assignments will be unaffected as they last less than 12 weeks.
If he is right, we are effectively saying that 700,000 peoplethe ones we know aboutwill be totally unaffected by the new proposal. I do not want to class it as a Munich agreement, but it is something of a damp squib when compared with the expectations that many of us had.
I look forward with great hope to the proposed anti-avoidance measures, which are meant to stop employers evading the regulations. We know from our experience of such laudable measures as the national minimum wage that principle, enforcement and reality are often very different. For example, in November 2007 I asked in a written question for details of the number of national minimum wage enforcement officers policing the entire Yorkshire and Humberside region. I was told that the two offices at Shipley and Sheffield, which service the entire region, had seven each, and that by 2009 the figures would be increasedto seven in Shipley and eight in Sheffield. Given that our region is the third worst in the country for low-paid workers, and that the offices are based some way from Leeds, low-paid workers in Leeds are as likely to spot a minimum wage enforcement officer as they are to see Lord Lucan.
Clearly, even on a minimum level there is a huge amount of work to be done. I bring to the attention of hon. Members the fact that on current trends the chance of an employer being inspected is now once in every 330 years. I think that we could do a bit betterperhaps we can get it down to every 300 years; that might be satisfactory. The Lords report highlighted the problems associated with enforcement of the national minimum wage, and the evidence shows some ways in which employers contravene the minimum wage provisions.
I urge hon. Members to look at the report: it is a very good read. It confirms the fact that the national minimum wage regularly fails to provide a wage floor for low-paid workers, and that alongside a more general pressure to hold down wages at the lower end of the labour market it allows wages to be depressed below the legal minimum. However, although I have extolled the virtues of the report, it is strangely silent on the vulnerability of workersboth resident and migrantin the informal economy; yet as the Low Pay Commission makes clear, the Government have no idea of how many are working in it.
The Department for Business, Enterprise and Regulatory Reform recently announced new measures aimed at reforming the minimum wage and cracking down on rogue employers, including fairer methods for dealing with minimum wage arrears, the toughening of penalties for those who break the law, and increasing the maximum penalty for non-payment of the national minimum wage to an unlimited fine. The Department states that the most serious cases of non-compliance will be tried in the Crown court, yet I would argue that those measures are corrective and are therefore dependent on rogue employers being caught in the first place. As we have heard, the sparseness of the resources devoted to discovering and tracking such employers, coupled with a range of barriers and disincentives that inhibit closer working between enforcement agencies, is likely to undermine the effectiveness of the measures. Indeed, the TUC says that it is a national scandal.
The TUC report, Hard Work, Hidden Lives, published last month, says that up to 2 million workers in Britain are still at risk of exploitation because of their vulnerable work status. Its research found some employees being paid £1 an hour, some working 70 hours a week, and others facing sexual abuse. The TUC also said that exploitative employment practices seen in the 19th century were still being used today. It found home workers being paid £1 an hour, fast-food employees working 70 hours a week, and domestic staff facing physical and sexual abuse. It is exactly those types of jobs that vulnerable migrant workers and serial low-paid and low-skilled resident workers fall into.
As part of the TUC study, a Community union survey of 8,000 workers found that three out of four workplaces used temporary and agency workers, with some on contracts of a week or less. Some were on only two hours notice. Will the Minister tell us how the proposed strengthening of agency worker legislation will help workers on one-week contracts? Will the Minister tell us how the proposed strengthening of agency worker legislation will help workers on one-week contracts? Again, I look forward to his explanation on that.
Colin Burgon: I agree with that commentdo not get me into trouble. I ask the Government to ensure a continuation of the effectiveness of the minimum wage by taking forward recommendations from organisations such as the Institute for Public Policy Research and the Fair Pay Network. Those recommendations include maintaining the value of the national minimum wage to at least remain in line with average earnings growth over an economic cycle, and guaranteeing tougher, robust and meaningful enforcement of the minimum wage. Other proposals include incrementally increasing the present lower rates for young workers, offering skills and career advice to all low-paid workers in receipt of working tax credit, and improving their pay and prospects at work.
Critically, we should also build fair-wage commitments into central and local Government contracts and the huge financial transactions that national and local Government engage in. Welocal and national Governmentshould be the agency that drives up terms, conditions and living standards for poorer-paid workers across the scene.
I shall end on the following point. At root, we are discussing a situation that I believe will not be improved through market forces. We have mentioned the word agency many times today, but the only agency that will bring justice and fairness into the arena of work is the Government, and they should not abdicate that responsibility. During the rough economic times into which we are moving, people expect a Government to defend them. It is the very least people should expect and I hope we can do so.
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