Whenever I do investigative reporting about companies that treat workers badly, there is usually someone who asks, “Why don’t they just leave then? No one is forcing them to work there, are they?” Unsympathetic, perhaps, but it’s actually a good question to ask. The answer can reveal a lot about the way an economy does (and doesn’t) work.
Sometimes the reasons are obvious. The workers might be in the country illegally, have incurred debts to recruiters they must repay or be tied to their employer by the terms of their visa. Then there is the macroeconomy: when unemployment is high, people don’t necessarily have better options.
At other times, though, the question is harder to answer. Take the UK, where unemployment has (until a recent turn in the data) been the lowest for almost 50 years. In spite of that, a report by the Low Pay Commission, an independent body set up to advise the government on minimum wage rates, suggests illegal underpayment of workers has persisted. In 2022, more than 300,000 or roughly one in five minimum wage workers were underpaid, according to estimates by the LPC based on official statistics – a similar share to the previous year.
When the LPC studied longitudinal data between 2012 and 2019, it found that one-third of underpaid workers remained underpaid the following year. Figures from HMRC hint at the same phenomenon. Of 251 recent cases where employers were “named and shamed” for underpaying a single worker, 43 involved underpayments that lasted for two years or more.
So why do people put up with bad jobs, even when – on paper at least – they don’t have to? For the LPC, which meets regularly with employers and workers around the country, the answer is often fear. “When you talk to workers about moving jobs, you can literally see the whites of people’s eyes, they’re really stressed,” David Massey, secretary of the LPC, told me.
For many, the fear is that the next job will be worse, or that it won’t last. In can take time to build up job security. Paternity leave, maternity and paternity pay are only accessible after fixed periods; protection against unfair dismissal the same. It can also take time to secure stable shift patterns that fit with your childcare and other responsibilities.
In low-paid jobs where zero-hour contracts are prevalent, working hours can depend not on the contract, but on your relationship with your manager. As one hospitality worker quoted in the LPC report says: “You’ve got to work your way up again. Hope that you get a good, decent amount of hours.”
Patchy and expensive local transport can play a role, too. Minimum wage workers are more likely to travel to work by foot or on the bus than others, but this can limit the jobs available. An analysis of the Greater Manchester area by the Joseph Rowntree Foundation from 2018 found, for example, that to get to Manchester airport for a 6am shift often takes five times longer by public transport than by car.
Then there is the welfare system. Any change in income can change the amount of universal credit coming in, sometimes in unpredictable ways. And ending up on jobless benefits is financially painful.
The cumulative effect of all this, argues Massey, is to make the UK labour market less flexible than it appears, at least at the bottom end. “Our experience is sitting in rooms full of workers saying, ‘It’s a massive risk, I can’t move jobs’; then sitting in a room of employers saying, ‘We can’t find anyone’,” Massey says. “It’s not great for anyone if that end of the labour market is gummed up with fears and worries.”
In other words, policies that give people a bit more security over predictable schedules and employment rights won’t necessarily lead to less flexibility. In fact, they might just have the opposite effect. – Copyright The Financial Times Limited 2023