Just deserts?: poverty and income inequality: can workplace democracy make a difference?

Document type
Coats, David
Smith Institute
Date of publication
1 July 2013
Employment, Poverty Alleviation Welfare Benefits and Financial Inclusion
Social welfare
Material type

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This report provides an analysis of deep-rooted problems in the UK's labour market and suggest how workplace democracy can help tackle the rising levels of in-work poverty and income inequality. The report reveals that profound structural weaknesses in the UK labour market have led to rising income inequality, the growth of in-work poverty and stagnant wages. Living standards for those with incomes below the median have been squeezed since 2004. A major reason for this is low wage growth. Rising in-work poverty is responsible for increases in the payment of tax credits and in-work benefits to low-paid workers. The UK also has low levels of employee participation and low rates of unionisation in the private sector. Forms of workplace democracy either have never existed in the UK or have diminished in importance.

The report explores the following institutions of workplace democracy: worker representation at board level; works councils on the continental European model; trade unions and collective bargaining; co-operatives and mutuals; employee share ownership and shared capitalism; individual employee involvement; and other policies that influence the initial distribution of incomes. After discussing the different models of workplace democracy and their effects on in-work poverty and income inequality, the report makes as series of policy recommendations. The recommendations include: revising the remit of the Low Pay Commission; looking at ways of extending the coverage of the living wage without replacing the national minimum wage; the reintroduction of fair wage policies; and reform of the Information and Consultation of Employees Regulations.

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