Resolution Foundation

Putting good work on the table

Reforming labour market institutions to improve pay and conditions


The UK needs stronger labour market institutions

Decent work is a pre-requisite for delivering shared prosperity and improving the lives of the country’s 34-million-strong workforce. In this context, the UK labour market has a number of strengths – from high employment to a national minimum wage that is now among the highest in the world. But there are also deep problems in some areas of the labour market – from stagnant real wages (which have only just returned to their 2008 peak), to extensive insecure work (zero-hours contracts reached a new record at the end of 2022) – that have persisted over time and are unlikely to go away on their own.

In other work, we have described how the national framework of employment regulation and enforcement needs to be strengthened to better protect workers. This is necessary but not sufficient to deliver high-quality jobs: some of the challenges we face are specific to particular areas of the labour market and so are less amenable to one-size-fits-all employment regulations acting in isolation. In this briefing note, part of the Economy 2030 Inquiry, we turn to the role of labour market institutions in resolving these remaining problems – examining existing institutions and considering the case for experimenting with new ones.

Trade unions remain important but need strengthening

Trade unions remain an important form of labour market institution – still representing over 6 million workers, shaping workplace practice and participating in national organisations that shape our workplaces. But over the past four decades, union membership has fallen dramatically to less than half its peak in the early 1980s (from 52 per cent in 1980 to 22 per cent in 2022). Alongside long-term structural changes (such as the changing industrial make-up of Britain’s economy and the rise in self-employment), policy changes from the 1980s onwards, including direct legislation, reinforced union decline by placing restrictions on their activity. The professed goal of these policy changes was to level the playing field between firms and unions and modernise the industrial-relations framework. But that is not where we have ended up today.

So we recommend making three policy changes that would build on the existing industrial-relations settlement while restoring a level playing field and updating some of our outdated processes. First, to ensure that workers fully understand their options, unions should have a right to enter workplaces to raise awareness among employees. Second, we should adjust union-recognition requirements to bring them more into line with other aspects of democratic life: instead of the current requirement that 40 per cent of the entire bargaining unit must vote in favour of union recognition we recommend a simple turnout threshold (also of 40 per cent). And third, we should make voting processes more inclusive by introducing an online option for union recognition ballots: requiring postal-only ballots is an antiquated approach unfit for the 21st century.

For all research queries about this report, please contact Hannah Slaughter. For press queries, please contact the Resolution Foundation press office.

Hannah Slaughter
Senior Economist,
Resolution Foundation
Email Hannah