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Shopping Fair for the economy - by Michael Taft

09 Jul 2013

There has been much discussion about how to support workers in employment – whether through higher wages, more working hours, better conditions, or more labour rights.  

This usually revolves around joining a union and influencing government policy.  However, there has been up to now little discussion about how we get the general public involved – the people on the other side of the cash register, at the restaurant table, on the pub stool.   

That is why Mandate’s Fair Shop campaign is so welcome.  Its innovation is to invite people to participate in the campaign to improve working conditions in the retail sector in a very simple, easy and everyday way; namely, to get people to shop in businesses that treat their workers fairly by recognising their right to negotiate with their employers through a trade union.  

The benefit to the owners of a Fair Shop and their employees should be obvious.   If more people shop in their premises, the higher their sales and the greater their profits – profits which can be shared out to workers through collective bargaining.  But is there a larger economic and social benefit?  Yes, and this is what gives the Fair Shop campaign such potential.

First, let’s acknowledge that just because a business is a Fair Shop doesn’t mean workers won’t have problems with their employers.  However, where workers bargain collectively, they are in a stronger position to address these problems on their own terms.  On the other hand, where businesses refuse to recognise their employees’ rights, workers are at a much greater disadvantage and have less chance to correct or mitigate any wrongs.  So, the Fair Shop campaign seeks to direct more business activity to work places where employers are in a stronger position.

Why does this matter for the overall economy?  Here is one small example.

If workers are able to negotiate higher wages or more working hours so that their weekly income increases on foot of higher turnover, the state benefits from higher taxation (for every €100 wage increase, the state gets nearly €42 through direct taxation/PRSI).  Other businesses also benefit, because those workers will spend more.

This has the win-win effect of increasing growth and reducing the deficit.  However, if the employer hoards the money, the state receives far less while there is almost no increase in consumer spending.  Apart from a few enriching themselves, where is the gain?

Question: in which workplace is a successful negotiation for higher incomes likely to take place?  The one where workers can negotiate through a trade union.

There’s another way the economy benefits.  In Fair Shop businesses, workers are able to prevent, if not all, then many violations of labour law – in the area of working time, payments, discrimination, etc.  This, of course, benefits the workers involved.  

But there is a wider social gain – and this cuts to the core of the general trade union demand for what can be called ‘high-road employment’.

Many employer organisation, Government Ministers and media commentators equate ‘competitiveness’ with reduced wages and working conditions.  This ‘race-to-the-bottom’ results in not only lower spending and but lower productivity as well.  

Productivity means how much can be produced by a business for every hour of business.  The higher the productivity, the more profit can be shared out.  

We used to have a public agency called the National Centre of Partnership and Performance (before it was abolished through spending cuts).  They studied what makes for good workplaces.  

A key finding of theirs was that businesses that (a) recognised workers’ right to negotiate through a trade union, and (b) involved their employees in the decision-making process of the business (profit-sharing, consultation, etc.) were the most productive.  Businesses that refused to recognise this right and foster these practices were the least productive.  

Why is this?  An involved, engaged workforce whose rights are respected and whose participation is welcomed are more productive than workplaces that deny rights, engage in dodgy practices and generally treat their employees like a commodity.  Imagine which workplace you’d like to work in.  Of course, low-road employers can and do make a profit – but it is not shared out to the same extent as the ‘fair’ employers.  The few benefit, the rest have to make do – and the rest includes not only the employees but the economy at large.

The more successful businesses understand the benefits of higher productivity through more progressive practices.  And economies built on these kinds of businesses are more successful – for the employer and the employee.  

Look at countries which have economies like our own:  small open economies which are highly reliant on exports (Austria, Denmark, Belgium, Finland, and Sweden).   In these countries, workers have the right to negotiate through trade unions.  And their wage levels reflect that:  workers in the wholesale/retail sector earn on average nearly 30 percent more than retail workers here.  And that doesn’t count the social benefits those workers receive such as free GP care and low-cost prescription medicine because employers pay a much higher PRSI payment.  Yet, retail enterprises in those countries are still highly profitable.

These higher wages feed back into the business economy through higher spending.  This is the virtual circle that starts from a Fair Shop.  This is not to say retail workers in these other countries don’t have problems with their employers, but they have a stronger negotiating platform than most retail workers here.

Mandate’s Fair Shop campaign can promote these beneficial impacts – for workers, for Fair Shop companies and the larger economy.  But we all need to participate in that campaign.  There are over 650,000 trade unionists in the Republic.  That doesn’t count their families, retired members and people who would like to join a union but are under pressure from employers not to.   Nor does it count the thousands who are not in a trade union but support the aims of the campaign.  

What would happen if even a small portion of trade unionists (e.g. one in ten) switched spending to Fair Shops at, say, an average of €10 per week?  It would come to €33 million a year.  That is a significant sum being diverted into workplaces that respect workers’ rights – a real gain for the business owners and for the employees.  These gains will feed back into the economy bringing more positive results.

And if this is an inducement for good businesses, it should also as an incentive for businesses to sign up to the Fair Shop label.  If you think about, it would be the easiest profit a business could make – acknowledge the rights of your workers to gain the patronage of more workers.  

There are challenges ahead for the Fair Shop campaign.  For many people who want to support this initiative, a Fair Shop may not yet exist in the area or be convenient to reach. And there is the need to ensure that the employers realise the actual gains accruing to them from the campaign itself (this also makes it easier to show the businesses that are not Fair Shops what they are losing).   

But Mandate has provided the platform to tackle these and other challenges – by setting up the campaign in the first place.  Now it is our turn to take the next steps – to advertise this campaign wherever we can:  with our families, friends and workmates.   And to support the campaign by shopping in Fair Shops.

For more information about Fair Shop contact info@fairshop.ie