The Case for Shared Ownership: Patrolling a Tight Labour Market

25 February 2020

In the final instalment in our blog miniseries ‘The case for shared ownership’, our Policy Lead Will Thomson looks at compliance, and the ways in which this and shared ownership business models could support workers in high-risk sectors.

On Thursday 13 February, Matthew Taylor – the Government's Interim Director of Labour Market Enforcement – was invited to the Resolution Foundation to speak about the employment challenges facing the UK over the coming decade. He outlined his office’s upcoming annual strategy which will take a specific focus on non-compliance and enforcement in four high-risk sectors: hand car washes, agriculture, construction and social care. The types of Government intervention discussed ranged from auditing voluntary initiatives (such as verification badges from sector trade bodies) to clamping down on sectors with acute levels of exploitation.

This raises an interesting question about how we can ensure good employment for people in different labour markets. Direct intervention from Government is appropriate, if not necessary, to enforce compliance in a widely unregulated hand car wash sector which is linked to human trafficking and accounted for 27% of labour exploitation cases in the UK in 2017. However, the other high-risk sectors might require a different approach based on the size and structure of the workforce.

Let's take a look at domiciliary care as an example. According to the 2019 Skills for Care State of Adult Social Care and Workforce in England Report, there are around 685,000 people working in domiciliary care, working across 9,005 domiciliary care providers; 83% of the workforce are female (compared with 46% of the economically active population) and 21% identify as BAME (compared with 14% nationally), though in London the workforce is significantly more diverse with 67% identifying as BAME. The majority of care provision is outsourced by local authorities, with 97.5% of domiciliary care being provided by the independent sector (including private, non-profit and social sector providers) in 2018.

Precariousness is an endemic feature of the domiciliary care workforce. In 2019, the median hourly rate for a care worker in the independent sector was £8.10 per hour – this is around a quarter of the median pay across the economy as a whole and close to half the median pay of a nurse. Moreover, 58% of the workforce are on zero hours contracts, leading to a widespread denial of employment rights in the sector. Some estimates have suggested that up to 11% of the domiciliary care workforce could be paid below the legal minimum wage, once unpaid travel time between visits is taken into account.

What we see, therefore, is a sector that has a problem with providing good employment to its disparate workforce, which is disproportionately made up of women and (at least in London) people who identify as BAME. The scale of the challenge is made even greater when we consider demographic pressures of an ageing population and a policy trend towards the personalisation of care provision (and thus a growing need for domiciliary carers) alongside persistent underfunding from government since 2010 (which has driven the cost of care down to unsustainable prices). These are structural issues that have led to a significant squeeze on wages and the erosion of employment terms and conditions for those working on the frontline of domiciliary care.

Patrolling this labour market is no simple task. With over 9,000 domiciliary care providers operating across the country it would be unrealistic to rely on a voluntary initiative from the independent sector to deal with the issue – especially when care providers operate on such tight margins. And while the Care Quality Commission regulates social care providers in the UK, its main focus is on the quality of care received and not on employment practices (for example, their regulations for staffing do not mention wages or employment terms and conditions).

At the same time, local authorities are under such severe funding pressures that commissioning decisions are often determined by considerations of cost over quality. There have been some initiatives aimed at changing procurement practices: UNISON have created an Ethical Care Charter which councils can sign up to a set of commitments to fix minimum standards for carer employment conditions – but it doesn't yet have significant take up across local authorities in the UK.

Perhaps another angle to look at this issue from is to examine how changing ownership structures and socialising the business models in care provision can help to ensure, not only compliance with labour laws, but good employment for people in some of the most precarious parts of the workforce. As we’ve written before, shared ownership business models have the potential to transform employment by paying higher wages, increasing workforce solidarity and providing a richer set of benefits to employees.

Shifting away from private, for-profit provision of care towards a non-competitive system made up of mutuals, multi-stakeholder cooperatives and social enterprises has the potential to drive improvements in employment conditions and, by extension, increase labour market compliance in a high risk sector – without reliance on voluntary initiatives or recourse to Government intervention. There are already examples of alternative models of care provision like Cartrefi Cymru, a multi-stakeholder care co-operative operating across Wales, and the Equal Care Co-op, a care and support platform co-operative in Calder Valley. With that said, adequate funding for social care from Government will, of course, need to be part of the solution.

At SIB, we are interested in the ways in which social investment can be used to promote fairer business and good employment. We have been focusing our efforts on supporting business models that are likely to lead to more equitable outcomes for people and empower the workforce. Looking ahead, we want to explore the ways that different forms of shared ownership businesses can be harnessed to provide security, stability and decent wages to those people working in sectors that are characterised by low pay and chronic insecurity – such as domiciliary care – and we will be publishing further research on this over the year.

Ultimately, it is through developing and testing more democratic and redistributive models of business ownership, as exemplified in the social economy, that we can begin to tackle some of the more intractable challenges presented by the future of precarious work and inequality – and in doing so build a fairer economy.

Photo by Dariusz Sankowski.

Will Thomson

Policy Lead

Will joined SIB as Policy Coordinator in May 2019, becoming Policy Lead in December 2019.

Before joining SIB, he was a consultant at a Bristol-based public affairs agency and provided secretariat support for two All-Party Parliamentary Groups. He has produced a series of policy reports on devolution for the Bristol Chamber of Commerce and also worked with two social investment organisations based in the West of England.

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