illustration for the drivers of inequality

Driver Category 4.2

Weak labour market institutions, precarious and informal work and lack of employment protection

This driver covers aspects related to low pay, low pay traps and low mobility out of low pay. These include: the existence of collective bargaining, adequate wage floor (eg statutory minimum wage or collectively agreed minimum) and effective trade unions - as well as the prevalence of precarious forms of work (eg. gig economy and false self employment) that contribute to low, insecure pay for workers in certain sectors of the economy and in certain occupations. These forms of work benefit employers by reducing labour costs but leave workers vulnerable.

It also covers aspects related to the informal economy where workers are often vulnerable to excessively low pay and insecure working arrangements. Aspects related to discrimination at work, employment relations and conditions and all forms of exploitation, whether forced labour, child labour, exploitation in terms of working conditions etc. are also included in this driver category. The existence of legislation, its enforcement and the role of labour market institutions are all important factors influencing inequalities.

Guiding Questions

Minimum wage and collective bargaining

  • Does your country have a statutory minimum wage?
  • Does it vary across geographic areas, sectors or for different types of workers (eg. young workers)?
  • How many workers receive the minimum wage and how does the size of this group compare to all workers?
  • Has a living wage benchmarking been carried out in your country (and differentiated for different regions as relevant)?
  • How does the minimum wage compare to the living wage benchmark?
  • What is the process for setting the minimum wage?
  • Is the process inclusive, enabling worker participation?
  • What is the process for reviewing the minimum wage?
  • Is it regularly reviewed and increased in line with inflation?
  • How is the minimum wage effectively enforced?
  • Is there a unit of labour inspectors that is properly staffed and trained?
  • What information is available on enforcement – the ability of inspectors to gain access to workplaces and information, the number of inspections, the violations documented, any fines and penalties applied
  • and the impact in terms of workers who have benefited?
  • Do collective bargaining systems exist?
  • Do collectively agreed minimum wages exist in certain sectors/industries?
  • Do collectively agreed minimum pricing arrangements exist in agricultural sub-sectors?
  • What is the level of coverage of these systems in terms of the numbers of workers / smallholders benefiting?

Trade unions

  • What legislation exists in relation to the right to unionise and strike?
  • Is unionization protected and enabled by law?
  • Is there evidence that trade union activists are being targeted with threats or violence, or with blacklisting practices?
  • Are unions effectively representing workers, actively negotiating with employers in relation to pay and conditions and defending workers in disputes?

Low-pay and precarious forms of work

  • What is the prevalence of low pay in terms of the size of the labour market?
  • What public sector workers are particularly at risk of low pay and what is the status of wage negotiations regarding these workers?
  • What types of contracts are on offer in relation to precarious and low-paid work?
  • Is the use of temporary contracts, out-sourcing or zero-hour contracts relevant?
  • What is the impact of the different contracting practices on workers’ terms and conditions?
  • Is there evidence of increasing false self-employment practices (gig economy), where workers are not treated as employees but designated as contractors?
  • In which sectors are these practices of disguising employment relationships prevalent or growing?
  • What is the impact on the pay and terms and conditions of workers?
  • What is the profile of ownership of the major firms involved in the rise of precarious work?
  • Is there evidence that owners exert influence on labour market policies and regulation or on tax policies?
  • Is it possible to analyse the evolving turnover, profit and tax contributions of key, large firms involved in the rise of precarious forms of work?

Employment protection legislation

  • What employment protection legislation exists? What provisions exist in relation to the types of contract allowable and the conditions for using fixed term and temporary contracts?
  • What are the provisions for (individual and collective) dismissal (notification procedures, notice periods, severance pay) and what is the definition of unfair dismissal? What sanctions are applied for unfair dismissal? Are any derogations provided for in the law?
  • Are workers able to freely access employment tribunals to challenge employers over unfair practices? Is there strong or weak enforcement of the legislation in place?
  • Were trade unions consulted in the formulation of the existing law and are they consulted during any revisions of employment protection provisions?
  • What reforms to employment protection legislation are being discussed? Is the private sector lobbying for the redefinition of any aspects of current legislation (e.g. for new contract types, to loosen restrictions on the use of fixed term contracts, to reduce severance pay or cap payments for unfair dismissal)?

Informal economy

  • What is the level of employment in the informal economy? Is the informal economy growing or declining in scale?
  • What is the government doing to support the transition to formality (such as changes to enable businesses to register more easily, formal access to finance, skills training or business advice services, a progressive and simplified tax structure that benefits small and micro enterprises, improved labour inspection targeted at formalisation)?
  • Is there evidence of firms using the informal economy to evade taxes and regulatory controls? In which sectors/industries is this a problem? What is the ownership profile of these firms?
  • What regulations and legal protections exist to protect informal domestic workers?

Indicators

Potential indicators to monitor the drivers of inequalities in this main driver category

  • Number of workers covered by minimum wage (or wage agreements) per sector/industry/occupation, as % of total workforce and % male/female workers
  • Minimum wage as % of estimated living wage; minimum wage as % of mean/median wages
  • Number of inspections conducted per year and number of minimum wage violations documented (per sector/industry)
  • Non-compliance rates related to minimum wage payments in different sectors
  • Trade union membership (male/female)
  • Number of attacks recorded on trade union members
  • Number of workers on temporary contracts / zero hour contracts / working in gig economy (disaggregated by relevant characteristics)
  • Number of people employed in informal economy (disaggregated by relevant characteristics)
  • Number of small and micro enterprises newly registered as formal businesses each year

Candidate Policies

To see related Candidate Policies in this main driver category please click here.