The COVID-19 pandemic has shed light on the harsh reality of insecure working conditions that many workers – particularly those in the front line – are subject to. Good employment charters are one way to ensure the security of good work. Implementing good employment charters in local policy agendas can increase productivity and develop more inclusive economies. Ceri Hughes’ research outlines the benefits and pitfalls of adopting good employment charters.

• It is argued that the fair treatment of employees will enable employers to recruit and retain skilled and engaged workers – benefitting from their ideas and loyalty.
• However, good employment charters should not be framed solely as productivity-enhancing initiatives.
• There are broader ethical and reputational concerns associated with adopting a good employment charter.

Good employment charters and standards have become a feature of local policy agendas seeking to promote good work, increase productivity and to develop more inclusive economies. One advantage is that they seek to engage directly with employers to increase access to good employment practices, but they are also voluntaristic, difficult to scrutinise and relatively small-scale, so it is essential that they form part of a wider movement for change to promote good employment. This paper argues that selling them as ‘win-win’ productivity boosting initiatives may engage employers, but this strategy must be backed up with a clear understanding of their wider value, as well as their limits.

What could good employment charters achieve?

Employment charters are voluntary initiatives that set out to describe what constitutes ‘good employment’, to recognise employers that meet those expectations and/or to support employers to improve their employment practices. In Greater Manchester, the Good Employment Charter emerged from Andy Burnham’s 2017 mayoral manifesto, and similar initiatives have also been spearheaded by mayors in Liverpool, London and other areas.

These initiatives have been billed simultaneously as a means of increasing access to good jobs and of supporting employers to grow and be more successful. The Independent Prosperity Review for Greater Manchester, for example, proposed that the Good Employment Charter should be seen as a ‘mechanism for improving leadership, skill utilisation and productivity, as well as for raising employment standards’. By treating employees fairly, it is variously argued, employers will be able to recruit and retain skilled and engaged workers, will benefit from their ideas and loyalty, experience less sickness absence and increase their productivity. From the perspective of increasing access to good employment and raising productivity, a potential strength lies in their ability to engage a range of employers and work with them to improve their practices, regardless of their starting position. This is reflected in the tiered design of a number of local charters, where employers are encouraged to sign up and work towards full membership or accreditation, perhaps drawing on the services and advice sessions that are signposted or offered through the initiative.

But while a case can be made that good employment practices can improve productivity, this framing poses some challenges. Here are three reasons to be cautious about framing good employment charters as productivity boosting initiatives.

Reasons to be cautious

First of all understandings of productivity will differ between employers and may not map onto that of other local stakeholders. In many instances employers associate productivity with efficiency or output gains, but an all-consuming drive for productivity on these terms could undermine the quality of work for employees. Some good employment practices may involve immediate costs to the employer, for example, paying the living wage, or offering guaranteed hours and paying workers even if there is a short notice change in demand. Evidence of improved performance from introducing these changes may not be immediately evident, or may even accrue to other employers. If the impact of implementing measures to improve pay, job and income security are judged narrowly, i.e. primarily in terms of efficiency gains and over the short-term, then the advantages are unlikely to be recognised by employers. Standard measures of productivity, such as Gross Value Added per hour or per worker, are also poor indicators of the value of work undertaken in foundational sectors.

A second consideration is that charters tend to engage unevenly and on a relatively small-scale. They depend on soft influencing and partnership working as there are few direct levers that city-region policymakers can draw on to promote good employment. In terms of the scale of engagement, the national Scottish Business Pledge, which promotes a set of core employment practices alongside a number of other sustainable and ethical business practices, currently lists around 800 employers as members. The Greater Manchester charter currently has around 300 supporters and a small number of full members, whereas there are estimated to be over 23,000 enterprises with five or more employees based across the city-region. Local charters can therefore be thought as targeted initiatives that bring together a subset of employers who are motivated for various reasons to offer good terms to their employees. This engagement is valuable and can have wider impacts beyond direct members through supply chain commitments, but this also points to the importance of other activities seeking to raise productivity and promote good work.

Finally, beyond viewing the charter as a ‘win-win’ approach to raising productivity there are a number of other reasons employment charters could be a valuable addition to local policy agendas seeking to promote good employment. In fact, employers often cite broader ethical and reputational concerns rather than a concern with productivity as reasons for engaging in voluntary schemes like these. In a context of fragmented employment systems, charters could be useful in identifying barriers to good employment which may be located outside single organisations. For policymakers and campaigners, broader value may come from using the charter to support a wider conversation about what good employment looks like and how it might be possible to re-organise work, bringing in campaigners, employees and the wider public.

Policy recommendations

• Do not frame good employment charters solely as productivity-enhancing initiatives. Use them to promote a broader understanding of productivity and success among employers, as well as emphasising the wider social and ethical benefits of engaging with charters;
• Explore the wider value of charters, including as a means of identifying barriers to securing better employment practices that might lie outside of individual organisations;
• Good employment practices might lead to productivity gains for some, but it will be much harder to determine this if improvements on one aspect of good employment are secured through trade-offs in other areas, for example, better pay but fewer progression opportunities.

This article was originally published in On Productivity, a collection of thought leadership pieces and expert analysis addressing the gaps in economic performance across the UK, published by Policy@Manchester.

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