This article is more than 10 months old

This article is more than 10 months old

Labour’s manifesto will reaffirm plans for the most dramatic shift in conditions for employees in Britain since the 1980s – including changing the way wages are set for 20 million workers.

The “clause V” document, which will be agreed by senior party figures at a meeting on Saturday, is expected to be launched by Jeremy Corbyn next week.

The Labour manifesto: five key areas in this weekend's talks Read more

It will reiterate a radical but little-discussed commitment made in 2017, to introduce “sector-wide collective bargaining” across the economy.

Torsten Bell, director of the Resolution Foundation, said the change would represent “a seismic shift in the world of work”.

“Fully rolling out collective bargaining coverage would mean that in the region of 20 million more employees would have their pay set by negotiations between bosses and unions,” he said.

Laura Pidcock, the shadow employment rights minister, told the TUC congress in September that “sector-wide collective bargaining will set minimum and legally binding pay, terms and conditions for every employer and every worker in the sector”.

She added: “In practice, it means that rather than the employer having all the power to determine what your conditions and pay are at work, they will be legally obliged to enter into negotiation with your trade union – a giant step forward in rebalancing the unequal power relations that exist between worker and employer.”

It is unclear whether the policy would be introduced gradually, as in New Zealand – where the government is trying to build a consensus for an increased role for trades unions – or more abruptly.

Other labour market reforms will include John McDonnell’s aspiration of reducing average working hours to 32 hours a week within a decade – announced at this year’s Labour conference in Brighton.

Labour would also ban zero-hours contracts, which affect 900,000 people, and give employees in companies with 250 or more staff the right to own shares under an “inclusive ownership fund” – benefiting 10 million people.

Union leaders regard this significant strengthening of workers’ bargaining power as an essential prerequisite for any loosening of immigration controls.

Unite’s general secretary, Len McCluskey, told the Guardian earlier this week: “It’s wrong in my view to have any greater free movement of labour unless you get stricter labour market regulation.”

Backers of a pro-migration motion passed at Labour’s conference had hoped to see free movement rights extended to other groups aside from EU citizens, and were infuriated by McCluskey’s intervention.

But Labour strategists are concerned about the perceptions of working-class voters, in particular in Brexit-voting seats, with the Conservatives keen to weaponise the claim that Corbyn backs unlimited migration.

The Guardian understands a compromise has been reached that will fall well short of the significant expansion in freedom of movement the grassroots campaigners had hoped for.

One insider said there were a few “glitches to be resolved” but a position had essentially been agreed.

Other radical policies passed at Labour conference, including achieving net zero carbon emissions by 2030, and incorporating private schools into the state system (#AbolishEton, as supporters put it), are expected to be watered down before they reach the pages of the manifesto.

However, Labour’s carefully-crafted Brexit policy, which committed a Corbyn government to negotiating a new deal with the EU and submitting it to a referendum within six months, is unlikely to change.

Corbyn will chair the clause V meeting, which will be attended by members of the party’s ruling national executive committee (NEC), as well as the shadow cabinet and representatives of the unions.

The dramatic expansion in the role of trades unions in the economy is central to Corbyn’s plans for transforming Britain – and his leadership has been underpinned by the backing of McCluskey’s Unite in particular.

McDonnell’s headline-grabbing 32-hour week is intended to be negotiated by trades unions, as employers reap the benefits of automation and other productivity improvements.

Labour advisers are conscious of the need to balance radicalism with the risk of alarming wary voters. McCluskey’s chief of staff, Andrew Murray, who advises Corbyn, told the Guardian last month he thought the party should not “rush ahead” of its 2017 manifesto.