29th June 2011
The IPA is pleased to announce that John Monks, former General Secretary of the ETUC and the TUC has been appointed as President of the IPA. Lord Monks gave his inaugural speech at the IPA’s annual general meeting this month, a version of which is reprinted here.
I’m delighted that my first task as the incoming President has been to launch the IPA’s new practitioners guide to partnership working. My interest in partnership working goes back to the 1980s when a generation of union leaders and labour thinkers – among them former IPA President Hugh Stirk and former directors Willie Coupar and Bryan Stevens, Bill Jordan of the engineers, John Edmonds of the GMB – were at the forefront of developing this new style of union-management relationship at companies including Rover and Tesco.
The deal was flexibility at the workplace, in return for employment security – or flexicurity as it has become known. When I took over as General Secretary of the TUC in 1993 that principle became a central feature of our work: we set up the Partnership Institute and the incoming Labour Government in 1997 reciprocated with the Partnership Fund.
Of course, partnership was controversial within the union movement – collaboration, some called it; sleeping with the enemy. And it was true that our version was weaker than the EU model of social partnership, which had been firmly rejected by the CBI and found little favour in the early days of the Labour Government.
That EU model included union influence at a national level over macro-economic policy; industry-wide bargaining not just at plant/enterprise level; and a union voice in companies’ corporate governance at board or senior level.
The New Labour Government did use a social partnership approach – for example on introducing and maintaining the minimum wage and on proposals for family friendly working, as well as the eventual transposition of the information and consultation directive. But their heart wasn’t in it, and a generational change among both union leaders and company CEOs saw partnership slip off the front pages. But it never went away, in part because the IPA and its member companies continued to fight the good fight.
Now we face a deepening economic crisis, unless the hopes of the coalition Government and indeed all of us are realised, with a surge in growth and job creation in the private sector, which will absorb the people being displaced in the public sector.
But one thing is clear: our economic model – predicted on the view that we were a post-industrial society with an inexorably shrinking manufacturing base – is bust. Reliance on services, financial services and retail in particular, and on property and construction, has been shown to be extremely vulnerable to instability.
Currently there is much talk about the need to rebalance our economy back towards industry and exports, but there is less idea how to do it. Once you have lost leading edge technology and high level skills, other countries that are less profligate with these advantages pull away quickly – and this has happened on a wide scale.
Cheap foreign competition has something to do with it. But how can we explain the relative success of the Northern European economies, or Northern Italy, in keeping strong manufacturing sectors and positive balance of payments?
How can we explain our reliance in manufacturing in particular on foreign ownership? What happened to British leadership, confidence and skill? Fortunately we do still have successful examples, but we need many more.
We need a better model. The current economic crisis has laid bare the weaknesses of the concentration by much of British business on short term share holder value and its private equity equivalent. The crisis originated in some banks, but the availability of cheap and plentiful credit, together with financial deregulation, encouraged poor practices on a wide scale. Leveraging became a way of life. 20 per cent return on capital became the normal expectation of major investors. The debts of the crisis will now be with us for a generation, maybe more. We have inflicted a rotten deal on our young people.
We need to face facts. The bonanzas of North Sea oil and the explosion of financial services are over. The harsh truth is that there are no more easy deals on offer – and to survive we need to compete with the best in the world, in the real economy.
I see the role of the IPA as being at the heart of the debate about a replacement for our current failed model, working for raised standards at work, standards of respect, of performance, of productivity, of skills. Our job is to help those managers and owners engaged in building competitive businesses for the long term, not just the next quarter, and to support unions who want both a fair share for workers, and also to ensure that they work to the best standards of skill and culture with the best equipment, in a workplace culture of engagement and respect.
For me the examples we need to learn from are the other countries of Northern Europe, social market economies with effective collective bargaining and influential worker involvement. Some in British business may regard this as passé – a provocative return to the 1970s. Nothing could be further from the truth. Unless the UK pulls together, the prospects for recovery are bleak. So I am looking for a new alliance, which is for serious honest business, for partnership, for growth and sustainability for the long term. There are many voices, saying similar things – and we have an opportunity to change the terms of the debate. IPA members – watch this space.