29th October 2010
Industrial relations is back with a bang, argues IPA director Nita Clarke. She assesses the task ahead for managers, unions and the workforce.
Industrial relations – for so long the poor relation in the HR stable - is back with a bang, it seems. Journalists can be found regularly predicting a winter/spring/summer/autumn of discontent (delete seasons as applicable). The CBI has tweaked the TUC’s nose with a demand that the Coalition Government change the law to restrict the opportunity for strikes; the TUC Congress in return hears bloodcurdling calls for civil disobedience to resist public spending cuts. Meanwhile the dispute at British Airways remains unresolved, and London Underground is severely disrupted almost monthly. A survey by employment lawyers DLA Piper of suggested that 9 out of 10 employers anticipate increased industrial action in the coming months. No wonder many employee relations professionals are to be found poring over dusty tomes by Hugh Clegg to rediscover lost skills of negotiation and bargaining under pressure. But despite the high profile, is industrial action really the key challenge facing leaders and their HR colleagues?
No-one can predict the effect of the £81 billion public spending cuts on industrial relations in the public sector. If most of the half a million jobs go through natural wastage or voluntary redundancy, if departments and services engage with their remaining staff to protect or redesign services, the impact may be contained. On the other hand, while we are not France, it would be foolish to be too complacent about the possibility of serious resistance to the cuts in some services or some areas. A recent survey by the CIPD suggested that around half of public sector workers are prepared to strike to save their jobs and rights. There may well be a hostile reaction to the changes announced to public sector pension schemes, which no amount of good industrial relations practice will mitigate.
However we do know the Coalition has signalled it wants to keep dialogue going with the public sector unions by maintaining for example the Public Services Forum; partnership working in the NHS has been backed by the new Department of Health, with every minister including the Secretary of State turning up to the first post-election meeting of the Social Partnership Forum. And while the schools workforce partnership body has all but been abandoned by the Education Department, the new ministers are apparently intent on establishing a new stakeholder forum which will include all the schools trade unions.
In the private sector, the sudden plunge into recession in some ways bought out the best in UK employment relations, with management and unions sitting down to work out joint strategies to deal with the credit crunch and the sudden collapse in markets. The automotive industry was just one sector where joint agreements on short time working, pay freezes, part-time working, extended holidays, sabbaticals and so on saw companies over the worse. It is no accident that those sectors with mature and effective relationships between trade unions and companies, such as the chemical industry, managed their way through and are coming out strongly at the other end.
However, it is true that the legacy of this crisis management is already leading to a more scratchy and difficult period, with staff demanding recognition and reward for their forbearance, as profitability returns. Another potential flashpoint remains the interpretation by employers of the Posted Workers Directive, which led to the wildcat disputes at the Lindsay oil refinery and secondary action at other oil refineries and energy sites in 2009 and the demand for ‘British jobs for British workers’, as contractors brought in EU labour rather than recruit from the local labour market. These disputes, incidentally, showed the power of social media in mobilising disaffected workers at great speed, often independent of the union, leaving employers flat-footed.
Nevertheless, long running disputes such as those at British Airways and Royal Mail are the exception. Days lost in strikes remain at an historic low. The 2009 total of 455,200 working days lost is lower than the 2008 total of 758,900, less than the average lost in the 1990s (660,000) and considerably lower than the average for both the 1980s (7.2 million) and the 1970s (12.9 million). The 98 stoppages total in 2009 is considerably lower than the 2008 total of 144; the average number in the 1990s was 273. Just over 200,000 workers were involved in labour disputes during 2009, compared with just over 500,000 in 2008. To put these figures into perspective, recent estimates suggest that 7.6 million working days are lost to flu-type illness each year, at a cost to the economy of £1.35 billion.
While we may have a Conservative prime minister, there are few signs at this stage that he wants to remind the country of the 1980s by provoking industrial conflict. Despite the CBI’s lobbying, it is not clear that a government in the midst of economic uncertainty wants risk political capital on industrial relations reform that is unlikely to deliver any economic benefit. The Secretary of State for Business, Vince Cable, has made clear his view that such legislation in uncessary. The Government would also do well to remember the law of unintended consequences. Mrs Thatcher’s legislation to force political fund ballots on unions resulted in a strengthening of affiliated unions’ ties with labour, and the establishment of political funds in other unions, which most certainly did not benefit the Conservatives. Unions that get an endorsement for industrial action under any new rules with higher thresholds will find their position strengthened, not weakened. The FBU recently won 79 per cent support for strike action on a 79 per cent turnout. Be careful what you wish for.
It’s not the 1980s in another way – trade union membership is down, as is trade union density across the economy. In the public sector it has fallen by 4.7 per cent compared with 1995 to 56.6 per cent; in the private sector union density stands at 15.1 per cent. Among all people in employment union membership stands at around a quarter of the workforce, with 6.7 million in membership in 2009, down from the high of 13.2 million in 1982.
These figures mean that if trade unions want to have a real impact, on either employers or government, they’ll have to do it by forming alliances with non-union members of the public, as the TUC has recognised in developing their campaign strategy against the cuts. It also means that most unions are unlikely to stray too far from public opinion, and that means no prolonged strikes. Only a few like the RMT can rely on the old ways – by exploiting the demand for their members’ labour - although possibly that’s not quite what Milton Freidman had in mind when he extolled the virtues of the free market.
All of the above masks the real industrial relations challenge: continuing to keep the workforce on board when pockets and lifestyles are being hit by public spending cuts, the economic outlook remains unclear, and the continuing threat of a double dip recession making employers reluctant to grant significant improvements in pay or terms and conditions. Yet the UK starts from a low employee engagement base; Gallup’s latest survey indicates that only a quarter of employees are engaged with their job. No wonder the CBI in May identified engaging employees as the biggest challenge facing employers.
In some ways, those workplaces with unions or workplace representatives are in a better position to cope with an uncertain future. Employers can at least have a collective relationship with the workforce; they have a partner to deal with, and an additional means of communication. Union or employee reps can also help build trust in, and grant legitimacy to, the decisions that are taken. Those workplaces with no representative architecture in place may find managing change more difficult.
But this period will also pose a huge challenge to managers, many of whom will have never had to deal with the workforce during such a difficult period. Managing conflict and disagreement, whether with unions or not, are skills that a generation of managers may lack. Conflict does not necessarily manifest itself in industrial action; the biggest threat may be retention, absenteeism, disaffection and disengagement.
Businesses need to look now at what structures and processes they have in place to engage with their workforce, and allow their workforce to engage with them. Do line managers know how to genuinely consult with employees, and what to do when all parties don’t agree? Do they have a clear strategic narrative of what climate the business is operating in, and where it is going to go and are they able to explain that to employees? Are there good relationships with workplace representatives, and do they understand how decisions are taken? Are HR business partners in a position to take this agenda forward?
All the evidence is that employee engagement does not have to suffer when times are tough – provided staff are seen as the agents and not the victims of change. The IPA’s advice is to invest in good workplace relations now, to prepare for the uncertainty ahead – whether it be through information and consultation machinery, trade union recognition, establishing staff councils and forums or other structures that enable staff and employers to talk and to listen, and to face whatever is coming down the track together.
Nita Clarke is director of the IPA
