30th September 2010
Employers, employees and unions are dissatisfied with the current ER system. David Coats argues they have a point, and now is the time for change.
The UK’s employment relations system is in a mess. While the Labour government introduced new statutory rights for individuals and trade unions they did little to address the problems that perplex employers, workers and trade unions.
Employers complain about over-regulation and red tape and trade unions attack the so-called anti-union laws. Yet it is far from clear that either party is proposing solutions to the most significant problems in the world of work: a very low level of employee engagement and a very high level of perceived unfairness.
The employee engagement problem has been well documented by the MacLeod review, the principal findings of which were published in Engaging for Success (2009). Despite the supposed benefits of such strategies, very few employers have apparently achieved the levels of commitment needed to secure sustainable organisational performance. Even the Chartered Institute of Personnel and Development (CIPD) admit that barely a third of British employees are engaged, a third are disengaged and a third are indifferent. These results are disappointing, perhaps even astonishing, given the focus on human capital and the apparent application of so-called high commitment employment practices over the last 20 years.
It may sound a little counter-intuitive to suggest that the there is a general perception of unfairness in many British workplaces. After all, employees have more formal legal protection today than at any time in the past. Moreover, according to the Fair Treatment at Work Survey (BIS 2009) between 2005 and 2008 employees’ knowledge of employment rights rose at the same time as the experience of problems at work fell. Yet despite this supposed improvement, around 34% of employees reported that they had experienced a problem at work over the preceding two years. While almost a third of that group reported a problem with specific employment rights, the remainder had rather less precise grounds for complaint – or at least not grounds that could generate a claim for a legal remedy. In other words, the most frequently experienced problems seemed to owe more to the culture of the workplace and the quality of management than a straightforward breach of a legal obligation by the employer.
Despite the high volume rhetoric about burdensome regulation the employer case is weak. The UK has a very lightly regulated labour market by international standards. It is easy to hire and fire just as it is easy for businesses to be born and to die. While it is true that workers are more inclined now to take cases to employment tribunals, this phenomenon seems to be related inversely to union membership decline – the fewer the union members across the economy the more cases to employment tribunals. Reviving workplace institutions to nip problems in the bud might be a reasonable solution, but many (perhaps even most) employers are resistant to such a proposal.
While trade unions claim they are shackled by the anti-union laws, the evidence tells us that trade unions are in decline across the developed world, no matter what the public policy dispensation. It is changes in the structure of the economy that are driving union membership trends, not the constraints imposed by Mrs Thatcher’s trade union legislation. A more “favourable” legal environment may make union activists feel happier about the world, but it is unlikely to produce a flood of new membership applicants.
These points are made not just to offend people but to get the parties to abandon their preconceptions and look at the harsh realities. For far too long the HR profession has viewed unions as at best a necessary evil. And for an equally long period the unions have failed to understand that they cannot rely on anybody but themselves to revive membership and effectiveness.
What the UK needs, more than anything else is an open and honest conversation about how to rebuild our employment relations system. Today’s arrangements leave all stakeholders feeling dissatisfied and it is in all their interests to forge a durable settlement that delivers better outcomes.
What might a new settlement contain? To begin with we might expect there to be more effective arrangements for dispute resolution and in turn that demands more effective arrangements for employees’ concerns to be articulated collectively. Better enforcement of existing employment rights in those sectors of the economy where employees are most vulnerable would also be a good start. More specifically, all listed companies should be either compelled or at least encouraged to include information about people management in their operating and financial review – the narrative section of the annual report designed to give investors a fair view of the business. The matters to be included could cover such hard data as labour turnover and accident rates, but could also embrace a range of measures to assess the quality of employment on offer (measures of autonomy and control, fair pay, procedural justice etc).
Perhaps the most controversial issue is the question of collective voice. In formal terms British workers have more rights to be informed and consulted about workplace issues than at any time in the past. Yet even thought these rights are well-established on the statute book they are poorly understood and rarely used. Some might argue that stronger unions can fill the so-called voice gap. But there is little evidence to show that unions are reaching the unorganised in the private sector and these workers need representation now. Government must at least ensure that workers are aware of their rights and, if the law is not to fall into disrepute, must create the conditions for effective implementation. The evidence shows that non-union representatives often lack the training, support and advice they need to discharge their obligations effectively. One possibility would be for the government to fund the provision of these services but leave the choice of provider to the workers representatives. In other words, a competitive market would be created for the provision of training and advice to the members of consultative bodies. Where unions are recognised they would continue to have exclusive rights. But in the rest of the economy unions would need to take their chances with other potential providers – Citizens Advice Bureaus, law centres, lawyers, FE colleges. There is an opportunity for unions here if they can gain the confidence of hitherto non-union representatives and combine that activity with an effective campaign to organise the workplace.
For too long participants in debates about the world of work have been defending entrenched, ideological positions, looking to fell their opponents with a knock-out blow. This may have made sense after the intense social conflicts of the 70s and 80s but it is of little value today. This is not to suggest that disagreements can be eliminated. But it is obviously a problem if the employment relations system should itself be the subject of a perpetual disagreement. Our predecessors in the post war period understood the need for a consensus within which reasoned (and sometimes unreasonable) argument could take place. If a new model of capitalism is to emerge as a result of the banking crisis then the task is urgent. Policy choices made over the next five to seven years could set the agenda for the next thirty. The last transformational event in capitalism (the Thatcher-Reagan revolution) left us with the confusion and disorder in the world of work that we confront today. We owe it to the next generation to prove that we can do better.
David Coats is director of WorkMatters Consulting
www.workmattersconsulting.co.uk
A longer discussion of all these issues can be found in Time to cut the Gordian knot: the case for consensus and reform the UK’s employment relations system available from the Smith Institute, www.smith-institute.org.uk
