2001 Annual Review for the UK

This record reviews the main industrial relations developments in the UK during 2001.

Political developments

The Labour government elected in May 1997 was re-elected for a second five-year term at the general election held in June 2001. The Labour Party's majority over all other parties in the lower house of parliament, the House of Commons, fell slightly but remained substantial at 167.

Collective bargaining

As there is no system for registering collective agreements in the UK, making an accurate assessment of the number of collective agreements impossible. Collective bargaining in the UK continues to be highly decentralised: most bargaining is at company or workplace level, with little multi-employer bargaining outside the public sector.

One development in bargaining structures during 2001 was that new, unified national pay negotiation machinery arrangements were agreed between employers and trade unions in the higher education sector, introducing 'single-table bargaining' covering all staff in both the 'pre-1992' and 'new' universities.

Pay

Collectively agreed basic pay rose by an average of 3.2% during 2001 (according to the Labour Research Department Bargaining Report, November 2001). The increase in average earnings was higher, at 4.4% (according to the Office for National Statistics).

In the public sector, for the third year running, the government accepted in full the pay awards recommended by the independent pay review bodies for more than 1 million public sector workers (UK0103120F). Most groups received above-inflation increases. For example, school teachers in England and Wales and nurses received a general pay rise of 3.7%. Particular groups, including newly qualified teachers and senior nurses, were awarded substantially higher increases, reflecting severe recruitment and retention problems.

Working time

Average collectively-agreed normal weekly working time in 2001 was just over 38 hours for manual employees and 37 hours for non-manual employees (according to IDS Study 717, October 2001). Average actual weekly working time for full-time employees was 38.1 hours (according to the New Earnings Survey).

Agreements reducing working hours were not reported to be widespread over 2001. At their Easter 2001 conferences, the UK's three main teaching trade unions supported a joint resolution calling for a 35-hour working week and threatening to take industrial action if the government refused to meet their demands (UK0105130N). A review group to examine teachers' workloads was subsequently set up, and the School Teachers Review Body was asked to recommend on how to deal with the issue when it reports in early 2002.

Research published in April 2001 suggested that the Working Time Regulations 1998- which implemented the 1993 EU working time Directive (93/104/EC)- have had a limited effect, if any, on most UK organisations. It found that long hours continued to be worked consistently by a significant minority of employees, facilitated by voluntary exemptions from the legislation, and that the Regulations were seemingly a matter of little concern for most employers and their workers. There was also evidence of some employers exploiting ignorance about the Regulations to deprive vulnerable workers of their rights (UK0105133F).

New agreements on flexible working time were reached at a number of companies, including motor manufacturers Land Rover, Nissan and BMW.

Pay inequalities

In February, the Equal Opportunities Commission's Equal Pay Taskforce published a report drawing attention to the 18% gap in average pay between men and women and making recommendations to tackle the disparity. These included a requirement on employers to carry out regular equal pay reviews (UK0104126F). While rejecting mandatory pay reviews, the government responded by announcing a range of measures, including reforms to speed up equal pay cases at employment tribunals, the appointment of 'fair pay champions' to promote good practice, and extra funding for the EOC to help employers with pay reviews (UK0106134N).

Research suggests that unionised workplaces are almost twice as likely to have well developed equal opportunities policies and monitoring arrangements as non-union workplaces (UK0108144F).

Job security

No reports of significant new employment security agreements were found. Such agreements are not widespread in the UK. In recent years a number of high-profile employment security guarantees have been overtaken by closures or other major restructuring exercises. Union concern at the significant rise in redundancies during the year, particularly in manufacturing, where there were almost 150,000 job losses in 2001, was reflected in calls for more government support for the manufacturing sector and for more effective consultation requirements on employers (see below under 'Company restructuring').

Training and skills development

Trade unions have been seeking greater involvement in training matters. Research completed during 2001 found that, although collective bargaining over training is still relatively rare, joint project work, consultation and other forms of employee involvement in training provision is more widespread. Legislative innovations may stimulate wider union involvement. The Employment Relations Act 1999 requires consultation over training issues where trade union recognition is introduced under the statutory procedure. The Employment Bill published by the government in November 2001 includes a right for 'union learning representatives' to take paid time off to promote training and development opportunities in the workplace (UK0112104N).

Other issues

During 2001, a number of employers were reported to have agreed improved parental leave arrangements, notably in respect of paid paternity leave, in advance of forthcoming legislative changes. Major employers doing so included motor companies Vauxhall, Land Rover and Peugeot, retailers Tesco and Sainsbury and a range of government departments. There was also an increase in the number of long-term pay deals reported, spreading beyond manufacturing to other sectors.

Legislative developments

During 2001, a number of significant changes to the legal framework were introduced and proposals for further reforms published, against the background of continued concern from employers' groups over the volume and cumulative impact on businesses of new statutory requirements (UK0112103N and UK0110106N).

Changes to employment tribunal rules in July 2001 to deter unreasonable cases were followed by further government proposals to reduce the number of tribunal applications (UK0108142N). The Trades Union Congress (TUC) was particularly critical of a proposal to charge workers for pursuing employment tribunal cases. Ministers subsequently dropped this idea but included other proposals for changing employment tribunal rules and reforming dispute resolution in the Employment Bill published in November (UK0112104N). Other key provisions of the Bill included extended parental leave rights, in line with commitments made in the Labour Party's election manifesto (UK0105132F), and powers to make regulations to implement the EU Directive (1999/70/EC) on fixed-term work (UK0108141N). The government also announced that provisions would be added to the Bill during its passage through parliament to place a duty on employers to consider requests for flexible working arrangements from parents with young children (UK0112105N).

During the year, litigation pursued by unions which reached the European Court of Justice resulted in changes in the UK's legislation on parental leave (UK0105128N) and holiday entitlement (UK0107138N and UK0110105N) to bring it in line with EU Directives.

In May 2001, a new arbitration procedure became operational in the UK, providing a voluntary, fast-track alternative to an employment tribunal hearing for resolving claims of unfair dismissal (UK0109101F).

Other key legislative developments are highlighted elsewhere in this review.

The organisation and role of the social partners

At the beginning of April 2001, the Amalgamated Engineering and Electrical Union and the technical union Manufacturing Science Finance announced that a proposed merger between the two organisations had been approved in membership ballots. The new 'super-union'- named Amicus- came into being on 1 January 2002. With around 1 million members, the new union is the second largest affiliate of the TUC, behind the public services union Unison, and is the largest affiliate of the Labour Party. Another new union, Prospect, came into being on 1 November 2001 as a result of a merger between the Institution of Professionals, Managers and Specialists and the Engineers' and Managers' Association. Prospect has over 100,000 members.

The Confederation of British Industry (CBI) and the TUC are both represented on the Learning and Skills Council, set up in April 2001, which has taken over responsibility for the funding and planning of all post-16 vocational education and training (UK0110111F).

In October 2001, the CBI and the TUC published a joint assessment of the reasons behind the 'productivity gap' between the UK and its major competitors (UK0111104N), following a request by the government in October 2000 that the two organisations jointly address a range of issues in an effort to boost the UK's productivity. The exercise resulted in a proposal for a permanent CBI-TUC Productivity Group, which the government will consult on policy development.

Industrial action

Official statistics published in June 2001 showed that current levels of strike activity in the UK continue to be historically low, but that there was a slight upturn in each of the three indicators (number of strikes, days lost and employees involved) during 2000 (UK0110109F). Provisional figures for the first six months of 2001 suggested a further rise. Notable strikes during 2001 included:

• three one-day strikes by London Underground drivers in February over safety issues;

• an unofficial strike of postal workers in May over the implementation of a national agreement on new working time arrangements; and

• an eight-day strike by firefighters in Liverpool in July over plans to appoint non-uniformed staff to senior management positions.

National Action Plan (NAP) for employment

As in previous years, the government consulted the CBI and TUC on the content of the UK's 2001 National Action Plan (NAP) for employment, drawn up in response to the EU Employment Guidelines. However the previous practice of incorporating a joint contribution by the two organisations on the guidelines which accord the social partners a key role was discontinued.

TUC officials expressed less satisfaction than their CBI counterparts with their respective organisation's involvement in drawing up the 2001 UK NAP, perhaps reflecting the greater importance trade unions attach to active labour market planning. The TUC told EIRO that 'the main problem in terms of social partner involvement is that the UK lacks the institutional arrangements between the social partners on the one side and between them and the government on the other side to take all the various elements of the employment guidelines process forward.'

The NAP records the government's commitment to 'promoting a closer dialogue with the social partners by involving them in the formulation, development and implementation of policies', and highlights the range of areas covered by the EU Employment Guidelines in which the social partners play a role.

Company restructuring

In January 2001, in the light of the controversial restructuring initiatives in a series of high-profile companies, including General Motors' December 2000 announcement of the closure of its Vauxhall car plant at Luton, the government initiated a review of the UK's redundancy consultation laws (UK0101110F). Subsequent instances of restructuring, including large-scale redundancies at the Anglo-Dutch steel-maker Corus announced in February 2001 (UK0102113F), prompted further trade union criticism of the way in which companies frequently make such announcements without first informing and consulting their workforces, and renewed calls for the swift adoption of the proposed EU employee information and consultation Directive, which the UK government continued to oppose (it was eventually adopted in February 2002). The House of Commons Select Committee on Trade and Industry also called for improvements to the UK's workforce consultation legislation (UK0103117N).

The plant closures and redundancies at Corus led to a GBP 135 million aid package from the UK government and the Welsh Assembly designed to support redundant steel workers and promote training opportunities and regeneration measures (UK0107140F).

Other major instances of restructuring during the year included the closure of Motorola's Scottish plant (UK0110107F) and substantial job cuts in the UK's aviation and aerospace industries following the terrorist attacks in the USA on 11 September 2001 (UK0110114F).

Employee participation

The progress made towards adoption of the EU Directive on informing and consulting employees generated extensive debate about its potential impact in the UK (UK0201116N). The EU Employment and Social Policy Council's political agreement on the Directive in June 2001 (EU0106219F) was welcomed by the TUC as a 'major strategic breakthrough', but disappointed the CBI, which had campaigned against its adoption. The CBI was strongly critical of the amendments put forward by the European Parliament on second reading (EU0110206F), and praised the UK government for negotiating 'the least damaging deal available' during the negotiations on the final text of the Directive, concluded in December. The DTI said that it would consult widely about the Directive's implementation in the UK once the measure is finally adopted.

The adoption in October 2001 of the EU European Company Statute and the associated Directive on employee involvement in European Companies (EU0110203N) attracted relatively little attention, but UK implementation of the Directive may serve to revive debate on board-level employee participation in the UK, where the issue has been largely ignored since experiments in certain state-run enterprises in the late 1970s. There is as yet no indication of the extent to which companies headquartered in the UK intend to use the European Company Statute to incorporate as European companies.

New forms of work

Temporary agency work

During 2001, the government published a revised draft of the Conduct of Employment Agencies and Employment Business Regulations for consultation. The government's aim, as set out in the NAP, is to overhaul existing legislation 'to ensure that the interests of both those who are seeking and offering temporary employment are properly protected'. The new measures are expected to be introduced during 2002.

Section 23 of the Employment Relations Act 1999 allows the government to confer employment status on groups of workers, potentially including agency workers, who are not legally classified as 'employees' and are therefore excluded from some statutory protection. The government has yet to act on this.

Teleworking

The CBI's 2001 employment trends survey (UK0107139N) showed a significant increase in the number of private sector companies using teleworking - 39% compared with 23% the previous year - and commented that this indicated that employers were responding to employees' demands for more flexible working. In August, the TUC published a report arguing that the widely predicted teleworking revolution had so far failed to materialise, highlighting recent statistics showing that employed teleworkers who usually work at home account for less than one in 10 of all teleworkers and only 0.5% of all employees. The TUC argued that, while teleworking can provide more flexible working patterns for individuals, it can also become an extension of work intensification and the 'long hours culture', in which case the opportunity to help improve work-life balance is lost. Both organisations are currently taking part in government-initiated discussions on developing voluntary guidance on teleworking.

Other relevant developments

With effect from 1 October 2001, the government increased the main adult rate of the national minimum wage (NMW) from GBP 3.70 an hour to GBP 4.10 - a rise of almost 11% (UK0104124N). At the same time, the 'development rate' of the NMW, for workers aged 18-21, rose from GBP 3.20 to GBP 3.50. The government also announced that it had agreed in principle to increase the adult rate to GBP 4.20 and the development rate to GBP 3.60 on 1 October 2002, subject to economic conditions.

Outlook

In 2002, industrial relations in the UK are likely to be increasingly affected by heavy job losses in manufacturing and an upturn in unemployment. The political priority the government attaches to the modernisation of the public services (UK0111107F) may lead to growing tensions with the public sector unions, a number of which have already begun to review the extent of their financial support for the Labour Party (UK0111106F). In the renewed debate about the prospects of the UK joining the European single currency, the leaderships of both the CBI and TUC support the principle of UK euro entry but there are differences over the issue within both organisations. In terms of the legislative agenda, the way in which the UK implements the EU employee consultation Directive is likely to be a major focus of attention.