UK: Annual review — 2010

  • Observatory: EurWORK
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  • Published on: 17 November 2011

United Kingdom

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UK: Annual review — 2010

1. Political developments

The Labour Party, which had been in government since 1997, lost its parliamentary majority at the general election in May 2010 (winning 258 out of 650 seats). It was replaced by a coalition of the Conservative Party (which won most seats in the election, at 306, but not an overall majority) and the Liberal Democrats (which won 57 seats). This was the UK’s first coalition government since the Second World War. A key priority of the new government, led by Conservative Prime Minister David Cameron, was cutting public spending to reduce the deficit (UK1005019I), including a general public sector pay freeze. The coalition programme included a review of employment and workplace laws to ‘ensure they maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive’ (this review had not been completed by the end of 2010).

2. Legislative developments

The key legislative developments in 2010 (in addition to those mentioned in section 7) were as follows:

3. Organisation and role of the social partners

No significant changes in the organisation and role of the social partners occurred during 2010. The main trade union merger development was a decision by the 3,500-member Association for College Management (ACM) to merge with the 217,000-strong Association of Teachers and Lecturers (ATL) from January 2011.

The latest statistics from the Department for Business, Innovation and Skills (BIS) put total trade union membership in employment at 7,054,000 in the fourth quarter of 2009, down 2.3% from 7,219,000 a year previously. Overall union density among employees remained unchanged (owing to a fall in employment levels) at 27.4%, with private sector density at 15.1% and public sector density at 56.6%.

A revised Advisory, Conciliation and Arbitration Service (Acas) code of practice on time off for trade union duties and activities came into force in January 2010. The code seeks to ‘aid and improve the effectiveness of relationships between employers and trade unions’ by specifying how the statutory right to reasonable time off for union duties, activities and training should work in practice.

4. Collective bargaining developments

No official data are collected on the number, level and content of collective agreements. Collective bargaining occurs mainly at single-employer level, though relatively large numbers of workers are covered by multi-employer agreements, notably in the public sector and in industries such as construction. The latest BIS statistics found that 32.7% of employees were covered by a collective agreement in the fourth quarter of 2009, down from 33.6% a year earlier. In 2009, the rate was 17.8% in the private sector (18.7% in 2008) and 68.1% in the public sector (70.5% in 2008).

There was little change in overall bargaining structure in 2010, though the new coalition government’s agenda of public sector decentralisation suggests that national-level pay bargaining arrangements in areas such as education and healthcare may be coming under pressure. During 2010, the main development was the announcement in October that the Schools Support Staff Negotiating Body (SSSNB) would be abolished. The SSSNB was set up in 2009 to negotiate pay and conditions for some 500,000 schools support staff in England.

Pay bargaining in 2010 occurred against a background of an unsteady emergence from recession, combined with rising inflation. The UK economy grew relatively slowly during 2010, before contracting slightly in the last quarter of the year. Calculated on the basis of the Consumer Prices Index (CPI), annual inflation ran at over 3% throughout 2010, reaching 3.7% in December. Pay deals were generally at slightly lower levels than in 2009 though the average increase rose somewhat in the latter part of the year, and most research organisations monitoring settlements put the median pay increase at around 2% (well below inflation) during 2010. According to the Labour Research Department Workplace Report (October 2010), collectively agreed pay increases were 1.75% for the year (well below inflation) compared to 2.4% during 2009. The number of pay freezes, which had been high in 2009, fell back in 2010. However, freezes imposed by the government or employers in the public sector in 2010 meant an increasing divergence between pay trends in the private and public sectors towards the end of the year.

Working time did not appear to feature prominently in collective bargaining in 2010. There were few reports of cuts in working time without loss of pay – one exception was a one-hour weekly reduction agreed at Royal Mail – while announcements of short-time working (with a reduction in pay) were much less common than in 2009.

The lack of official data collection makes systematic assessment of the contents of collective agreements very difficult. A Trades Union Congress (TUC) study published in 2010 (UK1004039I) shed some light on bargaining on equality issues. It found that affiliated unions had achieved the greatest negotiating successes over the previous four years in the areas of parental rights (51% of unions reported success), flexible working and work–life balance (44%), age (37%) disability (35%) and race equality (35%).

5. Responses to economic downturn

The UK economy came out of recession in the last quarter of 2009, though growth faltered again in the final quarter of 2010. Despite a degree of economic growth, the unemployment rate (as calculated by Eurostat) hovered around 8% for much of 2010 (and approached 20% for under-25s). The debate moved on from tackling the downturn to the appropriate policies for securing economic and employment growth. The coalition government that took office in May adopted a policy of rapid reduction of the public deficit, mainly through major spending cuts, though with some tax increases (notably in VAT).

Trade unions and employers responded very differently (bipartite or tripartite initiatives in such areas are not a common feature of UK industrial relations). The TUC argued that the spending cuts were too fast and deep, and (along with measures such as the VAT increase) were preventing growth from taking hold. It focused its opposition and campaigning around the cuts to public services and jobs, the public sector pay freeze (at a time of rising inflation) and pension changes, arguing that these targeted ordinary people and undermined demand. The CBI national employers’ body was generally in favour of the government’s deficit-reduction approach, though with some concern about whether there was a positive strategy for economic growth. For the CBI, the spending cuts, though painful, are essential to balance the public accounts and build the UK’s future prosperity, and should be accompanied by a major reform of public services.

6. Pensions

Pensions were a leading issue in UK politics and industrial relations in 2010. The new coalition government made or announced a number of changes, such as: linking increases in the basic state pension to earnings; speeding up the process of increasing women’s state pension age to 65, and the age for both sexes to 66; cutting the tax relief on pension contributions for high earners; using the CPI rather than the generally higher Retail Prices Index (RPI) as the index for increasing public sector pensions; and relaxing the requirement to use the RPI as a minimum for indexing occupational pension schemes.

The government set up an independent Public Service Pensions Commission to review public service pension provision and make recommendations on making it sustainable and affordable in the long term. The Commission published its interim report in October 2010. Its recommendations included increased employee contributions, and it found that final-salary public sector schemes (whereby the pensions is set as a defined proportion of the employee’s pay on retirement) were in many cases unfair - suggesting that the Commission’s final report, due in 2011, may recommend their abolition. In October, the government announced an average 3 percentage-point increase in employee contributions to public sector pensions.

The various changes made or planned to public sector pensions were strongly opposed by trade unions and, by the end of 2010, there were indications that the issue might become the central focus of concerted union action in response to the government’s spending cuts. The CBI is in favour of public sector pension reform, and especially the abolition of final-salary schemes.

In the private sector, record deficits in occupational pension funds contributed to an increasing tendency for employers to close costly final-salary and other defined-benefit schemes to new employees, or to further contributions from existing members (UK1004029I). Such closures, or the threat of them, led to industrial disputes in 2010 in cases such as the AA (car breakdown cover), AstraZeneca (pharmaceuticals) and the BBC (broadcasting). In universities, the planned closure of the final-salary scheme to new employees and other changes to pension arrangements announced in July seemed to be heading towards industrial action at the end of the year.

In July, the government issued proposals for abolishing the ‘default retirement age’, whereby employers can require employees to retire once they reach the age of 65 (UK1008019I). The default age will be abolished from October 2011.

7 Developments in working conditions

Important legislative developments relating to working conditions in the UK in 2010 included the following:

Relevant policy developments in 2010 included the following:

  • The new coalition government published in November its skills strategy for reform of further education and training (UK1012039I). One of the government’s main aims is to increase the number of adult apprenticeships, while expecting employers and learners to pay more towards the cost of training.
  • The coalition government commissioned a review of health and safety that was published in October. Recommendations included a consolidation of legislation and simplified risk assessments for low-hazard workplaces.
  • National Health Service (NHS) employers launched a campaign in March 2010 to end stigma against NHS workers suffering from mental ill health and improve employment rates for this group.

Survey findings reported in 2010 included:

  • Employees in both the private and public sectors see job security as more important than pay, working hours or flexibility in the current difficult economic climate (IFF Research).
  • Over the 10-year period from 1999/00 to 2009/10, the rate of reported fatal and major work-related injuries to employees fell by 13%, while the rate of injuries resulting in absence from work for more than three days declined by 33%. From 2000/02 to 2009/10, the number of working days lost per worker through work-related injury and illness fell by 30% (Health and Safety Executive).
  • Some 64% of remote and isolated workers (those who mainly work alone or away from an office or other base) report mental ill-health in excess of the level defined as ‘psychological distress’, which is significantly above the level reported in the general working population. Poor mental health in this group is associated with high demands, low decision-making authority, low skill discretion, role conflict and job insecurity. These workers also experience higher levels of general ill-health symptoms than other employees, especially fatigue and neck, shoulder and lower-back pain (British Occupational Health Research Foundation).
  • 327,000 workers experienced violence at work in 2008-2009, a 12% increase on the previous year (British Crime Survey);
  • Workers regularly go to work when ‘too ill to do so’ – 20% of respondent had done so in the month previous to the survey and a further 36% in the preceding year (TUC) (UK1004019I).
  • A third of employers surveyed increased stress-management activities as a result of the recession, but the number providing stress-management training fell (IRS).
  • Slightly more than half of employers surveyed in 2010 had cut their training budgets in the past year (Chartered Institute of Personnel and Development) (UK1006019I).
  • The proportion of the workforce receiving training fell from 63% in 2007 to 56% in 2009, and the number of days training per head fell slightly (UK Commission for Employment and Skills).
  • Around 5 million employees regularly worked unpaid overtime in 2009, and nearly 900,000 regularly worked more than 10 hours a week without payment (TUC) (UK1001039I).

8. Major conflicts and restructuring cases

In general, 2010 saw relatively little strike activity. In the first 11 months of the year, 358,000 working days were lost (compared with 455,000 in the whole of 2009) through 107 stoppages (98 in 2009). In 2010, the number of strikes was fairly evenly distributed between the public and private sectors, but the former accounted for nearly 90% of the total days lost. Three days of nationwide strike action by civil servants in March, called by the Public and Commercial Services Union in protest at government plans to change redundancy arrangements were probably responsible for the majority of the days lost during 2010. Otherwise, transport appeared the area of the economy most strongly affected by industrial action, with a series of strikes at London Underground (largely over job losses) (UK1012019I) and at British Airways (cost-cutting and changes to employment conditions) (UK1006029I).

Legal aspects of industrial action were in the news during 2010, with controversy over employers gaining court injunctions to prevent strikes over technical irregularities in union strike ballots (as at Network Rail, the rail infrastructure company), and calls from both employer organisations and unions to change the legislation in this area (UK1010029I).

The UK restructuring cases recorded by the European Restructuring Monitor (ERM) in 2010 resulted in the total loss of around 77,000 jobs, a 40% fall on the 2009 figure of 130,000. However, the public administration sector figure rose around threefold from some 11,000 in 2009 (9% of the total) to 31,000 in 2010 (40% of the total). This reflected a move in the focus of high-profile restructuring from the private to the public sector, accelerated by the policies of the new government. Public sector employment fell by 1.3% or 77,000 in the year to the third quarter of 2010, and the effects of public spending cuts may, according to forecasts, cost up to 500,000 jobs over the period to 2014-2015.

Major restructuring cases in 2010 included large-scale job losses at a number of local authorities, such as Birmingham City Council and Nottinghamshire Country Council. Significant workforce reductions continued at banks such as Royal Bank of Scotland and Lloyds TSB, while other major cases included bankruptcies/closures at companies such as Rok (construction), Teesside Cast Products (steel), Shop Direct (retail) and Jarvis (rail maintenance).

9. Other relevant developments

There were no other significant developments in industrial relations or working conditions in 2010.

Mark Carley, SPIRE Associates/IRRU, Warwick Business School

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