Partnership, flexibility and employment: The growth of job security agreements

Over 1997-8, policymakers in Britain and Europe have been advocating industrial relations "partnership" as a means of reconciling labour flexibility with employment security. In the UK, "job security agreements" are becoming increasingly common between employers and trade unions as a means of introducing productivity-enhancing change without necessarily threatening jobs. In particular, this marks a new departure for the social partners in the manufacturing sectors, which have traditionally been characterised by more adversarial relationships. Question-marks remain, however, over how enduring such partnership agreements can be, and how widely and successfully they can be replicated.

In April 1997 the European Commission published a Green Paper on Partnership for a new organisation of work (EU9707134F). It argued that the key to improving competitiveness and employment was "through a better organisation of work at the workplace, based on high skill, high trust and high quality". The implicit precondition for realising this goal was greater employment security. Only then could managers and workers feel genuinely able to collaborate and innovate to develop the production process to meet the ever more demanding and discerning requirements of customers. In short, stated the Green Paper, flexibility requires security, and to deliver both objectives successfully requires partnership.

One month later, the Labour Party was elected to government in the UK with an overwhelming parliamentary majority (UK9704125F). In the industrial relations arena, the central pledge was to "modernise" workplace relations by acknowledging a dynamic relationship between fairness and efficiency. In the words of Labour's business manifesto Equipping Britain for the future: "The key to orderly and effective industrial relations is to establish a fair and effective balance between rights and responsibilities that will promote partnership, not conflict, at the workplace. This is the principle that will inform our whole approach to industrial relations."

This approach was welcomed by the trade unions, which saw the commitment to an active training and employment policy as setting the scene for greater involvement with employers in workplace industrial relations. Relations between the social partners had already begun to take a new direction with the conclusion of a growing number of "job security agreements" (JSA s). With renewed impetus from EU and UK policymakers, these have continued to become more widely popular.

JSAs in practice

JSAs began to take off in the early 1990s as a means of managing restructuring during the economic recession. They have continued to grow as employers have found them to be a valuable means of managing the process of change, reassuring the workforce of its purpose and harnessing the employees' support and commitment. Very recently, JSAs have begun to be introduced in the financial services and retail sectors, although the vast majority are to be found in the private industrial sectors. Here we look at the results and wider implications of recent research into four high-profile examples of both new and longstanding agreements. (Original research conducted under the supervision of members of the Industrial Relations Research Unit by Tony Dobbins and Rachel Conning, under the MA Industrial Relations programme. For further details see "Employment security policies and new working practices in two brownfield manufacturing plants", T Dobbins (1997) and "The significance of 'partnership' deals between trade unions and management in two manufacturing industries", R Conning (1998), both unpublished MA dissertations, University of Warwick.)

Rover

The "New Deal" at Rover, the motor manufacturer, which was implemented in 1992, can be seen as the culmination of a series of productivity-enhancing initiatives such as the introduction of "total quality management" (TQM) in the late 1980s. New ways of working such as "cellular production" techniques required new forms of multiskilling, teamwork and employee involvement. At the same time, in a context of high levels of unemployment and legislation restricting trade union action, the late 1980s and early 1990s marked a quiet period in the company's workplace industrial relations, even as the effect of increased competition and job losses was felt. As the recession began to hit home, the company felt it was necessary to act on its new initiative and that it was able to do so. After a period of sustained job losses it was felt that further job cutting would be self-defeating. Instead, a commitment from employees to "full flexibility" and "continuous improvement" could be achieved only where employment was not threatened.

"Employment security" can be interpreted in different ways, however, and it can have different meanings for different groups. Shopfloor workers at Rover retain a healthy scepticism about the significance of the New Deal's employment guarantee, realising that they cannot be insulated from the effects of major external shocks. In addition, with the takeover of Rover by BMW in 1994, suspicion appears to be increasing as the multinational has begun to link investment commitments between its plants - and ultimately the Rover employment guarantee - to further employee concesions. "Employment security" is still valued, but is seen as coming at the expense of the growing temporary workforce. However, for the trade unions, an important positive result of the New Deal has been their changing role and relationships with management. They see their greater involvement as underpinning both the employment guarantee and workers' commitment to increasing productivity.

Jaguar

Like Rover, the 1994 JSA at the Jaguar car company came on the back of both redundancies and various quality improvement initiatives. It also followed a takeover by Ford in 1989 which provided the investment to make changes in the organisation of work and to offer large pay increases to the workforce. in order to facilitate acceptance of the change. Significantly, this takeover also opened the threat of sourcing production elsewhere in the Ford empire, notably the USA.

The JSA introduced wide-ranging flexibility in terms of: reducing demarcation s between jobs; increasing craft multiskilling; introducing greater teamworking; use of temporary workers; and working time (varying start and finish times and breaks, and efforts to introduce compulsory overtime). According to both managers and workers, it also led to an intensification of work with: closer work measurement; attendance and timekeeping control; "bell to bell" working and speed-up of the production line; and increased responsibilities for supervisors over their work teams. The wider terms and context of the JSA are not wholly positive for the workforce, therefore. However, the trade union involved similarly remains enthusiastic about its new role, such as involvement in committees on maintenance working and training, which it says go far beyond merely consultative procedures.

Massey Ferguson

The JSA agreed in 1990 at the Massey Ferguson tractor company tells a similar story. The JSA followed crisis conditions in the company and the implementation of other efficiency-improvement initiatives including cellular manufacturing. It was facilitated by the decentralisation of collective bargaining down to plant level, a decline in industrial disputes, and less multiunionism in the plants. It also led to an intensification of work, associated with the introduction of a new tractor model, and the employment of large numbers of "temps" as a buffer workforce. In 1994 the company was taken over by Agco, which introduced the double-edged sword of greater potential investment but also more internal competition between plants. However, the case differs in that the role and relationships of the trade unions with management do not seem to have changed significantly. In fact, the introduction of greater teamworking in many ways has marginalised the union role at local level, even if there is now somewhat more consultation at a formal level higher up.

Blue Circle

When the Blue Circle cement group agreed a JSA in 1997 (UK9702102F), the deal generated widespread publicity as it went further than most other previous agreements in introducing flexible working practices and procedures for employee involvement (see, for example, "Cementing a new partnership at Blue Circle", IRS Employment Trends 638, August 1997). Earlier changes had introduced annual hours working, regrading and multiskilling, and consolidated annual salaries. However, recession and increased competition in the 1990s led to large-scale redundancies and a willingness by both management and unions to consider alternative approaches. A "company-wide action team" was established in 1996 as a formal partnership body with a remit to develop alternative ways of managing change and improving productivity, backed up by "local action teams" in the plants. There is some evidence that these are already beginning to have real results in terms of improving productivity and employee involvement. However, although the unions remain enthusiastic about the new arrangements, it appears that one effect of the local action teams (whose employee representatives are not necessarily lay union officials or even members) may be to "dilute" the role of the unions at local level.

Commentary

The four manufacturing case studies above have a number of important lessons and wider implications. They show how partnership agreements in the form of JSAs are likely to be introduced in very specific circumstances: when firms have been wrestling for a protracted period of time with the problems of implementing various quality and flexible working measures against a backdrop of successive crises and redundancies. The subsequent role of parent companies in using the "carrot and stick" of investment decisions can also be significant, so that JSAs may also be more likely to be found in subsidiaries of multinational companies.

The JSAs go some way in meeting the policymakers' requirements of partnership whilst containing some serious flaws. The different JSAs have been so far successful in protecting jobs, although often only by implementing a "core and periphery" employment strategy, and in introducing greater flexibility in working practices and improvements in productivity. However these results do not reflect a wholly "positive-sum game" as "core" workers may experience an intensification of work as a result of changes in working practices. In addition, workers are realistically cautious about the conditions placed on the job security guarantee.

In procedural terms, the JSAs have had a significant impact in providing the unions with a greater role in the change process. At first, the JSAs in a sense reflected a traditional concession bargaining agenda. Employers found that they required greater employee cooperation to deliver flexible and multiskilled teamworking and the unions in turn pressed for job security and redistributive demands as a quid pro quo of accepting change. Yet the JSAs appear to have gained their own momentum and have gone beyond any uneasy alliance in adversity, demonstrating that there is a real potential for partnership in managing the change process. However, there is also a danger of employee involvement taking the form of managerial co-opting of the trade unions into a wider set of work organisation issues. Such "incorporatism" risks driving a wedge between senior and local union representatives, or between the union and their members, which would make the JSA less robust should serious problems reoccur. (J Arrowsmith, IRRU)