Cross-border comparison leads to shorter working week at UK Peugeot plant

In September 2000, after protracted negotiations and strike action by the workforce, management and unions at Peugeot's major UK plant agreed a reduction in the working week. The move followed the introduction of the 35-hour week at the parent group's plants in France and is an indication of the way in which reference points in collective bargaining are developing a cross-border dimension.

The growing impact of cross-border comparisons on terms and conditions, especially within internationally integrated companies, was underlined by the conclusion of an agreement, in September 2000, implementing a shorter working week at Peugeot's major UK car production facility at Ryton, near Coventry. The agreement followed the introduction of the 35-hour week at the parent PSA group's plants in France under recent French legislation (FR9902157N). However the specific arrangements for implementing the new 36.75 hour week at the Ryton plant became the focus of a dispute between the UK management and the production workforce which saw a 24-hour strike by each shift and brought the company to the brink of a prolonged stoppage of production.

New model brings increased output and employment

In contrast to the closure, restructuring and retrenchment being experienced by other parts of the UK's car manufacturing sector (UK0012104F), both output and employment have risen at the Ryton plant in recent years following its success in securing a mandate from the parent PSA group to produce the highly successful Peugeot 206 model. The 206 was launched in August 1998 with production based at Mulhouse in France and Ryton, but high sales led the company to start up production at a third plant, Poissy, within five months.

At Ryton, production levels of 80,000 vehicle units per year in 1997 and 1998 rose to 160,000 units in 1999, reflecting soaring demand for the 206. A substantial proportion of the plant's output is exported to other EU markets, including France. Since 1998, total employment at the Ryton plant has increased by 900 to 3,300 (of which the production workforce accounts for 2,800) with a third shift being recruited to fulfil the increased production levels that demand for the 206 required. Productivity has risen too as a result of both new working time arrangements and automation: 1,650 units per week were produced in 1994 compared with levels which reached 3,900 in 1999, with a similar sized workforce in both years.

Pre-existing working time arrangements

Unlike some of the other major motor manufacturers, the standard working week for the Peugeot production workforce at Ryton had remained at 39 hours, the level which prevailed across the UK engineering industry prior to the 1989 national dispute over shorter working time which led to the demise of the sector-level collective agreement. At Jaguar, also based in Coventry, the standard working week was reduced to 37 hours in the early 1990s. This was also the case at Rover, which has major plants in the West Midlands, where, based on comparison with the then BMW parent group's plants in Germany, a further agreement was concluded in late 1998 for a reduction to 35 hours to be implemented by 2001 (UK9812168N).

At Ryton, unions representing the production workforce indicated to management in the spring of 1999 that, with the adoption of the 35-hour week at the group's French plants, they would be looking to negotiate a shorter working week. Management recognised that the UK company was probably going to have to respond, and the understanding reached was that negotiations would commence once the French agreements were concluded, which duly happened in the autumn of that year.

Under an annual hours arrangement concluded with the workforce in 1997, Ryton's 39-hour week was based around four-day working (Monday-Thursday) with two shifts (9.75 hours per shift) for 45 weeks of the year, with scope for the number of shifts worked in the week to move up to five or down to three at the same basic rate of pay over an annual period as production volumes fluctuated. The 1997 agreement also provided for contractual overtime of up to 200 hours per year to be worked. These arrangements gave scope for a third shift, recruited on different employment contracts in early 1999, to work three 9.75-hour days at weekends (Friday, Saturday and Sunday) amounting to 29.25 hours per week. There was no interchange between the "weekend shift" workforce and the established "Monday-Thursday double-shift" workforce.

According to management, the combination of the annual hours agreement and the new weekend shift made the Ryton plant extremely competitive within the PSA group – a substantial increase in production was secured without any investment cost to increase the plant's capacity. These arrangements, which differ from those found in the PSA group's French plants, formed the backdrop to the dispute in the summer of 2000 over the implementation of a shorter working week for the production workforce.

Dispute over new arrangements

Negotiations between management and trade unions resulted in a proposed package providing for a 36.75-hour week for both segments of the production workforce - equivalent (once allowance is made for paid meal breaks) to the 35-hour week which applies in the PSA group's French plants. The proposed package, which was put to the workforce in early July 2000, also envisaged the introduction of extra shifts to increase production levels. The package, and a subsequent revised version, were both rejected by the workforce in ballots and each shift staged a 24-hour stoppage in the final week of July. An all-out stoppage was called for late August whilst management declared that it would go ahead and implement the proposed package unilaterally from the same date.

In the event, both the all-out strike and management's implementation of new working time arrangements were suspended to allow space for resumed talks, and a further set of revised proposals was eventually accepted by the workforce in early September. The nub of the dispute appears to have been over management proposals to sustain high levels of plant utilisation by introducing extra shifts on Fridays for the "double-shift" workforce and Monday morning shifts for the "weekend-shift" workforce. This led press commentators to characterise the dispute as one over "lifestyle" and the "work-life balance" (according to the Guardian newspaper on 28 July 2000).

The revised proposals accepted by the workforce: introduce a 36.75-hour week for all the production workforce, which involves a reduction in the standard week of 2.25 hours for the established double-shift workforce but 7.5 additional hours working for the weekend-shift workforce; and scale down the extent of the additional Friday and Monday shifts which the respective segments of the workforce will be required to work over a given period. In addition, all employees on the weekend shift will be moved onto the same contractual arrangements as the established workforce. This has the significant implication of increased employment security for the weekend-shift workforce.

Commentary

The reduction in the working week at Peugeot's major UK plant following the introduction of the 35-hour week at the parent group's plants in France is a striking illustration of the way in which reference points in negotiations over terms and conditions are developing a cross-border dimension within the EU (TN9907201S). It is important too to note the particular circumstances under which this occurred. The Ryton plant is part of an integrated European system of manufacturing for the various Peugeot and Citroen models in which the French plants have a dominant position and therefore influence. Like its counterparts in the other internationally integrated car manufacturers, Peugeot's UK management has consistently utilised comparisons of practice and performance with plants elsewhere in the PSA group in local negotiations with the Ryton workforce. With the introduction of the 35-hour week in France, the company in the UK found itself faced with a similar demand from its own trade unions, the comparative logic of which was probably difficult to deny.

Three other features of this case merit comment. First, the dispute over the adjustment to shift arrangements which accompanied the introduction of the 36.75 hour week crystallised around the company's demands for more shifts to be worked at times that were regarded by the workforce as "unsocial". The dispute thus resonated with wider public debate in the UK over the need for measures to redress the "work-life balance".

Second, the adoption of more flexible working time arrangements has been a key item on management's agenda across the European car industry. The annualised hours arrangement at Peugeot thus constitute part of a wider trend within the sector. However, whereas in some other cases, such as Rover and Volkswagen, the adoption of more flexible working time arrangements has primarily been against a background of downwards adjustments in the overall volume of working time, at Peugeot the context has been one of augmenting the overall volume of working time.

Third, the current buoyancy of production and employment at the Ryton plant does not mean that it has become immune from the inter-plant competition for investment and mandates to produce new models that is the norm within all the large car manufacturers. This was starkly underlined by a statement from the parent PSA group in December 2000 that a major investment in a new paint shop at Ryton could be jeopardised by continued uncertainty over the UK joining the euro. (Paul Marginson, IRRU)