Continuity and change in pay and working time

The changing nature of collective bargaining in the UK and the ever-increasing need for flexibility provide the means and motivation for organisations to develop their pay and working time systems. However, recent research, covering 1996, indicates that few appear to be doing so, despite widespread unease over current arrangements.

Trends in collective bargaining: decentralising, decreasing

One of the most significant transformations of British industrial relations in recent years has been the shift from national to enterprise-level bargaining. Multi-employer bargaining arrangements have tended to be replaced with multi-establishment, single employer bargaining, although there are also signs of decentralisation within the individual firm. Similarly, within the public sector (UK9702104F), efforts have been made to fragment traditional bargaining arrangements through the introduction of "Agency" status and market-testing to the civil service and local authorities, and by further institutional decentralisation through the promotion of National Health Service (NHS) Trusts and local management of schools. These changes have occurred alongside a dramatic decline in coverage of collective bargaining, largely due to the decline of manufacturing employment and the expansion of the service sector.

These trends of contraction and decentralisation in collective bargaining might have been expected to have granted management considerable scope independently to refashion pay and working time systems in order to respond better to an ever-changing and increasingly competitive environment. An examination of whether this flexibility has really happened in the workplace is being made through the Industrial Relations Research Unit (IRRU) panel survey of pay and working time in four different but very important sectors: engineering, printing, retail and the NHS. The summary below is based on the latest findings from the 1996 results, using a sample of 314 organisations and representing a total workforce of over 313,000. The survey is based on the responses of the most senior manager dealing with pay and working time in each organisation.

Pay and working time: issues and concerns

Most respondents in each sector are reasonably satisfied with existing pay and working time arrangements, although a significant proportion of them are dissatisfied, and many feel that their employees are far from happy too, as indicated by the table below (which gives the responses of managers).

The main concerns and pressures for change are summarised below.

Pay concerns

• Low basic. Many comments refer to low basic wage rates relative to other similar employers in the locality. This can have an impact on employee motivation and work quality, and can also lead to increased recruitment and training costs associated with labour turnover. Many employers find it difficult to address this problem, however, given financial constraints.
• Ability to pay. Accordingly, the main concern of many employers is that "annual pay increases are expected by the workforce, but trading conditions do not always allow these to happen". Fears may also be expressed regarding the possible effects on pay pressures of higher inflation or any further recruitment difficulties. In retailing, some are concerned at the prospects of a national minimum wage (UK9703112F).
• Incentivisation/ individualisation. One answer might be to make more clearer links between remuneration and individual, group and company performance. The greater individualisation of pay rates and bonuses through some form of merit- or competency-based system is therefore a widespread aspiration, but it is recognised that the key point is "how to operate a successful differential pay scheme" given problems of finding suitable and acceptable measurement criteria.

Working time concerns

• EU Directive. Several respondents listed EU regulations on maximum working hours as the main working time issue facing them. There was also some awareness that the EU working time Directive (UK9702103F) could add to workforce pressures on rest-times and holidays.
• Variability. Greater flexibility in terms of working time is a common aspiration for management. A particular desire may be to minimise the need for overtime by, for example, covering weekend working in a basic week. Awareness of new practices as annualised hours is increasing, but a combination of low basic pay and extensive overtime working appears to form an attitudinal barrier to innovative change for both management and the workforce.

Key findings

If the above indicates what managers worry about in terms of pay and working time and suggests what they would like to happen, what do the results tell us about what is actually happening at workplace level? In fact the key findings of the survey point to a great deal of continuity.

Pay

• The levels of the most recent pay rise in each of the four sectors reflect changes in the level of the Retail Prices Index (RPI) and the vast majority are made as part of an annual pay round. External considerations are important, especially in terms of reference to the RPI and comparisons with national competitors.
• Individual pay is rare, especially outside of engineering. Variability in earnings within the workplace is normally due to overtime working and/or shift premia.
• There are few attempts to connect the pay settlement to wider considerations relating to the organisation of work. Around 20 employers have related the pay rise to changes in work reorganisation: figures which are particularly low given the long-standing desire in each of the four sectors to secure offsetting cost reductions when making changes to pay.

Working time

• The concept of a standard working week remains strong, especially outside of the service sectors. Full-time average basic working hours are around the same level (37-38 hours) in each sector, but for many employees actual hours worked can be much longer. In fact, 72 of the engineering firms and 40 companies from the printing industry report that some of their workers typically work in excess of 48 hours a week, the "ceiling" stipulated in the EU Directive on working time. Such regular long hours are less widespread in the service sector, although 12 of the NHS Trusts and three of the retailers also report typical working of over 48 hours.
• According to firms in all of the sectors, changes to working time are designed primarily with the objectives of securing greater flexibility and reducing costs. Flexible working is mainly to be found in the service sectors, however. Forms of "flexi-time", the variation of the working week around the standard basic within given constraints, is reported by 46% of the retailers, 45% of the NHS Trusts, 18% of the engineering firms and 3% of the printers. Annualised hours systems are even more rare in each of the four sectors, with one case being found in the engineering sector, five from the printing industry and eight in the NHS Trusts.

Commentary

Recent changes in the nature of collective bargaining in Britain have promised to open greater opportunities for the development of organisation-based pay and working time systems. Yet, as the IRRU survey results show, there are few signs of employers breaking from the "sector effect" in terms of, for example, the level or timing of the pay award, even where, as in engineering and retailing, the national agreements have broken down. Furthermore, despite employer's desires for change in these areas, there is little dramatic change in terms of, for example: pay individualisation; "quid pro quo" bargaining linking pay to work reorganisation; or even flexible working time. Thus if the procedural forms of bargaining have changed, much of the substantive outcomes remain similar. This cautious conformity may be associated with concerns about pay "leapfrogging" or other costs of change. In many ways however it is structurally conditioned by the "overtime culture" resulting from low basic pay and product market uncertainty, and as such will be difficult to change. (J Arrowsmith, IRRU)