Series of government initiatives follows election

Following its re-election in June 2001, the UK's Labour government has announced a number of organisational and policy developments in the industrial relations area.

The weeks following the Labour Party's victory in the general election held on 7 June 2001 have seen the government announcing a series of initiatives relating to industrial relations matters.

Governmental reorganisation

At the Department of Trade and Industry (DTI), Patricia Hewitt takes over as trade and industry secretary. Alan Johnson continues to be responsible for employment relations, with promotion to the rank of minister of state. The DTI assumes responsibility for "work-life balance" issues and equal opportunities and pay from the former Department for Education and Employment (DfEE), which is now renamed the Department for Education and Skills. The former DfEE's responsibility for age and disability discrimination issues passes to the new Department for Work and Pensions (formerly the Department of Social Security).

Increase in national minimum wage for younger workers

On 21 June, the government announced that it had accepted a recommendation by the Low Pay Commission (LPC) to increase the national minimum wage (NMW) "development rate" for workers aged 18-21 from GBP 3.20 to GBP 3.50 per hour from 1 October 2001 and, subject to the continuation of favourable economic conditions, to GBP 3.60 from 1 October 2002. The move follows the announcement in March 2001 of an increase in the main adult rate (UK0104124N). The government has also agreed to give the LPC permanent status.

The increase was welcomed by the Trades Union Congress (TUC) and "cautiously accepted" by the Confederation of British Industry (CBI). However, the TUC described as "perplexing" the government's decision not to apply the adult NMW rate to 21-year-olds, as recommended by the LPC.

Review of employment dispute resolution

On 22 June, Alan Johnson announced a government review of the mechanisms for resolving individual employment grievances, with the aim of promoting conciliation rather than litigation via employment tribunals. The backdrop to the review is the growing employer concern about the cost to businesses of employment litigation, and the threefold increase in the level of tribunal applications over the 1990s, which the CBI sees as evidence of the emergence of a "compensation culture" (UK0011199F). The DTI stresses that tribunal claims can be costly to the applicants too in terms of stress and damaged employment prospects.

As recently as 16 July 2001 the government introduced changes to employment tribunals' rules of procedure to deter and penalise the pursuit of unreasonable cases (UK0012102N), along with a new arbitration scheme offered by the Advisory, Conciliation and Arbitration Service in respect of unfair dismissal claims which would otherwise go to a tribunal hearing (UK0011199F) came into operation in May 2001. A central objective of the latest review will be to encourage the resolution of problems within the workplace without recourse to litigation.

Public services reform

The re-elected Labour government's intention to give a greater role to the private sector in the management and delivery of public services (UK0105132F) has generated considerable unease on the part of public sector trade unions. The issue was discussed at a highly publicised post-election dinner for senior union leaders hosted by the Prime Minister, Tony Blair, at 10 Downing Street on 27 June.

The Prime Minister's official spokesperson said the meeting had given Mr Blair the opportunity to spell out the scope of the public sector reforms the government was putting in place, and to underline that the private sector involvement being considered was not "wholesale privatisation". Union participants said the meeting had "cleared the air" and that the Prime Minister had clearly recognised the importance of winning the support of public sector staff for the government's reforms. However, no specific assurances appear to have been given by the government, and union concern about the prospect of "creeping privatisation" is likely to continue to surface during the summer union conference season.

New body to advise on flexibility for working parents

On 28 June, the government announced the establishment of a Work and Parents Taskforce which will examine ways of giving working mothers and fathers of young children the legal right to ask to work flexible hours and to have their request considered seriously by their employer. The proposal for a legal right to flexible working was put forward in the government's December 2000 green paper Work and parents: competitiveness and choice (UK0101106F), but strongly opposed by employers' groups (UK0104125N).

The Taskforce, which will be chaired by Professor Sir George Bain (currently chair of the LPC) and includes representatives of the CBI and TUC, has been asked to develop "a light touch legislative solution which builds on best practice and avoids placing onerous burdens on business".

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