United Kingdom: Latest working life developments – Q2 2017

Mounting pressure to end the 1% pay cap on public sector workers, falling union membership, the ‘gig economy’, and a strike at British Airways are the main topics of interest in this article. This country update reports on the latest developments in working life in the United Kingdom in the second quarter of 2017.

Post-election pressure to end public sector pay gap

On 29 March, Prime Minister Theresa May called a snap general election for 8 June. However, the election ended in a hung Parliament where no party has an overall majority. Although the Conservative Party lost 13 seats, it received 42.4% of the vote and thus formed a new government, through agreement with the Democratic Unionist Party.

However, the election result weakened the government and it has come under increasing pressure from the Labour Party and others to end the 1% pay cap imposed on public sector workers in 2015 (which followed a two-year pay freeze imposed in 2010). Dissent was growing before the election, which was reflected in the outcome of a consultative vote by members of the Royal College of Nursing (RCN) union where 78% of the 52,000 members who took part supported strike action if pay restraint were to continue. Added pressure came from a report by the Office of Manpower Economics in July, indicating the fall in real-term public sector wages since 2010, made worse by the current inflation hike. Moreover, on 4 July, a pay rise was awarded to firefighters above the pay cap. While firefighters’ pay is not determined by central government, increases offered in recent years have been in line with the cap. Several Cabinet ministers, as well as a number of Conservative backbenchers, then backed the call to ‘scrap the cap’, potentially signalling future rebellion against the policy if there is no action. However, it currently remains intact.

Fall in union membership and collective bargaining coverage

The statistics on UK trade union membership recorded the largest annual drop in the overall level of membership in 2016, since annual figures collected by the government began in 1995. Union density also fell from 24.7% to 23.5%; from 13.9% to 13.4% in the private sector and from 54.9% to 52.7% in the public sector. Collective bargaining coverage also declined, from 27.9% of employees to 26.3%: 59% in the public sector and less than 15% in the private sector.

Growth of precarious work and developments in the ‘gig economy’

A new report from the GMB union shows that up to 10 million workers, one-third of the UK workforce, are now trapped in precarious employment. Furthermore, its poll of 1,000 such workers found that 61% had suffered stress as a result of their current job; the same number had also worked while unwell for fear of not being paid, losing their job or missing out on future work. The report precedes the publication this month of recommendations from the chief executive of the Royal Society for the encouragement of Arts (RSA), Matthew Taylor, appointed by Theresa May to lead a review into the so-called ‘gig’ economy (characterised by the prevalence of short-term contracts and freelance work) and the rights of the self-employed people who work in it.

A submission to the review by employer confederation CBI called on policymakers to embrace new ways of working and also branded assumptions that all workers favoured fixed employment as ‘lazy’ and ‘outdated’. Describing the UK’s flexible labour market as an ‘invaluable strength’, the CBI warned that the government will put Britain's competitiveness at risk if it adopts a heavy-handed approach towards regulation, following the review.

Furthermore, a submission by delivery company Deliveroo, called for a ‘modernisation’ of the employment law to allow for additional rights and benefits to the self-employed which, it says, it is currently legally prevented from offering. Deliveroo, currently subject to a legal challenge over the employment status of its drivers, also proposes the creation of a new category of employment that would allow companies to calculate entitlements based on services delivered, rather than hours worked, thereby retaining ‘flexible relationships’.

BA cabin crew strike action

Up to 2,000 British Airways (BA) cabin crew began 16 days of strike action on 1 July, with a further 14 days planned from 19 July. The workers have already taken 26 days’ action this year as part of an ongoing pay dispute. Their union, Unite, says that BA is now discriminating against these workers by withdrawing bonuses and removing staff travel concessions, on the basis of a blacklist of strikers.


Unite has also launched legal action over BA’s decision to ‘wet-lease’ aircraft from another airline during the strike. The union is challenging the government’s approval of the lease of Qatar Airways’ aircraft during the current stoppage, as it believes the leasing is in breach of European regulations and does not comply with Civil Aviation Authority safety regulations.

Commentary

It remains to be seen whether the government will bow to pressure and lift the public sector pay cap, effectively ending the seven-year austerity agenda. The CBI’s submission to the Taylor Review suggests that the government will face strong business opposition for any future legislative changes, while the Deliveroo submission is of interest, as it effectively states that it would like to provide greater employment benefits to its drivers if permitted by law. Its submission has, however, been viewed with much scepticism by unions, who argue that there is much more that the company could do now, without waiting for legislative change.

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