UK: Annual review — 2011

  • Observatory: EurWORK
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  • Published on: 28 November 2012

United Kingdom

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This article outlines 2011’s main developments in industrial relations and working conditions in the UK.

1. Political and economic developments

The coalition government of the Conservative Party and the Liberal Democrats, formed in May 2010 (UK1005019I), remained in office during 2011. Its main priority remained cutting public spending in order to reduce the budget deficit, resulting in cuts in public sector employment, accompanied by a general public pay freeze and changes to pension schemes (see section 7), though it also took some initiatives intended to encourage economic growth and reduce unemployment. Throughout 2011, the government conducted a review of employment law, aimed largely at lightening regulatory burdens on employers, though this produced few concrete outcomes by the end of the year (see section 2).

Elections were held in May to the devolved Scottish parliament and Wales and Northern Ireland assemblies. In Scotland, the pro-independence Scottish National Party, which had previously formed a minority government, won an overall majority for the first time. In Wales, the Labour Party made gains and formed the new government, though without an absolute majority. In Northern Ireland, the Democratic Unionist Party and Sinn Fein remained the largest parties.

The economy made little headway during the year. GDP (as measured by the Office for National Statistics, ONS), having grown by 1.4% in 2010, increased by 0.4% in the first quarter of 2011, was unchanged in the second quarter and rose by 0.6% in the third quarter, before contracting by 0.2% in the fourth quarter (according to preliminary estimates). The unemployment rate reached 8.4% in September-November 2011, up from 7.9% in the same period of 2010 (ONS figures). This was the highest rate since 1995. Among people aged 16-24, the unemployment rate was 22.3%, the highest level since comparable records began in 1992.

Inflation, as measured by the Consumer Prices Index (CPI), ran at 4% or more throughout 2011, peaking at 5.2% in September and falling back to 4.2% by December. Using the Retail Prices Index (RPI), inflation exceeded 5% for most of the year before easing to 4.8% in December. For comparison, average pay increased by 1.9% in the year to September-November 2011 (ONS figures).

2. Legislative developments

The main legislative developments in 2011 (in addition to those mentioned in section 6) were as follows:

  • The Agency Workers Regulations 2010 came into force in October 2011 (UK1108019I). They implement the EU Directive (2008/104/EC) on temporary agency workers (EU0811029I), giving these workers the same basic employment conditions after 12 weeks in an assignment as would apply if they had been recruited directly by the user company.
  • A number of provisions of the Equality Act 2010 (UK1010019I) were enacted during 2011, including those allowing positive action and setting specific public sector equality duties. However, implementation of provisions on ‘dual discrimination’ and third-party harassment was delayed pending further consultations.
  • The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 abolished the default retirement age from October, preventing employers from forcing employees to retire at the age of 65 (UK1102039I).

The government consulted on or proposed a series of measures intended to reduce the impact of employment regulation on businesses, reduce ‘red tape’ and encourage recruitment (UK1112039I). None of these ideas and proposals resulted in legislation by the end of 2011. Notable examples included:

  • reforming the rules regulating employment tribunals (UK1101029I) and unfair dismissal, including a doubling of the employment period required before an employee can claim unfair dismissal (UK1110019I) and the introduction of compensated ‘no fault’ dismissal for small businesses (UK1111019I);
  • amending legislation on transfers of undertakings (UK1107039I) and on consultations over collective redundancies; and
  • reviewing the enforcement of compliance with statutory employment rights (UK1105019I).

As part of the same review process, the government decided not to move forward with earlier plans to extend several statutory entitlements to new groups of workers (see section 7). It also announced that it would exempt businesses with fewer than 10 employees from virtually all new legislation for three years from April 2011 (UK1104049I).

3. Organisation and role of the social partners

No major changes in the social partners’ organisation or role occurred during 2011.

The UK’s long-term trend towards trade union consolidation has slowed since 2007, and recent union mergers have been relatively small scale. For example, the largest merger decided in 2011 involved Aspect, which represents 4,000 professionals in education and children’s services, transferring engagements to Prospect, the 120,000-strong professionals’ and managers’ union, and becoming an autonomous group within Prospect. 2011 also saw minor mergers among company-based unions in financial services. However, proposals were announced in August (UK1109019I) for a rather more substantial merger in the transport sector between the National Union of Rail, Maritime, and Transport Workers (RMT), which has 77,000 members, and the Transport Salaried Staffs’ Association (TSSA), which has 28,000 members.

The latest statistics from the Department for Business, Innovation and Skills (BIS) put total trade union membership in employment at 6,854,000 in the fourth quarter of 2010, down 2.8% from 7,054,000 a year previously. Overall union density among employees stood at 26.6% in 2010, compared with 27.4% in 2009, with private sector density at 14.2% (15.1% in 2009) and public sector density at 56.3% (56.6% in 2009).

The government announced in October a consultation on cutting what it claims is the excessive amount of paid time off (known as facility time) granted to union representatives, including full- or part-time secondments to union duties, in the civil service. This move, opposed by unions, reportedly reflected a more general wish among some business groups and in the Conservative Party to reduce current statutory time off entitlements for employees who are union representatives.

4. Developments in collective bargaining and social dialogue

No official data are collected on the number, level and content of collective agreements. Collective bargaining occurs mainly at single-employer level, though large numbers of workers are covered by multi-employer agreements, notably in the public sector and in industries such as construction.

The latest BIS statistics found that 30.8% of employees were covered by a collective agreement in the fourth quarter of 2010, down from 32.7% a year earlier. In 2010, the rate was 16.8% in the private sector (17.8% in 2009) and 64.5% in the public sector (68.1% in 2009).

There was little change in overall bargaining structure in 2010. However, the government asked the independent review bodies that reach national pay settlements for public sector employees such as teachers and National Health Service staff to draw up, by mid-2012, plans for local pay bargaining (as already introduced for some courts staff - UK0705019I) , with the possible abolition of national bargaining. In the private sector, seven major contracting companies in construction withdrew from a set of national industry-level collective agreements covering work such as electrical contracting, plumbing, heating and ventilation. Supported by the Heating and Ventilating Contractors’ Association (HVCA) employer association, the companies proposed instead a single new national agreement for building engineering services. The move drew strong opposition from unions, which claim that it will result in major pay cuts, and resulted in unofficial industrial action by some workers affected.

Trade unions won recognition for collective bargaining purposes with a number of employers in 2011, either voluntarily or by using the statutory procedure (UK0007183F). Examples of new bargaining units included pilots at (low-cost airline), employees at Kammac (brewery industry services), employees of LSG Sky Chefs (catering) and ISS (business services) at two airports, and cleaners employed by John Laing Integrated Services (business services) on a rail contract. More unusually, union derecognition was also under debate at several employers during the year (UK1111029I).

The lack of official data collection makes systematic assessment of the contents of collective agreements impossible. Pay has traditionally been the key issue in bargaining, and all the evidence available suggests that this remained the case in 2011 (UK1204019Q). Working time appeared to feature little in bargaining (UK1204029Q), while pensions were prominent in some areas (see section 7)

5. Responses to the economic situation

Trade unions and employer organisations did not take any notable bipartite initiatives, or participate in any tripartite initiatives, in response to the economic situation during 2011 (such initiatives are not a common feature of UK industrial relations).

The aspect of the government’s response to the economic situation that had the greatest industrial relations impact was public spending cuts. These cuts resulted in job losses, a pay freeze and occupational pensions reform in the public sector. The Trades Union Congress (TUC) responded with a major demonstration against the cuts and ‘for the alternative’ in London on 26 March. The specific issue of public sector pension reform produced large-scale protest strikes in June and November (see section 6). The alternative promoted by the TUC is based on the argument that public spending is being cut too far and too fast, with the effect of reducing demand, slowing growth and damaging living standards. The TUC instead calls for the promotion of growth and jobs through measures such as investment, public sector pay increases, support for apprenticeships and training.

The CBI employers’ body supports government efforts to tackle the public deficit and what the CBI sees as excessive dependency on the public sector. It argues that only the private sector can create jobs and growth. The CBI wants the government to enable this through measures to boost competitiveness, such as tax and planning changes, and deregulation, including in the area of employment law. It also supports initiatives such as tax incentives for employers to recruit young unemployed people.

6 Developments in working conditions

Little new legislation relating to working conditions took effect in 2011. Apart from the provisions outlined in section 2, the main development was that, from April, the Additional Paternity Leave Regulations 2010 allowed fathers to take up to six months’ additional paternity leave if the mother returns to work before using her full entitlement to statutory maternity leave (UK1102029I). The government announced in May plans to introduce in 2015 a new, flexible system of shared parental leave, available equally to either parent (UK1106029I). However, it decided (UK1104049I) to scrap earlier plans to extend workers’ rights:

  • to ask for time to study or train, on or off the job, which applies only in companies with more than 250 employees, to organisations with 250 or fewer staff; and
  • to request flexible working, which applies in respect of children under the age of 17 (or 18 for children with disabilities), to the parents of children under 18.

Relevant policy developments in 2011 included the following:

  • In March, the government launched a ‘common-sense’ reform of the health and safety system, which was implemented in stages during the rest of the year. This included: cutting inspections of ‘responsible’ employers and focusing activity on high-risk areas and serious breaches of legislation; and simplifying legislation and guidance.
  • As part of the reform, the government commissioned an independent review of health and safety regulations, with a remit to consider the opportunities for ‘reducing the burden’ of legislation on businesses. The subsequent report, published in November, found no evidence to support ‘radically altering or stripping back’ current regulation, which is ‘broadly fit for purpose’. However, it identified some problems with the legislation’s application, and called for the removal of 35% of current health and safety legislation through a consolidation of sector-specific rules.
  • The government commissioned an independent review of the sickness absence system, aimed at cutting costs and burdens on businesses. The review’s recommendations, published in November, included measures to support employees at work (such as a new independent service to assess absent employees’ capacity for work) and changes to the benefits system.
  • In November, the government announced a £1 billion ‘youth contract’ scheme to help young unemployed people get a job, which should provide at least 410,000 new training and work placements for people aged 18 to 24 over three years from 2012. Other training initiatives taken by the government included: a series of measures to promote apprenticeships and improve their quality; a reform plan for skills and further education; and a new £250 million fund for employers’ vocational training.
  • The government reviewed possible measures to encourage businesses to take on more responsibility for skills training, including the idea of extending paybill levies on employers in particular sectors to fund training and ‘licence-to-practice’ schemes (whereby employers must train workers to a certain level, enabling them to obtain a professional licence to work). Any such regulatory measures were strongly opposed by the CBI, which argued that they would hinder employer investment and do nothing to increase skills levels.

Research findings and statistics reported in 2011 included:

  • Over April 2010-March 2011, 26.4 million working days were lost due to work-related illness and workplace injury, down from 28.5 million in 2009-2010. However, 171 workers suffered fatal injuries at work in 2010-2011, up from 152 in the previous year (Health and Safety Executive).
  • From 2007 to 2010, there was a steady decline in sickness absence, from an average of 6.7 days absence (3% of working time) per employee per year to 5 days (2.2%) (EEF).
  • Stress was the most common cause of long-term sickness leave for both manual and non-manual employees in 2011, for the first time in the 12 years that annual research on this issue had been conducted (CIPD).
  • Psychosocial hazards are an increasing problem at the workplace, and stress, bullying/harassment and overwork are now among the top five hazards faced by workers (UK1104029I) (TUC).
  • Nearly half (46%) of UK employers had employee well-being strategies in place in 2010, up from 30% in 2008 (UK1012049I) (Chartered Institute for Personnel and Development).
  • Ethnic minority workers feel that they face barriers in their career development (for example, being promoted less regularly and receiving less training than their white counterparts), and nearly half feel that they have to leave their employer in order to progress (Race for Opportunity).
  • The number of people who were working part time because they could not find a full-time job reached 1.31 million in the three months to November, the highest figure since comparable records began in 1992 (ONS).
  • Nearly all UK employers (96%) now offer at least one form of flexible working to employees and 70% offer three or more forms. Recently, there has been particularly rapid expansion in teleworking and the provision of career breaks/sabbaticals (UK1109039I) (CBI/Harvey Nash).

7. Industrial action

More working days were lost to strikes in 2011 than in any year since 1990. During 2011 (according to ONS), 1,388,000 working days were lost through work stoppages, compared with 365,000 in 2010 – nearly a four-fold increase. 2011 saw 140 stoppages, involving 1,536,000 workers, up from 88 stoppages and 161,000 workers in 2010.

The ONS statistics seek to record all strike action, except for disputes involving fewer than 10 workers or lasting less than half a day, unless100 working days are lost due to a single dispute, regardless of the number of workers involved.

Over 90% of working days lost in 2011 were in the public sector, and were largely due to one-day strikes in June (when 262,000 days were lost in the public sector) and November (963,000 days lost in the public sector). The strikes were in opposition to government plans to reform public sector occupational pension schemes, notably raising employee contributions and the retirement age, and amending the calculation of benefits to the detriment of many employees (UK1103019I). The June strike was called by four teachers’ and civil servants’ unions (UK1107019I) while the November strike was broader – it was claimed by the TUC to be the biggest stoppage for 30 years - and involved 30 unions across the public services (UK1112029I).

While private sector industrial action was at much lower levels, occupational pensions were also increasingly an issue of conflict in this sector. There were a number of disputes, sometimes including strikes, over employers’ plans to close or reform pension schemes, as at Unilever (consumer goods) (UK1201019I), Ford (automotive), CEMEX (building materials), GE (aircraft engines) and the BBC (broadcasting) (UK1101039I).

The major public sector strikes revived calls from employer organisations for a tightening of legislation on industrial action, notably by making the balloting requirements more stringent. Some ministers indicated that the government was examining the issue (UK1107029I), but it took no action during 2011.

In March, two rail workers’ trade unions won an important court case, the effect of which will be to make it more difficult for employers to obtain injunctions to prevent industrial action where there have been technical irregularities in union strike ballots (UK1103029I).

8. Restructuring

The UK restructuring cases recorded by the European Restructuring Monitor (ERM) in 2011 resulted in the total loss of around 93,000 jobs, a 22% increase on the 2010 figure of 76,000. The public administration sector figure rose from 28,000 in 2010 (37% of the total) to 43,000 in 2011 (46% of the total). This reflected the increasing effects of the government’s spending cuts: public sector employment fell by 4.4% or 276,000 in the year to the third quarter of 2011 (a period over which private sector employment increased slightly), with particularly sharp falls in local government and the civil service.

Major public sector restructuring cases in 2011 included large-scale job losses at the Ministry of Defence and numerous local authorities, such as Manchester City Council and Warwickshire County Council. In the private sector, significant workforce reductions continued at banks such as Lloyds TSB, while other substantial cases included bankruptcies/closures at companies such as Focus (retail) and Southern Cross (care homes).

Job losses and cuts to services in the public sector led to industrial action in some cases, for example at Southampton City Council, health and social care in Northern Ireland, and Nottinghamshire police force.

In the private sector, the highest-profile cases of restructuring were probably: the closure of a Pfizer (pharmaceuticals) research and development site in Kent, with the loss of 2,400 jobs; and the announcement of 1,400 job losses at Bombardier (transport equipment) after it failed to win a UK government contract to build trains. In both cases, trade unions organised campaigns to oppose the restructuring/job losses, promote alternatives and seek to influence company and government decisions, but without preventing the redundancies.

9. Other relevant developments


Mark Carley, IRRU/SPIRE Associates

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