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In the third quarter of 1998, the UK's GDP was 2.5% higher than a year
earlier. Balance of trade in goods was in deficit by GBP 3.9 billion,
compared with GBP 2.6 billion a year earlier. In December 1998, the all-items
retail prices index (RPI) inflation rate stood at 2.8%, down from 3.0% in
In what is believed to be an unprecedented bilateral initiative between the
governments of the two countries, the UK and Spain issued a joint statement
in early December designed to influence the debate at the Vienna European
Council meeting on 11-12 December 1998 about the EU's strategy for generating
employment growth (EU9812141N ). The implicit intention of the declaration
appears to have been to emphasise the centrality of continued labour market
reform in boosting employment, as against the possibility of more
interventionist job-creation measures favoured by some other Member States.
On 3 December 1998, the Department for Education and Employment published a
consultative green paper, Meeting the challenge of change , outlining
plans for a radical reform of the teaching profession. One key objective is
the introduction of a new career and pay structure, designed to raise
teaching standards by rewarding high performance by classroom teachers. At
present, progression beyond the top of the main professional grade is
dependent not on classroom performance but on teachers taking on managerial
responsibility within schools. The government is now proposing a two-tier pay
scale for classroom teachers, with a new higher scale separated from the
existing one by a performance threshold, based on appraisal and assessment.
To cross the threshold, teachers will need to demonstrate "high and sustained
levels of achievement and commitment". Head teachers will assess and review
teachers' progress, underpinned by external assessment.
On 11 December 1998, it was announced that a ballot of union members at
Rover, the motor manufacturer, had overwhelmingly endorsed an agreement
negotiated between management and union officials involving 2,500 job losses
and more flexible working hours. The changes had been sought by Rover's
German parent company, BMW, as the price for new investment in Rover and
keeping open the Longbridge production plant in Birmingham which employs
around 14,000 people. BMW management maintained that a 30% productivity gap
existed between the Longbridge plant and BMW plants in Germany, which had to
be narrowed by means of more flexible working practices.
New research by the UK government's Office for National Statistics (ONS) uses
data from the 1998 New Earnings Survey and the spring 1998 Labour Force
Survey to produce an estimate of the number and percentage of employees
likely to be affected by the introduction of the statutory national minimum
wage (NMW) in April 1999 (UK9807135F ). As well as estimating the
aggregate impact of the NMW, the ONS has also analysed its impact by sex,
full-time/part-time status, region, occupational group and industry division.
The findings of the research are published in the December 1998 issue of the
official publication /Labour Market Trends/.
The end of 1998 marked a milestone in the development of the European Union.
On 1 January 1999, 11 Member States officially adopted the European single
currency, the euro (the third stage of Economic and Monetary Union, EMU). Of
the EU Member States, only Denmark, Greece, Sweden and the UK remain outside
the "euro-zone", but it appears inevitable to many observers that at least
most of these countries will join the single currency in the not too distant
future. In 1998, the impact of EMU on industrial relations was assessed more
widely than before and was the subject of keen debate for the social partners
at European, national and regional levels.
According to calculations made in December 1998, the economic growth rate was
2.8% and average annual inflation measured by the EU Harmonised Indices of
Consumer Prices was 1.1%. Unemployment figures continued to decrease, and the
EU harmonised unemployment rate for Sweden fell from 9.1% in December 1997 to
7.5% in December 1998. Unlike 1997, when the fall in unemployment was largely
explained not by a corresponding rise in employment but by the fact that the
number of full-time students increased, employment started to rise rapidly in
the second half of 1998, primarily in the private sector. In some occupations
there was even a shortage of qualified labour.
Early in November 1998, Swedish media reported that metalworkers made
redundant by the ball-bearing manufacturing company SKF in Gothenburg were to
work for Volvo Cars, which was short of labour. Two weeks later, the
management of the Volvo group announced that it planned redundancies for
5,300 workers worldwide, including 2,600 in Sweden and 1,100 in other
European countries. Cutbacks were to be effected before mid-1999. At the time
of writing, the management has not specified which units are likely to be
affected and how the cutbacks would operate. It did however promise that
cutbacks would be carried through "in a socially responsible and dignified
manner and in full agreement with the trade unions".
In late September 1998, the large Swedish energy group Vattenfall announced
that 1,000 of its 8,000 employees would have to be made redundant before the
year 2000. The oldest employees would be offered early retirement, while
others were to take part in training to prepare them for new tasks in the
group. Some 500 workers would, however, be dismissed.