2000 Annual Review for the UK

This record reviews 2000's main developments in industrial relations in the UK.

Political developments

TheLabour Party government elected in May 1997 continued in office. The next general election is due by May 2002 but is widely expected to take place in the spring of 2001. In the local council elections held in May 2000, the Conservative Party and Liberal Democrats gained seats and the control of a number of councils at the Labour Party's expense.

Collective bargaining

As there is no system for registering collective agreements in the UK, making an accurate assessment of the number of collective agreements is not possible (one estimate from the early 1990s suggested that there were some 10,000 "pay control points" across the UK economy at which negotiations between employers and trade unions took place).

Collective bargaining in the UK continues to be highly decentralised: most bargaining is at company or workplace level, with little multi-employer bargaining outside the public sector. The findings of the 1998 Workplace Employment Relations Survey (WERS) (UK9811159F), published in late 1999 (Britain at work, Mark Cully et al, Routledge 1999), indicated that pay for 28% of employees in the private sector was determined by collective bargaining, compared with 49% in 1990 when the previous survey was undertaken. In the public sector, the pay of 54% of employees was determined by collective bargaining, compared with just over 90% in 1990, reflecting moves in the intervening period to pay-setting by review bodies or indexation formulae in large parts of the public sector (see below under "Pay").

While the WERS figures confirmed that the retreat from collective bargaining over pay had continued, the trend towards more decentralised arrangements showed signs of being reversed. The proportion of private sector employees covered by multi-employer collective bargaining in 1998 was 18%, compared with 22% in 1990. However, in terms of enterprise-based collective bargaining over pay there has been some movement away from workplace-level bargaining towards bargaining at a higher level, covering all or several sites within the enterprise (UK0001251F).

Pay

Collectively-agreed basic pay rose by an average of 3.1% during 2000 (according to IDS Report 818, October 2000), with the increase in average earnings being higher, at 4.1% (according to the Office for National Statistics).

In the public sector, for the second year running, the government accepted in full the recommendations of the pay review bodies for above-inflation pay awards for 1.3 million public sector workers - including teachers, nurses, doctors, judges, the armed forces and senior civil servants. Most groups were awarded rises of 3.3%-3.4%, with larger awards to improve the retention of experienced nursing staff and, under the controversial performance-related pay scheme, experienced classroom teachers (UK0003163F). The government's handling of the performance-related pay scheme for teachers was the subject of a successful legal challenge by the National Union of Teachers (UK0008184N) but, after the required consultation had been carried out, the government confirmed that it would go ahead with the scheme (UK0011100F).

In May, it was announced that junior doctors had voted overwhelmingly in favour of accepting a new pay deal providing significant pay rises and addressing long-standing grievances over excessive working hours (UK0006177N).

Working time

Average collectively-agreed normal weekly working time in 2000 was 38.2 hours for manual employees, 36.8 hours for non-manual employees and 37.5 hours where employers do not distinguish between manual and non-manual groups (according to IDS Study 697, October 2000). Average actual weekly working hours for full-time employees was 39.8 hours (according to the New Earnings Survey).

The Working Time Regulations 1998 (UK9810154F) were expected to prompt the reform of working time patterns. However, the Warwick pay and working time survey, conducted in the summer of 1999, indicated that, initially at least, most employers sought to minimise the impact of the legislation by securing the flexibilities available via collective or workforce agreements and by encouraging individual opt-outs from the 48-hour limit on average weekly working hours. The survey revealed that long working hours remain common and there have been only limited signs of innovations such as annualised hours. However, the implications of the Regulations, in particular their support for the principle of negotiation over working time issues, may prove more significant in the longer term (UK0001150F).

One notable agreement on shorter working hours was at Peugeot's Ryton plant near Coventry where the standard 39-hour working week for production workers was reduced to 36.75 hours. Union pressure for new arrangements followed the introduction of the 35-hour week at the parent group's plants in France. Initial proposals were the subject of industrial action - which commentators saw as being motivated by "work-life balance" concerns - before agreement was finally reached in September (UK0101111F).

Job security

Although employment security agreements have attracted considerable attention, their incidence in the UK is limited. The 1998 Workplace Employment Relations Survey found that 8% of all private sector workplaces (though with significant sectoral variations) and 21% of workplaces in the public sector were covered by an employment security or "no compulsory redundancy policy". A number of high-profile employment security guarantees, most notably those at Rover and Vauxhall, have recently been overtaken by major restructuring programmes, highlighting questions about their ultimate viability in adverse market conditions (UK0012104F).

Training and skills development

In recent years, trade unions have increasingly attempted to incorporate training into the bargaining agenda through initiatives such as the "Bargaining for skills" project operated by the Trades Union Congress (TUC) and Training and Enterprise Councils. The government's Union Learning Fund also supports union projects to promote vocational education. Research carried out during 2000 suggests that, although collective bargaining over training is still relatively rare, joint project work, consultation and other forms of employee involvement concerning training provision is more widespread.

The Confederation of British Industry (CBI) and the TUC continue to be closely involved in the development of national policy on skills and learning (UK0010196F).

Legislative developments

During the year there was a succession of important legislative developments, with the phased implementation of the provisions of the Employment Relations Act 1999 continuing and a number of EU-inspired regulations also being introduced (legislative developments relating to discrimination in employment are outlined below under "Equal opportunities and diversity issues").

In January 2000, the Transnational Information and Consultation of Employees Regulations 1999 took effect (UK0001146N), transposing EU Directive 94/45/EC on European Works Councils into UK law. In April, the provisions of the Employment Relations Act 1999 concerning the unfair dismissal of strikers came into force, followed in June by the Act's most controversial measure - a new statutory procedure through which trade unions can seek recognition from employers for collective bargaining purposes (UK0007183F).

The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, intended to give effect to EU Directive 97/81/EC on part-time work, came into force in July (UK0005175F). September saw the commencement of two further provisions of the Employment Relations Act - the statutory right to be accompanied by a trade union official or fellow worker at workplace disciplinary and grievance hearings (UK0010195F), and modified rules on the conduct of ballots on industrial action (UK0008184N).

In December, the government published consultative proposals for further measures to promote parental leave and "family-friendly" employment practices (UK0101106F). Earlier in the year, the TUC mounted a legal challenge to the Maternity and Parental Leave Regulations 1999, arguing that the restriction of parental leave rights to the parents of children born on or after 15 December 1999 is in breach of EU Directive 96/34/EC on parental leave. The High Court decided to refer the issue to the European Court of Justice for determination (UK0006176N).

During the year, there were frequent employer criticisms of the growth in labour market regulation, prompting ministerial pledges to reduce the regulatory burden on businesses (UK0004165N). Statistics published in October showed that employment tribunal claims had reached record levels in 1999-2000, which the CBI saw as evidence of the emergence of a "compensation culture" (UK0011199F). In November, the government unveiled a package of measures to limit the impact of regulation on businesses, including changes to employment tribunal procedures, which was welcomed by the CBI as "an important shift in the right direction" (UK0012102N).

The organisation and role of the social partners

In June, the TUC's annual analysis of official Labour Force Survey statistics showed a rise in trade union membership for the first time in two decades. Between autumn 1998 and autumn 1999 there was an increase of 70,000 union members, bringing total union membership to almost 7 million (representing 30% of all employees). However, the TUC expected job losses to result in a fall in union membership over 2000. Moves continued during the year towards a merger between the Amalgamated Engineering and Electrical Union and Manufacturing Science Finance to form a "super-union" in manufacturing which would be the TUC's second-largest affiliate (and the Labour Party's largest). A statutory ballot of both unions is expected early in 2001. A number of smaller unions transferred their engagements to larger organisations during 2000.

In October, the chancellor of the exchequer invited the CBI and TUC to engage in a joint discussion process to address the "productivity gap" between the UK and countries such as the US, Germany and France (UK0011197N).

Industrial action

Official statistics on the incidence of labour disputes in 1999, published in June 2000, show that 242,000 working days were lost from 205 stoppages of work due to disputes – in each case the second-lowest totals since records began in 1891. The available figures for 2000 suggest that industrial action remains at historically low levels. Industrial action during the year included strikes by Scottish local government workers, health workers in the West Midlands and Peugeot employees, and unofficial local stoppages affecting postal services. In April, the Transport and General Workers' Union announced that the long-running dispute at Lufthansa's UK airline catering company Skychefs had been settled, with workers dismissed for taking part in a strike in November 1998 being given the opportunity to return to work or receive compensation (UK0005172N).

National Action Plan (NAP) for employment

As in the previous two years, the government consulted the CBI and TUC on the content of the UK's 2000 National Action Plan (NAP) on employment, drawn up in response to the EU Employment Guidelines. Officials of the two organisations again submitted a joint contribution, reproduced in the NAP, focusing on the issues of improving employability, modernising work organisation and strengthening equal opportunities policies.

Equal opportunities and diversity issues

In February 2000, the government launched a media campaign against age discrimination at work to back up the code of practice on age diversity in employment issued in mid-1999. This was followed by a further initiative by the Employers' Forum on Age, designed to commit leading UK employers to an active age diversity strategy (UK0003159N).

Following the EU Employment and Social Policy Council's agreement on Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation, the government minister responsible said that the Council had accepted a range of key amendments put forward by the UK. She pledged to ensure that its implementation "strikes a fair and sensible balance". The CBI said the UK government had achieved a "broadly workable result" on the provisions concerning discrimination on grounds of disability, sexual orientation and religion or belief, but expressed concern that the "fuzzy law" on age discrimination would "create considerable confusion". The TUC welcomed the agreement on the Directive but was critical of the of the extended, six-year implementation deadline for its age discrimination provisions (UK0011198N).

In December 2000, the government issued proposals for speeding up employment tribunal procedures for dealing with equal pay claims. At the same time, the government indicated how it intended to meet the requirements of EU Directive 97/80/EC on the burden of proof in cases of discrimination based on sex, which the UK must implement by July 2001, by amending the Sex Discrimination Act.

Information and consultation of employees

As already noted, Regulations to implement the European Works Councils Directive in the UK came into effect in January 2000. The Department of Trade and Industry estimated that the introduction of the UK Regulations roughly doubled the number of UK-based companies subject to the requirements of the Directive - with about 100 UK companies being newly brought within scope as a result of the inclusion of UK employees in the application of the Directive's workforce-size thresholds (UK0001146N).

During the year, there was extensive debate over the draft EU Directive on national information and consultation rules, with UK trade unions and employers' organisations highlighting their opposing stances on its desirability. The UK government, encouraged by the CBI, maintained its opposition to the draft Directive in discussions within the EU Employment and Social Policy Council. However, it came under strong pressure from trade unions and others to drop its objections to the Directive and to improve employee information and consultation rights more generally, prompted in particular by the controversial handling of the break-up of the Rover group (UK0004164F and UK0005174F), the announcement of the closure of Vauxhall's Luton car plant (UK0012104F) and other similar high-profile cases of company restructuring.

Press reports of the Labour Party's national policy forum in July indicated that, in talks with union leaders, ministers insisted on continuing to oppose the draft EU consultation Directive but agreed to a review of domestic employee consultation rights in company restructuring which would look at which elements of the Directive might be adapted to UK circumstances (UK0008184N).

New forms of work

Official statistics show increases during the 1980s and 1990s in the number of people working part time, as self-employed, for an agency or as other types of temporary worker, and in flexible working practices such as teleworking. However, a TUC report published in June 2000 argued that the significance of such changes in the structure of employment has been overstated, noting that "in practice the vast majority of people work within standard employment arrangements" and that the "traditional job" is likely to continue to predominate (UK0009189F).

According to a survey of workplaces across the West Midlands, reported in February 2000, the use of non-standard forms of employment and outsourcing is more widespread than initiatives to increase the flexibility of work organisation and working time. Yet it is the use of these latter, internal forms of flexibility which is more likely to be the subject of negotiation and consultation with employees. The researchers concluded that a significant "participation gap" surrounds employers' use of non-standard forms of employment (UK0006178F).

Other relevant developments

With effect from October 2000, the government increased the main adult rate of the national minimum wage (NMW) by GBP 0.10 to GBP 3.70 per hour. The youth rate payable to workers aged 18-21 rose in June 2000 from GBP 3.00 to GBP 3.20 (UK0003158N). The government asked the Low Pay Commission (LPC) to continue to monitor the impact of the NMW and to make recommendations on its future uprating (UK0007182N).

In September, the TUC called for an increase in the NMW to between GBP 4.50 and GBP 5.00 per hour (UK0009187N). However, the CBI's evidence to the LPC, published in December, urged caution over increasing the NMW. In its evidence to the LPC, the Engineering Employers' Federation proposed using a pre-determined formula for future increases (UK0101108N).

Outlook

The outcome of the forthcoming general election is likely to have important implications for industrial relations, especially in terms of the regulatory framework. The Labour Party is expected to put forward further measures in the area of parental leave and family-friendly employment and possibly to signal the reform of employees' information and consultation rights in respect of company restructuring, but at the same time party leaders will be anxious to avoid alienating business opinion - an important constituency for "new Labour". Although the Conservative Party indicated during the year that a future Conservative government would now retain the NMW, it has said that it would repeal the statutory union recognition procedure.

Beyond the election, the prospect of the draft EU Directive on national information and consultation rules being adopted is highly significant for UK industrial relations. It could drive the spread of works councils or consultative committees in UK companies, with major implications for the nature and extent of employee representation and for employers' employee involvement strategies.

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