CBI publishes survey of employment trends

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The Confederation of British Industry’s latest annual employment trends survey, published in September 2005, highlights employer concerns about the impact both of existing employment legislation and of prospective regulatory developments at national and EU level.

In September 2005, the Confederation of British Industry (CBI) published the results of its latest annual employment trends survey, conducted in conjunction with the Pertemps recruitment agency. The survey, carried out in May 2005, reports the responses of 420 private sector employers to a questionnaire that covered a range of labour market issues. Key findings from the survey are outlined below.

Company performance

'Effective people management' is the factor seen by the most respondents (41%) as the key influence on competitiveness, with 'management skills' being ranked as the most important specific human resources factor.

Impact of employment regulation

Employment regulation introduced over the past five years is reported to be having a major adverse impact on employers, with 76% of respondents complaining about the time spent on administrative compliance and 58% about the amount of senior management time it takes up.

Pension provision

Only 26% of firms now offer defined-benefit pension schemes to their employees, compared with 54% in the 2002 survey and 30% in 2004. Larger firms remain more likely to do so. Stakeholder schemes are the most common (40%), followed by occupational defined-contribution schemes (39%) (UK0301109F).

Working time

According to the survey, over one-third (36%) of employees had signed an individual opt-out from the 48-hour limit on average weekly working hours, compared with 30% in 2004. Employers with 500-4,999 employees had the largest proportion of employees who had opted out (40%). However, the proportion of employees who in practice worked an average of more than 48 hours per week was lower at 16% - compared with 20% in 2004. A substantial minority of companies (43%) believe that the potential withdrawal of the individual opt-out (UK0506104F) would have a have a significant or severe detrimental impact on their organisation, while 53% felt that this would have no impact or only a minor impact. Of those firms indicating that removal of the opt-out would have a significant or severe impact, 34% said that the primary impact would be to undermine their ability to meet customer needs.

Very few firms reported making much use of the Working Time Regulations’ exemption from the 48-hour week of workers with autonomous decision-making powers. The main reason given (59%) for this was that companies 'don’t need to make use of it', but one-third of the respondents (32%) said they had 'never heard of this flexibility'.

Flexible working

As in the 2004 survey (UK0411104F), part-time working was the most common flexible working practice used by employers (85%). This was followed by flexitime (39%) job sharing (34%) and career breaks/sabbaticals (19%).

As regards the operation of the statutory right for employees to request flexible working, in force since April 2003 (UK0304104F), 90% of employee requests have reportedly been accepted by employers (55% were accepted formally, 20% informally and 15% resulted in a compromise) and 10% declined. There are, however, significant sectoral variations, with the highest proportion of requests declined being in retailing (21%) and distribution, hotels and restaurants (19%). This year, 52% of companies reported that the legislation had had 'no impact' on their organisation, compared with 62% in 2004. The proportion reporting a negative impact rose from 11% in 2004 to 26% in 2005, while one-fifth of firms reported that the legislation had had a 'small positive impact', compared with a quarter in 2004. The CBI comments that: 'These figures suggest it is becoming harder for employers to accommodate requests to work flexibly and show that the government must be cautious in extending the right to new groups of employees' (UK0507104F).

Use of temporary agency workers

Temporary agency workers make up on average 5% of companies’ workforces, but with some sectoral variation. In terms of the impact of the proposed temporary agency work Directive (EU0410204F), 32% of agency assignments in the UK last less than six weeks; the remaining two-thirds of longer assignments would be affected by the current proposal in the draft Directive of a six-week qualifying period for equal treatment.

Use of migrant workers

The survey indicated that about one-fifth of firms had hired staff from abroad - 19% from non-EU countries; 20% from the 'new' EU Member States, and 21% from the 15 'old' EU Member States. However, there are pronounced sectoral differences, with 50% of firms in the distribution, hotels and restaurants sector recruiting from abroad and 33% of construction companies doing so. Skilled and professional workers accounted for over two-thirds of migrant workers from the old EU 15, while the majority of workers from the new EU Member States were unskilled.

Employee consultation

The most widely used method of employee involvement used by companies was regular team meetings, reported by 87% of companies, followed by written methods (eg staff noticeboards) (85%) and electronic communication (75%).

Nearly half (47%) of respondent companies reported they had permanent mechanisms for informing and consulting employees, such as a staff council, compared with 49% in the 2004 survey, 47% in 2003 and 35% in 2002. A further 19% said that they intended to introduce such a structure over the next year. Firms with 5,000 or more employees were most likely to have introduced such mechanisms (79%), compared with only 13% of firms employing fewer than 50 staff. The CBI comments that employers are 'stepping up to the challenge' posed by the Information and Consultation of Employees Regulations which came into effect for undertakings with 150 employees in April 2005 (UK0502103N). The main issues on which employers already consult employees were business developments (cited by 71% of respondents), employment developments (60%), terms and conditions of employment (57%) and training (56%).

Relations with trade unions

Employers’ expectations on 'union attitudes in the workplace' for the year ahead were generally positive: a substantial majority expected union relationships to be very cooperative, cooperative or 'balanced'. However, 'adversarial' relationships were expected with workplace union representatives by 12% of respondents, with local union officials by 17% and with national union officials by 18%.

Employment tribunal cases

Nearly four out of 10 employers (39%) had faced an employment tribunal (ET) claim in the last year. Over a quarter (26%) of these were settled out of court by employers despite legal advice that the tribunal would rule in their favour, and 20% were settled out of court after advice that the company was unlikely to win. A further 22% were withdrawn by the applicant. A quarter of cases were won by the employer at an ET hearing. Only 7% were fought by employers at a hearing and lost. These figures are similar to those in the 2004 survey.

Most respondents did not think that the new regulations covering workplace disciplinary and grievance procedures that came into force on 1 October 2004 (UK0408102F) had had a beneficial impact in terms of reducing red tape, reducing the number of weak or vexatious claims or reducing the total number of tribunal claims.

Overall, as in 2004, a substantial proportion of employers (45%) said they regarded the ET system as an 'ineffective way of handling employment disputes'. Of these, over half (55%) said that ETs were 'too adversarial', 26% that they were 'too costly' and 19% that they were 'damaging to employee relations'.

Workforce diversity

A quarter of employers had conducted an equal pay audit, 5% planned to do so in the next year and 24% were considering conducting one but had not yet drawn up any firm plans. Large firms with 5,000 employees were more likely (40%) to have conducted an equal pay audit.

Asked about the main obstacles to achieving a more diverse workforce, two-thirds (65%) of employers cited a lack of applications from women and minority groups, and a quarter cited the 'lack of a clear business case'.

Training and skills

According to the survey, three-quarters of employers were dissatisfied with the business awareness (76%) and foreign language skills (74%) of school leavers, while 42% were dissatisfied with school leavers’ basic literacy and numeracy skills. Employers were generally more satisfied with the skills of graduate recruits, but again the main areas of concern were foreign language skills (49%) and business awareness (44%). Employers report having provided remedial training in literacy and numeracy over the past year for 17% of school leavers and 21% of adults.

Skill shortages are reported to have had a serious impact on the business performance of one-third of companies, and only 14% report no problems. Skill shortages are most acute in the construction sector. Skills gaps among existing employees were identified by 86% of firms.

Almost all employers (98%) in the survey reported providing job-specific training to employees over the past year, and 87% also said they provided financial support for employees to study or develop skills. Some 71% provided work experience for school pupils and 59% for university students. However, 88% said that they could be encouraged to provide more work experience if the government offered help with costs or other support.

Most employers have had some contact with government skills agencies, eg the Learning and Skills Council (UK0110111F), but smaller employers remained less engaged. The vast majority of firms (94%) used external training providers. Private providers outscored further education (FE) colleges in terms of meeting employers’ needs, though FE colleges did best on cost.

Commentary

The CBI’s employment trends surveys, now in their eighth year, provide an annual barometer of current employment practice among UK companies and of managerial opinion on key employment issues. Notable aspects of the survey this year include a reported rise in the proportion of employees signing individual opt-outs from the 48-hour week, and continued employer concern about prospective regulatory developments at EU level, particularly the possible removal of the individual opt-out from the working time Directive and the implications of the draft temporary agency work Directive.

The CBI itself, in launching the survey, particularly emphasised the increasing concern reported by employers about the effect on business of employees’ right to request flexible working (UK0509108F), and the 'growing signs of the cumulative impact this and other new employment legislation, introduced since 2000, is having on employers'. Highlighting these findings, CBI deputy director-general John Cridland said: 'Companies have made great strides during the last 18 months to make a reality of the government’s family friendly policies. But this survey provides a disturbing insight into the impact that new employment legislation is having which a government committed to better regulation must heed.' (Mark Hall, IRRU)

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