Employers worried about threats to flexibility

The Confederation of British Industry’s latest employment trends survey, published in September 2007, provides data on employer views and policies on a range of key industrial relations topics. The survey found that employers were concerned at the prospect of further regulation and its potentially damaging impact on flexible employment practices.

In September 2007, the Confederation of British Industry (CBI) published the results of its tenth annual Employment trends survey ‘Fit for business’ (2Mb PDF), conducted in conjunction with the Jobs Pertemps recruitment agency. The survey, carried out in May 2007, records the responses of over 500 employers across all sectors of the economy, including 19% of public sector employers. This article gives an overview of the report’s main findings in the industrial relations sphere.

Employment regulation

Asked about the effects of new employment legislation over the past five years, 77% of respondents reported an adverse impact in terms of time spent on administrative compliance, 64% expressed concern about the amount of senior management time taken up by employment regulation issues and 54% reported negative effects from employment tribunal claims. The latter proportion represents an increase of 20% on the figure for 2006. Respondents expected the impact of regulation to worsen rather than to improve over the next five years. Almost three quarters (73%) of employers said they were concerned that Gordon Brown’s recent appointment as prime minister could lead to new employment rights.

Flexible working

As in last year’s survey (UK0610049I), part-time work was the most common flexible working practice used by employers (91%). This was followed by job sharing (55%), teleworking (46%), flexitime (45%) and career breaks or sabbaticals (37%). All types of flexible working arrangements were reported to be more widespread than last year, with teleworking increasing particularly significantly (from 14% in 2006 to 46% in 2007).

With regard to the operation of the statutory right for employees to request flexible working arrangements for childcare purposes, 94% of requests from parents had reportedly been accepted by employers – some 66% of these were accepted formally, 19% informally and 10% resulted in a compromise – while 6% of the requests were declined. In April 2007, the statutory right to request flexible working arrangements was extended to carers (UK0702019I). Only a slightly lower proportion of requests from carers, at 93%, had reportedly been accepted by employers; of these, some 52% were accepted formally, 32% informally and 10% on a compromise basis, while 7% of requests were declined.

Half of the employers surveyed said they offer the right to request flexible working to all employees, not just those groups covered by the statutory provisions. Some 74% of respondents – representing almost three quarters of employers surveyed – indicated that the right to request flexible working arrangements had had a positive impact on employee relations, and 65% of respondents reported a positive impact on recruitment and retention. However, about one in five employers (22%) reported a negative effect on labour costs.

Temporary agency workers

Temporary agency workers constitute, on average, 3% of employers’ workforces, but with some notable sectoral variation. Energy and water supply operations use the highest proportion of temporary agency workers (7%), while retail and professional services use the least (1%). The CBI survey showed that a majority of respondents were concerned that the proposed EU directive on working conditions for temporary agency workers could seriously damage labour market flexibility. The proposed directive was thought likely to have significant effects in terms of extra costs (according to 65% of employers), a reduction in flexibility (62%), additional bureaucracy (58%) and a reduction in the use of temporary agency workers (58%).

Working time

According to the 2007 survey, an average of 32% of employees had signed an individual opt-out from the 48-hour limit on weekly working hours, compared to 30% of staff in 2006. However, the proportion of employees who in practice regularly worked more than 48 hours per week was lower in 2007 (13%) than in 2006 (19%). Employers with fewer than 50 employees had the largest proportion of employees (32%) who worked more than 48 hours per week.

A significant minority (44%) of employers believe that the potential withdrawal of the individual opt-out would have a significant or severe detrimental impact on their organisation.

National minimum wage

Companies were asked about the likely impact of the GBP 5.52 (€7.68 as at 26 November 2007) national minimum wage, in force from October 2007 (UK0703059I). One quarter of respondents indicated that the increase would have an impact on them. Of these, two thirds (66%) said that the increase would mean a basic pay rise to ensure compliance, but with no knock-on impact on differentials, and a third (32%) said that the increment would also have a knock-on impact on pay differentials further up the pay scale. Over a quarter (27%) of those affected responded that the increase would curb growth plans or reduce investment in other areas, while 18% declared that they would reduce the number of employees to offset the cost and/or improve productivity.

Migrant workers

Over one fifth of employers (21%) had employed staff from the 15 ‘old’ EU Member States in the previous year, and 24% of employers had employed staff from the new Member States (NMS). Only 16% of employers had used workers from outside the EU. Workers from the NMS were more likely to be unskilled (38%) than those from the EU15 (31%) and from non-EU countries (23%). In terms of economic sector, the hospitality sector was most likely to hire workers from the NMS (46%), closely followed by construction (36%). Respondents indicated that demand for labour from outside the UK was likely to grow over the next 12 months.

One in five survey respondents (21%) provided English language training in the workplace for migrant workers or directed them to relevant local courses, and 16% helped migrant workers with initial orientation and practical information on life in the UK in induction and training materials. These proportions are higher among larger firms (37% and 39% respectively).

Working with trade unions

Asked about their expectations in respect of ‘union attitudes in the workplace’ over the coming year, employers were generally positive: a substantial majority expected trade union relationships to be ‘cooperative’ or ‘balanced’. Nevertheless, 21% of respondents expected ‘adversarial’ relations with workplace trade union representatives, while 23% of employers expected such relations with local union officials, and 31% of those surveyed expected the same with national union officials.

The survey also enquired on what issues employers negotiated with and consulted recognised unions. Unsurprisingly, pay (70%), working hours (57%) and holidays (53%) were the most common issues for negotiation. Relatively few organisations negotiated on pensions (18%) and training (8%), although consultation on these issues is more widespread, at 52% and 61%, respectively.

Respondents were asked what they thought were the main reasons for the decline of trade unions in private sector workplaces. Almost half of respondents (46%) chose ‘resistance to change’, 26% felt that trade unions were ‘out of touch with the workforce’ and 17% that they were ‘too confrontational’.

Employment tribunal cases

Nearly a quarter (24%) of employers had faced an employment tribunal (ET) claim in the last year. Over a quarter of cases (27%) were reportedly settled ‘out of court’ by employers despite legal advice that the tribunal would rule in their favour, and 22% were settled after advice that the company was unlikely to win. A further 28% of claims were withdrawn by the applicant. Just over one fifth (21%) of cases went to an ET hearing and were won by the employer. Only 3% were fought by employers at a hearing and lost.

As in 2006, a substantial proportion of employers (49%) noted that they regarded ETs as an ‘ineffective way of handling employment disputes’; 30% regarded ETs as ‘effective’ and 21% were ‘unsure’. Over half of respondents, at 55%, believed that ETs were ‘too adversarial’, 31% reported that they were ‘too costly’ and 14% considered that they were ‘damaging to employee relations’.

Almost half of respondents, at 46%, believed that weak and vexatious claims had increased over the past year, while 46% reported no change and 11% reported a decline in such claims.

Workforce diversity

Half of employers responding to the survey (50%) reported having a formal diversity policy, while 39% had no formal diversity policy but did have equality practices in place. One third of employers surveyed (33%) reported they had taken positive action in relation to, for example, recruitment, advertising and training, to achieve a more diverse workforce; 25% had an action plan on diversity and monitored progress. Larger companies were more likely to report diversity policies and practices than smaller ones. Two thirds of respondents (67%) reported that the main obstacle to achieving a more diverse workforce was a lack of applicants from among disadvantaged groups.

Two thirds of respondents (67%) reported that the employment practices most affected by the age discrimination legislation introduced in 2006 (UK0612039I) related to retirement. Other areas most often affected were recruitment (reported by 37% of employers), length of service benefits (30%) and pensions (23%).

Just over a quarter of employers surveyed (28%) had conducted an equal pay audit in the past three years, 9% of respondents planned to do so in the next year and 29% were considering conducting one but had not yet drawn up any firm plans. Over one third (35%) had ‘never considered conducting an equal pay audit’. Large employers with 5,000 or more employees were more likely, at 46%, to have conducted an equal pay audit than smaller companies.

Mark Hall, IRRU, University of Warwick

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