Employer survey highlights labour market concerns

The Confederation of British Industry’s latest employment trends survey, published in September 2008, provides data on employer views and policies on a range of key industrial relations topics, including domestic and EU legislation. The survey reveals positive employer responses to developments such as the right to request flexible working and postponed retirement, but employers continue to express concern at the cumulative impact of employment regulation.

In September 2008, the Confederation of British Industry (CBI) published the results of its annual employment trends survey conducted in conjunction with the Pertemps recruitment agency. The survey, carried out in May 2008, analyses the responses of over 500 employers across all sectors of the economy, 12% of which were public sector employers. In terms of company size, 7% of respondents employed 5,000 or more staff, 32% employed 500–4,999 workers, 20% employed 200–499 workers, 25% employed 50–199 workers and 17% employed fewer than 50 staff. This article gives an overview of the report’s main findings relating to industrial relations.

Impact of employment regulation

Almost two thirds (64%) of respondents saw the cumulative burden of employment regulation as a threat to labour market flexibility, and 67% felt it would continue to threaten flexibility and competitiveness in the future.

Working time

Companies reported that an average of 29% of employees had signed an individual ‘opt-out’ from the 48-hour limit on weekly working hours, compared to 32% of staff in the 2007 survey (UK0710029I). Employers with 50–199 employees had the largest proportion of opted-out employees (33%). However, the proportion of employees who in practice regularly worked more than 48 hours a week was lower in 2008 (11%) than in 2007 (13%). Use of the opt-out by employees varies across economic sectors and is particularly prevalent in low-paying sectors. More than half (56%) of transport employees and almost half (49%) of construction workers have signed an opt-out.

In total, 40% of employers believe that the potential withdrawal of the individual opt-out would have a significant or severe detrimental impact on their organisation.

Temporary agency workers

Temporary agency workers constitute, on average, 3% of employers’ workforces – the same proportion revealed in last year’s study – but with some notable sectoral variation. Skilled sectors are significant users of temporary agency workers, including energy and water supply (7%), manufacturing (5%) and science, high-tech and information technology (5%).

The CBI survey showed that 70% of companies were concerned that the draft EU directive on temporary agency work – prior to revisions agreed in June 2008 (UK0806039I) – would impose increased costs and 63% believed that it would reduce flexibility. As a result, 59% of companies stated that they would reduce their use of temporary agency workers. However, the survey found that 60% of all temporary agency work assignments lasted less than three months. Most of these will be covered by the extended 12-week qualifying period for equal treatment with directly-employed staff that is currently incorporated in the draft directive.

National minimum wage

Companies were asked about the likely impact of the GBP 5.73 (€7.36 as at 15 October 2008) national minimum wage (NMW), effective from 1 October 2008 (UK0803019I). A quarter of respondents indicated that the increase would have an impact on them – the same as for last year’s increase. Of these workers, almost half (48%) stated that the increase would mean a basic pay rise to ensure compliance, but with no knock-on impact on differentials (down from 66% in last year’s survey), and slightly fewer (44%) revealed that the increment would also have a knock-on impact on pay differentials further up the pay scale (up from 32% last year). Almost a third of respondents (32%) indicated that the move would lead to increased prices. Concern over the impact of the increased NMW was reported to be greatest in the hospitality sector, where 60% of companies are affected, followed by retail (52%), transport and distribution (37%) and manufacturing (32%).

Flexible working

As in previous years, part-time work was the most common flexible working practice, used by 89% of respondents, followed by job sharing (54%), teleworking (46%), flexitime (43%), career breaks or sabbaticals (35%), term-time working (29%), annualised hours (26%) and compressed hours (21%).

With regard to the operation of the statutory right for employees to request flexible working arrangements (UK0702019I), 95% of requests from parents had reportedly been accepted by employers – some 65% of these were accepted formally, 17% informally and 13% resulted in a compromise – while 5% of the requests were declined. A similar proportion of requests from carers for adults (96%) had reportedly been accepted by employers; of these, some 62% were accepted formally, 22% informally and 10% on a compromise basis, while 4% of requests were declined.

Almost half (47%) of the employers surveyed revealed that they offer the right to request flexible working to all employees, not just those groups covered by the statutory provisions. Some 69% of respondents indicated that the right to request flexible working arrangements had had a positive impact on employee relations, and 63% of respondents reported a positive impact on recruitment and retention. However, about one in five employers (22%) reported a negative effect on labour costs, and 15% highlighted the negative impact on productivity and customer service.

Flexible retirement

According to the survey, almost a third (31%) of employees reaching retirement age requested the postponement of their retirement, and 81% of requests were granted by their employer. Employers offer a range of options for flexible retirement, including continuing full-time employment (71%), part-time employment (66%), receiving a pension and continuing to work (41%) and phased retirement. However, only 20% of employers allow staff to continue accruing pension benefits.

Employment tribunal cases

Nearly two fifths (39%) of employers had faced an employment tribunal (ET) claim in the last year. In 29% of cases, ET claims were subsequently withdrawn by the applicant. Over a quarter of cases (26%) were reportedly settled ‘out of court’ by employers despite legal advice that the tribunal would rule in their favour, and 23% were settled after advice that the company was unlikely to win. Less than a fifth (17%) of cases went to an ET hearing and were won by the employer. Only 3% were fought by employers at a hearing and lost.

Close to half of respondents (44%) believed that weak and vexatious claims had increased over the past year, while 47% reported no change and 9% reported a decline in such claims.

Working with trade unions

Some 38% of respondents recognised trade unions for collective bargaining. Respondents were asked what they thought were the main reasons for the decline of trade unions in private sector workplaces. Almost half of respondents (45%) chose ‘resistance to change’, 28% felt that trade unions were ‘out of touch with the workforce’, 12% attributed the decline to ‘globalisation’ and 17% to unions being too ‘confrontational’.

Asked about their expectations in respect of their relationships with trade unions over the next 12 months, employers were broadly neutral. Almost half of respondents (49%) expected a ‘balanced’ relationship with both national officials and workplace union representatives. The latter were seen as more likely (37%) to be ‘cooperative’ than were national officials (29%) and less likely to be ‘adversarial’ (15% and 22% respectively). More employers (29%) expected adversarial relationships with local union officials.

Workforce diversity

Some 43% of employers responding to the survey reported having a formal diversity policy, while 19% had no formal diversity policy but did have equality practices in place. A quarter of employers surveyed reported that they had taken positive action in relation to, for example, recruitment, advertising and training, to achieve a more diverse workforce; 19% had an action plan on diversity and monitored progress. Larger companies were more likely to report formal diversity policies and to take positive action than smaller ones.

About three-fifths of respondents (59%) reported that the main obstacle to achieving a more diverse workforce was a lack of applicants from among disadvantaged groups, and 18% cited the ‘lack of a clear business case’ for diversity.

Equal pay audits

Almost a third (32%) of employers surveyed had conducted an equal pay audit in the past three years (compared to 28% in 2007), 9% of respondents planned to do so in the next year and 26% were considering conducting one but had not yet drawn up any firm plans. As in 2007, at least a third of employers had ‘never considered conducting an equal pay audit’. Large employers with 5,000 or more employees were more likely, at 55% (up from 46% in 2007), to have conducted an equal pay audit than smaller companies.

Commentary

The CBI’s employment trends survey, now in its eleventh year, provides an annual barometer of current employment practices among UK companies and of managerial opinion on key policy issues. Notable aspects of the survey this year include the reported increase in companies undertaking equal pay audits, the incidence of flexible retirement and the finding that most temporary agency work assignments in the UK will be unaffected by the draft EU agency workers directive now that the legislation includes a 12-week qualifying period. However, as the Trades Union Congress (TUC) pointed out in a press statement, the survey is not representative of all UK companies. Most respondents were from large and medium-sized companies whereas the majority of UK businesses employ fewer than 50 staff. The TUC commented: ‘This is a survey of Britain’s better employers and therefore looks through rose-tinted glasses at today’s world of work’. In September 2008, the TUC published its own survey of what UK workers think about their experience of work. This found that, while most workers were generally satisfied with their jobs, substantial minorities reported problems relating to pay, workloads, stress and working hours (UK0810039I).

Mark Hall, IRRU, University of Warwick

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