United Kingdom: Flexicurity and industrial relations

  • Observatory: EurWORK
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  • Published on: 14 September 2009



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United Kingdom
Author:
Melanie Simms
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Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Flexicurity is a term rarely heard in UK policy making or industrial relations practice. Government policy focuses on active labour market policies to encourage participation in employment rather than dependence on social security. Unions and employers are primarily involved in delivering improved training policies rather than other aspects of flexicurity. This ‘alternative model’ of flexicurity differs considerably from the original concept. Nonetheless, UK unemployment is comparatively low and perceptions of job security amongst employees are comparatively high.

1. Flexicurity policies: main national measures

1.1 Please briefly outline the main nation-wide public policies (even if administered by local authorities), which are usually considered part of the ‘flexicurity’ approach in your country, distinguishing between the four basic components of flexicurity:

a) contractual arrangements;

The UK has one of the most flexible and lightly regulated labour markets in the EU in that employers can hire and fire with comparative ease. Employers have duties to consult in the case of redundancy: individually (in the case of all redundancies), and collectively (in the case of 20 or more redundancies). Collective consultation can be with any employee representative, not just a trade union. Legal minimum compensation for redundancy is on a sliding scale taking account of age, length of service and weekly pay. The absolute maximum (61 year old, 20 years service, 310 pounds per week) is GBP 9300. Employers may choose to pay more than the statutory minima if they wish – around 56% of employer report that they do so (Welfare 2004 – reported in individual measures questionnaire response (UK0611039Q)). In addition, there are protections against unfair dismissal which place the burden of proof on the employer to demonstrate the selection and procedures are fair. If the process is deemed to be unfair by an Employment Tribunal (ET), an employee may seek a return to the job, or be compensated. Generally, compensation is capped at GBP 60,600, although sometimes can be higher in cases of gender or race discrimination where there is no cap.

Over the past decade, individual rights to flexible working have increased (UK0607019I). Parents with young children (or older children if they are disabled) have the right to request flexible working. More recently this right has been extended to carers of adults. Maternity and adoption pay have improved. Paternity leave provisions have also recently been strengthened to include the option of (but no right to) some paid leave. Unions will also seek to improve entitlements at workplace and company level. However, involvement of trade unions varies. In unionised workplaces (i.e. 30% of all workplaces: 16% of private sector workplaces, 90% of public sector workplaces as reported by Kersley et al, 2005) unions are likely to represent workers being made redundant and they also give specific advice to individuals or groups of members involved in ET cases. Unions thus regularly support workers seeking to enforce their rights and have sought to bargain company-level improvements beyond statutory minima.

b) lifelong learning;

Central government is responsible for policy in England, but education and skills training policy is also devolved to the respective bodies of the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly. There is comparatively little culture of adult learning in the UK and investment by employers and skills levels are both comparatively low according to the Leitch Review of Skills in England, 2005. In England, 35% of employers (employing more than 25% of workers) do not provide any training at all for employees. Where training is provided, it is skewed towards higher skilled employees (TUC, 2007). Figures are comparable for the other regions. There is no statutory requirement to provide training, although there is a proposal to introduce such a policy if training investment does not increase by 2010. This area has already seen a considerable increase in policy focus in recent years with, in addition to the Leitch Review, the formation of a Learning and Skills Council in 2001 (UK0110111F) and new rights to workplace learning representatives in 2003 (UK0305102F).

The Leitch Review attracted considerable interest and the government is likely to adopt many of its proposals. These proposals can be summarised as follows:

  • Routing public funding of vocational skills through ‘Train to Gain’ and ‘Learner Accounts’;
  • Strengthening the employer voice on skills through creation of a new Commission for Employment and Skills, increasing employer engagement and investment in skills, reforming Sector Skills Councils who will simplify and approve vocational training;
  • Launching a new ‘pledge’ for employers to voluntarily train more employees at work. If insufficient progress has been made by 2010, introduce a statutory right for employees to access workplace training;
  • Increasing employer investment in higher level qualifications, especially in apprenticeships and in degree and postgraduate levels;
  • Raising people's aspirations and awareness of the value of skills, creating a new universal adult careers service to diagnose skill needs with a skills health check available for all;
  • Government to introduce compulsory education or workplace training up to age 18 following introduction of new Diplomas and expanded Apprenticeship route; and
  • Integrating the public employment & skills services to deliver sustainable employment, enabling more disadvantaged people to gain skills and find work, developing employer-led Employment and Skills Boards.

Involvement of unions in delivering the growing emphasis on the ‘learning agenda’ has been substantial. UnionLearn has a turnover of over GBP 21 million and is entirely managed by unions. It is responsible for the GBP 12.5 million annual budget of the Union Learning Fund. It has two key objectives: training 22,000 workplace Union Learning Representatives (ULRs) by 2010, and giving around 250,000 learners access to training annually. As well as these objectives it runs and accredits training programmes for unions, and other initiatives to build skills training capacity.

Employer involvement in skills training is voluntary. The 25 Sector Skills Councils (SSC) are employer-led, independent bodies which promote skills training in particular sectors and cover around 89% of the UK workforce. They take a strategic overview of existing and future skill requirements in sectors and plan for any necessary changes. The Leitch Review plans a considerably enhanced role for SSCs. Similar programmes exist in Scotland, Wales and Northern Ireland, although the process of devolution inevitably leads to increasing divergence in policy and practice between regions. It is, nonetheless, reasonable to assert that there is considerable similarity between UK regions as compared to other EU countries.

c) active labour market policies;

Social partners have no responsibility in delivering ALMPs although are consulted during policy development. The dominant theme guiding UK labour market policy is to encourage labour-market participation. Job seekers must be available and actively looking for full-time work in order to receive Job Seekers Allowance (JSA), though carers, sick people and lone parents are able to claim other benefits. Alternatives to work are acceptable under certain limited circumstances. These can include education/training, voluntary work or environmental work for fixed periods. Contribution-based JSA depends on National Insurance Contributions (NICs); income-based JSA applies if individuals have not paid enough NICs (or only paid contributions for self-employment) and are on a low income. The maximum weekly benefit rates are low, at GBP 46.85 for adults aged 18-24 and GBP 59.15 for those aged 25 and over. Couples receive GBP 92.80. An unemployed 16 or 17 year old may be able to get income-based JSA for a short period if for example any of the following circumstances apply: being forced to live away from parents; likely to suffer severe hardship if JSA not paid; or being part of a couple responsible for a child. Note that benefits are reduced if recipients have savings over GBP 6,000, and if there are savings over GBP 16,000 then individuals are likely to receive nothing regardless of previous contributions. JSA is not available to those who left their previous job voluntarily and penalties can be applied if applicants turn down work ‘without good reason’.

The level of assistance in seeking work increases as the length of time unemployed increases. Furthermore, after a set period of time (different for different groups), specific groups (ages 18-24, 25-49, 50 , lone parents, musicians, disabled people) are tracked into different ‘New Deal’ programmes. Details of the programmes vary, but aim to provide individualised return to work support (job search assistance, training, subsidised employment and work placements) and failure to participate leads to benefits sanctions – there is, thus, an element of compulsion in the UK system.

Employers are encouraged to sign Local Employment Partnerships which provide access to appropriate workers in exchange for providing assistance to unemployed workers (interview practice, mentoring, Work Trials, etc.), but the Department for Work and Pensions website indicates that only 200 employers have done so to date. Eligible employers can take unemployed workers on a 15 day Work Trial period without cost to them and with no obligations on either side.

Finally, tax credits are also an important part of active labour market policy. Essentially these are intended to remove disincentives to work by focusing tax credits at 1) working families and 2) those on low pay. This has been subject to considerable criticism for being a complex, bureaucratic and slow system, but is defended on the basis that it targets tax credit at very specific groups.

d) social security.

As indicated above, the guiding policy underpinning access to social security across the UK is one of ‘mutual obligations’ or ‘rights and responsibilities’, in placing a priority on paid work . Again, there is no role for social partners other than in consultation during policy development. Currently, worklessness is a primary feature of inactivity, rather than unemployment, and increasing attention is being paid to those on sick leave or receiving disability benefits. Some 2.7 million people of working age currently receive Incapacity Benefit and the Department for Work and Pensions claims that 700,000 of these would like to be in work. To address this, a Pathways to Work programme has been established to facilitate those claiming Incapacity Benefit moving into paid employment. In practice, this focuses on implementing disability discrimination legislation, interviewing claimants about their options for returning to work, rehabilitation advice, in-work support, and financial credit for returning to work.

For each policy, you should specify whether the involvement of trade unions and employer associations in the implementation is: i) substantial; ii) marginal; or iii) none and, if relevant, briefly illustrate their role.

1.2. Please briefly present the main national labour market trends since 1990: labour market participation and employment, unemployment and long-term unemployment.

29.3 million people were in employment in 2007 compared to 26.9 million in 1990. Employment dipped in to a low of 25.2 million in 1993 and has risen steadily since. But it should be noted that this is set against considerable population growth over that period. The current UK population is 60.6 million, compared to 57.2 million in 1990. Immigration into the UK has grown since 1995. According to the 2007 LFS, 12.5% of the working age population was board abroad, up from around 8% in 1995. Immigration from New Member States has contributed strongly to this growth (Wadsworth, 2007).

At 74%, the labour market participation rate is at the same level as 1990, but it declined quite markedly between 1990 and 1993 when it dropped to just over 70%, but has been rising steadily since then. Manufacturing, and primary sector jobs have declined steadily since 1990, whereas service sector jobs have increased. This labour market restructuring has advantaged some groups and disadvantaged others. The aggregate 74% participation rate reflects a participation rate of 79% for men (down from 82% in 1990) and 73.5% for women (up from 72% in 1990).

The Department for Work and Pensions (2005) has set out a Five Year Strategy to raise labour market participation to 80% by 2010.

Variation in labour market participation

There remain considerable regional variations in labour market participation even once the effects of gender and age structures of the regional population are accounted for. Employment rates are lower in large cities and areas with a background of mining or manufacturing; reflecting changes in sectoral employment. London is distinctive and is characterised by relatively low employment rates, a greater than average share of unemployed people and a higher than average percentage of people who have never worked. Like many cities, it is ‘job rich’ with commuters travelling from outside to work in cities; but these are largely not low skill jobs.

Unemployment is comparatively low. In 2007, the unemployment rate was 5.3%, representing 1.6 million workers, and 813,000 people were claiming unemployment benefits (Job Seekers Allowance). People with no qualifications are much less likely to be in work than those with higher qualifications. Again, these data are comparable to 1990 when unemployment was 1.6 million, but rose to nearly 3 million in 1993 following a recession. Long-term unemployment is also low, but focused on key groups; older men, those with fewer skills, people with disabilities, lone parents, and those with dependent children. Long-term unemployment also peaked in 1993 at around 1.2 million. The key change since 1990 has been the decline of long-term youth unemployment, largely as a consequence of higher rates of participation in post-compulsory education and the implementation of the New Deal for Young People (see above).

Note: Figures are taken mainly from the Labour Force Surveys. The section on ‘variation in labour market participation’ draws on Green and Owen, 2007.

2. Flexicurity policies: the role and positions of the social partners

2.1 Please, illustrate briefly the role of the social partners and social dialogue – at all levels – in the policymaking process which led to the introduction of any of the policies mentioned under point 1.1 and linked to the efforts to combine flexibility on the labour market and security.

Consultation is through the routine processes of policy consultation. Typically, there is a 12 week consultation process during which time anyone can submit responses to a series of consultation questions. Individual unions, the Trades Union Congress (TUC), and relevant employer representative bodies present their views which are summarised and publicly reported.

2.2 Please outline briefly the main positions of the social partners on flexicurity, with reference to its four basic components (contracts, lifelong learning, active labour market policies, social security):

a) Do employer association and trade union especially stress some dimensions?

Skills training and life-long learning are of particular significance and relevance to both employers and unions. Trade unions are particularly concerned at labour market flexibilisation and that flexicurity may be interpreted in this way within the UK context. Employers are particularly interested in deferring any further labour market regulation which, they feel, would harm the competitiveness of the UK economy.

b) In their opinion, do the policies mentioned under point 1.1 effectively implement flexicurity (i.e. they balance/combine flexibility and security)?

The Unquoted Companies Group (see Memorandum by the Unquoted Companies Group) and other employer groups who submitted evidence to a recent House of Lords committee argued that that the less regulated, less unionised, lower tax UK model represents a good example of flexicurity in action. This was contested by the TUC who argued that this less regulated labour market was ‘not flexicurity’. Both sides have serious and well-publicised concerns. Employers associations and other employer representative bodies have made a strong case to the relevant review bodies (see Memorandum by the Confederation of West Midlands Chambers of Commerce, Memorandum by the British Retail Consortium and Memorandum by EEF) that they feel that the current balance of policy is skewed against competitiveness and towards over-regulation. The TUC on the other hand, has made a strong case (Owen Tudor in House of Lords Report) that the current labour market policies do not provide adequate security for employees and that the responsibilities on employers are insufficient. For example, they have particular concerns over employment protection for temporary agency workers (UK0706019I).

c) According to the social partners, which are the main shortcomings of the policies undertaken so far? What should be needed to progress towards a full-fledged flexicurity approach?

By and large, UK employers are wary and very vocal in their opposition to any aspects of flexicurity that might lead to stronger labour market regulation.

Prescriptions for progress towards a ‘fully-fledged’ flexicurity approach rest on whether or not one accepts the argument that the UK represents a model of flexicurity, albeit a different model to others found in Europe. If one does accept that the UK model is a different, but appropriate, model of flexicurity, one would advise more of the same in terms of policy approach. If, however, one takes issue with the notion of an Anglo-Saxon model of flexicurity as being skewed more heavily towards flexibility than security, then one would likely advise progress on issues such as: strengthening worker rights during dismissal and redundancy; removing of social security provision; improving the culture and provision of skills training, including a statutory duty on employers to provide training or funding for training; removing compulsion from the ‘floor’ of social security provision and its means-tested provisions; simplifying the tax credit system; and examining the potentially gendered effects of flexible working polices – some of which may discriminate against women.

However, in light of the broader policy concerns of the current government which is keen to appear pro-business and low taxation, it seems extremely unlikely that the UK will see a tightening of its labour legislation e.g. relating to the ease of dismissing workers or making them redundant – although arguably this is a key area that will continue to challenge the applicability of the notion of flexicurity in this context. A recent House of Lords committee recommended that ‘As far as the UK is concerned, progress toward enhancing flexicurity requires action on skills and welfare to work measures rather than changes in labour law’ (see House of Lords, European Union - Twenty-Second Report)

2.3. How are trade unions and employer associations in your country contributing, either independently or jointly, to implement a flexicurity approach by their own initiative?

Some attempts at workplace ‘partnership’ have involved elements of flexicurity, for example in the paper industry (UK0708019I) and elsewhere (UK0205103F).

3. Collective bargaining and flexicurity

3.1 How is decentralised collective bargaining in your country, either at workplace level or territorial level, contributing to implement a flexicurity approach?

Bargaining at company level is the norm in the UK, and there is no obligation to register collective agreements which makes their monitoring practically difficult. Furthermore, few collective agreements explicitly address flexicurity measures though it may be implicit that agreement over, say use of contractors or temporary work will not lead to redundancies.

Nonetheless, it is possible to identify union strategies in the three unionised sectors employing large numbers of flexible workers: education, creative industries, and construction. One of the largest groups of temporary workers covered by collective bargaining is fixed-term workers in the higher and further education sectors. The University and Colleges Union (UCU) has worked hard over the past 10 years to ensure mechanisms for job security for these workers, but little bargaining progress had been made. Some employers conceded measures such as specific career training and career advice for these groups, or bridging funds to secure employment between contracts, but these are the exception rather than the norm. Unsurprisingly cost-minimal options (such as targeting career advice) are more common than potentially costly options such as providing bridging funding between contracts. In practice, this has had some very limited impact in providing security for fixed-term workers. Equity (representing workers in the creative industries) also has large groups of flexible workers. Their bargaining strategy accepts the flexible working pattern that is prevalent in this industry and focuses on establishing relevant terms and conditions with specific employers (a rate for the job), and individual advice for members during periods of unemployment. Finally, UCATT represents workers in the construction industry and has campaigned heavily around the issue of ‘false’ self-employment whereby workers are obliged to register as being self-employed (and are thus liable for paying taxes, social security payments, etc.) in situations where the ‘worker’ is in fact only working for one organisation, for a set amount of hours, and where a manager has formal managerial responsibility for them. Outside these sectors, there are examples of sector-specific priorities and innovations. Connect is the union representing professional workers in the communications industry. It runs a service for members offering careers advice and skills training. It also advertises job vacancies. This was a response to the large scale downsizing of management posts in the sector in the 1990s and has become a resource for union members being made redundant.

More generally, according to the Workplace Employment Relations Survey 2004, bargaining over training occurs in only 9% of workplaces with a recognised union, though this has increased from 3% in 1998. In 55% of unionised workplaces, unions are informed or consulted about training, leaving 36% where training is decided unilaterally by management. In workplaces with non-union representation, 2% negotiate on training, 84% inform or consult, and only 14% impose unilaterally (Stuart and Robinson, 2007). Finally, there have been examples of innovative approaches to supporting redundant workers during politically sensitive restructuring (particularly around training provision where large numbers of redundancies are announced in one area), but again, these are not the norm in UK employment relations.

3.2. Are there any sectors where the issue of flexicurity is particularly relevant? Please present shortly the basic economic and labour market features of these sectors and their specificities with respect to the implementation of flexicurity, with special reference to collective bargaining.

Arguably, because of the nature of British labour market policy in the past 30 years, flexicurity is relevant in all sectors. Some of the key unionised sectors are discussed above (section 3.1). In largely un-unionised sectors (including, but not limited to the community and voluntary sector, the hotels and hospitality sector, large sections of the retail sector, etc.) work is often seasonal and/or for fixed periods and/or insecure, but strategies to manage this are at employers’ discretion.

Please indicate whether, according to existing analysis, the contribution of collective bargaining to flexicurity is: i) substantial; ii) marginal; or iii) none.

Probably marginal.

4. Commentary by the NC

4.1 Please provide your own comments on the issue of flexicurity and industrial relations in your own country.

At the heart of the debate in the UK is whether or not we can define the current policy approach of very flexible labour markets combined with active labour market policies as one of flexicurity or simply one of flexibility. The issue is one of emphasis. By and large, employers and government argue that labour market and social security provisions are adequate and cite relatively low reported job insecurity in support. Indeed, growing evidence (Green, 2003 and Fevre, 2007) suggests that a) the growth of job insecurity in the 1990s was largely a feature of professional and quasi-professional employment, and b) since the late 1990s, perceived job insecurity has been levelling off and declining – undoubtedly reflecting tighter labour market conditions. Added to this, fixed-term work is still not a common experience of work in the UK – even the highest estimates range to around 7% of the working population, although clearly there is seasonable variability in this (Labour Force Survey 2007). Part-time work is more common with around 25% of people in employment working part-time and is particularly prevalent amongst women and young workers reflecting, respectively, a growth in female labour force participation and a growth in students working part-time. Both groups largely report part-time employment, which is normally permanent, as an active choice.

Critics argue, however, that much could still be done to strengthen provisions for informing, consulting and negotiating with workers during organisational restructuring, that elements of compulsion should be removed from social security provisions, that the gendered effects of flexibility need examining in much greater detail, and that the UK has a long way to go to match the kind of adult training provision seen in many other EU countries. On this final point, the government has agreed to adopt many of the recommendations of the Leitch Review which aspires to considerable improvement in many areas of skills training (see HM Governement, 2007).

References

Department for Work and Pensions, Department for Work and Pensions Five Year Strategy: Opportunity and Security throughout Life, TSO, Norwich, 2005.

Fevre, R., ‘Employment insecurity and social theory: the power of nightmares’ in Work, Employment and Society, 21 (3), pp 517-535, 2007.

Green, A. and Owen, D., ‘The geography of poor skills and access to work’, Joseph Rowntree Foundation, 2007. Available at: http://www.jrf.org.uk/knowledge/findings/socialpolicy/0046.asp

Green, F., The Rise and Decline of Job Insecurity, Department of Economics Discussion Paper, University of Kent, 2003. Available at: http://www.kent.ac.uk/economics/papers/papers-pdf/2003/0305.pdf

HM Government, World Class Skills: Implementing the Leitch Review of Skills in England, Department for Innovation, Universities and Skills, July 2007. Available at: http://www.dcsf.gov.uk/skillsstrategy/uploads/documents/World Class Skills FINAL.pdf

Kersley, B., Alpin, C., Forth, J., Bryson, A., Bewley, H., Dix, G., and Oxenbridge, S., Inside the Workplace: First Findings from The 2004 Workplace Employment Relations Survey, Department for Trade and Industry, 2005.

Stuart, M. and Robinson, A., Training, union recognition and collective bargaining, Unionlearn, Trades Union Congress, 2007. Available at: http://www.unionlearn.org.uk/publications/index.cfm?frmPubID=95

TUC, Time to Tackle the Training Divide, Trades Union Congress, 2007. Available at: http://www.tuc.org.uk/skills/tuc-13698-f0.cfm

Wadsworth, J., Immigration to the UK: The Evidence from Economic Research, Centre for Economic Performance, 2007. Available from: http://cep.lse.ac.uk/_new/publications/abstract.asp?index=3091

Welfare, S., ‘Communicating bad news: managing redundancy’, Industrial Relations Review, Number 803, July 2004.

Melanie Simms, IRRU, University of Warwick

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