Partners in Progress - the TUC annual conference

The September 1997 Trades Union Congress conference was held under the slogan of Partners in Progress, reflecting the organisation's "social partnership" agenda. The conference went smoothly, though a closer look at views on the issues of flexibility and fairness highlights possible areas for major disagreement.

On 8-11 September 1997, the Trades Union Congress (TUC) held its first conference in nearly 20 years at which the decisions made by its 75 affiliated unions may again have some influence in the corridors of power. The theme of this year's conference was Partners in Progress, reflecting the TUC's "social partnership" agenda. In line with this approach, the conference was addressed by such speakers as: the Prime Minister, Tony Blair; the Archbishop of Canterbury, George Carey; the director general of the Confederation of British Industry (CBI), Adair Turner; and the member of the European Commission responsible for social affairs and employment, Padraig Flynn.

The conference went relatively smoothly, with the most contentious issues being the Archbishop of Canterbury's speech in favour of trade union recognition and concern by some unions over the TUC's plan to set up a company to sell cheap gas and electricity to union members. The "new unionism" recruitment drive, which will be supported by an "academy" to teach union organisation skills (UK9708155F), was supported wholeheartedly by the congress. The Government's "new deal" and "welfare to work" programmes (UK9707143F) were also supported, as was most of the leadership's positions around European issues. There was some flexing of muscles over employee rights, and on the first day of the conference some union leaders called for a complete extension of employment rights - including union recognition - to apply to all staff from day one of the employment contract.

However, all parties expressed the view that successful companies increasingly know that the foundations of competitive success rely on the skills, motivation and commitment of their staff, and also that greater productivity and quality is best achieved by people who feel secure, and not threatened. The Prime Minister said that he recognised the positive role played by trade unions in the workplace and that the Government would introduce minimum standards to deal with "bad" employers, with a White Paper on "fairness at work" due early in 1998. Adair Turner of the CBI, while agreeing with the former statement, added that the CBI would rather come to voluntary agreements on such issues than be faced with legislation. The TUC, while slightly worried that Government might be swayed by the powerful business lobby against legislation on union recognition, was still confident that the Government would stick to its word.

Overall the key themes covered by the major speakers were modernisation, fairness and flexibility, but despite all the rhetoric of unity there were signs of possible areas where disagreement may be apparent, especially between on the one side the EU and the union movement, and on the other side the Government and the employers. In reality, though, all four parties have different ideas on what key issues of the flexibility debate are to entail.

The TUC view of flexibility

On the first day of the conference, responding to what he thought the Government might see as a trade-off between employment and employment rights, John Monks, the TUC general secretary, said that the unions realise that the modern organisation needs to be flexible to do well in an increasingly competitive world. However, the "hire and fire" of completely flexible labour markets is not what the union movement regards as flexibility. Mr Monks asked: "How can a company that has just got rid of its skilled experienced workforce respond flexibly to new demands? Why should a company invest in staff for whom it has no long term plans? How can a company expect a workforce plagued by insecurity to be positive about embracing change?" He told the congress that this was exploitation and not flexibility.

Mr Monks explained to congress that the TUC wanted "positive" flexibility in which employees would have: real choice about how to combine the pressures of work and family; new childcare provision and help for working parents; real opportunities for learning new skills; and proper rights and opportunities for the part-timer, the temporary and the subcontracted worker. "Employers might want flexible workers. But people at work today need flexible employers. Not the hire and fire, take it or leave it brigade, but the ones who see that choices must be a two-way street, worked out together". Flexibility means promoting employment security and new skills for all. It means recognising that change is the only constant, but that with respect at work comes the willingness to change. To bring about this kind of flexibility, the TUC deems it essential to form a partnership with government and with employers - a partnership which means an elimination of exploitation and promotion of union rights and standards. This speech set the tone for the TUC's version of flexibility, but as the week went on it became clear that some of the other parties had their own version.

Prime Minister and CBI stress competitiveness

Expressing his version of flexibility, the Prime Minister told the congress that the labour market today is completely different in substance from what it was in the early part of the 20th century, and that it was even distant from what it was 10 or 15 years ago. Mr Blair said that four factors were combining to produce very different labour markets: economies are becoming far more open to trade so that we have to become competitive to survive; consumers are far more sophisticated today; products are far more individualised so mass production has ended; and technology and the mobility of capital have revolutionised the process of production. For Mr Blair, this is the modern competitive challenge which is leading to the need to modernise labour markets - which in turn is probably one of the biggest challenges facing the economy.

Adair Turner of the CBI echoed these thoughts and added that there is also a need to recognise the competitive challenge on the European front, and for Britain to play a full and constructive role in Europe. For his members, it is particularly important for Britain to play a strong role in "the debate about social Europe and the contentious issue - we recognise that it is a very contentious issue - of flexible labour markets". Mr Turner clearly believes that something is going wrong with Europe's competitiveness, with the way that its labour markets work and with the operation of its social model. In particular, the CBI sees the problem with European labour markets as that of a crisis of jobs. Mr Turner said that Europe has failed to respond well to some challenges, and especially to: the challenge of new technologies which make some categories of skilled labour redundant and others essential; the huge potential growth of the service economy; and the need of more diverse patterns of working time to meet customer requirements. The CBI clearly feels that Britain should be following the USA's example of completely flexible labour markets.

Commission defends European social model

When Padraig Flynn spoke to the congress at the end of the week, his position was arguably closer to the TUC view that the arguments put forward by the employers have little foundation in fact. The commissioner agreed that the European Union economy has underperformed for much of the past two decades in terms of growth and job creation - but not because of lack of competitiveness. He said that Europe is competitive on any criteria that makes economic sense: "We have declining unit labour costs, and the highest levels of profitability for 35 years. So to suggest that Europe is not competitive and then to blame it on Europe's social model is, in all its forms, simply misleading."

Instead of seeing Europe's social model as a drag on competitiveness, Mr Flynn insisted that public social spending in Europe is a productive factor, creating stronger economic performance: "It is not a cost; it is an investment for both the short and the longer term. It is not an unaffordable luxury. It is simply the European way of coping with change and with paying for services that citizens of all advanced industrialised countries demand."

The way forward?

The Prime Minister told the congress that what he saw as the Conservative path of inequality, insecurity, low wages and so on, is not the way to deal with the employment problem. Neither, he said, is the "old Labour" ideology of heavy-handed state intervention, nationalisation and industrial conflict, the answer. Instead, Mr Blair insisted that there is a third and more modern way of building a true enterprise economy where people have to face up to the reality of being adaptable, flexible and open to change. This involves the recognition that people will change jobs often, that the nature of jobs will change, even if people remain in them, and that demarcation is part of a redundant language. Adair Turner said that part of the response to these challenges has to be labour markets flexible enough to deliver high employment, and employment policies focused not on defending existing jobs but on equipping people with the skills to flourish in a rapidly changing world, and reform of welfare state structures so that high social security charges no longer act as a tax on jobs.

By contrast, Padraig Flynn insisted that the problem is not that European countries' economies are weak, or their budgets unbalanced through excessive social spending. Their problem is that their competitive success, reflected in trade, and in productivity, has not been matched by effective economic policy management. Persistent unemployment is not the consequence of overdeveloped social policies, although many could be usefully reformed. It is the result of underdeveloped and fragmented economic policies, as well as poor investment in human resources. The commissioner said that the paradox is that some commentators never cease lecturing Europe about how it should learn from the USA's flexible labour markets, when it could learn much more from the USA in terms of economic policy management than in terms of labour market and social policy design.

Areas of agreement and disagreement

Despite the differences highlighted above, the CBI suggested that there are certain areas of labour market flexibility over which the unions and employers can agree, and others where they are likely to find agreement difficult. Yet even in the areas of common ground, there there are potential points of disagreement. As Adair Turner pointed out, the term "labour market flexibility" is a contentious one; when one side talks about "labour market flexibility", the other hears nothing but "job insecurity". The following points serve to highlight some of those differences between the two sides.

The CBI states that flexible labour markets are ones where: skills are flexible; skills change; and individuals cannot expect to do the same job with the same skills throughout their life, but have to retrain and reskill continually. The CBI believes that lifelong learning is central to individual, corporate and social success and that employers have a moral obligation to help maintain "employability", even if they cannot always maintain employment levels in their own particular company. "New unionism" also places great emphasis on training and skills flexibility, but sees job security rather than just employability as an essential prerequisite for flexibility.

Another dimension of flexibility on which the CBI suggests that agreement might be possible is flexible patterns of working time, in a context in which old patterns of continuous full-time work are breaking down, and more and more work is part-time. The CBI states that while flexible working time is sometimes second best to full-time employment for the individual, very often it is positively sought by individuals because it balances better with their lifestyles and family responsibilities. Flexible working time patterns are often vital for businesses faced with changing patterns of customer demand. New unionism recognises changing working time patterns, but also believes that some employers use flexible working time to bring about cheaper labour and worse conditions of employment than those for full-time staff. The unions also see working time issues in terms of achieving a better quality of life with shorter hours of work for all.

There are some issues related to flexible labour markets on which the CBI admits that any agreement will be much tougher. The most contentious is the freedom of companies to reduce employment and make staff redundant when competitive circumstances demand. The CBI says that flexibility will always be rightly tempered by laws on redundancy payments and unfair dismissal, but if it is tempered too far, then the very laws that seek to protect existing jobs can actually prevent new ones being created, as companies are either deterred from expansion by the costs of shedding labour if business slumps, or make very high levels of investment in automation to minimise labour input. The employers say that the closure of the Renault at Vilvoorde, Belgium earlier this year (EU9704118F) is spurring demands for further restrictions on companies' ability to restructure, and they fear that such measures could reduce employment levels, not increase them.

However, Padraig Flynn commented that the EU's new Amsterdam Treaty (EU9707135F) has put employment at centre stage alongside the other criterion of success - price stability - and that it aims to promote a "positive-sum game" in economic and social policy from which all can benefit. He agreed that there should be some modernisation but insisted that reform and modernisation does not mean wholesale deregulation and that, contrary to the rhetoric, deregulated labour markets do not produce higher levels of employment than well regulated ones.

Commentary

The above points of disagreement highlight the potential difficulties of the social partners in reaching a voluntary agreement over the various elements of labour market flexibility. The reason is that flexibility is all too often a "catch-all" term, and that most of those involved concentrate on external flexibility - ie the ability of the organisation to vary its commitments either through reductions in numbers or a change in their status (the use of temporary contracts, for example). However, real advances are more likely to come through internal flexibility. To quote the European Commission's April 1997 Green Paper on a Partnership for a new organisation of work (EU9707134F):

"It is about the scope for improving employment and competitiveness through a better organisation of work at the workplace, based on high skill, high trust and high quality. It is about the will and the ability of management and workers to take initiatives, to improve the quality of goods and services, and to make innovations and to develop the production process and consumer relations"

There is no doubt that at the TUC conference there was a genuine feeling for creating partnership, but ultimately, despite the rhetoric of modernisation, if the route chosen for future development is external flexibility, it may still come down to who has the greatest amount of leverage and bargaining power. From this point of view, the conference may have been more of a "testing of the waters" than a "launching of the ship". (MW Gilman, IRRU)

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