industrial relations in uk.doc

7/28/2019 industrial relations in uk.doc

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INDUSTRIAL RELATIONS IN UNITED

KINGDOM:

United Kingdom: Industrial relations profile

Facts and figures

Area: 244,820 square kilometres

Population: 60,943,912

Language: English

Capital: London

Currency: British pound (1 = GBP .86 as at 15 July 2009)

Economic background UK

GDP per capita

(in purchasing power standards, Index: EU27=100, 2008)

115.5

Real GDP growth (% change on previous year)

(annual average 20042007)

2.68%

Inflation rate

(annual average 20042007)

2.0%

Average monthly labour costs, in (2005) 4,071

Gross annual earnings, in (2005) 46,051 (2007)

Gender pay gap

(Difference between average earnings of male and female

employees as percentage of earnings of male employees, 2007)

21.1%

Employment rate (1564 years) (2007) 71.5%

Female employment rate (1564 years) (2007) 65.5%

Unemployment rate (1564 years) (2007) 5.3%

Minimum wage (2007) Hourly rate of GBP 5.73

Sources: European Industrial Relations Observatory (EIRO) and Eurostat

Industrial relations, pay and working time UK

Trade union density (%)

(Union members as percentage of all employees in

dependent employment)

28%

Employer organisation density (%)

(Percentage of employees employed by companies

that are

40%

Sources: EIRO and Eurostat

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Background:

The system of industrial relations in the United Kingdom (UK) is traditionallycharacterised by voluntary relations between the social partners, with a minimal

level of interference from the state. In the context of very early industrialisation

and a liberal political culture in which the state seldom intervened in the affairs of

private actors, trade unions gradually consolidated their membership and power

base throughout the 19th century. Various legislative developments also allowed

trade unions the right to organise workers and engage in industrial action. In 1868,

the UK Trades Union Congress (TUC), the confederal umbrella body for UK trade

unions, was formed. The 1871 Trade Union Act recognised trade unions as legal

entities as corporations and granted them the right to strike. Subsequently, the

1875 Conspiracy and Protection of Property Act allowed the right to peacefulpicketing, while the 1906 Trade Disputes Act allowed UK trade unions to engage

in industrial action without the threat of being sued for damages. In addition to this

body of legislation, a minimal level of legal regulation that stipulated basic health

and safety conditions in workplaces was also built up during the 19th century.

The economic context throughout this time was also favourable to the

development of trade unionism. Owing to the pace of industrialisation and the

existence of substantial colonial markets for UK industry, the 19th century and

early 20th century were characterised by extensive economic growth. This

economic climate facilitated the development of a system in which some of the

fruits of economic development could be designated for collectively bargained

wage increases. In terms of the role of the law, collective bargaining was far more

important than the influence of legal regulation. For employers and trade unions,

the role of statute law was to support and extend collective bargaining rather than

to comprehensively regulate the system. Notably, the law provided trade unions

with a series of immunities from UK common law. These immunities covered

the right of trade unions to engage in industrial action with employers, which

would otherwise have been illegal under UK common law.

The membership of UK trade unions grew markedly in the post-war years. The era

also represented the golden age of British pluralism, where the role of tradeunions in securing industrial peace and efficiency was emphasised. In the private

and public sectors, sectoral level collective agreements were also typically reached

that covered whole industries. By the late 1960s, however, concerns emerged

about the efficacy of a system in which shop floor industrial unrest appeared to be

rising. This led to the Donovan Commission, a government commission that

attempted to investigate the causes of workplace disputes. Industrial conflict grew

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markedly in the 1970s, partly as a result of the economic crisis that affected

western countries after the 1973 oil shock. The era was characterised by trade

union militancy and high levels of industrial action, and attempts by successive

left-wing and right-wing governments to regulate the system largely met with

failure. The period culminated in the 19781979 winter of discontent, where

public sector trade unions engaged in regular and lengthy industrial action over theincumbent Labour governments policy of public sector pay restraint.

Main actors:

Trade unions:

Trade union density has fallen markedly in the UK since a peak of 56.3% in 1980.

Despite occasional small rises in membership since 1997, statistics over the past

decade would suggest that union density has reached one of its lowest levels at just

under 30%. A large difference in trade union density rates is evident between the

private and public sectors. As of 2008, trade union density in the private sectorwas 16.1%, while it reached 59% in the public sector (Department for Business,

Enterprise, and Regulatory Reform, 2008).

Trade unions in the UK are organised both horizontally and vertically, with someorganising particular occupations, such as teachers; others organise in particular

industries, while a few operate in particular companies. The sole trade union

confederation in the UK is the TUC .There are 6, 471,030 members in TUCaffiliated unions, down from a peak of 12,172,508 members in 1980. However, the

TUC does not conclude or have the power to conclude collective agreements at

any level. In response to declining membership figures, UK trade unions have

engaged in many mergers in recent years. In 2008, there were 167 trade unions in

the UK this was down from 238 unions in 1998 and 326 in 1988. In 2007, the

UK trade unions Amicus and the Transport and General Workers Union (TGWU)

merged to form Unite the Union (Unite). This is the UKs largest union, with amembership of about 1,900,000 workers. The largest public sector trade union is

Unison, which has a membership of 1,344,000 persons and organises workers in

all areas of the public sector.

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Employer organizations:

The TUC is paralleled on the employers side by the Confederation of British

Industry (CBI). Like the TUC, the CBI has no mandate to collectively bargain andbind its affiliates. In general, the CBI represents large companies in the private

sector and is regarded by the government as its main interlocutor with business. Its

members comprise individual companies (currently about 3,000) and tradeassociations (around 150). Owing to the largely decentralised nature of

employment relations in the UK, the role of employer organisations in the

countrys industrial relations is not overtly prominent. Their role in collective

bargaining declined notably during the 1980s, when many existing national

sectoral level agreements ceased to function and companies began to negotiate

with trade unions at lower levels. Some organisations have disbanded, while

others have stopped trying to regulate employment conditions. Current employerorganisations that do engage in social and employment affairs are the Engineering

Employers Federation (EEF) and the Local Government Association (LGA).

Employer organisation density in the UK is approximately 40%.

Collective bargaining:

In the UK, the dominant level for the setting of pay and working time is the

company or plant level in the private sector. In areas of the public sector and in asmall section of the private sector sectoral level agreements are concluded. There

are no national intersectoral agreements in the UK, nor is there any tradition of

this, aside from a very brief period in the 1970s. In 2008, the coverage rate of

collective agreements in the UK was 34.6%. There is a large discrepancy between

figures for the public and private sectors, with collective bargaining coverage for

the public sector reaching 72% in 2008, compared with 20% for the private sector

(Department for Business, Enterprise, and Regulatory Reform, 2008). Compared

with other west European countries, the UK is notable for the disorganised nature

of its levels of collective bargaining and the lack of legal backing and promotion

that collective agreements are subject to. In line with the UK voluntarist tradition,collective agreements are voluntary instruments that are binding in honour only.

However, the terms of collective agreements are normally incorporated into

individual contracts of employment that are then legally enforceable. Collective

agreements are subsequently never extended by legislation, and there are no

voluntary mechanisms for the extension of collective agreements. Moreover, noformal mechanisms exist for the coordination of wage bargaining levels in the UK.

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However, in practice, trade unions in different companies and sectors often share

information with one another, and agreements in certain companies and sectors

often act as informal benchmarks for negotiators in other areas. Collective

bargaining in the UK has become far more decentralised since the 1970s and

1980s. In this period, many companies in the private sector left sectoral

agreements and, in the public sector, collective bargaining also became moredecentralised. According to one study (Visser, 2004), the degree of bargaining

centralisation in the UK stands at just 13%.

Other issues in collective agreements:

Collective agreements on issues besides pay and working time are not widespread.

While vocational education and training is strong in some professional and

technical sectors, it has been historically weak in others. Recent attempts havebeen made to regularise vocational training through National Vocational

Qualifications, and these have been supplemented by further moves to establish

lifelong learning routes especially through the university for industry initiative.

However, much of the provision of skills training is decentralised to the newly

formed Sector Skills Councils (SSC). Currently, there are 25 SSCs in the UK; all

of the councils are employer-led, independent organisations, each covering aspecific area of the UK.

Features of Industrial Relations of the UnitedKingdom:

The main features of Industrial Relations of the United Kingdom are:There are

two forms of trade unions, one is theBasic Trade Union and the other isIndustrial

Trade Union.

Types of employees are:

i. Blue color:It refers to those employees who are directly involved with the

production department of a factory.

ii. White color: It refers to those employees who are not directly engaged with

production but are related to management of the organization.

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Climate of Employment Relations in the United

Kingdom:

In a research report on employment relations in the U.K. It has been stated thatrespondents are not only informants; they are also actors within the workplace,

relating to events and practices of which they are a part. Given the contested

nature of IR reliance on a single role-holder, such as workplace HR managers,

may lead to a partial or biased picture of the nature of Industrial Relations in theworkplace. With multiple respondents often asked similar or identical questions

about their perceptions of IR, Workplace Industrial Relations Survey (WIRS) has

been able to establish the degree of dissonance between respondents within the

same workplace and has helped to explain reasons for the differences. This is

nowhere more apparent than in the case of perceptions of the climate of

employment relations in the workplace.Workplace Industrial Relations Survey (WIRS) made number of contributions to

discussions about industrial conflict in Britain.First, it gave a more accurate picture of the incidence of industrial action than

other sources. Just as Warwick Workplace Survey had identified Strikes of Short

duration and those in smaller workplace were under-recorded so Workplace

Industrial Relations Survey (WIRS) provided information on the incidence ofindustrial action short of a strike where official statistics were either absent or

patchy. Furthermore, as Industrial Relations scholars might have anticipated,

Daniel and Millward found managers and worker representatives in Workplace

Industrial Relations Survey (WIRS) disagreed about the occurrence of industrial

action, a finding replicated in subsequent surveys.Second, it supplemented information on the incidence of strike action with otherinformation about conflict at work such as claims to industrial tribunals and

perceptions of the climate of IR at the workplace.

Management perceptions of climate indicate an improvement in IR since 1990

but, perhaps surprisingly, relations remain poorer than they were in the early

1980s (Table). The table also shows that, whereas managerial perceptions of

climate were poorer in union workplaces than in non-union workplaces in 1980-1990, the gap had disappeared by 1998.

In addition to the single-item climate indicator available in Workplace IndustrialRelations Survey (WIRS) since the outset, Workplace Industrial Relations Survey

(WIRS) includes items such as sanctions against employees (formal written

warnings, suspensions of employees, deductions form pay, internal transfers for

disciplinary reasons) , and days lost through sickness and absence.

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Third, workplace Industrial Relations Survey (WIRS) showed that different

actors had very different perceptions of the climate of IR at the workplace. Data

for worker representatives matched to that of management showed that the

representatives had a poorer perception of the industrial relations climate than their

managerial counterparts. This finding has been replicated over the course of

Workplace Industrial Relations Survey (WIRS). The advent of linked employer-employee data in 1998 meant that analysts were able to assess mangers

perceptions of IR climate alongside those of employees in the same workplace.

Comparisons revealed that managers tended to view climate more positively than

their employees in the population with 25 employees more and the Population

with 10 or more employees. Similar finding have been reported for 2004.

Fourth, workplace Industrial Relations Survey (WIRS) permitted analysts to

investigate workplace-level correlates of IR climate and industrial conflict. Blanch

flower and Cubbins (1986) paper using WIRS was the first to use micro data to

assess propensities for various types industrial action. Their coverage of the non-manufacturing sector was also novel. Their findings from multivariate analyses

broadly confirmed results from the cross-tabular analyses undertaken by Daniel

and Millward. Using WERS98 Knight and Latreille looked at the correlates ofindividual conflict as measured by workplace variability disciplinary action,

dismissals and tribunal and tribunal applications. They showed that both

workplace and workforce characteristics explained much to the variance. Analyses

of WERS98 and WERS04 have also shown the correlates of positive perceptions

of climate differed markedly arced managerial respondents and employees within

the same workplace. Workplace Industrial Relations in Britain, 1980-2004; David

(Blanchflower Bruce V.Rauner)

Unions and Employment Growth in the United

Kingdom:

The effects of unions on workplace-level employment in Britain illustrate two

things. First, although changes in workplace employment have featured in theWorkplace Industrial Relations Survey (WIRS) sourcebooks reported a

preponderance of establishment with declining employment numbers over the

recession period (1980-84) the analyses of this issue have largely occurred inacademic papers. The impact of current recession (of 2009-10) is yet to be

assessed.

Second, it illustrates the way in which WIRS can help us understand IR not simply

through the mapping of the terrain but by trying to understand the relationship

between key variables in the data.

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The workplace Industrial Relations Survey (WIRS) literature on unions

employment effects has focused on changes in workplace employment levels.

Early studies used retrospective data form managers on employment levels in

earlier years to estimate union effects on employment change. More recent studies

have begun to use the Workplace Industrial Relations Survey (WIRS) panel data,

thus obtaining more accurate information. (Workplace Industrial Relations inBritain, 1980-2004; David G. Blanchflower Bruce V. Rauner)

INDUSTRIAL DISPUTES:

Notions of conflict at work conjure up strong images in the popular imagination.

Themore familiar images are of large-scale, disruptive industrial disputes; the less

common are of individual grievances, most dramatically illustrated by high

profiletribunal cases. The past quarter century has seen a concurrent decline in

collective expressions of conflict and growth in the individualised expression of

conflict, most transparently manifest in a dramatic fall in the incidence of strikes

and a rising tide of claims to the Employment Tribunal.

THE PATTERN OF DISPUTES:

Discussions of conflict have traditionally focused on the incidence of disputes andprincipally on strikes and the rate of applications to the Employment Tribunal

(ET).There is a lot to be said for this approach: official statistics on strikes and

Employment Tribunal claims have been collated and published throughout the

twenty-five year period that is our focus, and indeed strike data in the UK extend

back to 1893. Nevertheless, official strike statistics tell us nothing about the

incidence of either very short strikes that fall below the threshold for inclusion in

official statistics or other forms of industrial action such as working to rule,

whilst numbers of ET claims tell us nothing about the overall extent to which

employees raise formal grievances at work. In the sections which follow, we

examine the pattern of disputes using this broader set of indicators. We first map

out the pattern of collective and individual disputes, drawing variously upon data

from the official data series, the Workplace Industrial / Employment Relations

Survey (WIRS / WERS) and other sources. We then go on to provide some

reflections on the changing patterns of disputes and the inter-relationships between

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different types of dispute.However, there is a further concern that statistics on such

phenomena provide only a partial insight into the quality of workplace relations.

This is because strikes, formal grievances and ET applications are each

institutional expressions of discontent, with the incidence of each being

determined, in turn, by the strength of trade union organisation, the presence of

workplace grievance procedures and the legislative framework of the tribunalsystem. Accordingly, a further section then goes on to present evidence on the

broader incidence of conflict, drawing upon a number of direct and indirect

measures of the state of workplace relations. The overall aim is to develop a multi-

dimensional picture of the changing nature and extent of workplace conflict over

the period from the late 1970s to the present. We return to the issue of institutional

effects on manifestations of conflict later in the paper.

Individual disputes:

Mindful of the particular nature of matters of dispute that had afoundation in statutory or contractual rights, the DonovanCommission (reporting in June 1968) addressed the need for newarrangements for dealing with disputes between individualemployees and employers. The Commission proposed that theindustrial tribunals that already handled disputes arising underthe Redundancy Payments Act 1965 be given an enhanced role inthe administration of labour law to address all disputes betweenindividual workers and his employer and so provide an easilyaccessible, speedy, informal and inexpensive procedure forachieving an amicable settlement of disputes (Donovan, 1968:para 577). The same Commission proposed the right not to beunfairly dismissed and the Industrial Relations Act 1971 whichenacted this right broadened the role of the Industrial Tribunals(renamed Employment Tribunals by the Employment Rights(Dispute Resolution) Act in 1998) to include unfair dismissal.

Collective disputes:

Even the most casual observer of employment relations would be aware of thesubstantial decline in strike action since the early 1980s. Figure 1 shows a longer

time series extending back to 1960 to demonstrate that the decline in the number

of stoppages was part of a longer trend which began in the 1970s. However, that is

not to suggest that industrial action was a declining problem in that decade. Large

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disputes kept the number of days lost high and these increased at the end of the

1970s, culminating in the so-called winter of discontent.

EVIDENCE ON THE BROADER INCIDENCEOF DISCONTENT:

One clear conclusion from the foregoing discussion is that the level of disputes

whether collective or individual can be heavily affected by factors other than the

underlying degree of conflict at work. This raises a further question as to how

levels of discontent as opposed to levels of overt disputes have changed overtime? First, it is clear that only a minority of employees experiencing problem at

work choose any kind of formal approach to addressing their complaint. For

instance, Casebourne et al(2006) report that only a quarter (24 per cent) of those

who had experienced a problem at work had put their concern in writing to theiremployer and just three per cent had brought a tribunal case as a result of their

complaints. There are no data available that allow us to chart directly the changingincidence of problems at work among employees across our twenty-five year

period. The closest objective indicator is perhaps provided by Citizens Advice,

who record the number of employment-related problems raised with Citizens

Advice Bureaux each year. This series shows an increase in the number of

reported problems through the 1980s and

early 1990s, from 312,000 in 1980 to a peak of 882,000 in 1993 (Figure 3).Thenumber has fallen back since that time, albeit with some fluctuations; the most

recent available figure (for 2007) stood at 505,000. However, one must treat thisseries with some degree of caution since it is plausible that the increase in volumes

in the 1980s could partly be explained by some expansion of the network of

Citizens Advice Bureaux following the introduction of government funding in the

mid-1970s, whilst the broad downward trend since 2000 may be partlydetermined by the introduction of a web-based enquiry service in 1999. As an

alternative, one can express the total number of employment-related problems as a

percentage of all problems reported to the Bureaux, and this series is also shown in

Figure 3. It has its own limitations, since fluctuations in the series may be

prompted by the changing incidence of problems in areas other than employment

(e.g. social security or housing). However, whilst the mid-1990s peak in thenumber of problems stands out less in this alternative series,one nonetheless

retains the impression of improvements since 2000.

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INDUSTRIAL CONFLICT MANAGEMENT:

The Advisory, Conciliation and Arbitration Service (ACAS) is the main body

involved in conciliation and arbitration in the UK. It is an autonomous, tripartite

body established by statute and its task is to improve industrial relations. The

largest part of ACASs work is individual conciliation. The amount of individual

litigations and employment tribunal cases has increased considerably within theUK in the past decade or so. Arbitration is a relatively small part of its work,

mainly because it has no powers to arbitrate without the consent of both sides.

Arbitration is neither compulsory nor legally binding.

The latest available official statistics show that, in a 12-month period to October

2008, some 147 work stoppages were recorded, in which 677,000 workers took

part and 837,700 working days were lost. This marked a decline from the figuresfor the 12 months until October 2007, where 210 stoppages were recorded,

involving 878,000 workers and resulting in 989,000 lost working days. These

figures are also historically very low. In 1988, for example, there were 781

stoppages recorded, in which 790,000 workers were involved and 3,702,000

working days were lost. The figures for this year also represent a typical year for

this period. The general decline in labour disputes in the UK is likely to be

attributable to falling trade union density rates, and to the anti-union laws of the

1980s and 1990s.

In 2008, large industrial actions occurred in the UK public sector over the

governments policy on public sector pay restraint. More complete statistics areavailable for 2007 regarding the sectors involved in strikes. In 2007, of the 142

stoppages recorded, 55 occurred in the transport, storage and communication

sector, while 21 took place in the education sector, and 20 were recorded in public

administration, defence and the compulsory social security sector, making these

the three sectors most affected by strikes during the year. These sectors were also

the most adversely affected in terms of working days lost and workers involved(Office for National Statistics, 2008a).

Tripartite concertation:

Owing to the UK voluntarist tradition, policy concertation has been uncommon,

and there are currently few formal mechanisms or forums for tripartite

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concertation in this country. From 1962, a tripartite National Economic

Development Council existed, in which the government and UK social partners

discussed economic policy; however, this was abolished in 1992. In the late 1970s,

consultation between government, employers and trade unions was also growing

in importance. However, the Thatcher government, which was elected in 1979,

sought to eradicate any forms of corporatism. Since then, tripartism or corporatismhas not been re-introduced on a comprehensive or formal basis. However, the UK

social partners are regularly consulted by the public authorities on the direction of

public policy in the country on an ad hoc basis; they are also represented in a

series of committees that are of a tripartite nature. For example, the social partners

are represented on the Low Pay Commission (LPC), an independent UK body that

issues recommendations for increases in the national minimum wage. The LPC

board consists of nine members three trade union representatives, three

employers and three labour market relations experts. At the sectoral level, the UK

social partners are involved in the aforementioned SSCs, which seek to improve

the skills of workers in the UK.

Workplace representation:

Traditionally, there have been no statutory works councils in the UK. In line with

the voluntarist tradition, workplace representation was solely achieved through

trade union presence in the workplace and was not enshrined through the law. As

previously mentioned, a considerable decline in trade union presence and power

has occurred in the UK over the last 25 years. In 2008, 46.6% of workplaces hadsome sort of trade union representation (Department for Business, Enterprise and

Regulatory Reform, 2008). The EU information and consultation Directive of

2002 (Directive 2002/14/EC) was implemented in the UK in 2004 as the

Information and Consultation of Employees Regulations. The regulations lay

down statutory procedures for workplace representation, and stipulate that

workplaces with 50 or more employees must have a body for the information and

consultation of employees in place.

Employee rights:

Employee rights are enforced in the UK through a variety of mechanisms. Firstly,

employees have access to employment tribunals that determine whether the rights

of employees have been infringed. Trade unions are responsible for the monitoring

of collective agreements, and the right of trade unions to engage in strike action is

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decided by the UK civil courts. Health and safety conditions in workplaces are

monitored by the UK Health and Safety Executive (HSE), while compliance with

the national minimum wage is monitored by the countrys HM Revenue and

Customs (HMRC) department.

A conservative government, led by the then Prime Minister Margaret Thatcher,

was elected in 1979 on an anti-trade union, neo-liberal platform. Successivegovernments of this political stripe pursued a legislative programme that placed

legal restrictions on trade unions ability to engage in industrial action, and that

privatised many areas of the public sector, while managing the public sector in an

anti-union fashion. During this period, trade union membership also declined

markedly, and the majority of sectoral collective agreements in the private sector

were dismantled as companies abandoned them. A New Labour government, led

by Prime Minister Tony Blair, was elected in 1997, offering a moderately

conciliatory approach to the trade unions. The cornerstone of the Blair

governments approach to employment relations was the use of legal individual

employment rights to protect workers. Most notably, a national minimum wagewas introduced. Many of these legal rights emanated from the level of European

Union, and the post-1997 period saw a marked increase in the influence of legal

regulation in the employment relationship. Nonetheless, trade union membershipcontinued to decline, and in 2008 trade union density stood at 28%. As of 2009,

the UK system of industrial relations would appear to exhibit a mixture of

characteristics. While the old tradition of the state not intervening in relations

between the social partners is still manifest in the non-legally binding nature of

collective agreements and in the fact that trade unions and employer organisations

have little statutory involvement in public policy and little recourse to bipartite or

tripartite forums at the national level, legally established employment rights wouldnow appear to be a permanent feature of the UK system.

The global 2008 economic crisis has particularly affected the UK. Unemployment

rates have increased markedly, and several financial institutions have had to berescued by the UK government. As of 2009, the effect of the crisis on the

development of the UK system of industrial relations is unclear. Trade unions

have responded to the crisis by calling for greater government intervention to

support employment levels. At the same time, collective agreements have been

concluded by the UK social partners at company level with the aim of reducing

working time in order to preserve employment levels (UK0811029I). However, asof 2009, it is too early to identify any concrete trends.

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Pay and working time developments:

Minimum wage:

A national minimum wage has been in place in the UK since 1997. The rate is set

by the LPC, which advises the government on low pay and recommendsappropriate rates. The current minimum wage in the UK as set in October 2008

for adults aged 22 years or older is GBP 5.52 (about 6.38 as at 7 July 2009) an

hour. For workers aged between 18 and 21 years, the minimum wage is GBP 4.77

(5.52) an hour. The minimum hourly wage for all workers under 18 years of age

who are, in addition, no longer of compulsory school age is GBP 3.53 (4.08).

Some workers undertaking apprenticeships or accredited training may not be

considered eligible to receive the national minimum wage for a certain period of

time, which varies according to their age and length of time in employment. Other

categories of workers who are exempt include au pairs, share fishermen, members

of the clergy, those in the armed forces, prisoners and some people working infamily businesses. Moreover, the rate payable under the national minimum wage

can, in all cases, be reduced where accommodation is provided to the worker.

Pay developments:In April 2008, the average gross annual earnings in the UK were GBP 25,100. In

April 2007, the equivalent figure was GBP 24,020 (Income Data Services, 2008).

An increase of 4.5% was therefore recorded. In November 2008, the percentage

annual rise in collectively agreed average weekly earnings was 3.8%. In

November 2007, this figure amounted to 3.4% (Labour Research Department,

2009).

In terms of gender, the average gender pay gap in the UK in 2008 was 12.8%. This

gap is measured in the UK on the basis of median hourly earnings, excluding

overtime. In 2008, median hourly earnings excluding overtime for men was GBP12.50, and for women GBP 10.91. Between 2007 and 2008, the gender pay gap in

the UK rose by 0.3 percentage points from 12.5% to 12.8%. However, the gender

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pay gap stood at 17.4% in 1998, so the figure has substantially fallen over the last

decade.

Working time:

Based on a study of 417 company and sector agreements, the average collectively

agreed working time was 37.3 hours a week in 2008 (Income Data Services,

2008). Thus, no change was registered on the average of 37.3 hours in 2007.

Although virtually all collective agreements deal with working time, because of

the low collective bargaining coverage rate few employees have their working

time regulated by such a collective agreement. The regulation of working time has

been a point of much debate, especially with the European Commission in recent

times. The UK has implemented the statutory maximum working week of 48hours, as set by the EU 1993 Working Time Directive (Council Directive

93/104/EC) in a particular and restrictive way. The regulation allows for

exemptions of large numbers of managerial and professional staff and permits

individuals to opt out of the regulations.

Pay settlements:

It is worth recalling that, as well as furthering our understanding of pay levels,

there is a strong WIRS tradition identifying factors associated with the size of paysettlements. WIRS is a useful source of information on this issue given its

representative nature and the general lack of information on pay settlements in the

economy more generally. However, its impact in policy discussions is limited

given the gap between data collection and data analysis, such that policy analystsoften resort to other data.The actual list of influences on pay settlements contained

in WIRS would have been anathema to most economists at the time since

managers responses indicated that, quite unlike in the neoclassical economists

world, employers can be price-makers when it comes to setting wages, not just the

takers of prices for labour set by laws of supply and demand to which they are

passive respondents. This is a standard observation for IR academics, but was farmore controversial for labour economists grappling with early WIRS data.

Variable pay:

Variable pay has been a central issue in WIRS since the outset. This is not

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surprising. IR academics had been studying the role of piece-rates and

paymentsby-results in manufacturing for many years and their links with industrial

unrest were a cause for concern to the Donovan Commission. Today, variable pay

is often viewed as the antithesis of the standard or common rate-for-the-job pay

determination principle underpinning union wage setting (Marsden, 2004). The

idea, attractive to some, is that pay should match worker performance, not onlybecause this might more fairly reflect employees just deserts, but also because the

incentive effects of the link can bring their own benefits in terms of greater worker

motivation and loyalty, higher effort and thus productivity and thus,ultimately,

improved financial performance

Industrial Relations in Britain under New

Labour, 1997-2010:

When the Labour Party came to power in Britain in 1997 its attitude to organized

labour was distinctly ambivalent. It had recently rebranded itself New Labour

specifically to distance itself from its historic old Labour Party association with

trade unions. The following years in office were to prove a period of industrial

peace and, almost until the end, of sustained economic growth. But when the

electorate threw the Party out in 2010, its attitude to trade unions was no lessambivalent. Furthermore, those years had seen continued decline in both trade

union membership and collective bargaining.

In this post mortem account we start with New Labours inheritance and then look

at the ways in which it sought to promote partnership with trade unions. Unusuallyrich survey data permit an assessment of some of the consequences. It finishes

with a consideration of New Labours own legacy.

The inheritance:

The period between the departure of the previous Labour government in 1979 and

the return of New Labour in 1997 had been disastrous for organised labour. The

proportion of employees in trade union membership tumbled from 56 to 31 per

cent. Beyond public employment, it had been little short of a rout. In the privatesector, the proportion of workplaces (with 25 or more employees) where unions

were recognized was halved from 50 to 24 per cent. The proportion of employees

in the private sector protected by collective agreements collapsed similarly, from

around 55 to 25 per cent (Achur, 2010). Politically the picture for trade unions was

even bleaker. The influence of their leadership upon government policy, hitherto

very substantial, collapsed to non-existent.

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Those intervening years of Conservative rule, especially the 1980s under Margaret

Thatcher, had seen high drama in terms of industrial disputes. There had been

prolonged and even violent confrontations, of which the year-long coal-miners

strike of 1984/85 had been the most bitter. But by the 1990s the level of conflict

had fallen to historically low levels. The number of working days lost throughstrikes per year, having averaged 930 per thousand union members through the

1970s and 1980s, tumbled to 76 for the 1990s. The comparable figures for

numbers of strikes per million union members fell from 175 to 32 (Office for

National Statistics, 2010a). It is true that the number of individual grievances

registered with employment tribunals doubled over the period, and there is

evidence that the intensity of work had been on an increasing trend through the

1980s and 1990s (Brown et al., 2009: 184, 206). But high levels of strikes, so

much a feature of Britain for the previous thirty years, were a thing of the past.

Part of the reason for these substantial changes in trade union fortunes and

behaviour had been legislative intervention by the Conservative governments.British labour lawhad, for over a century, made a virtue of trying to keep out of

relations between employers and trade unions, an approach referred to as

collective laissez faire. Trade union rights to organise had traditionally been ill-defined, and there had been no more legal right to strike than a statutory protection

against being sued for the costs of strikes.

Tentatively at first, but then more methodically, the Thatcher governments of the

1980s had tightened things up. So far as union organisation was concerned, steps

were taken to make leaderships more accountable. Direct elections were required,

with ballots and external scrutiny. Members were given better access toinformation about their union. They were given more choice of whether to join a

union and, if so, which one. The scope for strike action was curtailed by a range of

devices. The grounds for acceptable strike action were narrowed by excluding

secondary and overtly political strikes. Strike procedures were constrained by

limiting the use of pickets, by banning union disciplinary action in support ofstrikes, and by preventing official union support of illegal strikes. Most important,

all strike action had to have the support of union members in a tightly regulated

balloting procedure (Dickens and Hall, 2010).The combined effect of all these

changes was to increase substantially the cost and complexity both of union

organisation and of strike action.

Far more important in its impact upon collectivism than these direct legal

interventions, however, was increasing product market competition. Some of this,

it is true, was the result of less direct government policy. The privatisation of

much of the public sector during the 1980s and 1990s was particularly important.

Many once highly unionised industries railways, steel, electricity, water,

telecoms, aerospace, and so on saw union membership and the coverage of

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collective bargaining contract as a result of their privatisation (Bach, 2010; Brown

et al, 2009: 41-47)). But a far more widespread influence was the increase in

product market competition arising from more global markets and corporate

ownership. Just two indicators give the scale of this. British imports of

manufactures, as a percentage of home demand, rose from 25 per cent in 1980 to

62 per cent in 2005 (Office for National Statistics, 2008). The share of foreignownership in the London Stock Exchange rose from 4 per cent in 1981 to 40 per

cent in 2006 (Office for National Statistics, 2010b). It has been demonstrated that

it was typically those private sector industries which faced most competition and

where profits were worst hit which experienced the biggest retreats in collective

bargaining over these years (Brown et al., 2009: 41). Thatchers legal changes

undoubtedly hastened the collapse of collective bargaining in Britains private

sector, but the underlying economic causes would have prevailed eventually,

whatever the government in power.

Changing the law:

Within days of his election triumph, Blair had mobilised the social partners. There

were two main tasks, both seen to be highly risky by the new government. The

first was to get agreement between CBI and TUC on legislative measures that

would go at least some way to meet trade union demands to expunge Thatchers

anti-union laws. At risk was the new governments carefully nurtured business-

friendly image on the one hand, and the support of the Partys union financialbackers on the other. The second task was to introduce a statutory national

minimum wage, an election pledge that had been bounced onto New Labour by itsparty conference. The Party leaderships anxiety that this might jeopardise growth

exceeded any ambition to redistribute income.

The negotiations over new trade union legislation were difficult, with the

government happy to let the CBIs views have a substantial influence. The

outcome, enacted in 1999, brought only a limited reversal to the Thatcher

legislation. Some minor restraints on trade union organisation were eased. The

main innovation in terms of trade union aspirations was the introduction of a

statutory recognition procedure. Union recognition would be required of a

reluctant employer if the majority of employees were already union members, or

where 40 per cent of eligible employees voted in favour. But the legal restraints onstrikes that had been introduced by the Conservatives were retained - on balloting,

picketing, secondary action and so on. The only significant changes made by Blair

were that strike ballots were made a little more anonymous, and it was made

illegal for employers to discriminate against strikers. The government was

determined not to be seen to be soft on strikes. And perhaps, strictly in private,

many union leaders were grateful for the procedural order that Thatchers anti-

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strike laws had brought to their rank-and-file. There were to be some other

innovations which could help trade unions. Employees facing a serious

disciplinary matter at work, whether or not unionised, were now entitled to be

accompanied by someone of their choice when brought in front of management.

That assured unions a formal role in workplaces where they were still present. A

new right was introduced in 2003 whereby workers could have learningrepresentatives to facilitate their broader training and education. That underlined

the positive face of trade unionism that the TUC wanted to promote. In 2005 a

Union Modernisation Fund was created, providing grants (eventually there were

67, totaling over 7 million) to unions to help them make better use of IT, improve

communications, enhance activist training and so on. Both directly and indirectly,

this had a widespread influence. By the time the Fund was wrapped up by the new

Coalition government in 2010 it had brought substantial improvements in the

professionalism of most of the larger trade unions (Stuart et al, 2006).

Outcomes:

It is futile to speculate on what might have happened in the absence of New

Labour. But we do have good measures of what did happen. Trade union

membership density continued to decline, slowly but steadily; from 31 per cent ofall employees in 1997 to 27 per cent in 2009 (Achur, 2010). Its decline in the

private sector continued; from 20 per cent in 1997 to 15 per cent in 2009. But

membership density also declined in the public sector; from 61 per cent to 57 per

cent. This was despite a government that was broadly sympathetic to, andfinancially dependent upon, trade unions, and which had passed substantial

legislation in 1999 to encourage employers to give them recognition.

A similar picture is evident if we look at indicators of collective bargaining. The

proportion of employees in workplaces where trade unions were present fell from

49 per cent in 1997 to 47 per cent in 2009. The proportion whose pay was affected

by a collective agreement fell from 36 per cent in 1997 to 33 per cent in 2009.

It is not only behaviour towards trade unions that has changed. The behaviour of

trade unions has changed. We have already noted the decline in industrial disputes

in the years preceding New Labour. This broadly continued up to 2009. The

average annual number of strikes per million trade union members, having fallen

to 32 for the 1990s, fell further to 19 for the period 2000 to 2009 (Office for

National Statistics, 2010a).

If we compare average figures over the two halves of the New Labour years, the

number of working days lost almost halved in the private sector, although it

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showed no clear trend in the public sector. We have also noted the tendency for

collective bargaining to become more consultative. There is ample evidence of a

decline in the perceived influence of trade unions at workplaces where they are

present up to the end of the 1990s. And this is how they perceived it themselves:

in the 2004 WERS survey, local trade union representatives and their managers

were in broad agreement that, over the main issues on which they interacted, theirrelationship was twice as likely to be characterised by consultation and

information exchange as by negotiation (Brown and Nash, 2008: 101).

If we look at the economic outcomes, this picture of declining trade union

influence is confirmed by detailed statistical analysis of the WERS survey and

Labour Force Survey (Blanchflower and Bryson, 2009). The wage effect of trade

unions diminished between the 1980s and the 2000s, whether one considers union

membership or recognition. But workers did enjoy a significantly larger union-

related wage premium in those (relatively rare) small workplaces with fewer than

25 employees which still had a union presence. Turning to employment growth,the significant negative association that unions had in the 1980s had vanished after

1990. Similarly, unions were associated with relatively poorer financial

performance of the firms where they had membership in the early 1980s, but thisdifference disappeared in the 1990s and 2000s. More amorphously, the perception

of managers that unions adversely affected the climate of employment relations

at their workplace also disappeared after the 1980s. The decline of trade unions

has thus been associated with a diminution of their apparent impact at the

workplace.

LESSONS WE CAN LEARN FROM IR

OF UK:

A labor agreement in Great Britain is not a legally binding contract.

Violations of the agreement by the union or by management carry no

legal penalties.

British unions are relatively powerful and strikes are more prevalent

than in the United States. British union membership has declined in recent years.

British labor agreements do not usually include provisions for

arbitration of disagreements or grievances.

Labor unions are relatively powerful (has decreased in recent years)

Strikes are more prevalent than in the United States.

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Labor agreements typically do not prohibit strikes and the general

public is more used to and tolerant of them.

System is not geared toward the efficient resolution of problems.

British in general still appear willing to accept conflict with resulting

strikes and lockouts as the price of protecting the rights of the

workers. Industrial democracy in Great Britain takes the form of collective

bargaining and worker representation through the use of teams.

British work groups elect a chief spokesperson or steward to

interface with management.

Union councils represent unionized employee to ensure workers are

treated fairly by management.

CONCLUSION:

The New Labour government saw no advantage in rebuilding that relationship.

Trade unions had become unpopular in the 1970s and Thatcher had played upon

that unpopularity with devastating effect electorally in the 1980s. The Labour

Party had long been heavily dependent on the trade unions financially 75 per

cent of its funds came from them in 1985 and knew that it could not look

business-friendly and independent unless it broke that link. By 2002, New Labourhad found alternative sources of finance and only 30 per cent of its funds came

from the unions. Ironically, by 2008, after a series of scandals linking the Party tothe sale of seats in the House of Lords had choked off those alternative sources,

dependence on unions was back even higher, at 90 per cent. A panic over the need

for union financial support for the 2005 election prompted an agreement with the

major unions (notably not with the TUC) called the Warwick Accord. Under the

terms of this agreement, New Labour politicians agreed to a shopping list of union

policy demands, of which the most tangible was the Union Modernisation Fund.

But this was far from the corporatist collaboration with union leaders so

characteristic of the 1960s and 1970s. Neither Blair, nor his successor as Prime

Minister, Gordon Brown, were close to trade unions or understood them. Although

Ed Miliband won the Party leadership in 2010 with union support, there is noreason to suppose him to be in any way different. Whether the discontents that will

accompany substantial public sector job cuts over 2011 and 2012 may provoke a

change of attitude in the Labour Party leadership remains to be seen.

The second question is how the period of New Labour government, so much more

sympathetic to trade unions than the preceding Conservative governments, altered

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British industrial relations. Central to answering this is the understanding that the

decline of trade unions and collective bargaining owes far more to the

intensification of competition in the wider economic environment than to any

governmental action.

What may endure for British industrial relations from the New Labour years is astrengthening of the practices of partnership and of conciliation. At workplace

level co-operative working will continue, whatever it is called. At the national

level, the success of the Low Pay Commission in creating and managing the

National Minimum Wage suggests that the social partners will, in established EU

tradition, continue to be centrally involved in the setting of minimum labour

standards. And as competition becomes ever more global, and collective

bargaining ever less adequate, statutory labour standards are likely to be an

increasing requirement of a civilised democracy. Similarly, the partnership upon

which Acass independence is based is likely to provide the template for

institutions for conflict resolution.

The practice of conciliation is likely to be in increasing demand in a world where

the competition for scarce resources will intensify. There is no appetite in Britishindustrial relations to return to the divisive years of the 1970s and 1980s, even if

unions had sufficient mobilising capacity. But also the nature of the problem has

changed. The extraordinary facility of electronic communications to enable the

mobilisation of mass discontents has coincided with the withering of the collective

representative structures that in the past would have helped the resolution of those

discontents. Whether in Glasgow or in Guangzhou, the challenge will be to nurture

worker representation in order to facilitate conciliation. Here New Labour mayhave left something on which can be built.

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industrial relations in uk.doc