1999 Annual Review for the United Kingdom

This record reviews 1999's main developments in industrial relations in the United Kingdom

Economic developments

1999 saw GDP growth decrease to 1.2%, from 2.2% in 1998 and 3.5% in 1997. However, inflation slowed, to 1.3% compared with 3.2% in 1998 and 2.8% in 1997. The unemployment rate decreased slightly from 6.4% (1,804,000 people) in 1998 to 6.3% (1,778,000) in 1999, continuing the decline which has been witnessed since 1993, when the rate stood at 10.7% (2,996,000). Public debt as a percentage of GDP fell from 41.4% in 1998 to 39% in 1999, continuing a decline from the recent high-point of 44.2% recorded in 1996.

Political developments

The way in which the UK is governed changed in a major way during 1999 through the devolution of some power to Scotland, Wales and Northern Ireland. Elections to the Scottish Parliament and Welsh Assembly resulted in the installation of a Labour-Liberal Democrat coalition in Scotland and a minority Labour administration in Wales. However, industrial relations legislation continues to apply on a Britain-wide basis. Traditionally, separate but parallel legislation has generally applied in Northern Ireland, which is now expected to be dealt with by the new Northern Ireland Assembly (which was suspended in early 2000) The Labour government elected in 1997 continued in office; the next general election is due by May 2002 but is widely expected in the spring of 2001.

Collective bargaining

As there is no system for registering collective agreements in the UK, establishing an accurate assessment of the number of agreements is extremely difficult. (One estimate from the early 1990s suggested that there were that some 10,000 "pay control points" across the UK economy at which negotiations between employers and trade unions took place.) Collective bargaining in the UK continues to be highly decentralised: most bargaining is at workplace or company level, with little multi-employer bargaining taking place outside the public sector. Some UK companies have replaced collective bargaining with individual employment contracts, but research published in February 1999 by the Department of Trade and Industry suggests that this has generally resulted in a greater standardisation of terms and conditions of employment (UK9902186N).

Pay

Collectively-agreed basic pay rose by an average of 3% during 1999, with the increase in average earnings being higher, at 4.9%. Despite the continuing recession in manufacturing there seemed to be little in the way of pay freezes or cuts. A survey by the Engineering Employers' Federation highlighted the fact that the level of earnings in industries such as engineering has grown at a faster rate than pay due to workforce reductions, skill shortages and increased overtime working (UK9901171F).

In the public sector, the government agreed to implement above-inflation pay awards. It accepted in full the recommendations of independent pay review bodies covering 1.3 million public sector workers, including teachers, nurses, doctors, judges, the armed forces and senior civil servants. The average increase recommended was 4.1% from April 1999, but this figure included wide variations between the different pay review bodies and within occupational groups, reflecting recruitment and retention problems (UK9903188F).

Working time

Average collectively-agreed normal weekly working time during 1999 was 38.4 hours - a slight increase on the previous year. Average actual weekly working hours fell slightly to 40.0 hours.

The number of full-time employees stood at almost 18 million, whilst for part-time employees the figure was almost 6 million. There has been a significant increase in the number of self-employed part-time workers, which over the last year grew by 5.4%. The distribution of hours worked by UK workforce is set out in table 1 below.

Source: Labour Market Trends, December 1999.

The largest increase over the previous year (3.1%) was in the number of employees working over 45 hours.

The 1999 Warwick Pay and Working Time Survey, covering four sectors, found that most organisations have recently introduced some form of change to working time arrangements. This was so for 78% of respondents in the printing industry, 69% in engineering, 69% of National Health Service (NHS) trusts and 92% of retailers. In all four sectors, the main changes revolved around changing shift patterns to increase total available hours, but in the NHS and retailing there was also an increasing trend toward part-time working. The survey also gives some indication as to whether working time issues were negotiated or consulted over, as shown in table 2 below.

Source: 1999 Warwick Pay and Working Time Survey.

Equal opportunities

The main driving force of equal opportunities policies in UK companies has traditionally been legislation rather than collective bargaining. However, in recent years there appears to have been some increase in the incidence of bargaining to promote equality, with unions and employers seeking to introduce positive workplace action to complement regulatory requirements. The approach taken by the December 1999 parental leave Regulations (UK9912144F), which facilitate collective or "workforce" agreements in place of the statutory provisions, is likely to encourage such a development. During the year, the government rejected proposals from the Equal Opportunities Commission for a major reform of UK sex equality laws. Instead ministers stressed the importance of working in partnership with employers and employees to foster change, and of guidance on good practice (UK9909130N) - for example, in November it issued a draft code of practice designed to encourage employers to eliminate unfair age discrimination in employment (UK9811161N).

One high-profile example of collective bargaining over equal opportunities issues was at the Ford motor company, where an employment tribunal case over the racial abuse of an Asian employee led to an agreement between the president of the company and senior trade union leaders on new measures to combat racial discrimination and harassment within Ford's UK plants (UK9911139N).

Job security

The incidence of employment security agreements in the UK appears to be on the increase, but their coverage remains limited. The results of the 1998 Workplace Employee Relations Survey (WERS), published in September 1999, show that 8% of all private sector workplaces and 21% of establishments in the public sector are covered by a job security or "no compulsory redundancy" policy. There are, however, significant sectoral variations. In financial services, for example, where staff in almost 40% of workplaces are covered by such a policy, major restructuring and job losses over the 1990s have led to job security becoming a major issue of concern, and some of the UK's leading financial services organisations have concluded agreements or made commitments on employment security (UK9910135F).

Training and skills development

Traditionally, collective bargaining over vocational education and training issues has been relatively rare in the UK, but trade unions are now increasingly attempting to incorporate training into the bargaining agenda through initiatives such as the Bargaining for skills project of the Trades Union Congress (TUC). Company-sponsored employee development schemes and open learning facilities appear to be on the increase. These typically encompass employer-funded or -subsidised voluntary personal development activities which need not be job-specific and which take place in employees' own time. Such developments are likely to be given further impetus by government initiatives to promote lifelong learning, such as "individual learning accounts" and the Union Learning Fund established to support trade union projects to promote vocational education (UK9906109F). Unions and employers' organisations are also involved in the development and delivery of the government's University for Industry initiative.

Other issues

The advent of the new millennium generated extensive and high-profile bargaining over the issue of incentives for working over the extended Christmas/New Year holiday period and dealing with the possible consequences of the millennium computer "bug". In the event, early expectations of a pay bonanza for staff proved largely unfounded, except for those in key sectors such as information technology (UK9911140F).

Legislative developments

The year saw a high level of legislative activity in the industrial relations sphere, with further moves to implement the package of individual, collective and "family-friendly" employment rights set out in the Labour government's 1998 Fairness at work white paper.

The principal developments were the introduction of the UK's the first-ever statutory national minimum wage on 1 April 1999 (UK9904196F) and the enactment of the Employment Relations Act 1999 (UK9902180F), the phased implementation of which began in the autumn (UK9912145F). Other key legislative developments included the reduction in the qualifying period of employment for protection against unfair dismissal (UK9905104N), the reform of the statutory consultation procedure on redundancies and transfers (UK9910134F), and the introduction of new statutory parental leave entitlements (UK9912144F). In December 1999, the government laid draft Regulations before Parliament to implement the EU European Works Councils (EWC s) Directive (UK0001146N).

Successive legislative changes gave rise to frequent employer criticisms of the growth in labour market regulation (UK9905106N and UK9909131N), prompting ministerial pledges to reduce the regulatory burden on businesses (UK9903195N and UK9906111N). Government proposals to amend the Working Time Regulations 1998 in response to employer concerns were bitterly opposed by trade unions (UK9907117N), but were implemented in December 1999.

The organisation and role of the social partners

In May 1999, a TUC analysis of official statistics showed that the 18-year decline in trade union membership in Britain (ie excluding Northern Ireland) had been halted, steadying at some 6.8 million employees (UK9905105N).

The merger of three unions in the financial services sector in May to form UNIFI (UK9903193N) was followed in November by confirmation that two major unions with substantial memberships in manufacturing - Manufacturing Science Finance (MSF) and the Amalgamated Engineering and Electrical Union (AEEU) - were engaged in talks about a possible merger which would create the UK's second largest union (UK9912142N). On the employers' side, there were press reports that the Confederation of British Industry (CBI) and the British Chambers of Commerce were discussing a possible organisational link-up.

Industrial action

Official statistics on the incidence of labour disputes in 1998, published in June 1999, showed that strike activity in the UK remains at its lowest level since records began in 1891. The number of recorded disputes was the smallest ever and the number of workers involved the fewest for 70 years. The number of working days lost through industrial action was lower than every previous year, with the exception of 1997 (UK9907215F). The available statistics for 1999 suggest that strike activity remains at historically low levels. Strikes occurring during the year included those at Lufthansa (UK9907121N) and BT (UK9912143N) and by university teachers (UK9907215F). Elsewhere, industrial action was threatened, but not carried out, by teaching unions over the introduction of performance related pay (UK9904199N) and by junior doctors over working time grievances ( UK9910136N).

National Action Plan (NAP) for employment

As in 1998, the government initiated consultation with CBI and TUC on the content of its 1999 UK National Action Plan (NAP) for employment, in response to the EU Employment Guidelines. Officials of the two organisations drew up a joint contribution to the Plan along similar lines to the previous year's, but as well as covering the issues of employability and the modernisation of work organisation, the contribution also commented on the development of equal opportunities policies (UK9904198N).

The impact of EMU on collective bargaining and industrial relations

Although the UK remains outside the euro single currency, it has been argued that EMU will have similar implications for industrial relations in the UK as in the 11 countries which currently form the "euro-zone" (see A preliminary review of the industrial relations implications of economic and monetary union, K Sisson, J Arrowsmith, M Gilman and M Hall, Warwick Papers in Industrial Relations no. 62, 1999). As both home and host to a larger number of multinational companies than any other EU country, the UK is unlikely to remain immune from the industrial relations consequences of the wage transparency provided by EMU and the enhanced potential for cross-country comparisons, nor the pressure for restructuring and the intensification of "regime competition" that EMU is likely to stimulate.

Both CBI and TUC welcomed the government's "national changeover plan" for potential UK entry into the single currency which was outlined by the Prime Minister in February 1999 (UK9902184N). Representatives from both organisations have been involved in a government committee to oversee the preparations for joining the single currency. While the leadership of both CBI and TUC support eventual euro-entry, there is a vocal minority in each camp which takes a more "euro-sceptic" stance.

In January 1999, the TUC published a report Preparing for the euro, which reviewed a range of key issues concerning EMU without reaching a conclusion about the desirability of UK entry, and in May the TUC held a major conference on the issue at which a range of views were expressed by union participants (UK9905102F). A resolution at the TUC's annual congress in September called on the government actively to pursue UK entry into the euro early in the new decade, but the TUC's two largest affiliates did not support this policy (UK9909129N). In July, following an extensive consultation exercise involving member companies, the national council of the CBI adopted a policy statement confirming its support for the principle of UK entry into EMU once key conditions for success are in place (UK9907118N).

Employee representation

The Employment Relations Act's statutory trade union recognition procedure - the legislation's most contested element - is not scheduled to come into force until after Easter 2000 (UK9912145F) but is already influencing employer attitudes, with an increase in union recognition agreements being reported (UK9902183N). There were further developments in the area of issue-specific employee representation mechanisms in the absence of union recognition, with amendments to the statutory consultation procedure on redundancies and transfers (UK9910134F) and new provision for "workforce agreements" with non-union employee representatives on parental leave issues (UK9912144F).

In October 1999, the general secretary of TUC strongly criticised the UK government for continuing to oppose the draft EU Directive on national information and consultation rules (UK9911138N). The UK government and CBI both consider that the proposal would be inconsistent with the principal of subsidiarity and would cut across existing practices.

Consultation took place on draft Regulations to implement the EWCs Directive in the UK (UK9907220F) and revised Regulations came into force on 15 January 2000 - one month later than the implementation date set by the 1997 EWCs "extension" Directive which reversed the UK's "opt-out" from the original EWCs Directive. The TUC is disappointed at the absence of any guaranteed role for recognised unions under the Regulations in selecting UK members of special negotiating bodies and statutory EWCs based on the Directive's subsidiary requirements.

New forms of work

Official statistics show increases over the 1980s and 1990s in the number of people working part-time, as self-employed, for an agency or as other types of temporary worker. WERS 1998, published during 1999, documented the distribution of part-time workers across UK workplaces according to sector, workplace size and so on. Across all workplaces, full-timers accounted for 75% of employment and part-timers 25%. Part-time workers were in the majority in 26% of all workplaces, notably in wholesale and retail, hotels and restaurants and education and health, and also more prevalent in workplaces belonging to very large organisations and in private sector workplaces with no skilled employees. The use of subcontracting and other non-standard forms of labour is also widespread. WERS reported 90% of workplaces using subcontracting, 44% using fixed-term contracts. 28% temporary agency workers and 13% freelance workers.

There was no major legislation during 1999 dealing with part-time or temporary employees in the UK but Regulations to implement the EU part-time work Directive are due to be introduced by April 2000.

New, more flexible forms of work organisation have continued to feature prominently in UK industrial relations debates, following company agreements covering issues such as teamworking, working time flexibility, job flexibility and security and harmonisation/single status, as well as the introduction of more generalised "partnership" arrangements (UK9906108F and UK9907214F). On the issue of teamworking - a central element of the new forms of work organisation - WERS 1998 shows that two-thirds of UK workplaces reported teamworking among the core workforce, but in only 3% of workplaces did this correspond fully to the model of autonomous teamworking.

Other relevant developments

"Partnership" has been a key theme of the Labour government's industrial relations policy (UK9907214F). TUC too has been advocating a "partnership" approach and held a high-profile conference on the issue in May which was addressed by both the Prime Minister and the director-general of the CBI (UK9906108F). However there is disagreement over the interpretation of "partnership", with both the government and CBI stressing that workplace partnership can take non-unionised as well as unionised forms, whereas TUC sees union involvement as essential to effective partnerships (UK9907116N).

Outlook

Most of the government's manifesto commitments in the industrial relations field are now in place. Although the government regards the Employment Relations Act 1999 as an "industrial relations settlement" to last for the remainder of the current parliament, the phased introduction of the Act's provisions and associated regulations will inevitably entail successive changes to the UK's employment law framework over 2000 and perhaps beyond, fuelling business concerns about the ability of employers, particularly small firms, to assimilate frequent regulatory reforms. On past experience, it is the statutory trade union recognition procedure (UK9903189F), which is not scheduled to become operative until mid-2000, which is potentially the most controversial aspect of the Act (UK9912145F).