Training News - April 2010
Economy
As polling day looms relentlessly the Budget deficit and the forthcoming election have dominated the headlines and the minds of politicians. The problem remains how to engage with an electorate disaffected not just by the global banking collapse that began the deepest recession for 60 years, but also by the MPs’ allowances scandal.
The suspension from the Parliamentary Labour Party of three former ministers for “bringing it into disrepute” so increased the feeling of deep public unease about the political establishment that the popular perception became one of widespread corruption in public office almost overnight. In March, Stephen Byers, Patricia Hewitt and Geoff Hoon (all Blairite MPs and due to retire after the election) were revealed by Channel 4’s Dispatches programme to be prepared to assist a lobbying firm for money. With somewhat disarming frankness Geoff Hoon explained his actions as “showing off”. Unfortunately for Mr Hoon and his colleagues the anger of senior government members such as Jack Straw means that they are likely to kiss goodbye to a peerage on leaving office.
Worse was to follow. On 28 March the Observer printed a thoughtful article entitled ‘Cash for promise’ scandal has stirred up murky waters’ exposing the secretive world of the lobbyist. It also reported that two more Labour ministers, Adam Ingram and Richard Caborn, were filmed offering to use their contacts in exchange for fees. On the same day the Mirror countered by accusing a “shameless David Cameron of raising more than £18m selling access to himself to investment bankers, hedge fund bosses and other super-rich financiers”. Therein of course is the dilemma for the Conservatives who are traditionally associated with representing the interests of capitalists and the establishment.
Sadly the new cynicism generated by such scandals is affecting not just the young and unemployed but also the middle aged and elderly who traditionally are well represented at the ballot box and now complain of feeling disenfranchised. Politicians of all parties have a long way to go if they are to regain public trust. For the moment it would appear that the Libdems have won the first round of TV debates with Vince Cable and Nick Clegg securing the popular vote. However, they would do well to remember the words of Harold Wilson, “a week is a long time in politics”, and three is even longer.
Strikes
Industrial unrest, which had become a rare phenomenon in recent years, returned to plague the unfortunate traveller at the beginning of the holiday season at Easter. The acrimonious cabin crew strike at BA rumbles on as the union Unite takes on chief executive Willie Walsh. This has become a very personal dispute as the company struggles for its financial survival. It is estimated that cost BA up to £45m in March as the airline carried 11.4% fewer passengers. The disruption to flights caused by the cloud of volcanic ash from the Icelandic eruption could not have come at a worse time.
On the railways the Rail Maritime and Transport Union (RMT) unashamedly put pressure on the government in the run up to the election, with a plan for four days of rush hour strikes just as commuters returned to work after the Easter break. Network Rail, like BA before them, successfully sought and gained an emergency injunction in the High Court and the national strike, the first for 16 years, was called off. Unsurprisingly Network Rail was pleased while Bob Crow, RMT’s general secretary, was “disappointed”. He described the decision as “an attack on the whole trade union movement” and pledged to re-ballot his members. John Humpreys, the formidable BBC Radio 4 Today presenter, further infuriated the volatile Mr Crow by describing the High Court’s decision as raising suspicions that the ballot was rigged.
Clearly the industrial climate is changing fundamentally. The TUC general secretary Brendan Barber warned of difficult times ahead, saying: “Whoever wins the next general election will have to think very carefully before they reach for the axe and what that will mean not only for pay and living standards but for the quality of services that the public sector delivers.” The New Statesman took a different view, pointing out that union membership is down from a high of 13 million in 1979 to 7.5 million, and warned the BA strikers that they were putting their jobs at risk. Nevertheless the beleaguered UK traveller faces yet another bank holiday challenge, this time from a most unlikely group of strikers, the AA patrol staff. They plan eight days of strike beginning over the May bank holiday. Not known for their militancy (this is the first national strike in the AA’s 100-year history) the Independent Democratic Union have called the strike because of the threat posed to their members by the £190m deficit in the pension scheme. The time bomb of demographic change and the pension scheme deficits has begun to tick and will have an irreversible effect on the global economy.
Dispute reconciliation
An excellent and timely Acas policy discussion document published in March and entitled Riding out the storm - managing conflict in a recession and beyond, examines these recent developments in industrial relations and puts them in context. The author Sara Podro attributes the emergence from recession as the cause of the reduction in conciliated disputes and subsequent increase in industrial stoppages, wildcat strikes and days lost to industrial action. Clearly as employers negotiate new terms and conditions in the struggle for survival, stress levels inevitably rise. So do the opportunities for infiltration by groups from the extreme left and right seeking to cause social unrest. Additionally, new technology changes the way workers are able to organise themselves. Networking sites such as Facebook and Twitter provide an excellent means of communication, making it possible to set up demonstrations and industrial action nationally or even internationally in a matter of seconds.
Increased levels of stress and bullying at work are undeniably a feature of the recession, as employees and employers are locked into this battle for survival. Cary Cooper is professor of organisational psychology and health at Lancaster University and the first patron of the National Bullying Helpline to resign during the controversy surrounding its founder Christine Pratt. In an article in People Management magazine, he insisted that anti-bullying helplines still have a vital part to play in supporting employees through these difficult times. The TUC, on the other hand, in its latest touchstone pamphlet entitled The Red Tape Delusion, claims that better regulation introduced since 1997 to protect the low paid and working parents has made the UK labour market more resilient to this recession.
In the private sector one organisation which has navigated the troubled waters of industrial relations successfully is the John Lewis Partnership. In March this most successful of retailers with its unique business model of shared ownership and employee engagement threw open its doors to a BBC 2 television crew in a fascinating three-part documentary, Inside John Lewis. The programme was filmed during the summer of 2009 and contained many frank exchanges as the camera followed managing director Andy Legge as he went about his daily routine. Some partners did express doubts about the sustainability of the partnership model against a background of recession and spoke of changes and slimming down. However, it seems their concerns are ill founded, at least for the moment. In March this year the company’s 70,000 employees shared a £140 million bonus pot at a rate of 14% of annual salary. This ranged from £1,500 to the average part timer, while Charlie Mayfield, the executive chairman, was entitled to receive £100,000. Compare the experience of the John Lewis Partners with that of the less fortunate employees of Cadburys who were taken over by the American company Kraft earlier this year.
Employment Tribunal figures
The Employment Tribunal statistics for 2008/9 show a 20% decrease in the number of claims and new figures released in mid March by Acas reveal a sharp increase in employees seeking to avoid employment tribunal claims. Monthly calls to the Acas helpline which have been referred to the early conciliation service, Pre Claim Conciliation (PCC,) have almost doubled since September 2009, and Acas estimates that over 5,000 tribunal claims have been avoided. The PCC was launched in April 2009 with the repeal of the statutory disciplinary and grievance procedures and the introduction of the new Acas Code of Practice.
There is good news for claimants who opt for the tribunal route and are successful, but have difficulty in obtaining the award from the previous employers. From 6 April 2010 a Tribunal Fast Track Service will be introduced using the High Court Enforcement Officers. The only cost would be a £50 court fee needed to issue a writ to seize assets recoverable because it will be added to the debt owed by the employer. Research published by the Ministry of Justice in May 2009 showed 39% of people granted awards by tribunals had not been paid.
Unemployment, the Budget and NI contributions
The latest unemployment figures and the budget deficit were lower than expected. Chancellor Alastair Darling delivered a cautious March budget recognising that victory at the polls belongs to whoever can convince voters of their party’s ability to manage the economy. He also announced borrowings £11billion lower than had been predicted in December.
Businesses may have been placated by Mr Darling’s budget but they were incensed by his Pre Budget statement in December to increase National Insurance contributions by 1% from April 2011. In January the CIPD and the British Chambers of Commerce mounted a campaign urging the government to drop the increase because it may endanger the economic recovery. At the beginning of March CIPD joined forces with the CBI, British Retail Consortium, Federation of Small Business, Forum of Private Businesses, Federation of Small Businesses, Institute of Directors and the Recruitment and Employment Confederation to petition the government against the planned rise.
Encouraged by the groundswell of opposition, George Osborne, Shadow Chancellor, put the NI increase centre stage of the Conservatives’ election campaign. He vowed the Conservatives would reverse the bulk of the increase by cutting £6 billion of the £11 billion of “waste” from the public sector identified by Mr Darling. As 23 of the UK’s businesses, including Marks and Spencer and Next, backed the Conservatives saying the 1% increase was a “tax on jobs”, David Cameron called it a “significant” moment in the election campaign. Lord Mandelson retorted that the 23 major firms had been deceived by the Conservatives and the pledge to axe part of the rise was a “cynical deception” that could not be achieved without increasing VAT. The debate rumbles on.
Banking pay and regulation
Two Northern Rock directors, David Baker and Richard Barclay, became the first senior banking executives to be penalised by the Financial Services Authority (FSA) since the banking crisis began. Baker, the former deputy chief executive, was fined £504,000 and permanently barred from working in the industry, while Barclay was fined £140,000 and prohibited by the regulator from performing any significant role.
Margaret Cole, director of enforcement and financial crime at the FSA, said: “This is a loud and clear message that we are serious about taking action against senior directors where they step over the line.” The FSA has now expanded its investigation to include David Jones, the former head of finance at Northern Rock. Bradford & Bingley, HBOS and Royal Bank of Scotland are also said to be under investigation by the FSA.
The misreporting of the mortgage arrears figures at Northern Rock pales into insignificance when compared with the goings on at Goldman Sachs. The Wall Street regulator, the Securities and Exchange Commission, has charged the British-based Goldman Sachs banker Fabrice Tourre with fraud. The SEC claims that Tourre created sub-prime mortgage investment deals that were designed to fail. The FSA was called upon by Gordon Brown to investigate “immediately” and it has now launched an enquiry, saying: “As you would expect the FSA is investigating the circumstances of this case and whether there are any implications for the UK-regulated entities of Goldman Sachs.” Goldman Sachs has caused outrage by announcing record results and setting aside £3.6billion in bonuses to pay its bankers in the first three months, as well as pledging to pay Tourre his bonus despite his fraud charge.
Following the controversial takeover of Cadbury’s by the American food giant Kraft (see Dispute Resolution above) the Unite union launched a campaign for a “Cadbury’s law” designed to stop speculators making a quick profit on takeovers on public interest grounds if a company is designated “strategic”. The move has been supported by the Libdems and it is included somewhat vaguely in the Labour Party manifesto. Whoever wins the next election will have to tackle the wholesale abuse that occurs routinely with senior executives and bankers pay and reward as a matter of priority.
