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Motivation Factors at Tesco Essay

The history of labour relations in the UK is a story of the gradual empowerment of the working classes. The system of industrial relations in the United Kingdom (UK) is traditionally characterised 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 peaceful picketing, 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 trade unions 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 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 1978–1979 ‘winter of discontent’, where public sector trade unions engaged in regular and lengthy industrial action over the incumbent Labour government’s policy of public sector pay restraint.

A conservative government, led by the then Prime Minister Margaret Thatcher, was elected in 1979 on an anti-trade union, neo-liberal platform. Successive governments 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 government’s approach to employment relations was the use of legal individual employment rights to protect workers. Most notably, a national minimum wage was 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 membership continued 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 would now 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 be rescued 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, as of 2009, it is too early to identify any concrete trends. 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 sector was 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 some organising 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 TUC affiliated 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 UK’s largest union, with a membership 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.

Employer organisations

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 and bind 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 trade associations (around 150). Owing to the largely decentralised nature of employment relations in the UK, the role of employer organisations in the country’s 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 employer organisations 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%. Industrial relations

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 a small 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, no formal mechanisms exist for the coordination of wage bargaining levels in the UK. 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 more decentralised. 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 have been 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 a specific area of the UK.

Industrial conflict

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 ACAS’s work is individual conciliation. The amount of individual litigations and employment tribunal cases has increased considerably within the UK 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 figures for 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 government’s policy on public sector pay restraint. More complete statistics are available 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 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 corporatism has 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 had some 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 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 country’s HM Revenue and Customs (HMRC) department. 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 recommends appropriate 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 in family 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 GBP 12.50, 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 pay gap stood at 17.4% in 1998, so the figure has substantially fallen over the last decade.

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