Current trends in collective bargaining and pay determination

Current trends in collective bargaining and pay determination Alastair Hatchett Visiting Fellow: University of Greenwich

Changing contours of collective bargaining • Long-term decline or resilience? • IDS experience of monitoring collective pay agreements over 45 years • The decline of industry bargaining (2 -tier) • The rise of large multi-site national companies • Sector differences & the size of companies • Trade union density: sector, skills & gender

Resilience of private sector collective pay bargaining Areas where strong car manufacture aerospace & defence electricity, gas & oil banking & insurance refineries & chemicals rail, bus, haulage telecoms newspapers Areas where weak small construction small retail (+ M&S, JL) hotels, fast food etc small manufacturers info/communications printing Chemical industry employers (CIA) say that of their 150 member companies 85% are unionised (October 2013)

Reasons for strengths and weakness Strengths derive from negotiating the rate for the job for particular skills and qualifications – skilled engineers, electricians, radiographers, teachers, nurses, midwives, scientific officers. Require stable employment and larger workplaces. Weaknesses arise from low-paid, unstable employment, high staff turnover, low-skilled work. Small workplaces. Fear of bosses.

Examples of large companies with collective agreements setting pay • Jaguar Land Rover, Ford, Honda, Nissan, Toyota, Vauxhall, Rolls-Royce Motors • Tesco, Morrisons, Asda, Retail Co-ops • RBS, HSBC, Lloyds Banking Group, Santander • British Gas, EDF, E. ON, RWE, Ineos • Rolls-Royce Aerospace, BAE Systems • British Airways, Virgin Atlantic, Heathrow • FT, Guardian, BBC, Daily Telegraph,

Impact of recession and austerity • In recession, unions key to negotiating short-time + temp pay changes (eg JLR & Honda) • In the crisis, banks forced to merge: all harmonised terms and maintained collective agreements; few had pay freezes! • Post recession some larger firms matched RPI • Pay freezes more in non-union areas? • Government pay policy has weakened collective pay arrangements in the public sector

Challenging perceptions of union representation and influence on pay • Received wisdom: no unions in private sector • WERS 2004: 65% of workplaces with 500+ employees set some pay via collective bargaining • BIS 2013 on TU density shows 49% in utilities, 40% in transport, 18% in manufacturing, 17% in finance, 14% in construction • A problem with WERS is it is a survey of small organisations (89% of workplaces below 50 employees in WERS 2011)

WERS findings: changes in collective bargaining coverage 2004 to 2011 Employees covered by collective bargaining Public sector Private sector All 2004 69% 17% 29% 2011 44% 16% 23% Workplaces 100% collective bargaining 2004 50% 5% 11% 2011 39% 3% 8%

National pay in large companies • Previous WERS research: long-term shift in pay setting from industry > company > plant • But picture more complex: piece-work coexisted with industry bargaining in 1960 s • National pay bargaining exists today in large companies (banks, supermarkets, BT, JLR) • Industry barg today: NAECI, Electrical JIB, LPC • Harmonisation: Lloyds Banking + Santander

Public sector pay determination undermined by Government pay policy • WERS survey in 2011 captured frozen pay + bargaining frozen or limited • Treasury undermines ‘independence’ of PRBs • PRBs = evidence-based collective bargaining? • In 2011/12 NHS employers engaged in talks on progression with NHS trade unions • Highly unionised: eg female/professionals • The future: fragmentation vs collectivism ?

WERS misunderstands interaction of employers, unions and PRBs ‘A fall in the % of public sector workplaces using multi-employers bargaining – from 58% in 2004 to 44% in 2011 – lies behind the decline in public sector pay bargaining. The % of public sector employees covered by collective bargaining in Health has fallen from 74% in 2004 to 14% in 2011, in part because the PRB has resumed responsibility of pay after Af. C negotiations were completed. ’

Is the Pay Review Body process similar to collective bargaining? • WERS says ‘it is arguable’ that it is similar, but they conclude that it is not (but ambiguous) • For the purposes of assessing employment relations it should be seen as similar • After all, WERS 2011 finds ‘ 96% of public sector employees worked in a workplace with at least one union recognised for pay bargaining’ • What about schools, the STRB and PRP?

Case studies from the recent past • JLR: from short-time in 2009 to export success in 2011 -2013 • Lindsey oil refinery dispute: employers and unions uphold NAECI agreement • Electrical contracting: national agreement upheld in face of employer challenge • Tanker drivers: from fragmentation to collective action

The role of large firms in setting market pay levels • IDS research on benchmarking shows large companies in each industrial sector have wide spread influence • Smaller firms want to check their pay rates for key skills against those of market leaders • Market-based pay very important in the last decade • Union influence on pay therefore wider than just where unions are recognised for pay setting