Chapter 2 - Building social partnership
General Council Report Chapter 2
Building Social Partnership
Introduction
Social partnership has been a major theme of the TUC's work in the past year. The main policy priorities were set out in the statement 'Partners for Progress - Next Steps for the New Unionism' which the General Council approved in February and which was discussed at a special conference of unions on 10 March. It took account of resolutions of the 1996 Congress, including Resolution 27 on social partnership, and it has been widely discussed by union conferences and executives. It is presented to Congress for approval.
This section also reports on the work of the General Council on economic, industrial and social issues, including the two Budgets since last Congress, the campaign for a national minimum wage; work on competitiveness and stake holding; work with unions in both the public and private sectors; education and training issues; devolution and the environment.
2.1 Partners for Progress In February the General Council approved a key statement of strategic priorities, Partners for Progress: Next Steps for the New Unionism. The main theme of the statement was the need for social partnership and the statement set out how partnership could help meet the priorities of jobs, investment, training and improving industrial relations. The statement also explained how social partnership could work at the national level and outlined the trade union Movement's priorities for a new Government.
The statement was discussed by affiliates at a special Conference on 10 March and a video illustrating the success of social partnership at the workplace level was shown. There was widespread support for the approach of the General Council at the conference and the statement has since been discussed by unions either at their Executive Council meetings or at their annual conferences. Throughout this extensive consultative process there has been a general welcome for the main priorities identified by the General Council and support for the approach of social partnership, provided there are minimum standards in the labour market and strong and independent trade unions.
The election of the Labour Government on May 1 has changed the political landscape. A rapid start has been made on tackling many of the long-standing points on the
agenda of Congress and set out in Partners for Progress. In the general area of employment, the measures taken include:
. The signing of the social chapter. This has been incorporated into the Amsterdam Treaty, along with a new EU Employment Title; . The right to join a union for GCHQ staff; . The repeal of the burden of check-off authorisations; . Early legislation on a National Minimum Wage and the speedy establishment of the Low Pay Commission; . The new Government's Budget where the action taken on jobs, investment stability and opportunities for all reflect the TUC's own priorities; . The promise of repeal of Compulsory Competitive Tendering in local government and the development of a best value model; . Rapid moves to establish referenda for devolution to Scotland and Wales; . An extensive process of consultation with a view to developing Regional Development Agencies in the English regions. By any measure, these form an impressive list for three months' work. Yet the underlying problems of the UK economy remain:
. There are too few world-class companies and a long tail of below-par ones, ill- equipped to be agile in the global market; . Training and skills levels remain low by the standards of many other advanced industrial nations; . There remain major problems of unemployment, especially long-term unemployment, and too many people are excluded from economic growth; . Employment insecurity remains high, caused by a corporate governance system heavily biased in favour of short-term returns to shareholders; . Sterling is overvalued and is making for an unstable monetary framework; . Public services need more investment and higher staff morale and the Welfare State needs reform; . There are momentous decisions to be made in the EU about Economic and Monetary Union, enlargement and reform of institutions and voting procedures.
The TUC and its affiliates have a major part to play in helping tackle these problems. An engagement will be needed with employers' organisations, particularly the CBI, Government and counterpart bodies in the EU, just as at the company and plant level progress can only be made in tackling the challenges of globalisation and technology on the basis of partnership.
The General Council commend to Congress their statement Partners for Progress: Next Steps for the New Unionism.
Partners for Progress video
A video exploring partnerships between trade unions and employers in the workplace was made in early 1997 and shown at the Partners for Progress Conference on 10 March. Produced for the TUC by independent production company CTN, the video features five workplaces - Jaguar Cars in Coventry, United Distillers in Glasgow, EXi in Salford, Lambeth Health Trust in London and the Electricity Supply Board in Ireland. Interviews with trade union representatives and managers from each explore the motives for partnership, the difficulties and successes. The video shows how partnerships between trade unions and employers are delivering benefits to employees and to business in different industries and regions. Peter Cassells, General Secretary of the Irish Congress of Trade Unions, describes the social partnership agreement between ICTU and Irish Government and how the Irish economy and Irish workers have gained as a result.
A copy of the video was sent to every affiliated union and to employers organisations and political parties. In addition, it has been added to the TUC publications list and is selling well. It will be shown to the 1997 Congress.
2.2 Budget submissions and reaction The TUC's Budget Submissions have continued the campaign for full employment and investment in people and against job insecurity. This work prior has been guided by the General Council's Full Employment Task Group (FETG) and has taken into account Composite Resolutions 15 and 19.
BOX BOX
| Full Employment Task Group General Council: Mr R Bickerstaffe (Chair), Mr E Sweeney, Mr D McAvoy, Mr A I Young, Mr K Jackson, Ms A Gibson, Mr J Edmonds, Ms M Vannet, Mr J Sheldon, Ms H McGrath. TUC staff: Mr Bill Callaghan (Secretary), Mr Ian Brinkley, Mr David Coats, Mr Neil Stoessel and Mr James Vizard. |
1996 Budget Campaign
The TUC's Budget Submission to the previous administration, A Budget for Skills and Security, was published in September 1996. The main theme was that labour market insecurity and the growth of casual employment were undermining both the economic recovery and investment in people. The submission put forward the idea of a large scale employment and training programme for the long term unemployed, based on an idea developed by the Institute for Public Policy Research (IPPR).
A seminar around these themes and proposals was held in the Barbican Centre, central London, in November immediately before the 1996 Budget, involving speakers from the CBI, the WISE Group, and the TEC National Council. An overnight analysis of the Budget was prepared and widely distributed the day after.
The themes of insecurity and under-investment also featured in a series of reports on the labour market produced in the period up to the election. These included comparisons between the full extent of unemployment and social exclusion in the UK and other EU countries. 1997 Budget Campaign
The TUC's 1997 Budget Submission was published on May 21. The Submission's main themes were investment and jobs, with a major focus on the New Deal programmes.
The Submission argued that it would be premature to slow the economy through interest rate rises or tax increases. However, if by the time of the Budget the Chancellor believed additional action was required this should be through tax rather than interest rate increases in order to take some of the pressure off the exchange rate and help the traded and manufacturing sectors.
The Submission noted the Chancellor had already given the Bank of England independence in setting interest rates. However, although the new Monetary Policy Committee of the Bank had been asked to make a priority the maintenance of stable prices. It also had to take account of the Government's growth and employment objectives. The opening up of the Court to wider industrial interests was welcomed.
The Submission also argued for a re-balancing of the economy through faster investment growth, and proposed three specific measures. The Budget Submission's key priorities on investment and the New Deal are summarised in the box below.
| Investment priorities |
Representatives from the General Council - Mr. R. Bickerstaffe and Ms. D. Covey, together with the General Secretary and Mr. B Callaghan and Mr I Brinkley from the TUC Office - met the Chancellor on 5 June. The General Council's representatives expressed the TUC's support for the new Government's growth, investment and employment objectives and the New Deal, and welcomed the commitment to strengthening labour market protections made in the signing of the Social Chapter and the early steps towards introducing the Minimum Wage. The General Council's representatives presented the Submission to the Chancellor, emphasising the need for measures to promote investment and on how the New Deal could be developed. The Chancellor restated the Government's commitment to sustainable full employment and said the Submission's points would be taken into acount in preparing the Budget and in follow up discussions wth Ministers and officials. The Budget
Many of the TUC's priorities were reflected in the new Government's first Budget on July 2. The TUC's overnight assessment was distributed widely the morning after the Budget.
The major economic theme of the Budget was the rebalancing of the economy towards investment, a priority shared with the TUC. The post budget assessment judged that
the Chancellor had done enough to curb any excessive growth in consumption, and, with the economy slowing down already, the major concern was that the Monetary Policy Committee of the Bank would overkill by raising interest rates. Forecast growth of 3.25 per cent in 1997 would not be excessive, and forecast growth of 2.25 per cent in 1988 would be too low to make much impression on the unemployment totals.
The Chancellor also made a number of welcome changes to boost investment, including the phased release of nearly £1billion in capital receipts for social housing and an additional £1.3 billion schools repair programme paid for by the windfall tax, and reforms in corporation tax to encourage long term investment. The latter included the abolition of the tax credit on distributed dividends to pension funds, and the TUC will be urging pension fund trustees to develop long term investment strategies to adapt to the Budget changes.
As expected, the Chancellor kept the inherited public spending totals to the cash plans for 1997-98 and 1998-99. However, for 1998-99 these plans included a contingency reserve of £5 billion. The Budget set aside specific amounts totalling £2.2 billion from the reserve to boost the departmental health and education spending programmes in 1998-99, with the remaining £2.8 billion of the reserve committed to meeting unavoidable departmental overspends in that year.
There are no spending plans for 1999-2000 and beyond, pending the outcome of a spending review. However, the Budget's medium term projections on the public finances showed that the Chancellor's new PSBR targets would be met by 1999-2000 and were compatible with overall public spending rising at least in line with the historical long term economic growth rate - in real terms by 2.25 per cent per annum - from 1999-2000 onwards.
| THE CHANCELLOR'S BUDGET PRINCIPLES |
Box
Overall, the Budget was a very good start in putting right the inherited weaknesses in the economy and the public finances and in meeting the new Government's objectives for full employment and a high investment, high productivity, competitive economy. The TUC strongly supported the Chancellor's strategic economic priority to raise the long term growth rate through investment and skills, and the six key principles outlined by the Chancellor ( see box). Churches' report on unemployment
The General Council received a presentation on a report from the Churches Enquiry into Unemployment and the Future of Work on June 25. The report condemned the widespread social exclusion the enquiry had found throughout the UK and strongly supported the concept of full employment as an achievable goal through the expansion of employment in both the private and public services backed by quality training and work programmes for the unemployed. The General Council welcomed the report and agreed to assist in following up its recommendations. 2.3 Welfare-to-work measures The Government has made a high-profile commitment to help unemployed people move into jobs, and has established a cabinet welfare-to-work committee, bringing together relevant work by different Departments. Although welfare-to-work is a theme running through all the Government's social security and employment policies, three elements stand out: the new deal for young unemployed people, and associated provision for members of other groups facing social exclusion (see above); a fundamental review of social security; and a review of the tax and benefits systems. The TUC is eager to play a positive role in achieving a successful outcome for each of these elements. The General Secretary took part in a briefing on the New Deal held by the Chancellor, and he and the Head of Economic and Social Affairs met Mr Andrew Smith, the Minister for Welfare to Work, to present TUC priorities.
Mr Frank Field, the Minister for Welfare Reform, is undertaking a fundamental expenditure review, and is also responsible for long-term planning in the Department of Social Security. In seeking to influence Mr Field's review, the TUC will present Congress's often re-stated support for the National Insurance principle. The TUC opposed the old Government's strategy of blaming benefit claimants for their poverty, and has emphasised that disabled people, unemployed people, lone parents and other people who have to rely on social security are keener than anyone that they should move from welfare into work.
The review, headed by Mr Martin Taylor, is examining ways in which the tax and benefits systems can be reformed to promote work incentives and strengthen family and community life. The TUC will be submitting evidence to Mr Taylor's review.
2.4 Jobseeker's Allowance Campaign
The TUC has maintained its opposition to Jobseeker's Allowance in the past year. The TUC's briefings on Jobs not J.S.A! have now reached their 68th edition. These briefings, sent to more than 300 organisations and individuals by fax and e-mail, are now also available in the TUC website's J.S.A. Campaign HQ.
It was reported to last year's Congress that TUC Centres for the Unemployed have increasingly taken a leadership role in this campaign, and this progress has continued in the past year. In October Centres for the Unemployed organised demonstrations in Cardiff, Liverpool, Newcastle and Sheffield, and Centres throughout the country have continued producing publicity material and organising meetings on this subject.
Although Centres for the Unemployed are now more prominent in the campaign, Congress House has also been active in pressing the case against Jobseeker's Allowance. TUC speakers have taken part in meetings across the country, a TUC leaflet on J.S.A. has been produced, and a number of reports have given expression to the TUC's concerns. Jobseeker's Allowance and Disabled People published in October took up the possibility of disabled people being stranded without any benefit entitlement, while The New Victims, also published in October, looked at the impact of Jobseeker's Allowance on unemployed people not entitled to means-tested benefits. In the Spring of this year the TUC also produced two short briefings on J.S.A., designed for members of the public who want less detail than is provided in the main TUC report on Jobseeker's Allowance.
The scope of the TUC campaign against J.S.A. has extended in the past year to include Project Work. TUC briefings on Jobs not J.S.A.! have increasingly devoted space to this campaign, and, in October, the TUC published Workfare: What Is the Government Up To?, which argued that Project Work has introduced full-blown workfare to this country.
2.5 Other benefits developments
Although J.S.A. and Project Work are major changes, their significance for people who rely on social security has nearly been equalled by changes to the administration of benefits. In October, the TUC submitted comments to a consultation on decision making and appeals in the benefit system, and was highly critical of proposals that independent adjudication of claims be abolished, and that the burden of responsibility for the provision of evidence needed to make a claim be shifted towards claimants. In the TUC's view, these proposals were designed solely to reduce the budget for social security, without sufficient attention being paid to the impact they would have on claimants or staff.
The TUC also strongly opposed the abolition of One Parent Benefit and the lone parent premium in Income Support and Jobseeker's Allowance. The TUC argued that existing benefit provision for lone parent families was inadequate, and should most certainly not be cut any further. This argument was repeated in comments to the Social Security Advisory Committee, and further articulated by the TUC's nominee to the SSAC, Mr Owen Tudor (Organisation and Services Department). Mr Tudor resigned from the Committee in April, and was replaced by Mr Richard Exell (Economic and Social Affairs Department). 2.6 National Minimum Wage
In line with Composite Resolution 13, Resolution 14 and the General Council's two statements to the 1996 Congress, the General Council have continued to campaign for the introduction of a National Minimum Wage (NMW).
Information about the regional incidence of low pay was included in the pack produced to promote the TUC's Employee Rights Campaign and those using the pack were
invited to raise the issue of low pay with parliamentary candidates and write to local newspapers to ensure that the NMW featured in the General Election campaign.
In March a report entitled Wage Rage was produced in co-operation with the Low Pay Unit and the Low Pay Network in line with Composite Resolution 13 of the 1996 Congress. This set out the case for the NMW arguing that inequality had grown faster in the UK in the last decade than in any other developed country except New Zealand. Britain was identified as the low pay capital of Europe with a larger number of workers earning less than two thirds average earnings than any other major European country (details are set out below).
(Take in diagram ch2 A sent separately) In addition the report explained that:
Wage Rage also set out the number of employees earning less than £4.00 an hour and analysed low pay by region. The Low Pay Unit and the Low Pay Network provided a very useful series of case studies which were included in the report to add a human dimension to the statistical analysis. The report received wide coverage and was the TUC's top story for March 1997.
(Take in diagram chapter 2 B being sent separately)
In June a further report entitled Hot and Sweated was publishedwhich examined the impact of the abolition of wages councils on the hotels and catering sector. This part
of the service sector was selected because it had a history of low pay, particularly amongst part-time women employees. The report was prepared for the TUC by Rosemary Lucas and Nicholas Radiven of the Manchester Metropolitan University. Among the key findings were:
. There had been clear downward pressure on pay following the abolition of wages councils. The survey showed that minimum pay had stayed the same or has decreased in a third of companies. The trend was most marked in small hotels. . Four years after the abolition of wages councils some small hotels were still paying the 1992 statutory minimum rate of £2.92 an hour. . Between seventy and one hundred per cent of employees in the establishments surveyed were paid the basic minimum rate. . A number of employers had abandoned overtime payments as 'too costly'. Employers had extended the length of the working week and paid workers less. . The abolition of wages councils created a vacuum and employers had to find a new basis for determining pay. . More than one in four employers had no provision for an annual pay review. The absence of an annual wages order had removed the reference point for reviewing pay. . In the majority of small hotels the levels of pay increases are now related to the financial performance of the business rather than the need to recruit and retain skilled staff or local labour market conditions. The use of the "financial performance" benchmark is associated with declining levels of pay. . Recent studies have shown growing support for a National Minimum Wage (NMW) among employers in hotels and catering. This survey showed that one third of employers were in favour of a NMW. It is important to note that the survey included a significant number of small hotels that would be more likely to oppose a NMW . Data collected in empirical studies shows that levels of pay in the industry are below those officially reported in the New Earnings Survey. A survey conducted in 1996 by Manchester Metropolitan University showed average minimum hourly pay in the industry of £3.17 with 84 per cent paid below £3.50 an hour. The report made clear that without a floor under wages employees had experienced significant downward pressure on pay. Employers had reasserted control of the pay process but in many cases were unable or unwilling to undertake an annual process of reviewing pay. These findings will be used by the General Council to assist them in preparing the TUC's submission to the Low Pay Commission.
The Low Pay Commission
Following the Labour Party's victory in the General Election the Government began to take steps to introduce a NMW. The Queen's Speech contained a commitment to introduce legislation in the first session of Parliament. This swift action was welcomed by the TUC. Steps were also taken to establish the Low Pay Commission in line with Labour's manifesto commitment to the NMW:
"There should be a statutory level beneath which pay should not fall - with the minimum wage decided not on the basis of a rigid formula but according to the economic circumstances of the time and with the advice of an independent low pay commission, whose membership will include representatives of employers, including small business and employees" New Labour - Because Britain Deserves Better p.17
The General Council statement to the 1996 Congress and Composite Resolution 13 supported the proposal to establish the Commission and noted that it would have been more difficult for the Labour Party to win support among the business community without the commitment to establish the Commission.
In June 1997 the Government announced that Professor George Bain, Director of the London Business School, was to Chair of the Commission. On 25 June public advertisements appeared inviting applications for membership of the Commission. The Government made clear that the appointments would be personal and that no member of the Commission could or should be mandated by their organisation to take a particular view. The intention was to encourage objective evaluation of the evidence so that consensus about the appropriate level of the NMW could be secured.
In earlier discussions with ministers at the Department of Trade and Industry, TUC representatives had made clear that the Commission should operate according to the principles of social dialogue and should be properly representative of the social partners. It was also emphasised that the Commission should have terms of reference which enabled it to consider the impact of its recommendations annually. Effective arrangements should be made for the enforcement of the NMW which gave a key role to trade unions.
Appointments to the Commission were announced on 23 July and the first meeting was held on 25 July.
2.7Competitiveness
The TUC continues to place high levels of competitiveness at the heart of its strategy for a high pay, high productivity economy, and has worked with employers organisations and the Government to develop common approaches to improving competitiveness of UK industries and services.
The General Secretary was appointed to a high-level Advisory Group on Competitiveness in July, working with prominent employers and other experts to advise the President of the Board of Trade. The Advisory Group was launched at a Competitiveness Summit, involving unions, employers and other partners in competitiveness. The President of the Board of Trade published a comprehensive Audit of UK Competitiveness to form the basis for the summit, setting out UK strengths and weaknesses in economic performance, corporate structures, employment patterns, and infrastructure.
Following the summit, the President of the Board of Trade established a series of working groups to examine key policy issues. The working groups will involve representatives of unions, companies, academics and other experts in developing common approaches to tackling the problems affecting UK competitiveness. The work of the groups and of the Advisory Group on Competitiveness will form the basis of a White Paper to be published in 1998.
In addition to these groups, the TUC has developed dialogue with the Department of Trade and Industry with a view to promoting trade union involvement in other parts of the DTI, including the Export Forum, set up jointly with the Foreign Office, of which Mr Ken Jackson is a member, and sectoral machinery.
The General Secretary was also a member of the Commission on Public Policy and British Business, which published its report in January. The report analysed the weaknesses in British competitiveness, set out the principles that should guide future policy, and outlined a programme of action by a new Government. It supported the principle that long term competitiveness could only be sustained on the basis of good working conditions and a partnership between companies and their employees, and supported a framework of employee rights including a national minimum wage, opting- in to the EU social chapter, and rights to information and consultation. The report also made key recommendations covering the areas of education and training, finance and investment incentives, corporate governance, competition policy, small and medium- sized firms, technology, transport and macroeconomic policy.
The report, which was produced by a Commission mainly composed of leading employers and independent academic experts, received wide publicity but was heavily attacked by the then Deputy Prime, Minister Michael Heseltine MP. The Labour leader Mr Tony Blair welcomed the report which he said formed a challenging agenda for a new Government.
The General Secretary has also been invited to be a member of an Advisory Group on European Competitiveness established by the President of the European Union Jacques Santer. The advisory group, which will include a range of union and employer representatives and which is chaired by former Secretary General of the OECD Jean- Claude Pey, will advise Mr Santer, the European Commission and EU member states on key issues affecting European Competitiveness over the next two years. Business Support
In September 1996, the Cabinet Office published a consultation paper on Business Support. The TUC response said that making business support more responsive and taking the opportunity to deliver some schemes locally or sectorally should not obscure the importance of direct support from Government in some key areas, including the Government's responsibilities for promoting research and development and technology.
The response therefore argued that decisions on the future of business support should be based on practical judgements about promoting long term competitiveness, rather than any ideological aversion to direct support for industry, and supported the retention of a number of national schemes of assistance. The paper called for local and sectoral partnerships to be encouraged involving a broad range of stakeholders, including employees, customers and suppliers, and the local community, as well as companies. In addition, it supported initiatives at national level to develop partnership within companies and between companies, and to disseminate best practice. The response also called for a more co-operative strategy between TECs and Business Links, at local level, and trade associations and industry training organisations, at sectoral level The TUC supported the proposal that the funding of business support should be related to indicators of the effectiveness of the schemes and proposed that these indicators should include the promotion of employee involvement.
The response opposed the use of challenge funding for business support, and argued that the funding criteria should recognise the interests of all stakeholders in promoting competitiveness. Corporate governance and stakeholding
Following the adoption of the Stakeholder Task Group's report Your Stake at Work - TUC Proposals for a Stakeholder Economy by the 1996 Congress, wide dissemination of the report has been achieved. It was circulated to trade unions, politicians, policy organisations, academics and the media and received a positive reception. Mr Roger Lyons, who chaired the Task Group, is the General Council's lead spokesperson on stakeholding.
Hampel Committee
The Committee on Corporate Governance, chaired by Sir Ronnie Hampel of ICI, was set up in November 1995 with a remit to "promote high standards of corporate governance in the interests of investor protection and in order to preserve and enhance the standing of companies listed on the Stock Exchange. The Committee's remit extends to listed companies only. In particular, the Committee was set up to review the Cadbury and Greenbury codes of best practice and address the role of boards, shareholders and auditors in corporate governance. It was also prepared to look at "any other relevant matters".
The Committee wrote to the TUC requesting its views on these matters. The TUC's report Mind the Gap - the TUC's Evidence to the Committee on Corporate Governance was submitted at the end of 1996.
The TUC report reviewed the impact of the Cadbury and Greenbury Committees to date. It argued that while some of their proposals had been valuable, there had been two central problems with their reports. Firstly, both produced voluntary codes, and in the case of the Greenbury Committee in particular non-compliance has been a problem. Secondly, the committees' proposals focussed primarily on increasing the accountability of managers to shareholders. The evidence argued that it is not a lack of accountability to shareholders that is the central problem with corporate governance; rather, the problem is the primacy given to shareholder interests over those of employees and other stakeholder groups, and it is this that should be addressed.
The Report published new research showing that Greenbury has had no impact on the trend of rising pay differentials within companies. Using data based on companies listed on the London Stock Exchange, the Report revealed that the average ratio between highest paid director salary and bonus and average employee pay in the same company grew by 4 per cent between 1994-5 and 1995-6. This takes no account of share option or L-tips which can inflate remuneration considerably.
The evidence put the case for a stakeholder model of corporate governance, arguing that the way to build long-term success is through investing in long-term relationships with stakeholders based on mutual respect and trust. Reforms to promote a stakeholder model were proposed:
and takeovers should be altered so that it does not conflict with the legal obligation of companies to consult with employee representatives over proposed redundancies.
Commission Consultation Paper on Company Law
The TUC commented on a European Commission consultation paper circulated by the DTI seeking views on the completion of the legal framework for companies operating in the single market.
The TUC's submission was based on established TUC policy in this area. It made the point that an essential part of measures to promote the legal framework for a single market is a common approach to the involvement of employees in the workplace. It also argued strongly that harmonisation of company law should not be at the expense of high standards.
The TUC's response was also sent to the ETUC.
Regional seminars
A series of regional seminars for trade unionists on stakeholding has taken place. These have included discussion of the case for stakeholding, the TUC's proposals for a stakeholder economy and the implications of stakeholding for trade unions and employees.
Meetings with officials
Following the election of a Labour government, useful discussions have taken place with officials on a wide range of corporate governance issues. While radical reform of corporate governance is unlikely to be high on the new Government's agenda, it is
clear that new proposals will be put forwards in due course. These are likely to be a mixture of best practice proposals and legislation.
Financial participation
Mr Bill Callaghan, Head of the Economic and Social Affairs Department, visited the United States in the autumn of 1996 as part of a study tour on Employee Share Ownership Plans (ESOPs) organised by Job Ownership. Over the course of the year, the TUC has raised its profile on this issue at conferences and other events - for example, the General Secretary addressed ProShare's annual award ceremony in December 1996. Contacts with a range of organisations and individuals working on this issue have been developed.
Competition Policy
The TUC has lobbied for an effective framework for regulating takeovers and other aspects of competition policy, on the basis of the resolution adopted at last year's Congress and the policy statement Tackling Market Power: the Reform of Competition Policy, which called for a wider definition of the public interest in takeovers, embracing employment and industrial competitiveness as well as competition, a shift of the burden of proof onto the bidding company in a takeover, and stronger protection of employee rights to ensure that they retain existing terms and conditions.
The statement formed the basis for discussions with a range of Labour Party front bench spokespeople and others. In January, the Leader of the Labour Party established a review team chaired by Lord Borrie to consider practical aspects of competition policy reform, including possible changes to the present institutional structure and the reversal of the burden of proof in takeovers. The TUC discussed these issues with Lord Borrie and submitted detailed proposals on both the policy framework and the operational aspects of competition policy.
The TUC comments focused on concerns on two issues in particular. The first was the TUC's support for a reversal of the burden of proof in takeovers so that a firm making a bid would be required to demonstrate that it would operate in the public interest as broadly defined. The note argued that this should not be a requirement on companies to prove beyond reasonable doubt that the takeover will succeed. Rather, companies should be obliged to make the case for the proposed merger, against a broader definition of the public interest, and the Office of Fair Trading should satisfy itself that there is a reasonable prospect that these benefits will be achieved. Not only would such a change strengthen the investigative powers of the OFT and the MMC, but it would also ensure that all takeovers, not just those which have effects on competition, pass a public interest test.
Secondly, the TUC expressed concern that the present requirements in British law, deriving from European legislation, to inform and consult employees and their unions where large scale redundancies are planned, are frequently circumvented in cases arising from takeovers, because the companies concerned claim they are constrained
by Stock Exchange rules concerning confidentiality. This means that employees often learn of redundancies through the press rather than through proper mechanisms for information, and there is no opportunity for genuine consultation
The TUC met Lord Borrie in March to discuss these concerns, and also restated the importance of taking account of the wider public interest in takeovers.
The importance of effective rules for informing and consulting employees also formed the basis of the TUC's support for lobbying on the proposed EU Directive on Takeovers. The draft directive, which is intended to establish a common framework for the handling of takeovers, was first proposed in 1989 and since the initial version was published the proposals for informing and consulting employees have been weakened even further. The TUC therefore argued that the case for effective rights to information and consultation remained as strong as ever, and indeed should be strengthened to reflect the standards of the European Works Councils Directive. A number of amendments in support of the TUC's objectives were introduced when the directive was discussed by the European Parliament in June.
Trade Policy
The TUC has continued to lobby in support of a social clause in international trade agreements to promote observance of basic labour standards, principally those concerning freedom of association, rights to collective bargaining, measures to tackle child labour, and equality in the labour market.
The debate on the social clause was placed on the agenda of the Ministerial meeting of the World Trade Organisation which took place in Singapore in December 1996. The purpose of the meeting was to consider the work programme for the WTO, and the ICFTU was supporting a proposal by the US Administration that the work programme should address the links between trade and labour standards, by the establishment of a working group to discuss the issue.
The TUC lobbied the British Government in advance of the WTO meeting in support of the ICFTU campaign, and this was taken up in a meeting between the General Secretary and the then President of the Board of Trade Ian Lang MP in November. Although the British Government had not supported a social clause, the TUC argued that the Government should accept the principle of further examination of the issue. However, the President of the Board of Trade rejected the TUC's proposals.
The TUC therefore published a report immediately before the WTO meeting highlighting the extent of abuses of basic labour standards, and setting out the arguments for a social clause as advocated by trade unions. It argued that the growth of trade should be accompanied by progress towards better employment standards in exporting countries.
box
box
| freedom from forced labour
measures to tackle child labour freedom from discrimination in employment freedom to form independent trade unions freedom of collective bargaining. These conventions have been ratified by the great majority of ILO members, including the great majority of developing countries, which report on their application in their countries every two years. |
The report emphasised that a social clause would ensure cooperation between the WTO and the ILO in monitoring the implementation of these core conventions through the well-established supervisory procedures of the ILO. Trade sanctions would only apply where it was clear that the country concerned was consistently refusing to tackle serious abuses. In spite of the TUC's lobbying, the British Government, acting in isolation within the EU, blocked the proposal for a working group to consider the issue further and therefore ensured that the links between trade and labour standards are removed from the WTO's work programme.
The TUC has, however, continued to work with Ministers in the new Government and welcomed the Labour's Party's commitment to ensure fairness and high ethical standards in international trade policies.
2.8 Public sector
Public Sector Pay
Further to the General Council statement on public sector pay endorsed by the 1996 Congress, the Public Services Campaign Team received a presentation in November from Professor Bob Elliott of the University of Aberdeen. The presentation covered research on public sector pay drawn from the New Earnings Survey and showed that relative pay had declined in many areas of the public sector. The Campaign Team also considered resolutions 56 and 57 on the civil service, and resolution 66 on professional skills/standards in public service. A meeting was also held in October for public sector negotiators on the national minimum wage, and in February unions met following the
release of the Pay Review Bodies reports, the recommended increases of which the Conservative Government again resolved to stage.
Primarily work has centred, in the current Congress year, on discussions around future pay determination systems in the NHS, with meetings in October and April, which reviewed outcomes and options for pay determination, followed by a seminar in June. The seminar considered presentations on national pay with local flexibility, job evaluation and third party dispute resolution. Discussions will continue and a further meeting drawing on issues raised at the seminar will be held in the autumn.
Compulsory Competitive Tendering and Best Value
Resolution 60 of the 1996 Congress drew attention to the Conservative Government's approach to local government and the concerns surrounding compulsory competitive tendering. Following the election of the Labour Government the TUC welcomed the announcement of the review of CCT and the proposal to introduce a 'best value' regime. Meetings took place in May between unions and the Secretary of State John Prescott, and the Local Government Minister Hilary Armstrong, to discuss issues arising out of the review. The office have also met with officers of the Local Government Association. TUC submissions were made to the DoE in June on best value and on revised regulations. Further meetings and discussions are expected to take place, and the TUC will be seeking to influence the development of the best value regime, ensuring that local government workers are involved in the process of managing change and improving service provision.
Private Finance Initiative
A composite resolution of the 1996 Congress drew attention to the Conservative Government's Private Finance Initiative which was raising concerns over its rigid application to all public sector expenditure, to its increasing use as a privatisation tool, and impact on employees. Whilst the TUC had previously recognised the benefit of public/private partnerships, PFI had become substitutional rather than additional to public sector capital expenditure and the backlog of projects particularly in the NHS meant that investment was not taking place.
In May the Labour Government announced a review of the PFI and the abandonment of the universal test principle which had attracted criticism from many quarters. In a submission to the review, the TUC drew attention to the need to ensure that PFI was not used as a means to transfer services to operators employing staff on less favourable conditions and to ensure that priorities for public investment were based on public need rather than the availability of private finance. A review of major acute NHS PFI schemes was announced in July and the TUC will be seeking to influence the review of PFI in non-acute fields in due course. A TUC report on PFI and public/private partnerships, including a trade union checklist, is in preparation.
Voluntary Sector
Meetings have continued to be co-ordinated by the office of the main unions in the voluntary sector to review developments. Meetings have also taken place with the National Council for Voluntary Organisations to facilitate information exchange on issues such as the impact of the working time directive on the voluntary sector and training.
Other Issues
Taking into account resolutions 64 and 65, and composite resolution 4, together with outstanding discussions on the management of change, PFI, and the progress of pay negotiations, TUC health service unions met Mr Frank Dobson, Secretary of State for Health in June. The office has also participated, together with affiliate unions, in meetings co-ordinated by the RCN to facilitate information exchange on the implementation of the Disability Discrimination Act in the NHS. Unions have also participated in officer level meetings with the Local Government Staff Commission (England) during the process of local government reorganisation.
2.9 Private sector
Arts, entertainment and media
The TUC has continued to work closely with the arts, entertainment and media unions throughout the year. The TUC has assisted the unions to promote the rights and interests of their members and has lobbied Government and policy makers on sectoral issues which relate to the arts and media industries.
The TUC's work in this area has drawn on the resolutions and composite carried at the 1996 Congress on the lottery, the BBC, creators' copyright, music and the National Curriculum, cross media ownership, employment agents' legislation and the tax and National Insurance status of workers in the entertainment industry.
The General Secretary chaired a meeting of the Federation of Entertainment Unions (FEU) in January. The meeting was an important opportunity for exchanging information on sectoral issues and for discussing follow up to Congress resolutions. As a result of the meeting, the TUC agreed to take specific action on Congress resolutions and affiliates were invited to contribute to the campaigns and initiatives led by the TUC on employment rights and New Unionism. The TUC also expressed its commitment to continued co-operation with the arts unions by providing assistance with sectoral issues, attendance at meetings of the FEU and further meetings between the TUC and the arts and media unions which will be convened on an annual basis.
1996-97 was a period of intensive and rapid change in the media, including the launch of Channel 5, the restructuring of the BBC and developments in digital television. In line with the composite on media ownership, the TUC will hold a seminar on the future of broadcasting in September. The seminar will brief affiliates on the significance of current developments and will stimulate discussion on future changes. Speakers will include Mr Chris Smith, Secretary of State for National Heritage, Mr David Elstein,
Channel 5 Chief Executive, Mr Raymond Snoddy, the Financial Times' media correspondent and Ms Carole Tongue MEP.
Lobbying has continued on a number of issues relating to the employment rights of arts, entertainment and media workers. The TUC wrote to Mr Ian McCartney on his appointment as Minister of State at the Department of Trade and Industry supporting Equity's concerns about the abolition of the licensing requirements of the Employment Agencies Act (1973) and the effectiveness of existing regulations to protect clients' money. The TUC also worked closely with peers on the Sundays (Dancing and Licensing) Bill in an effort to promote rights for employees who would be affected by the proposals.
The TUC's campaigns on employee rights (see Chapter 1), building social partnership (see Chapter 2), and new unionism (see Chapter 3) have also sought to incorporate the experiences of union members working in the arts and media sectors and other industries which are characterised by heavy casualisation.
Energy
In November, the TUC was invited to give evidence to an inquiry by the Trade and Industry Select Committee on Energy Regulation.
The TUC submission argued that the role of energy regulation should be to strike a balance between a range of different and occasionally competing objectives: the value to shareholders, the interests of consumers, good quality employment, long term investment and a sustainable environment. The overriding objective should be to maintain an effective universal service obligation benefiting the nation as a whole.
Whilst the TUC supported a degree of reform of the pricing formula, the submission argued that there was no technical solution that could reconcile these different objectives. Nor could it be assumed that these are purely transitional questions, which will ultimately be solved by competitive markets. Regulation should be regarded as a permanent phenomenon, and the structure of the regulatory system should therefore recognise these objectives explicitly and should account effectively for the decisions that are taken.
Industrial policy, public service, and the impact of the regulated industries on employment and economic performance are all core areas of government responsibility. The decisions that are taken about these issues should not, therefore, be seen purely as neutral and technical questions; rather they are questions of public policy which are and will remain the responsibility of government.
The submission therefore set out a series of principles for energy regulation:
Finance In line with the Resolutions on Building Society Demutualisation and Finance Services carried at last year's Congress, a meeting of unions in the Finance Sector was held in March to discuss areas of joint work.
The meeting focused on two issues: building society demutualisation and developments in the financial services industry. In the light of the Building Societies Bill, which proposed a framework in which those building societies that wished to remain as mutual societies could continue to develop a range of services and to compete effectively with non-mutuals, the meeting agreed to lobby both the then Conservative Government and the Labour Party in support of the broad framework. Following the meeting these concerns were taken up with the Treasury and with the Labour Party frontbench through correspondence and briefings.
The meeting also discussed the rapid changes in the structure of the financial services industry, which had dramatic effects on employment. These raised a number of policy
issues including specific issues relating to the financial services sector, such as financial services regulation, and also general issues such as technology, employment security, skills and the management of change. Some of these were already being pursued through TUC policies on stakeholding, technology, and employment. In addition, there were issues of wider public concern including the provision of financial services, and in particular mechanisms for saving and investment, for people on lower incomes. It was agreed that the TUC should maintain dialogue with unions in the financial services sector and that further joint work should be explored in the light of debates on the role of mutual societies and provident funds. Manufacturing/defence
The TUC has maintained co-operation with a range of employers organisations in the manufacturing sector to promote joint approaches to competitiveness, including textiles and clothing, chemicals, the railway equipment industry and the defence sector.
During the year the TUC has worked with the Department of Trade and Industry, the Labour Party frontbench and industry organisations to promote effective industrial polices for the defence sector, based on both a defence diversification agency and measures to promote the competitiveness of the defence sector as set out in the resolution adopted at last year's Congress.
In addition to dialogue with the DTI on the future for defence procurement, the TUC has briefed Labour Party frontbench spokespeople
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