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WMCA Industrial Strategy Consultation

A TUC Midlands submission
Report type
Consultation response
Issue date
Worker voice and social partnership

Priorities

Promote the benefits that trade union engagement and collective bargaining has for productivity, skills and high performance at the workplace level

Embed trade union engagement and social partnership in the design, delivery and implementation of industrial strategy including with political leaders and employers through sectoral and other initiatives.

Promote broader civil society partnerships that bring voluntary and community groups, NGOs, unions, businesses and academia together to set out key outcomes for the region and establish partnership working to deliver them.

Key issues and evidence

Successful organisations of all kinds require effective mechanisms for consulting with and engaging their workforce. There are many ways through which effective mechanisms for workers’ voice enhances organisational and business success.

It is intuitively obvious that people will prefer working for an organisation that treats them with respect, values their views and input and in which they feel that their skills and knowledge are making a clear and valued contribution. Higher levels of commitment and motivation translate directly into lower staff turnover rates and lower absence and sickness rates, both of which serve to boost productivity and profitability. In addition, organisations with effective procedures for resolving disputes and managing, for example, flexible working will be better able to safeguard the valuable resource of people’s time and protect itself from losing valued staff who need to combine work with other responsibilities.

These are vital ingredients for the effective running of any organisation. However, the contribution of workers’ voice to industrial strategy goes beyond these basic ‘hygiene’ factors, important though they are. As well as enabling organisations to run smoothly and minimise costs in areas like recruitment and sickness cover, workers’ voice contributes to successful industries and sectors in (at least) three key areas:

  • The introduction of new technologies
  • Management of change
  • Harnessing ideas for innovation and incremental improvements.

The introduction of new technologies is a key aspect of innovation in both products and processes and an important driver of higher productivity. Yet considerable sums are wasted every year on investments in new technologies where the potential benefits are not realised because of poor engagement and consultation with staff about the impact on their jobs and how to use the new technologies effectively. A recent survey of nearly 7,500 workers found that while 87% agreed with the statement “I am keen to embrace technology and maximise its benefits”, and 73% agreed that technology would improve productivity, less than one in four (24%) said that their employer gave them a say in how technology effects their work.1 Low levels of innovation and technological diffusion are one of the drivers of the UK’s low productivity,2 so ensuring that investments in new technologies reap their full benefits is essential to boost the performance of UK industries and sectors.

This will be particularly important in responding to the challenges posed as technological change accelerates through the ‘fourth industrial revolution’. How trade unions – and government – can best respond to this has been set out in the TUC reports Shaping our Digital Future and A Future that Works for Working People.

Remaining competitive in an ever-changing commercial environment requires effective strategies for the management of change. A vital part of this is the changes to workforce practices and tasks that may be necessary for a business to continue to thrive in uncertain conditions. The UK’s relatively under-regulated labour market does not give companies and managers sufficient guidance in how to manage change effectively and does not give UK workers sufficient protection and voice in that process; this is an area where strengthened minimum standards would bring clear benefits to both workers and employers. Workers who feel secure in their jobs and committed to their employer are much more likely to have the motivation and confidence to embrace changes to working patterns and tasks and giving workers a say in the process of change is vital to securing a successful outcome.

A 2009 study by Alex Bryson et al using nationally representative data for the private sector found that managerial innovations are associated with lower worker well-being and job satisfaction, except when workers are covered by a collective bargaining agreement. Further research suggested that this effect resulted directly from union involvement in consultation over innovation, showing that innovation and change introduced in consultation with unions is more likely to be successful3 . However, declining rates of union density and organisation in the private sector have left workers in non-unionised companies poorly protected in terms of consultation practices and voice at work.

The right of workers to be consulted about changes to their work is recognised in the Information and Consultation of Employees Regulations 2004 (ICE). However, as currently drafted these regulations have proved ineffective in delivering these rights and have failed to ensure that workers in non-unionised workplaces are consulted properly about developments at work. This is because the consultation rights have to be triggered by a request from 10% of the workforce, which, in an employer of any size that is not unionised, is a very high bar in terms of workforce organisation. In addition, many workers, in all probability the vast majority, are totally unaware of these rights. The TUC supports reform of the ICE regulations as an essential part delivering minimum standards across the UK in terms of workplace consultation and this would make an important contribution to an effective industrial strategy. In the meantime, however, the industrial strategy could help promote collective workplace consultation as a means to securing better workforce consultation.

Who knows a firm’s products and services better than its workforce? It is common sense that those who are responsible for making or delivering those products and services will be well-placed to suggest improvements - particularly in terms of processes, which can directly raise productivity, but also in terms of product design and service quality. Engaging the workforce in discussion about business improvement should be an ongoing process in which all voices and ideas are considered and valued; a dusty suggestion box that is never emptied does not do the job. There are numerous examples of suggestions for product and process innovation that have come from the workforce; for example, a suggestion from British Airways employee is saving the airline £600,000 in fuel (as well as reducing the company’s emissions). The suggestion was to make the planes lighter by de-scaling the toilet pipes;4 it is easy to see why this suggestion was more likely to come from the shop (or in this case plane) floor than the boardroom!

While the analysis of Andy Haldane of the Bank of England points towards a range of factors bearing responsibility for the UK’s low productivity, the data show that the productivity gaps within sectors are greater than, and increasing faster than, the gaps between sectors. This shows the importance of examining practices within firms in terms of explaining and addressing the UK’s productivity challenges. There is evidence to suggest that differences in terms of the quality of management are a significant part of the firm-level practices which distinguish high-productivity, successful companies from others5  and effective strategies for workforce participation are an essential part of good management.

Workers’ voice and involvement in decision-making is currently a serious weakness of the UK economy. The WERS Survey 2011 found that less than half (47%) of employees thought that managers were good at responding to suggestions from employees and just over one in three (35%) said that managers were good at allowing employees to influence decisions.6 This is a relative, as well as absolute, weakness. The European Trade Union Institute compiles a European Participation Index (EPI) which measures three sources of workers’ influence on companies: firstly, board-level employee representation; secondly, workplace representation; and finally, collective bargaining strength, as measured through the percentage of the workforce covered by collective bargaining and trade union membership7 . The most recentversion of the EPI puts the UK sixth from bottom of the EU28 Member States in terms of workforce participation; only Cyprus, Lithuania, Latvia, Bulgaria and Spain perform worse8 . Addressing this weakness must be a key component of a successful industrial strategy for the UK.

Workers’ participation in the companies in which they work can take different forms, many of which are complementary. Collective bargaining enables the workforce to negotiate with one voice over pay and working conditions and is key to delivering those ‘hygiene factors’ outlined above. In addition, in many cases, it is through collective bargaining machinery that workers have a collective voice in discussions about the future development of their workplace and company. Collective consultation can also take place in the absence of unions (for example, some companies have set up joint consultative committees under the ICE Regulations9 ), although this is relatively rare. Workforce input into strategic decision-making through worker representation on company boards is almost non-existent in the UK, though where it is in place it is certainly valued10 .

Across much of the rest of Europe, the inclusion of worker directors on company boards is an established and valued part of doing business11  .
The WMCA is fortunate that union recognition is prevalent across many major employers and industries across the footprint of the combined authority. Union recognition provides the most effective vehicle for worker voice and to securing improvements to pay, terms and conditions and health and safety. On a practical level, it can also play a vital role in identifying and developing training routes and programmes for workers. The WMCA would be wise to draw on these examples in spreading the message that collective bargaining arrangements is central to securing increased worker voice, productivity and sustainable economic growth in the long term for the region.

Recommendations

The WMCA and LEPs should aim to increase employee and trade union engagement, explaining the benefits that this can bring for productivity.
Employee and trade union engagement should include:

  •  Firm level - promoting the value of social partnership through collective bargaining and workforce voice in strategic decision-making. This could take the form of establishing greater information and consultation mechanisms with recognised trade unions or through other forms of employee engagement in non-unionised workplaces. The WMCA and local authorities could work with LEPs to jointly promote this as a core objective of the local industrial strategy as well as using commissioning, procurement and the allocation of specific funding streams to require evidence of effective workforce engagement.
     
  •  Sector level - convening sectoral bodies for employers, commissioners and purchasers of services (where appropriate), unions and other key stakeholders to develop joint approaches to boosting productivity, creating great jobs and managing structural and technological change on a sector by sector basis, looking at local labour supply, education and training that enables local people to access the skills required for key sectors, provision of workforce development and training, pay and conditions and career progression. The sectoral bodies should be convened for priority sectors in the region, including a focus on ‘foundational industries’ such as social care.

Ensure that the creation of great jobs is a core component and key performance indicator of the industrial strategy – looking at both securing high productivity, high pay employment in the region but enhancing employment standards, worker voice, good work and well-being for the large part of the workforce currently employed in foundational sectors of the economy.

Establish governance arrangements for the delivery and monitoring of the industrial strategy that includes trade union representation. For example, establish boards to oversee implementation of the industrial strategy Grand Challenges in the region, bringing a range of stakeholders representing employers, workers, community organisations, service users and others to oversee and scrutinise progress against Grand Challenge objectives in the region.

Contents
01
Skills and Learning
02
Infrastructure
03
Dynamic and smart state intervention in support of inclusive growth
04
Addressing inequalities by promoting inclusive growth
05
Sectoral interventions
06
Worker voice and social partnership
07
Appendix 1: Submission by the University and College Union (UCU)
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