Union pay priorities: 2001/02
Summary
Following the TUC Congress, we provide wage negotiators - both HR practitioners and employee representatives - with an overview of trade union bargaining agendas for the forthcoming pay year. A number of issues predominate:
This feature looks first at the general bargaining climate, and also at the pay scene from the perspective of the TUC and union movement as a whole. We then look in depth at the pay agendas of three key UK unions - MSF, Unison and USDAW - and round up the issues facing some other unions.
A number of themes - uprating the minimum wage, eradicating unequal pay, scrutinising executive reward and protecting the terms and conditions of public sector employees - look set to dominate unions' pay-related agendas over the coming 12 months. But for the labour movement, the 2001/02 pay year could turn out to be a difficult one: concerns abound about the economic downturn, recession in manufacturing and, above all, plans for greater private sector involvement in public service delivery.
Cut short two days early, last month's Congress in Brighton was completely overshadowed by events in the United States. But while little was actually debated in the conference hall, pay issues remain central to the bargaining agendas of both the TUC and its affiliate unions.
Last year, we reported how two priorities - increasing the level of the statutory pay floor and tackling the scourge of unequal pay - occupied a prominent position during the 2000 Congress (Pay and Benefits Bulletin 504). Twelve months on, despite some progress in these areas, the two issues still loom large on unions' pay agendas.
Other reward issues also feature prominently, particularly pensions and - of central concern to many in the union movement - the implications of Labour's ambitious plans for much greater private sector involvement in key services, such as education and health. At the other end of the scale, with the wage differentials between senior executives and their workforces widening, many union activists want more transparent remuneration arrangements for the bosses of UK plc.
As the 2001/02 bargaining round gets under way after the traditionally quiet summer period, we provide wage negotiators with a comprehensive guide to trade unions' pay priorities over the coming year. Our overview looks at:
The bargaining environment
With manufacturing now in recession - 40,000 jobs were lost in May and June alone - and mounting evidence of a slowdown in the rest of the UK economy (Pay and Benefits Bulletin 524), the bargaining climate for trade unions looks set to be less favourable than during the past few years, particularly given the uncertainties created by the situation in America. Add to this the Government's apparent determination to force through its controversial plans for the public sector, and it is not difficult to see why many major unions are approaching the 2001/02 pay year with some trepidation.
While none of this represents a return to the wilderness years of the Conservative era, the mood before this year's Congress was rather less positive than last year's gathering, where the theme was "winning at work". The paradox is that where unions are strongest, the bargaining climate is least favourable. Although manufacturing now accounts for less than a fifth of economic activity, the sector contains a disproportionately large number of trade union members, and high-profile redundancies at major companies such as Corus, Ford, Marconi and Motorola earlier in 2001 dealt a blow to union confidence.
And Tony Blair's determination to face down the unions over public service reform has left many representatives in that sector, where union density is at its strongest, on the defensive. Indeed, it looks as if the Government and the public sector unions will be on a collision course over the coming year. Although the movement has welcomed the spending injection for public services scheduled to take place until 2003/04, the Labour administration's plans for increased private sector involvement in service delivery - more public-private finance initiatives, use of spare capacity in the private sector, and recourse to private management skills - have met with stern opposition from trade unions.
Despite reassurances from trade secretary Patricia Hewitt that "loopholes would be closed", many unions remain worried about the potential for the increased use of private contractors to change the employment status and terms and conditions of public servants. The TGWU says that "PPP [public private partnership] should never be a substitute for proper public investment and Best Value should mean best quality services and best quality working conditions". With the latter in mind, the union calls for guarantees that any PPP initiatives would "not lead to the worsening of workers' terms and conditions".
Other unions articulate similar concerns. Unison wants a fair wages regulation system introduced to eradicate anomalies between those who remain in the public sector and those outsourced or re-organised into private firms. Similarly, craft union UCATT highlights the risks of a "two-tier" workforce emerging, recommending that a "fair wages resolution" apply to new starters working for a private contractor so they are "employed on the same terms and conditions of employment as those in the public sector", and that TUPE legislation covers all occupational pension schemes.
Equal pay remains key aspiration
Another area where the union movement looks set to give the Government a rough ride is that of equal pay. Released in February, the report from the Equal Opportunities Commission's Equal Pay Task Force made far-reaching recommendations on how to eradicate wage discrimination against women. But while the TUC welcomed the report as offering "many solutions which would help narrow the gender pay gap", it was critical of the Government's lukewarm response, which was limited to appointing "equal pay champions" rather than introducing statutory measures: "We are disappointed that the Government is not to accept the Task Force recommendations that the law be changed to force employers to carry out gender pay reviews . . . sadly there is nothing to make the bad employers comply."
Indeed, the issue of gender pay audits - where an organisation's reward practices are subjected to independent scrutiny - is one that the union movement has taken up with enthusiasm. In its response to the Task Force's report, the TUC argued that employers should be placed under a statutory duty both to perform such reviews and, if necessary, to adopt an equal pay plan aimed at eradicating anomalies. Particular vigilance, congress says, is required for performance-related pay systems, where the scope for women to get a raw deal is much greater. Furthermore, the TUC suggested that the Central Arbitration Committee (CAC) should become involved if employers failed to perform their duties.
Pay floor to pay ceiling
One way many in the labour movement believe that unequal pay can be tackled is through the national minimum wage, which disproportionately benefits disadvantaged groups such as women and ethnic minorities. In tandem with major unions such as the TGWU, the TUC has long campaigned for the statutory pay floor to be lifted to somewhere in the £4.50 to £5 region, and for a regular, annual uprating process to be introduced.
Although welcoming the Government's plan to increase the minimum wage to £4.10 in October 2001 and £4.20 in October 2002, the TUC has been critical of its refusal to apply the full adult rate to 21- as opposed to 22-year-olds - despite being urged to do so on three occasions by the independent Low Pay Commission. In March, the TUC signalled its long-term aim to bring everyone aged over 18 within the scope of the full adult rate, while creating a new rate for 16- and 17-year olds, who are currently excluded. Enforcing the minimum wage is also a top priority: in January, the TUC released figures showing that 170,000 workers were still being paid less than the legal minimum.
The TUC also believes that there should be tighter regulation at the other end of the pay spectrum. Describing the remuneration committees which set top pay as "the last closed shop", congress has consistently expressed grave reservations about the "inefficiency and unfairness" of the widening chasm between the pay of directors and that of their charges. At the end of August, general secretary John Monks called for employee representation on remuneration committees and for executive reward packages to be voted on at company AGMs.
Echoing sentiments expressed by some government ministers, the TUC has also called for more rigid performance criteria for executive reward schemes: "In the majority of cases, the targets set for the performance-related element of directors' pay are undemanding, and as a result many schemes will pay out vast sums of money for mediocre and poor performance."
Published just before Congress, the TUC's policy recommendations for senior reward include:
A succession of recent surveys have suggested that executive pay is rising at an inflation-busting rate and that the earnings gap between senior management and the rest of the employee population is widening (See Accounting for directors' pay ); it thus seems likely that the TUC will step up its campaign on these issues over the coming 12 months.
Pensions rising up agenda
Another area that is likely to be prominent on the union reward agenda is pensions, particularly after the CAC's declaration that pensions count as pay for collective bargaining purposes (See Employers' pension contributions are 'pay' for statutory recognition purposes ), and also as more people in the medium earnings bracket sign up for stakeholder pensions. Indeed, the TUC operates its own scheme, for which 15 teaching associations have already signed up.
Though welcoming stakeholder pensions, both the TUC and its member unions want to see employers doing more. During Congress, for example, USDAW called on "the General Council and all affiliates to campaign for employer contributions to stakeholder pensions to be made compulsory at law", while BECTU expressed similar sentiments.
Pay issues lie at the heart of Unison's bargaining agenda for the coming year. The union is campaigning hard to extend the scope and level of the minimum wage, and - given its preponderance of female members - is also at the forefront of the labour movement's drive to eradicate unequal pay. Most visibly, with the Government's controversial plans for the public sector due to come on stream, the union will be heavily involved in the emerging debate on the future of reward for public servants.
Resisting privatisation
Unison, whose "positively public" campaign will undoubtedly be stepped up over the coming months, is implacably opposed to Tony Blair's blueprint for public services, and has threatened to take industrial action if necessary. A much greater role for the private sector would, it believes, jeopardise service delivery and result in a "demoralised workforce with worsening pay and conditions".
The union continues to be a vocal critic of the outsourcing and contracting-out of key local authority and public services, which it says has severely eroded the terms and conditions of many of its members. The acceleration of this process under the Government's radical proposals for public sector modernisation is likely to be met with stern resistance.
On top of this, the union will continue its initiative to highlight low pay (and related recruitment and retention difficulties) in many parts of the public sector, through means such as the "conditions critical" campaign, which deals with the terms and conditions of ancillary workers in higher education. Announced days before Congress began, it remains to be seen whether the Government's plans for interest-free loans of up to £10,000 for public sector workers will address the real concerns of Unison's members.
Minimum wage is key
One of the other main planks of the union's agenda is the high profile "campaign for a living wage", which began in 1999. Working closely with the TUC, other unions, low pay groups and anti-poverty organisations, Unison's campaign has four key themes for 2001/02:
Unison set out its detailed plans for the national minimum wage in its third submission to the Low Pay Commission in November 20001. The LPC's response, which the Government accepted this March - that the general rate be increased to £4.10 an hour from 1 October this year and £4.20 from 1 October 2002 - was welcomed as a "step in the right direction", although "unfortunately it looks as if this larger rise has been given at the expense of future increases".
Developing a regular uprating mechanism for the pay floor remains one of Unison's key objectives: "The increase to £4.10 in October 2001 catches up with earnings over the two-and-a-half year period since introduction, but the 10p increase to £4.20 a year later will in fact be a relative decline when compared to prices and earnings." According to the union, there should be a "proper" uprating system "which takes account of inflation, wage rises and the wider economy, and should not simply favour what businesses say they are prepared to pay".
Abolishing the lower youth rate will also be a central part of Unison's bargaining agenda. While welcoming the 30p uplift for 18- to 21-year-olds announced in June, general secretary Dave Prentis reiterated that: "the youth rate discriminates against young people and they should be paid at the rate for the job regardless of their age. Just because you are under 22 it doesn't mean you pay less for your food, clothing or rent. We would like to see . . . a decent living wage for all workers of £5 an hour."
Much of Unison's approach to the minimum wage is driven by its desire to fight pay inequality. Many of its members - student and trainee nurses, care assistants, local authority cleaners and caterers - are low-paid women, the group that suffers most from wage discrimination.
Two issues dominate the pay agenda of the shopworkers' union, both reflecting the acute needs of its membership: extending the scope of the minimum wage, and signing up workers for stakeholder pensions. More generally, the union is campaigning against unfettered employer flexibility, from the use of zero-hours contracts to the desire of some retail organisations to open on Christmas day.
Because so many USDAW members are young people working in the UK's burgeoning retail industry, it is not surprising that the main thrust of the union's campaigning focuses on improving the reach of the statutory pay floor. Indeed, a day after the general election in June, USDAW said that its "top priority", following Labour's landslide victory, was a statutory minimum wage for everyone over the age of 16.
The union's campaign has two key aspirations:
In a motion published just before Congress, USDAW expressed its concern that: "the lower rate applied to 18 to 21-year-olds, together with the exclusion of 16- and 17-year-olds from minimum wage protection entirely, perpetuates unjust division, provides a source of cheap labour and continues to pass the burden of unfair employment practices onto young workers themselves, their families and the taxpayer." The union says it is especially worried that the absence of a rate for those under 18 "is likely to have a discriminatory impact on young women workers".
USDAW has already made some progress in the area of young people's pay. In August, it agreed a new youth rate of £3.52 an hour (applying to 16- and 17-year-olds) with the Co-operative Employers Association, which represents co-ops up and down the country. National officer Paul Gaffney welcomed the settlement, saying it "establishes the youth rate at 80% of the median adult rate . . . we hope that other reputable employers will take a lead from the Co-op".
Pensions loom large
The other key item on the USDAW reward agenda is stakeholder pensions, largely because many of the people it represents do not have adequate pension arrangements. Research has shown that those who are least likely to have made provision for a pension when they retire include women, part-timers, low earners, black and Asian workers and temporary/fixed term contract employees - sections of the population which account for much of the union's membership.
To this end, the union has launched what it describes as a "simple, secure, flexible and value for money" stakeholder scheme of its own, run in conjunction with the Prudential. In addition, USDAW is encouraging employers "to make a significant contribution" to stakeholder schemes, which it says will make the workforce "more committed to joining and staying" with the company. Over the coming months, the union will also be working to identify employers who are obliged to introduce a stakeholder scheme "and contacting them to ensure that they meet their legal responsibilities".
Like some of the other large unions, MSF is taking a central role in the labour movement's campaign on equal pay. It is also involved in fighting low pay in parts of the NHS, setting the case for paid education leave and arguing for beefed-up stakeholder pensions.
Audits needed to fight inequality
In conjunction with the general TUC campaign, MSF is calling for organisations to carry out equality reviews to ensure pay systems do not discriminate against women and ethnic minority workers. It has developed a four-point action plan:
MSF's work in this area is particularly focused on the issue of performance-related or variable pay, which affects a relatively large proportion of its members and where the scope for discrimination against certain groups of employees is much greater. The union notes that "trends toward secrecy, a lack of transparency and individualised pay packages have a particularly negative impact on the earnings of women and black people employed as managers and professionals".
Other campaigns
In our union round-up last year, we reported how MSF was involved in a major campaign to highlight how the pay of a "forgotten army" of NHS staff not covered by the review bodies had fallen behind that of comparator groups. During the past year, the union has managed to secure inflation-busting rises for 6,000 scientific staff worth up to 13% (with a further 3% for those in London), and is now turning its attention to the "Cinderella" and "peanut" pay of laboratory assistant staff, who currently earn as little as £8,600 a year. Given successes elsewhere in the NHS and the Government's acknowledgement of recruitment and retention difficulties for these employees, MSF is confident it can make progress.
At a more general level, MSF is involved in a campaign to give every UK worker the right to paid time off for study, which the union believes would help to address the UK's chronic skills shortages. Other unions taking part include NATFHE, TGWU, UNIFI and Unison, as well as the TUC itself.
Finally, like many other unions, MSF is becoming increasingly active in the area of stakeholder pensions, arguing the case for compulsory employer contributions. It is considering whether to set up a scheme of its own and, in the meantime, is warning employers not to abandon their existing occupational schemes in favour of more cost-efficient stakeholder equivalents. However, MSF wants to see members of occupational schemes allowed to contribute to stakeholder schemes as well (instead of making AVCs).
A round-up of union agendas for 2001/02
Here, we present a brief overview of the reward-related issues that will feature on the bargaining agendas of some of the UK's key unions over the coming 12 months:
Graphical, Paper and Media Union (GPMU)
Like a number of other big unions, the 205,000-strong GPMU is focusing on the issue of unequal pay. It is particularly worried about the potential for discrimination to occur in performance-related and broadbanded pay systems, and by "employers' enthusiasm for US-style workplace policies discouraging employees from exchanging information about their earnings". The union says it wants to see: tougher equal pay legislation; statutory equality impact assessments and pay audits; pay equity plans designed to eradicate the gender pay gap, based on job classes; and union involvement in this process.
One way the union hopes to bridge the gender pay gulf is through the national minimum wage, which particularly benefits women. The GPMU wants to see the statutory pay floor raised to half of male median earnings.
Other items on the print union's agenda include stakeholder pensions (encouraging more employees to sign up to the Printing Industry Pension Scheme), and the euro. In respect of the latter, the union - whose members have been badly affected by the downturn in manufacturing - says it is in favour of joining and that the Government should "seize the moment" and call an early referendum, but only if European social protocols are adopted as part of the package.
Transport and General Workers' Union (TGWU)
Initiated back in 2000, the union's "£5 Now!" campaign - which aims to secure an immediate increase in the statutory pay floor - continues as we approach 2002. "Tackling low pay, dealing with pay inequality and ensuring workers share in the prosperity of a vibrant economy are at the heart of the T&G's campaign for a minimum wage level of £5 an hour," the union's assistant general secretary, Jimmy Elsby, said at the end of June.
Including 18- to 21-year olds within the full adult rate is also a major priority. Although the union welcomed the 30p rise announced in June, general secretary Bill Morris believes that "the decision to deny the adult rate at 18 will do nothing except reinforce age discrimination against younger workers".
GMB
Pay is high on the general union's bargaining agenda, along with the UK's entry into the eurozone. Concerned about the effects of the strong pound on manufacturing - where many of the union's 700,000-plus members are employed - the GMB is pro-euro. It is urging the Treasury to "press ahead with its assessment of UK readiness to join the eurozone so that a clear recommendation in favour of the UK adopting the euro can be placed before the British people in a 2002 referendum". The union is also keen to see common EU social standards and employment protection levels introduced in the UK.
On the pay front, the GMB is running a number of high-profile campaigns. The "rage over age rates" (ROAR) initiative aims to highlight the discrimination faced by young workers who are ineligible for the full minimum wage (and those under 18 who are not afforded any protection); the union points to a MORI poll suggesting that 80% of the public backs its campaign.
Meanwhile, the "public services pay campaign" has targeted some of the lowest-paid ancillary workers in education, the NHS and local authorities generally. Throughout 2001, the union has been vociferously arguing the case for a flat-rate £1,000 pay increase for the 350,000 council workers on less than £5 an hour. While the union will be continuing this fight over the coming year, it will also be looking to prevent the erosion of existing terms and conditions for these employees through transfer to private contractors.
Amalgamated Engineering and Electrical Union (AEEU)
The UK's third largest union (and set to become its second after the proposed tie-up with MSF takes place), the AEEU is again on the defensive after another woeful year for the UK's manufacturers. It looks like being a difficult 12 months for the union's 720,000 members, with the economic problems facing engineering companies large and small giving AEEU representatives little room for manoeuvre at the bargaining table. Expect more pay pauses, freezes and below-inflation awards over the 2001/02 wage year.
While the union is, for obvious reasons, quieter than most on the pay front, it remains a confident advocate of UK entry into the eurozone. Only by joining the single currency can the UK's export-reliant manufacturing base recover, the union argues.
Snapshot 1
Unison
Profile: The UK's biggest union has 1.3 million members, the vast majority employed in local government, health and education. Workers in water, gas and electricity, the voluntary sector and housing associations are also represented.
Snapshot 2
Union of Shop, Distributive and Allied Workers (USDAW)
Profile: Representing nearly 300,000 workers in the retail, food and distribution sectors, USDAW is the UK's sixth largest trade union. Young people, women, ethnic minorities and the low-paid account for a large proportion of the union's membership.
Snapshot 3
Manufacturing Science Finance (MSF)
Profile: MSF is the UK's fifth largest union and is due to merge with the AEEU to create its second largest. The union represents around 430,000 professional and white-collar staff across both manufacturing and the service sector (including workers in the NHS and higher education).
1The submission can be accessed in full at www.unison.org.uk/poles/clw/lowpay2 .