What lies ahead in 2014?
The feared double dip recession seems to have given way to a two-speed recovery.
And as the months pass and May’s European elections, September’s Scottish independence referendum and the 2015 UK general election draw closer, the gap between the economic “haves” and “have-nots” will be a recurring political theme.
This year’s figures from the Office for National Statistics (ONS) are likely to confirm continuing growth in output, with private services and, finally, construction maintaining their impetus generated in the second half of last year.
The 3% Construction Industry Joint Council pay deal negotiated last November (effective this June, with 3% again in 2015) suggested a degree of confidence, although how far that rests on a housing market boom remains to be seen.
Manufacturing had more mixed fortunes in 2013, the car companies doing well and exporting heavily but individual companies in a range of other sectors still finding it tough. Those that depend most on public investment or procurement will be affected by continuing cutbacks in 2014.
The National Institute for Economic and Social Research forecast for overall GDP growth in 2014 is 2.0%. This would mean the economy just about catching up with its pre-recession peak (in January 2008), with continuing slow progress in some sectors.
That is lower than the average 2.3% forecast published by the Treasury. And it would be disappointing given growth of 0.8% in the third quarter of 2013 (1.5% over 12 months), following 0.7% in the second quarter and 0.4% in the first quarter.
The potential economic impact of the September referendum on Scottish independence, north and south of the border, will no doubt be hotly debated as the year progresses. When the Scottish government’s White Paper on independence was published last November, the Scottish Trades Union Congress (STUC) welcomed its emphasis on economic development and the idea of a National Convention on Employment and Labour Relations.
But it also raised questions for the unions about how an independent Scottish government might develop a sustainable approach to taxation, as well as currency union, with the UK.
Scotland’s “stumbling” economic recovery was, like the UK as a whole, excruciatingly slow in 2013 and dependent on low-paid and insecure employment. Prospects for the economy could loom large as the 630,000 members represented by the STUC decide how to cast their votes.
If UK economic growth remains slow, then an early reduction in the unemployment rate below 7% seems unlikely, despite the steady increase we’ve seen in employment.
That in turn points — if Bank of England governor Mark Carney sticks to his word — to no short-term rise in interest rates. As of late last year, the average independent forecast for the fourth quarter of 2014 was still 7.3%.
So there may be little threat of an interest rate rise that would feed through to RPI inflation through higher mortgage interest payments. But we know energy price hikes are in the pipeline and anyone hoping for a slackening off in the rising cost of living may be disappointed.
Independent forecasts for the Treasury put RPI inflation at 3.1% in the fourth quarter of this year and CPI inflation at 2.4%. At that level it will probably still be ahead of the trend in average earnings, forecast at 2.4% (discounting the usual city bonus-driven peak we’ll see in coming months).
The two employers’ organisations included in forecasts published by the Treasury — the British Chambers of Commerce (BCC) and the CBI — had put the figure at a more buoyant 2.9%. But despite upping its economic growth forecast significantly, the BCC now predicts earnings growing by a less impressive 2.6%
Some recovery in the level of private sector pay settlements would not be a surprise either, as the 2.5% median recorded in the Labour Research Department’s 2012-13 Pay Survey was disappointingly low.
Long-term and inflation-linked rises will probably boost settlement levels in January, but by March or April the broader trend should emerge.
However, April is when many of the big public sector pay anniversaries fall. Although some public sector groups may push past the government-inspired 1% cap, others might not even get that.
The report of the NHS Pay Review Body covering 1.3 million workers, due to be presented in February, could involve a freeze. If so, it will rekindle union, TUC and Labour anger over the squeeze on living standards.
The percentage of workers in poor quality jobs, wanting more hours and pay but forced to rely on in-work benefits, will continue to haunt Conservative and Liberal Democrat politicians. Median disposable income of non-retired households dropped by 6.4% between 2007-08 and 2011-12 after adjusting for inflation, the ONS reported last month.
The impression of a two-speed recovery will be hard to shake off whatever the government does to reduce direct taxes (for example by raising the income tax threshold to £10,500) or drive more people into low-paying jobs (through more “welfare to work” policies).
Last November, the Money Advice Service reported that 8.8 million people (18%) were in serious debt. But in Hull, Nottingham, Manchester, Knowsley and Liverpool it was over 40%.
As last year, the case for real improvements in the National Minimum Wage and voluntary adoption of the Living Wage will remain strong — the content (and timing) of this year’s Low Pay Commission report should be interesting.
However, a backlash from those who believe employers need more of a free hand on pay, no doubt as an incentive to grow the economy out of recession, can’t be ruled out.
Behind the scenes, employers will be making a bigger set of decisions about whether to invest in their businesses and — through training, higher wages, full-time and direct employment — in their workforce.
If the Westminster government is seen to be standing on the sidelines, if there is more evidence of the disappearance of medium-skilled jobs, if sufficient apprentice placements can’t be found, or if numbers unwillingly working part time remain high or even grow, the momentum for political change could increase.
The general election may still be more than a year away, but it is already having an effect on the relationship between unions and the political parties.
Last autumn, following the industrial dispute between general union Unite and Ineos, the Grangemouth refinery operator, the Tories and sympathetic media made an early start to their pre-election union-bashing.
Labelling trade union protestors “bully boys” for their leverage campaigning, prime minister David Cameron announced a review of union conduct during disputes, described by Unite as a ”pre-election stunt”.
Tory union-bashing is unlikely to stop there. As Unite’s general secretary Len McCluskey pointed out: “We are a proxy for smearing the Labour Party and Ed Miliband.”
And the coalition parties may also find it useful to further cast unions in a bad light by extending the attacks on union reps’ facility time and possibly unions’ check-off arrangements with employers. Reps in the central civil service have already been hit by the facility time rationing regime, and ministers are putting pressure on local authorities and schools to go down the same route. The idea looks likely to spread rather than recede.
Further difficulties are likely to be imposed on unions if the infamous “lobbying Bill” is passed in anything like its current form.
Currently going through the House of Lords, the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill 2013-14 was so widely condemned for its attacks on free speech that the government was forced into a temporary retreat on some of its plans.
However, it did not retreat on Part 3 of the Bill, which most directly affects trade unions. It forces large and medium-sized unions to independently assure their membership lists — despite the fact that they are already legally obliged to maintain accurate membership systems.
And it gives the state the power to access the lists and allows third parties to make complaints about them.
The TUC says the Bill imposes “needless red tape on union membership systems”. Even the government’s own Regulatory Policy Committee said the impact assessment on Part 3 “lacks a sound evidence base and is insufficiently robust” to justify the estimated costs to trade unions.
However, the TUC is even more concerned by the sections which give the government’s certification officer new powers to access membership lists and to appoint investigators to look at membership records, including at branch level.
The TUC says this makes “what should be sensitive personal data about union membership open to far too many people — think blacklisting if you wonder why people are concerned”.
Meanwhile, partly due to pressure from the governing parties and media, the Labour Party itself is looking to change its relationship with unions. In particular it is considering whether union members paying the union political levy should be separately asked if they wish to be part of the Party. This is one of a number of internal changes due to be considered at a special party conference in March.
As it happens, 2014 will see most of the 15 Labour-affiliated unions run their review ballots on whether to retain their political funds. As long as union leaderships continue to support Party affiliation there are unlikely to be any shock results: Unite and the Usdaw shopworkers’ union, who have already held their ballots in 2013, returned higher votes in favour of their funds than on previous occasions.
It is perhaps more difficult to envisage how union membership levels will fare over the coming year. Last year the official National Statistics on trade union membership revealed a surprise step up in union membership among employees between the end of 2011 and 2012 in line with the rise in employment.
But while the broad employment picture continues to improve, it is not at all certain that union membership figures will follow suit. The public sector, which accounts for a disproportionate number of union members, will continue to recede, putting a downward pressure on overall union membership.
Public services union UNISON leader Dave Prentis said recently: “With the government talking about a seven-year austerity programme, rather than the three years they spoke of in 2010, some 600,000 public service jobs are under threat, with 400,000 already gone.”
Also uncertain is whether there will be any union amalgamations. While at one point it seemed that there would be some such activity in 2013, this has not yet come to pass — indeed the planned merger between white collar transport union TSSA and Unite was abandoned.
There may be more movement on a link-up between Unite and civil service union PCS, following PCS’s 2013 conference decision to authorise discussions on the topic. The two unions have been in informal discussions.
As Labour Research went to press, a commencement date was awaited for planned changes to the Transfer of Undertaking (Protection of Employment) Regulations. The changes, expected to become law this month, amount to a direct attack on the terms and conditions of trade union members and a full frontal assault on the machinery of collective bargaining (see Labour Research, December 2013, page 21).
They will, as the TUC warns, “drive down terms and conditions for vulnerable workers and make privatisations cheaper and quicker”. In particular, the new regulations will remove TUPE protection, a year after the transfer date from all contract terms “incorporated from a collective agreement”, as long as any new terms “when considered together” are “no less favourable” to the employee.
The new regulations will also change the law to prevent transferred employees benefiting from improvements such as pay increases negotiated under a sector or industry level collective agreement after the transfer date.
This change follows the decision of the European Court of Justice in Alemo-Herron v Parkwood Leisure Limited Case C-426/11 (see Labour Research, September 2013).
Compulsory early conciliation via the Acas employment advisory and conciliation service arrives in April 2014.
Acas, an already overstretched service, has secured £3 million to fund IT systems, staff training and recruitment for 2013-14.
But the government believes that the long-term running costs of this reform can be met “through the savings that will accrue to the Exchequer as a result of fewer cases requiring determination in the Employment Tribunal”.
Fewer cases being heard by the tribunal is something this government has most definitely achieved, although at the price of denying access to justice to thousands of workers. Early indications are that the introduction of tribunal fees has caused the number of new tribunal claims to fall off a cliff (see Labour Research, December 2013).
April 2014 also marks the launch of employer penalties, to be paid in limited circumstances by employers who lose in the employment tribunal and who commit a breach of the worker’s rights with “aggravating features”. The fines will range between £100 and £5,000, with a discount for early payment. No part of this penalty is to be paid to the worker.
Zero hours contracts
In October 2013, business secretary Vince Cable announced a consultation into the escalating use of zero hours contracts, described by the TUC as “a start, but only if it results in the strong regulation necessary to stamp out this abuse”. At the same time, the Low Pay Commission has been asked to examine scope for increasing the National Minimum Wage.
Discrimination questionnaires will be abolished from 6 April 2014, despite 83% of respondents to the government’s consultation not supporting this proposal.
The procedure, which enables individuals to elicit further information about allegedly discriminatory conduct by their employers or co-workers, and which has been in place for 30 years, will be replaced with an informal approach to be set out in Acas guidance.
Also due to be removed this year is the tribunal’s power to make wider recommendations to improve the workplace practices of an employer found guilty of discrimination.
Equal pay audits
From October 2014, employment tribunals will have the power to order equal pay audits where the employer has been found guilty of sex discrimination. The powers are welcomed by the TUC in so far as they go.
But they are viewed as far too limited, since they will only ever apply to a small handful of employers, and only after the law has already been breached.
Extension of right to request flexible working
The right to request flexible working is to be extended to all employees with 26 weeks’ continuous service from April 2014 (not just those with parental or caring responsibilities), replacing the current “right to request” procedure with a general duty on employers to deal with requests in a “reasonable” manner within a “reasonable” period of time.
The TUC generally welcomes this development but has said that the right to request should be available as a day one right and extended to all workers.
Developments in relation to caste discrimination look set to rumble on. Promised legislation to expand the definition of race in the Equality Act 2010 to include caste now looks set to be delayed, as a timetable published by the Government Equalities Office confirms that a full public consultation will not start until February or March 2014 at the earliest.
There will also be a review by the Equality and Human Rights Commission, as well as “sector specific engagement” with groups including employers, public authorities and the judiciary.
A draft order is expected in autumn 2014, but legislation is unlikely until summer 2015.
European Court of Human Rights
This year is likely to see more hardening of the Tory position on the European Convention on Human Rights and the role of the European Court of Human Rights.
Justice minister Chris Grayling, whose declared intention is to “see the Supreme Court of the United Kingdom being in the United Kingdom and not in Strasbourg,” describes the current situation as “wholly and utterly unacceptable”. Grayling has promised “draft legislation which we will publish [in 2014]”.
No doubt his desire to escape from Strasbourg is fed, at least in part, by the knowledge that the result of the RMT rail union’s long-running challenge to the UK’s restrictive balloting and anti-strike laws under Article 11 — the right to freedom of association — should be handed down by the Court this year.
Judicial review, memorably described last year in the Daily Mail by Grayling as a “promotional tool for countless left-wing campaigners” is also under threat, with proposals to limit the ability of third parties to bring a judicial review action to challenge its decisions. These reforms, if implemented, will severely restrict the power of unions to use the courts to bring the government to account.
Incomes in retirement will be high on the agenda again this year. Last month’s ONS figures on disposable income showed that the median income of retired households had risen by 5.1%.
But the level of the basic state pension remains a cause for concern, and an April increase worth less than RPI inflation will do little to allay that.
It’ll be 2016 before the new single tier state pension comes in, but the issue is bound to be high on the agenda as the Pensions Bill 2013-14 passes into law.
With no more money going into the new scheme, some will be better off. However, others can expect to be worse off while existing pensioners will continue to feel left out. But as millions more join workplace pensions this year through auto-enrolment, public debate will focus increasingly on the quality of the schemes they are being signed up to.
The government has been consulting on a new generation of “defined ambition” workplace pensions that might provide a better balance between members and employers, and may well be tempted to legislate on workplace pensions again this year.
But it is the humble “defined contribution” (DC) pension that workers are being enrolled into en masse, and their value, cost and governance will rightly remain in the spotlight.
Drop-out levels have so far been very low, but so too is the level of money going into most DC schemes. Even by October 2018, when auto-enrolment is fully rolled-out, the minimum contribution level will be only 8%.
This is, in effect, 6.8% says the TUC, given that only “qualifying earnings” between £5,668 and £41,450 have to be counted (figures for the 2014-15 tax year were due to be announced as Labour Research went to press).
That makes minimum DC contribution levels look like the next issue that needs to be addressed. However, so far there is no sign that the government intends to act on that.
Health and Safety
This year may see a step closer to justice for blacklisted workers as pressure mounts on the government to take action against blacklisting. The TUC’s November 2013 day of action on blacklisting prompted workers and trade unionists to protest nationwide. The day was held four years after 44 contractors were exposed for vetting workers — often for raising legitimate health and safety concerns — against a secret database
The Scottish Affairs Committee investigating blacklisting is due to make concrete recommendations to the government this year.
This is will put further pressure on the government, as a number of unions began legal action against the major blacklisting companies last year which will continue through 2014.
Towards the end of 2013, a dubious compensation scheme for blacklisted workers was proposed by major construction companies involved in the blacklisting scandal (see Labour Research, December 2013, page 7).
The UCATT construction workers’ union described it as “a blatant attempt to gag blacklisted workers”.
Gangmasters Licensing Authority
This year will mark the 10th anniversary of the Morecambe Bay cockling tragedy in which 21 Chinese cockle pickers drowned in an incoming tide off the Lancashire/Cumbrian coast.
The 2004 Gangmasters (Licensing) Act was passed by Parliament in the wake of the Morecambe Bay disaster to regulate gangmasters employing potentially vulnerable workers.
The Act also set up the Gangmasters Licensing Authority (GLA). The GLA has been scrutinised by the government’s Red Tape Challenge, most recently in a consultation about its remit and authority ending on 21 June 2013.
The government’s response to this consultation suggests removing the high-risk industry of forestry from the GLA remit. And in the future, cleaners and apprentices working in agriculture may not be protected by the GLA.
There are also suggestions to remove automatic GLA inspections for first-time license applicants. The TUC opposes this move, which it claims could lead to up to one in five rogue agencies being licensed. The government is also carrying out a triennial review of the GLA, launched in September 2013. Both review outcomes are due to be announced this year. Next month’s Labour Research will carry a feature on the government’s proposals for the GLA.
A new Health and Work Assessment and Advisory Service is set to be launched in 2014 (see page 27). This will provide state-funded occupational health assessments for employees who are off sick for more than four weeks.
The service is being established following government-commissioned research on sickness absence in Britain. Unveiling the scheme last year, welfare reform minister Lord Freud claimed it would save employers up to £160 million a year in statutory sick pay and increase economic output by up to £300 million a year.
He said that for the first time, “all employers, big or small, will have access to a service that offers the early support they need to keep people in work and fulfil their aspirations”.
However, when the scheme was announced last year, it received a lukewarm response from the BMA professional association and non-TUC affiliated trade union for doctors which said it did not go far enough.
BMA occupational medicine committee chair Paul Nicholson said: “While a step in the right direction, the proposal falls far short of BMA policy … The BMA believes that all employees must have access to specialist-led occupational health services.” Nicholson added that the recommendations accepted by the government “simply seek to provide access to those who are off work due to sickness absence”.
At the level of the EU institutions, the key event of the year is the five-yearly election of a new European Parliament in the fourth week of May.
Constitutional changes mean that the European Parliament is a much more influential body than in the past, and although it cannot initiate legislation — that is the role of the European Commission — its approval is essential to get laws agreed. In the past it has been helpful to unions by blocking legislation on working time and labour in the ports.
This time around, extreme right parties are making a more concerted effort to win seats and influence, and last November there were two meetings of their national leaderships — in The Hague in the Netherlands and Vienna in Austria.
The aim is to create an alliance ahead of the polls to form a political group in the Parliament. To do this they need 25 representatives spread across seven countries (a quarter of EU member states).
So far, six parties are involved. These are France’s Front National, led by Marine Le Pen, Geerd Wilders’ Dutch anti-Islamic Party of Freedom (PVV), the Freedom Party of Austria (FPÖ), Vlaams Belang from Belgium, the Lega Nord from the north of Italy, the Swedish Democrats and a nationalist party from Slovakia.
They will probably find the extra country they need. But with strident nationalism central to extreme right views, they may find it difficult to cooperate across borders on a longer term basis and form the “third force” in Europe the Austrian FPÖ has called for.
The elections, and the choice of the new Commissioners which will follow this, mean that there is little prospect of substantial new legislation this year.
One item which may still get through is legislation on the enforcement of the posted workers’ directive, setting the rules for companies who employ their own employees in other countries. Government representatives reached a compromise on this last month (see page 8). But the legislation still has to be agreed with the European Parliament and Commission before it can come into effect.
Away from the EU institutions, the key question remains the extent of progress towards economic recovery and whether there will ever been an end to austerity. The latest forecast from the European Commission last November suggested that, across the EU as a whole, growth will be 1.4% in 2014.
However, there will be big differences between states, with stronger growth prospects for Germany (at 1.7%) and Austria (1.6%), but a much more uncertain future for Italy (0.7%) and Spain (0.5%). This will be very clearly seen in the levels of unemployment, which are still expected to be more than a quarter of the working population in Spain (26.4%) and Greece (26.0%), while in Germany the jobless rate is forecast to be 5.1% and in Austria, 4.7%.
Learning and skills
The coming year is set to be dominated by major changes arising from the coalition government’s latest skills strategy, Rigour and responsiveness in skills, published in April 2013.
The strategy focuses on raising standards by making the training and skills system more professional; intervening in poor provision; creating traineeships; reforming and improving the quality of apprenticeships; using funding to make provision more responsive; and giving employers and individuals the information to make appropriate choices.
As part of the strategy, the government is currently piloting major changes to the skills funding regime in England through the Employer Ownership Pilot. This is giving employers direct access to government subsidies for workforce training as opposed to the traditional arrangement whereby all government funding goes direct to colleges and training providers.
The second round of the pilot is testing out the development of new Industrial Partnerships — involving employers, unions and others — with a remit for taking “wider responsibility for skills development in a place or sector”.
The government’s Future of apprenticeships in England: implementation plan began in October 2013 and will continue developing over 2014 and beyond. It introduces a more employer-focused approach so that reformed apprenticeships will be:
• employer-led and designed to respond to the needs of industry, meaning each apprentice has the skills required by the sector;
• focused on quality so the apprentice has to demonstrate their ability through rigorous assessment at the end of their apprenticeship; and
• graded on completion — pass, merit, or distinction — to mark the level of achievement.
In response, the TUC’s learning and skills organisation, Unionlearn, aims to achieve a step-change in the direction of union learning and the role of Unionlearn over the coming year to coincide with the government’s major national policy reforms, particularly the new skills landscape developing around employer ownership and Industrial Partnerships.
The introduction of Industrial Partnerships is seen as an important opportunity for trade unions to become further involved in developing workforce skills.
Over the coming months, Unionlearn will be working with unions to develop union engagement with Industrial Partnerships and through a number of key objectives. These include expanding the number, and improving the quality of learning opportunities for all sections of society facing barriers to labour market entry, especially young people; and promoting a skills agenda that is integrated with a coherent industrial strategy.