Employment
Baroness Prosser
To call attention to the changing world of employment; and to move for papers.
Baroness Prosser
My Lords, I am privileged and pleased to be able to introduce this debate—
Baroness Anelay of St Johns
My Lords, I suggest that we observe the usual courtesies of this House, which are that first we leave quietly and secondly that we do not walk in front of the person trying to speak.
Baroness Prosser
Whatever happened to the gentlemen?
I am privileged and pleased to be able to introduce this Labour debate on the changing world of employment. The subject is wide and encompasses issues to do with the economy, education, welfare and services as well, of course, as employment policy. My contribution will range across these areas, ending with some proposals for action.
Most noble Lords will recall the days when, educated or otherwise, qualified or not, a person could walk into a job at any time and, if they did not like it, they could walk out and into another one. The need for hands was very great. Factories employed people in their thousands. Rural areas employed miners in hundreds of communities and the supply chain of pit props, clothing, safety equipment et cetera kept the money going round in villages and towns throughout the land.
Opportunities did not, of course, abound for everyone. Very limited childcare facilities and opportunities for part-time work meant that most women had the choice of staying at home or finding jobs that could fit around their husband’s employment—evening and morning shifts, in the main. Flexibility of attendance was unheard of, and opportunities for people with disabilities were even more limited than they are today. Newcomers to the country faced hostility, and were herded into jobs that no one else wanted.
Then came the 1980s and the Thatcher Administration— the second industrial revolution, as it was called. Things which were going to change anyway suddenly changed very rapidly. Globalisation was making itself felt, and manufacturing took flight, commencing its round-the-world quest for the cheapest dollar. Mines closed in their hundreds, leaving communities bereft and groundless, and new technology took hold, introducing easier and faster methods of production than could be matched by the human hand.
I had some interesting conversations about that time with international trade union colleagues. One man at a metalworkers’ conference complained that a French company—which, by the way, had been a big employer in the United Kingdom—had left his country, Malaysia, and was now setting up in cheaper Vietnam. Ironic, I thought.
In the 30 years since this shift started we have seen a profound change in the labour market. After a sharp fall in the numbers employed in the 1980s, and apart from a blip downwards in around 1991-92, employment figures have risen steadily, with an extra 4 million people in employment between 1993 and 2008. Of course, during that time the structure of the labour market has changed.
According to figures contained in the excellent IPPR report, “Jobs for the future”, the agriculture and fishing sector is down by 27 per cent, manufacturing down by 31 per cent, and electricity and gas down by almost half. Increases came in real estate, up by a whopping 103 per cent, and information and communications, up by 59 per cent, with health and social work, education, arts, entertainment and recreation all also significantly higher. So there has been a major shift from blue collar manual work—or “full-time, proper jobs”, as some in the trade union movement used to rather patronisingly say—to jobs requiring different skills and certainly a more formally educated workforce. There are more jobs for women, too. Clearly, this major change in the nature of the workforce called for a shift in trade union activity and emphasis. My own union—the T&G, as was—supported by the TUC, ran a major campaign led by the noble Lord, Lord Morris of Handsworth, with the slogan “Full-time rights for part-time workers and permanent rights for temporary workers”. These aims have been achieved, although it has taken almost until now to settle the agency workers directive.
In a spirit of meanness, the Government of 1993 removed many low-paid and largely non-union workers from the protection of the wages boards. One woman member of the T&G executive council, who worked as a bartender in the north-east, did not get a pay rise until six years later, when Labour introduced the national minimum wage in 1999. Many workers in unorganised workplaces received paid holidays for the first time, via the introduction of the working time directive.
The right to request flexibility was introduced by the Labour Government, and despite the musings of some policy wonks—most of whom have never set foot in a workplace outside of Westminster—I believe it is recognised by most employers as both helpful and essential. Also courtesy of the previous Government, the real needs of working parents were recognised by fiscal initiatives which provided meaningful help towards childcare costs, making it economically viable to participate in the labour market.
The national minimum wage mentioned above was introduced amid an exaggerated furore of likely job losses. Four million jobs later, that was shown up for the myth that it was. Since then there has been the emphasis on education, and improving standards for all. I do not, of course, disagree with that intention. I do, however, question what I would describe as a bias towards academia at the expense of vocational training.
Not everyone is cut out for academic work; anyway, the country also needs people with practical skills. During this period, we have seen too many young people convinced that a university education is the only or best option and taking degree courses in subjects not remotely linked to the needs of the labour market.
All of this was very well while everything else in the garden was rosy. The shift from making things to a service-based economy goes back many years and the growth of the finance sector has its roots pre-1997. Very neatly, of course, the taxes paid by extremely well paid financial workers paid the bills for the growth of public services, which I must say were in need of investment following the funding blight of the 1980s, but now we come full circle. The banking bubble has burst and a new Administration rule the Westminster agenda. The financial situation is of course very difficult—it would be crass to pretend otherwise—but simply cutting away all the advances that have been made in the past 15 or so years does not fill me or, I suggest, the great British public with confidence.
The idea mooted by the Chancellor of the Exchequer, and repeated this week by Michael Gove, that reducing workers’ employment rights is going to boost jobs would be hilariously funny if it were not so tragic and frankly ridiculous. Taking away education maintenance allowances, collapsing the Future Jobs Fund, cancelling the right to work experience and increasing fees to attend university are taking this debate in completely the wrong direction. This week’s report by the IFS states that education spending is being slashed by 14 per cent, the largest cut since the 1950s. How mad is that? We need a strategy that recognises the global nature of the dilemma in which we find ourselves. PwC's recent report, The World in 2050, says in its summary:
“Rapid growth in consumer markets in the major emerging economies, associated with a fast-growing middle class, will provide great new opportunities for western companies that can establish themselves in these markets”.
It goes on to say that,
“Western companies will increasingly be playing in the slow lane of history if they continue to focus on markets in North America and Western Europe”.
According to this report, the UK currently sells around 7 per cent of its exports to the BRIC countries, about the same as we export to Ireland.
So what do we need to do? First, I suggest we need to get a long-term strategy which encompasses the recognition that we are a global player in a world which is fast overtaking us. Long-termism is not of course a familiar political concept, with most politicians operating on the maxim of jam today and heaven tomorrow. However, none of us will be thanked in the future if we do not work towards the United Kingdom taking a leading role in the world’s economic development.
Secondly, we need to invest as much as possible in the education and training of the population, with better support for school pupils making choices about their studies, opportunities for them to experience work and for employers to build relationships with schools. We need more money going into vocational training, including opportunities for young people to retrain or to take up apprenticeships at a more mature stage in their lives. Lots of youngsters do not do well at school; then, when they are 25 or 30, they realise that they could have done better. We waste talent and lose spending power by not giving second chances to such folk. Equally, we need second chances for women post having children. The Women and Work Commission report produced in 2006 estimated that increasing women’s participation in the labour market could be worth between £15 billion and £23 billion each year to the Exchequer.
Thirdly, we need to invest in research—not an area where we have in the past covered ourselves in glory. General manufacture in large volume is not likely to return to this country. Wages and general costs prohibit that—all the more reason, therefore, to invest in innovation and new ideas.
Fourthly, we need to wake up to the fact that society has changed. Expectations among groups which have long been left behind or marginalised have shifted over the years and remaining at the bottom of the heap will not be quietly tolerated for ever. Positive action programmes to help employers understand the value of diversity in the workplace would go a long way towards breaking down myths and barriers. We cannot afford to leave great swathes of the population on the unemployment shelf just because we are not used to coping with disability, for example, or difference. These are just a few ideas which are essential to aid the UK’s recovery and to launch us back into the global marketplace. Failure to act will not only see the UK limping along, looking like a second-class has-been, but exacerbate the already unacceptable wealth gap and lead to an unhappy and divided society.
There are, of course, a number of immediate initiatives which the Government should take to deal with the current high rate of unemployment. I am sure that other noble Lords will address some of these issues in their contributions.
Baroness Brinton
My Lords, I thank the noble Baroness, Lady Prosser, for instigating this important debate on the changing world of employment. In the enormous breadth of the subject, I want to focus on vocational routes to employment.
For those of us coming to the last few years of our working life span, compared to those struggling at the moment to find their first job, our prospects, career progression and expectations, both good and bad, were often clearly signposted and, frankly, there was not much opportunity to deviate from the pre-ordained route. In the late 1990s, as the senior bursar of Selwyn College, Cambridge, I saw for myself how drastically the changing needs of the employment market were affecting jobs within the college. Our loyal and devoted maintenance manager took retirement at 65. He had left school at 14, been an apprentice to a carpenter, and when he became a carpenter in his own right—no formal qualifications in those days, just serving his time and learning from his apprentice master—had joined the college’s maintenance team in his 20s. He was always the first to admit that his key skills were low. His successor, by contrast, had a higher national diploma, equivalent to a vocational degree, and, frankly, he needed it. The health and safety requirements of the post, as well as the functional skills needed to specify building contracts, monitor and deliver them to budget, deal with personnel issues relating to his staff as well as provide customer service to other staff and students in the college meant that the job had become very different.
Other speakers may want to focus on the knowledge-intensive industries, but I want to spend a little time looking at the vocational needs of employers and employees. The coalition Government have rightly focused on ensuring that apprenticeships are made more easily available, building on the work of the previous Government, and the 100,000 new apprenticeships are very welcome. However, I am sorry to say that I still hear frequent comments from further education colleges, young applicants and many others that employers are often reluctant to come forward and offer apprenticeships. I have spent much of the past 20 years in a number of roles working with key business stakeholders and with businesses, small and large, trying to understand how we can resolve the eternal conundrum whereby businesses say that they cannot recruit youngsters with the right qualifications and skills, but they will not take responsibility for training them in apprenticeships.
There are, of course, many notable exceptions. I shall highlight just one. Marshall Aerospace of Cambridge has led the way in developing apprenticeships and advanced apprenticeships with clear career progression on to higher education. It is expected that many of the 16 year-olds it takes on will, during their time with the company, earn while they learn and, as important, make a serious contribution to the company and its bottom line. Many will end up with a master’s degree or PhD and this is not just in the obvious area of aerospace engineering: it has them in IT design, business skills and a range of other areas as well. So popular are the apprenticeships that the company now runs taster days for local schools and offers advice and guidance to young people about whether this is the right route for them.
I know this from personal experience. My foster son attended such a taster day, and he was grateful that at the end of it he felt, and indeed Marshall advised him, that it was not the right route for him—very helpful for someone at 14 or 15 to have that advice. Marshall believes that it is in its best interests as a company to take this course of action where other businesses might say that it is too expensive. I say that Marshall’s results speak for themselves.
If employers say that our young people are not work-ready, we must continue to look at the core functional skills that they have mastered as they come to leave school, especially those not following the more academic route. It is absolutely vital that every young person continues to get support in functional skills, formerly known as key skills, until they have mastered them. My illustration of the maintenance manager for the 21st century shows that. However, even fast food jobs these days require IT and literacy skills. Gone are the days when a lad in a sandwich bar just needed his manual skills. Often people will e-mail in their lunch orders or, in larger chains, an order will be taken down on a computer and another staff member will download it, read it and deliver it. There are many other examples. There are very few jobs these days that need no skills.
I want to return to the issue of technicians and vocational training. The UK Skills Commission has recently published its report on technicians and progression, and I support much of its findings. It is absolutely right to say that technicians are the unsung heroes of the UK’s leading industries. If we are to provide an effective workforce to reinvigorate our major industries, including manufacturing—I agree with the comment made by the noble Baroness, Lady Prosser, that we are unlikely to become a major manufacturing nation again, but I am confident that we can significantly improve manufacturing in this country—we must change our approach and our culture to encourage young people as early as possible to see engineering and other technical roles as attractive as the current fashionable but for the vast majority, frankly, unattainable status of footballers and celebrities.
The report states:
“For the first time, we have the opportunity to develop a technical pathway in schools, through further education and universities and into the professions. University Technical Colleges, specialist academies and some free schools are beginning to establish employer-led, technical 14-19 provision. This should be expanded further and fully integrated into post-compulsory education”.
My only additional comment is that I would welcome it being mainstreamed into community schools as well; it should not just be the preserve of specialist schools.
I take further issue with the report in that I think that starting at 14 is too late. Many universities currently run schemes such as the Cambridge University STIMULUS scheme where students reading maths, science and engineering go into primary schools to work alongside teachers to engender some enthusiasm for those subjects among nine, 10 and 11 year-olds. I have seen this as chair of the governors of a primary school in Cambridge where young people, who had decided that maths was probably a bit too difficult, really thought that it was something that they would want to continue with at secondary school—particularly girls. We definitely need to see more girls taking science at secondary school because otherwise, frankly, they have locked themselves out of engineering as a future route.
I also welcome the Skills Commission report on a new professionalism and registration proposal for technicians, but is it new? Traditional vocational skills are perhaps returning to the pre-1960s craft skills routes but, I hope, better documented and run with a higher functional and specialist skills route. The report also talks about a learner-driven system, but I have two caveats. First, we must ensure that young people have access to information, advice and guidance, especially those not following the academic route. I am grateful to the Government for allowing statutory advice and guidance in the Education Bill that is going through this House at the moment, which will ensure professionalism among careers staff and face-to-face advice for young people who come from the most disadvantaged backgrounds and who will not be following an obvious academic route. Secondly, we must encourage small and medium-sized enterprises, which, frankly, are the key driver of our economy—13 million individuals, creating 65 per cent of new jobs in the country—to invest in training, particularly technician training. With the Government’s offer on apprenticeships, it should be available to them. We must do everything that we can to encourage them to take it up.
I want to end on an upbeat note. Anyone who attended WorldSkills, hosted by the UK this summer and brilliantly run by UK Skills, would have seen an absolutely impressive demonstration and showcase of our best talent in all 46 skill areas. Anybody going around the extensive exhibition would have noted not just those doing the demonstrations but the enthusiasm, energy and excitement of the schoolchildren attending and watching our entrants and those from 47 other countries showing what they can contribute to their professions. If UK Skills can demonstrate the absolute strength of this country in the technical and vocational area, let us use that to harness it and make sure that in the future our technicians are the sung, not the unsung, heroes of our economy.
Lord Kestenbaum
My Lords, I congratulate my noble friend Lady Prosser on securing this vital debate. Its urgency seems driven very much by two different influences, one external and the other much closer to home. Externally, the days of economic power being concentrated in the hands of a few predictable nations—we were fortunate enough to be one of them—seem very long gone, as the noble Baroness mentioned. Consider the shift. In 1980 only 6 per cent of United States research and development was conducted overseas, yet 25 years later there are 750 foreign research and development centres in China. India produces 1.4 million engineers as graduates and 6,000 science PhDs. These are economic revolutions. China and India in particular, as we have seen, are the most profound threats to our own competitive advantage, not least because they have aggressive national strategies to prepare them for our very subject today—the changing world of employment.
The second influence is surely internal, namely the scale of job creation needed in the coming years as a consequence of deficit reduction—two words that have a huge impact on human misery. The Office for Budget Responsibility forecast is that between now and 2016, 610,000 public sector jobs will be lost. In addition, PWC’s estimate is that 500,000 private sector jobs that are dependent on public contracts will go, too. That will be 1.1 million jobs lost over the next five years, which makes our concerns today very real and very human. Therefore, I will focus my comments on two particular elements of this challenge: first, how growth will be at the heart of new employment; and, secondly, following on from the noble Baroness, whether our new workforce is being equipped with the right skills for this new economy.
In one sense, as the blight of worklessness increases, we know broadly where the new jobs will be. We increasingly talk of three things: a focus on core areas of strength—advanced manufacturing, aerospace and pharma; growing advantage in highly competitive smaller areas such as video games, visual effects, design and the creative industries; and the potential golden eggs of our economic future, namely graphene and biotech. Stian Westlake’s work at NESTA—where I used to be CEO—which he neatly calls Rebalancing Act, captures this rather well. Once we look deeper, not just at sectors but at which types of firms are really creating jobs, an interesting picture emerges. All the evidence shows, again and again, as my noble friend Lady Prosser said, that innovative, high-growth firms will produce the jobs of the future. NESTA’s research into high-growth is cited often in this House. It shows that 7 per cent of businesses in the UK, classified as high-growth, have been responsible for half the new jobs in the past decade. Seven per cent of our firms are producing half the new jobs.
What do the firms who are most likely to create new jobs have in common? Again, the evidence seems clear. They are not concentrated in particular sectors. Pleasingly, they are not found predominantly in one part of the country. That is good news. Rather, one factor links them all, and that is that they are disproportionately likely to innovate. These pockets of the innovation economy, from semiconductor clusters in the south-west of England to the creative industries hubs of eastern Scotland, could very well be the heartbeat of new employment.
My second point is that this changing world of employment will increasingly rest on skills. This innovation economy, as we know, needs the right economic infrastructure, access to capital and intelligent public policy, but above all it needs a very new and imaginative approach to skills. In my current role as chief executive of Lord Rothschild’s family investment business we come face to face daily with the opportunity to back new industries, and this new economy seems to require a new set of skills from the workforce that we meet. Not only does this involve the combination of technological, scientific and mathematical aptitude which one would expect but, increasingly, creative skills—particularly design—are coming to the fore. Most recent surveys show that employers also want the “softer” skills from their workforce: teamwork, collaboration, communication, problem-solving. I am sorry for that word because it does not capture it adequately, but for “softer” do not read “trivial”. It would be very helpful to know the Government’s approach to the crucial challenge of a new set of skills for a new economy, particularly—following on from the noble Baroness—learning these job-relevant skills at university. This is definitely a vital area for imaginative public policy.
My comments have focused on these two preconditions for employment in a changing world—high-growth firms and appropriate skills—but perhaps I may make one final observation. If we want new jobs, we cannot ignore innovative firms. There is, however, a human cost. For high-growth firms to flourish, poorly performing businesses must, as we know, shed staff and go under. Amidst all our talk of a new economy, we cannot be blasé about its effects on human beings. The noble Lord, Lord Layard, has written powerfully of the misery that worklessness creates. We need a system that allows our best businesses to thrive and create jobs, but we also need one that creates chances for those who fear unemployment or find themselves out of work, victims of what Schumpeter would have called “creative destruction”. It would be helpful to know what such a system is. Perhaps the German short-time compensation scheme the Kurzarbeit might be a useful model, and there are no doubt others which are imaginative partnerships between government, labour and business.
I make these concluding remarks on the social safety net not just because without it the human cost of this new economy is simply unacceptable, but, more broadly, because this debate is as much about the society we wish to build as it is about the economy which will help build it.
Baroness Gould of Potternewton
My Lords, I also thank my noble friend Lady Prosser for initiating this very timely debate, which is about changing the world of employment. I thought a lot about this and about the ideal that I would really like. At the end of the day, I decided that I could not talk about the ideal without talking about the present. It is a very sad, negative story about employment at present. On 12 October, at the Prime Minister’s Question Time, he accepted responsibility for everything that happens in the economy. That must include responsibility for the highest level of unemployment in 17 years, with over 2.5 million people without jobs and 1,200 extra people each and every single day becoming unemployed. One in five young people is out of work, with over 800 extra young people each day. Youth unemployment is near the 1 million mark, the highest number since corporate records began in 1992.
One of the first acts of the coalition was to scrap Labour’s Future Jobs Fund, which helped young people into work; and to introduce the work programme, which gives no guarantee of jobs for the future. The abolition of the Future Jobs Fund was all the more surprising because on 10 March 2010, just before the general election, the current Prime Minister referred to it as a “good scheme”. Why abolish it? A further advantage of the scheme was that it enabled partnerships with apprenticeship programmes, providing additional work placements for apprentices, and could have created up to 200,000 full-time paid jobs for young people up and down the country.
The noble Baroness, Lady Brinton, referred to the reluctance of some employers to train young people at work. I am a great believer in training on the job. We really must encourage more activity by employers to do that. Not satisfied with abandoning the fund, the Government have cancelled a number of schemes to help young people get on in life—starting with the very young and the abandonment of child trust funds, the ill thought-through plans to scrap the education maintenance allowance and the tripling of tuition fees.
Putting young people on the dole is not just a waste of talent but a waste of money. It does not make economic sense—not only in the short term but in the long term. There is strong evidence that if a young person cannot establish themselves in work early in their careers, they will find it much more difficult to do so later on. The lost generation of the 1980s—a whole generation of young people—grew up in Britain with little or no hope of a job. We must not let that happen to this generation of young people.
There are now more women unemployed than at any time since 1988. Redundancies in the public sector are dominated by women. To make it worse, the Government's welfare reforms actually penalise families in work by cutting support for childcare for parents who want to work; and by the end of this Parliament, it is estimated that the Government will have slashed the support for families with children by nearly £7 billion.
There is a pattern. All this has not happened by accident, but by design—and I say that with the greatest respect to Members opposite. It is a political choice, not a necessity. For instance, the Government have now accepted that women are being the hardest hit, whether it is because of the cuts in services, benefits or unemployment. I do not believe for one moment that the Government were previously unaware of the consequences for women and their families when those actions were taken. What is happening today takes me back to the 1980s, when women again bore a disproportionate share of the increased rate of unemployment. Women were then, as now, vulnerable to the actions of a Conservative Government. Also at that time, unemployment topped 3 million twice and less than one-fifth of 16 year-olds had a job. We cannot go back.
One accepts that like in every other country it was necessary to reduce the deficit, but for me there is something illogical in the Government’s philosophy. I am not an economist but I try to use my common sense: rather than generating jobs and making work pay, if you have more people on the dole who are not in work paying taxes but claiming benefits instead, it means that the Government have to borrow more, costing Britain an extra £500 million from the Treasury for every 100,000 people out of work. That surely cannot be sense. We were told by the Government not to worry about the loss of public sector jobs because the private sector would make up the shortfall. Those were fine words that have proved completely false. The Treasury is now forecasting that 700,000 jobs will be lost in the private sector.
The consequences of the Health and Social Care Bill will further exacerbate the problem. The reforms raise all the questions about workforce planning, education and training. Staff in the NHS are already in the midst of a pay freeze and their pensions are threatened with the triple whammy of paying more, working longer and receiving less in retirement. On top of this, despite revising down the figures used in their latest impact assessment, the Government still anticipate nearly 13,000 redundancies as a result of their planned reorganisation. This represents a personal tragedy for those affected and a colossal waste of talent, skills and resources at a time when the NHS can ill afford it. Even with the revised figures, the Government still predict redundancy costs alone running to £810 million.
The Government have failed to acknowledge the need to retain national workforce structures for terms and conditions, pay and bargaining—in breach of staff rights set out in the NHS constitution, which the Government said they would honour. The Bill will allow new commissioning groups greater leeway to break away from the Agenda for Change pay system. Not only does this rob health staff of certainty about their pay and conditions, but the potential for local pay negotiations also creates a massive extra administrative burden for local negotiators. Undermining the Agenda for Change may lead to an increase in equal pay litigation for the NHS—something which the existing system was designed to avoid.
The “any qualified provider” policy will make it extremely difficult to plan staffing and training placement, as providers will not have any guarantees of the volume of work they can expect. How is it to be ensured that there will be sufficient workforce to meet the needs, as the needs are not yet known?
The reforms, as if not a large enough upheaval for NHS staff on their own, are taking place alongside the expected efficiency savings of £20 billion over the next four years, which is already having an increasingly negative effect on services and staff. For example, the RCN’s Frontline First campaign has found that over 40,000 posts have been earmarked for removal from the NHS by employers looking to save money. This causes the RCN serious concerns that the dual reform of efficiency savings within the NHS is adversely affecting the quality of care and the safety of patients. Somehow the Government fail to understand the consequences of reducing the number of front-line staff. The right way to get a better health service is to get the best out of people. This requires a well trained, supported and rewarded workforce.
There are those who believe that the rising employment of older workers leads to the creation of youth unemployment—a position completely refuted by the TUC, which points out that they tend to do the jobs that the young unemployed might not expect to do. The main reason for the job crisis among young people is that not enough jobs have been created. Many older people choose to work, but many do so out of necessity. Low wages and poor pension provision—particularly in the private sector—coupled with rising inflation have made work a necessity, and we should all respect that, instead of trying to use it as an excuse for youth unemployment.
A statement from the Department for Business, Innovation and Skills says that a successful UK economy will depend on the skills and contribution of the older people in the workforce, but it relies on much more than that. It relies on a faster growing economy and on the Government actually looking again at their plans. We heard in Question Time the Government’s determination to stick to their three-point plan; but without change—without a real plan for growth—we are going to see unemployment continue to rise and the welfare bill continue to go up.
Baroness Randerson
My Lords, this is such a wide topic for debate, with so many facets, that it is obviously possible to touch on only one or two in the time available. I therefore intend to concentrate on the growth of so-called flexibility in the world of employment. Job descriptions are constantly changing. I remember that back in the 1970s, we frequently heard of the workforce working to rule. We do not seem to hear that phrase often these days: I suspect that is because the rules are always changing, and it is difficult to justify sticking to any particular rules. People entering the job market these days can frequently expect short-term contracts, even in the most skilled and highly paid professions. Agency working is very common, and the nine-to-five day and formal overtime pay—double at the weekends—have largely gone, with employees expected to be flexible in their working hours. Part-time working is increasingly common, and it is this I want to focus on, because the growth of part-time working is at one and the same time a bonus and a problem.
For the employee looking for a long-term career, the abundance of part-time jobs can be a frustration. It is often the case that people assemble a whole suite of part-time jobs in order to earn enough to live. Clearly, those people would far rather have a single job in full-time paid employment. However, it is the growth of part-time employment which has enabled so many women to combine employment with caring responsibilities. Although increasingly men undertake parenting responsibilities, women are still the predominant carers of children and of relatives, whether they are older or disabled.
The increase in part-time working is of course not unique to Britain. On average, it has increased steadily across all OECD countries since the mid-1990s, although there are very wide variations in the rate. One should not take that pattern of part-time working for granted. One country differs considerably from another, and there are some notable exceptions to the general trend. In Japan and the US, the amount of part-time working has decreased over the past 15 years. In some countries—the Slovak Republic, for example—part-time working is very rare, and one can understand why that might be the case, whereas in the Netherlands 60 per cent of women work part time. The UK is towards the top end, with about 40 per cent of women and 10 per cent of men in the workforce now working part-time.
To appreciate the complexity of the picture of part-time working, we just have to look at one profession. Let us take medicine as an example. More than half of all medical school graduates are now female; 38 per cent of GPs are female; and, of those, 35 per cent are GP principals. However, of those female GP principals, only 53 per cent work full time. Therefore, 47 per cent of female GP principals—now a very common set-up—work part time.
Having spoken to female GPs, it is absolutely clear to me that they are tremendously attracted by part-time working. It has enabled them to pursue a career, to have ambition and, at the same time, to look after families. That is key for them. Yet from time to time the medical profession complains that the number of part-time GPs is a problem in the development and management of local practices. Therefore, one can see the problem that we face.
However, there are worrying signs relating to the growth of part-time working, and that is something to which I want to draw noble Lords’ attention. In my own area in Wales, recent statistics show that within the past year there has been a reduction in full-time workers of 1.3 per cent, but there has been a 3.7 per cent growth over the same period in the number of part-time workers. There has also been a 9.2 per cent increase in the past year in the number of temporary employees. One can understand entirely that this is a response to the hard economic times in which we live. It is important that we also bear in mind that the pattern of employment in Wales has been predominantly, or very commonly, in the public sector and that part-time working has been more common in the private sector, which is creating some of the jobs that are needed in place of those in the public sector employment. However, if that pattern of increasing temporary and part-time employment goes on for too long, it will have implications for the stability of the workforce and the polarisation of income. I am sure that all noble Lords are aware that some part-time jobs, although by no means all, can be badly paid.
I have referred to part-time jobs fitting the lifestyles and needs of women but I also need to refer to the recent growth in the number of older workers, which has come about as a result of our ageing population. The Government have recently removed the compulsory retirement age. They are to be sincerely congratulated on that because it will free up many people who wish or need to work beyond retirement age. Many of those who wish to work beyond retirement age also wish to wind down; they want to work, but they do not want to work as hard or as long as they have in the past and part-time work suits them. The fastest growing group of workers between 2007 and 2009 was those aged over 65 and the second fastest growing group was those aged between 60 and 65. The Government’s recent decision on older people and the compulsory retirement age will add impetus to that.
I briefly want to mention a third group who particularly look to part-time work. That is young people who are still in education. For many decades students have traditionally taken jobs in the vacation, but since the introduction of tuition fees under the previous Government, it is now the norm for students at college and at university, studying on full-time courses, to have employment in the evenings and at weekends, which can have an impact on their ability, in some cases, to cope with their studies. For that reason, I am very pleased that, in the future, the repayment terms for tuition fees for young people will enable them to wait until they have graduated before they repay them.
In conclusion, we are walking a tightrope on part-time working. It suits an increasing number of groups of people and, therefore, is to be welcomed. However, there is a downside: in some cases, there is an association with low pay and fewer career opportunities. The difficult task facing any Government will be to foster the positive while controlling the negative aspects of this. I believe that although we now have a firm legislative basis for part-time working we still need to raise awareness among employers of the treasure trove of experience that part-time workers have to give to the work force.
Lord Collins of Highbury
My Lords, I am very pleased to be able to speak in this debate and I am very grateful to my noble friend Lady Prosser for initiating it. The world of work has certainly changed significantly in recent decades and must continue to do so, not only to ensure that Britain is as competitive as it can be, but also to ensure that it is as fair as it can be.
As I said in my first contribution to this House, the early death of my father meant that my mother was faced with the loss of her husband, her home and her livelihood in short succession. She was determined to provide for her children, and her hard work and resolve secured our future. Yet my mother would have been the first to acknowledge that things might have turned out very differently had it not been for the progress achieved through politics. It was the Equal Pay Act that transformed my family’s income and provided a level playing field for women like my mother. It was changes in the law that gave my mother protection from exploitation and it was changes in the law that enabled her to become an economically active individual rather than dependent on the state. I am very concerned that, amidst all the talk of rolling back red tape or ridding ourselves of EU regulation, we must be very careful that we do not also roll back those 30 years of progress. My mother’s struggle then is the struggle of thousands of working women now. They support their families and they grow the economy. If we make it harder for them to work and drive down the economy, we will only make it harder for ourselves.
In recent times, I cannot think of an area where the world of employment has changed as much as for the estimated 3.7 million lesbian, gay and bisexual people in our country. I think it is important to remember that, until the previous Government took action less than 10 years ago, it was entirely lawful for gay people to be refused a job or a promotion or to be sacked in this country simply because of the way they were born. Thankfully, this is no longer the case, in no small part also due to the campaigning work of many trades unions and organisations such as Stonewall.
Unusually, perhaps, it was the armed services that changed their treatment of gay personnel first, from 2000. The fact that, until then, the RAF was summarily dismissing fighter pilots for being gay, in spite of the £1.5 million cost of their training to the public purse, is a stark reminder that prejudice in the workplace is not only a human tragedy for those involved but also hugely costly to employers.
Changing the law was merely the first step in the process of changing the day-to-day working lives of gay people. I welcome the fact that they have demonstrably changed. Over 600 employers, for example, are now members of Stonewall's diversity champions programme. Those employers, including the Royal Navy, MI5, many police services and many major public companies, have all made a commitment to create workplaces where gay people can be themselves. Collectively those employers employ over 5.1 million people, and that is a real sign, perhaps, of the way that the world beyond Parliament is changing in the early years of the 21st century.
Furthermore, those employers are clear that doing this is not just the right thing to do, but makes sound business sense. Research has clearly demonstrated that gay people who feel able to be themselves at work are more productive, more creative, better team members and more loyal to the enterprise. As my noble friend Lord Kestenbaum said, it is these skills that we need to value.
Let us be clear, however. Thousands of people still experience discrimination at work simply because of their sexual orientation. Recent research from the Equality and Human Rights Commission revealed that almost a third of gay people go to work every day and feel unable to be open about their sexual orientation, unable to talk about their partners and their children in the way that heterosexual people may take for granted, simply because they fear how their colleagues may react. YouGov polling commissioned by Stonewall has shown that one in five gay people have experienced homophobic bullying at work from their colleagues.
We also need only to consider the near invisibility of openly gay people on the boards of FTSE 100 companies to see the impact that has. Gay people face their own pink plateau at work similar to that of women, disabled people and people from different ethnic groups. This is bad for people, but it is also bad for business. A company that does not allow its brightest and best to rise to the top will, in the end, damage its bottom line, a sentiment expressed so elegantly by my noble friend Lady Prosser and one that we all know is shared firmly by my noble friend Lord Davies of Abersoch.
Creating workplaces where all employees can be themselves need not be excessively expensive or complicated. If it were costly, would the many successful businesses that work in this area, such as IBM and Google, be so demonstrably in favour of making their workplaces better for gay employees? The answer is no. However, you do not have to be a large company to make a difference. Simple and practical steps can be taken by all employers, large and small, to create workplaces where everyone can contribute fully without fear of discrimination. I hope that we will see all employers creating those workplaces within our lifetimes.
Lord Monks
My Lords, I, too, start by expressing my appreciation to my noble friend Lady Prosser for initiating this timely and important debate. It is timely because the whole House must share the worries about rapidly rising unemployment, and it is important because the availability and quality of work is a good test of the health of a society.
By that test, our society has not been doing very well, especially on quality. It is not just the crisis. As a former trade union official, I have to report that wages in the UK grew by 56 per cent between 1978 and 2008. Not bad, you might think, until you know that GDP rose at twice that over the same period and that the share of profits rose very strongly, making a potent recipe for a widening gap between rich and poor.
As my noble friend Lady Prosser explained, there have been more managerial and professional jobs, a decline in middle and skilled jobs and a rise in routine, low-paid jobs. Why has this happened? Clearly, technological change and the rise of a global labour market have had an effect, but the roots of the problem lie in our underlying economic and political philosophy and the shift of power to a new global elite centred in financial service companies, especially, but not only, American ones. They enforced a new business model: the aggressive pursuit of shareholder value based on maximising short-term results. The outcome was successive waves of cost-cutting and retrenchment, designed, so it was said, to lift Britain out of its tepid entrepreneurial culture and to generate renewed dynamism.
It has not worked out like that. Instead, taking the long view, it has brought a slump in productive investment, lower productivity growth than in the 1950s and 1960s, a worsening balance of payments, an increase in debt, a rise in inequality and a capitalism in which the predator dealer has thrived. Now it has brought the mother and father of an economic crisis, termed the worst since the 1930s by the Governor of the Bank of England. The Government hope, indeed we all do, that a surge in growth and job creation in the private sector will absorb the people being displaced in the public sector. It is hard to be optimistic as the cuts curb demand for the products and services of the private sector, and I share the view of those on this side of the House that the cuts are too much, too fast.
One thing is crystal clear: our current economic model, predicated on the view that we are a post-industrial society with an inexorably shrinking manufacturing base, is bust. Reliance on services, financial and retail in particular, and on property and construction has been shown to be extremely vulnerable to instability, as well as promoting a widening gap between rich and poor. There is much talk about the need to rebalance our economy, but less idea about how to do it. Once you have lost leading-edge technology and export markets, it is not easy to make a recovery.
Cheap foreign competition has something to do with it, but how can we explain the relative success of the economies on the other side of the North Sea in keeping strong manufacturing sectors, developing new sectors and running positive balances of payments?
The facts are uncomfortable. The bonanzas of North Sea oil and the explosion of financial services are over. To prosper, we have to compete with the best in the real economy, which are our neighbours on the other side of the North Sea—social market economies, incidentally, with effective collective bargaining and influential worker involvement. Many in the UK might characterise this as a return to the 1970s, but it certainly is not. Unless the UK pulls together and innovates, our prospects are gloomy. That pulling together necessitates a commitment to greater equality. If we are all in it together, as the Prime Minister has said, we cannot have surging riches for a few while the lot of the majority worsens.
We need a better, more long-termist capitalism in which all the main stakeholders have influence, including the workers. We need financial services as servants of the economy, not masters of the universe. As the noble Lord, Lord Skidelsky, and others have argued, we need a national investment bank to support entrepreneurs, especially small and medium ones. We need investment in the green economy, in high grade manufacturing and in the arts, and we need a stronger vocational training system for all our people. We need more real engineering and less financial engineering.
We do not need cuts in employment protection, nor attempts to escape from the modest social obligations of the European single market. Perhaps I may ask the Minister what precisely the Prime Minister means when he talks about repatriating social policy from the EU to the UK. Does he mean repealing the entitlements that derive from the EU, such as the right to four weeks’ basic holiday, the right of workers to be informed and consulted about change, or the rights of part-time and temporary workers to equal treatment, of which we have heard something in this debate? Does he mean EU equality and health and safety standards, many of which are based on UK practice, which is among the very best in the EU and helps to raise standards in the new member states and in southern Europe? Or does the Prime Minister mean that he will block any new EU social measures applying in the UK, in which case I can report that there are very few such measures in the EU pipeline? What do the Government mean?
In conclusion, there must be no false contradiction between more jobs and better jobs. There must not be an approach which sells Britain as a place where exploitation is easy and workers are cheap. That might appeal to Mr Beecroft and any other venture capitalists working for the Prime Minister, but selling Britain in that way should not be the British answer to the jobs crisis. Raising our game must be the way forward.
Lord Young of Norwood Green
My Lords, I, too, congratulate my noble friend Lady Prosser on giving us the opportunity to debate what I believe to be one of the biggest challenges faced by all countries. The economy and employment will be the litmus test of the Government’s success and how they will be judged at the next general election. The coalition will not be able to continue the fiction that it was all the fault of the previous Government. When we left power, we had rescued the banks, introduced a number of successful measures to stimulate growth—for example, the car scrappage schemes and a cut in VAT—and a plan to reduce the deficit by half by 2015. No one on this side pretends that it would have been plain sailing but getting growth back into the economy would have been at the top of our agenda.
I congratulate the Library research department on the excellent briefing pack that it has provided; on many occasions, it is the unsung hero. On growth, the briefing pack states:
“UK GDP grew by a meagre 0.5% in 2008 and fell by 4.9% in 2009”.
After analysing that, it states that growth in the OECD and the UK,
“remained below that average in 2010. In the UK, the rescue measures implemented by the government during the recession, including emergency loans to recapitalise large banks, came at a time of sharply reduced tax revenue and so were funded by a large increase in the budget deficit. The Conservative-Liberal Democrat coalition has since announced cuts in government spending and increases in taxation to eliminate the structural deficit before 2015”.
I love the next couple of lines, which state:
“The extent to which this will act as a drag on growth during the recovery is a matter of debate among economists”.
You can say that again; it certainly is a matter of debate among economists. We still believe that the Government’s current policy is too far and too fast.
For the purposes of this debate, I want to focus on youth unemployment, which I believe is one of the biggest challenges, if not the biggest, that we face. Looking across to the Benches opposite, it is unfortunate that there is no one on the Conservative Back Benches here today speaking in this debate. Whatever their views, no one utters the terrible words “unemployment is a price worth paying” any longer, so we have progressed a bit. But, as my noble friend Lady Gould has reminded us, we have the highest youth unemployment since records began. As regards the impact of this, recently, on Radio 4 I heard a programme with young offenders. They were asked, “What’s the most important thing that would impact on your life that would stop you reoffending?”. The answer was, “Getting a job”. There were no ifs, buts or anything else, just the desire to get a job, which indicates the importance of this debate.
I shall now have to tread carefully or my noble friend Lady Gould might become my noble friend no longer. The Library briefing pack states:
“The fastest-growing group of workers between 2007 and 2009 was those aged 65 or over, followed by those aged between 60 and 65. These changes reflect an aging population, coupled with increasing life expectancies. These trends have led to rising activity rates and declining unemployment rates among older sections of the population. The age group in the working age population with the lowest activity and employments rates is those between 16 and 24. This is also the group with the highest unemployment rate. Conversely, the age group with the highest activity and employment rate is those aged between 35 and 49”.
I do not want this to be a battle but if you were a young person you could not help thinking, “Wait a minute, where are we going?”. It is not any good to lay blame. We have to look at the way in which we manage this change in the world of work. We still have what I have described in another debate as cliff-edge retirement. We have not got around to working out that we need to encourage people to depart from the world of work in a more phased and staged process, which would make some contribution.
I was interested in the point made by the noble Baroness, Lady Randerson, in relation to part-time working. I would suggest that flexible working overall has impacted on the world of work, which has changed dramatically. Looking at the whole scope of working life, the Government need to do much more to address this issue if we are to solve the problem of youth unemployment. It should be intergenerational. Of course it was a good thing to remove the retirement age of 65. I was in favour of doing that but we cannot leave it at that.
Young people face a number of challenges, as has already been said. The Future Jobs Fund has gone, as have education maintenance allowance and tuition fees. Let us look at this issue from their perspective. We are not generating too much hope. The loss of public sector jobs, without the consequent increases that we were told would happen in the private sector, will inevitably have an impact on youth unemployment, because of the impact on apprenticeships, to which I will come later.
I want to reflect on the question of skills. I agree with the noble Baroness, Lady Brinton, when she talked about the importance of key skills. They are vital. It is not just literacy and numeracy, although they are there. I would say you cannot do much, as we have described in this debate today, without IT skills as well. In the 21st century the key skills of literacy, numeracy and IT have to be there if we are talking about equipping young people for the world of work. My noble friend Lord Kestenbaum, who is unfortunately not here, uttered what I regard as the dreaded phrase: “soft skills”. Can we do away with that? They are not soft skills; they are essential skills for young people. You hear employers talk about soft skills, but turning up for work on time and being able to work as part of a team are not soft skills. The noble Baroness, Lady Brinton, referred to pre-apprenticeship schemes. There are a number of great schemes for getting young people ready for the world of work.
I want to praise the Government for what they are doing on apprenticeships because they are continuing the good work that we did. The previous Government rescued apprenticeships from near oblivion. We gave you a great foundation to build on. But I have a worry. Yes, this Government are spending more and getting more starts in apprenticeships, but a lot of them are adult apprenticeships. I do not knock adult apprenticeships because they are an important means of re-skilling, but we cannot take our eye off the ball for apprenticeships for young people aged 16 to 19. Every one that is created is a beacon of hope for a young person. We know that to be the case. As a young person at the age of 17 I was able to walk down the road and get an apprenticeship with what was then British Telecom. I do not think I would be able to do that any more. BT has 300 apprenticeships a year and 25,000 applications. So what can the Government do? The Leitch report has fallen out of fashion these days. We do not hear much about it but I think it was a very far-sighted report. My noble friend Lord Leitch said that there should be about 500,000 apprenticeships in learning by 2020 and that we ought to ensure that an apprenticeship place is available for all qualified young people by 2013, with significant growth in apprenticeships for older learners as well. We put that entitlement into the Apprenticeships, Skills, Children and Learning Act 2009. It was an ambitious entitlement but I believe it was the right thing to do. We tabled an amendment to this Education Bill, providing a bit more latitude given the difficulties, saying that entitlement should be there by 2015.
The problem we have with apprenticeships is not the number of starts, which is okay. There is a much more worrying statistic if you scratch beneath the surface and that is the number of employers who take on apprentices. It is still pathetically low with something between 4 per cent and 8 per cent overall. Even in the FTSE 100 companies it is only a third. I continually meet employers who, when I talk to them about apprenticeships, seem to know little or nothing about them. So what can be done? The Government have to lead by example. I cannot understand why this Government are still refusing to accept that a requirement to employ apprenticeships as part of a public procurement contract should be mandatory. We did it; we got over 300 apprentices for the Olympics and a promise of 400 for Crossrail. Why on earth are this Government taking that requirement away? What sort of signal is that giving to employers? More could be done on the small and medium-sized employer front as well with group training associations. The number of apprenticeships starts is okay but we need to get every employer in this country to understand that apprenticeships are not a burden but a great stimulus to any company and vital. If we do not solve this problem we know that, in terms of young offenders and disenchantment generally in young people, we will pay a much higher price in the future.
Lord Desai
My Lords, I thank my noble friend Lady Prosser for introducing this debate and for the very skilled way in which she did it. She started by saying that once upon a time there was an economy in the UK and that manufacturing was a major part of it. It used to be said that 48 years, 48 weeks per year and 48 hours per week was the way that traditional working-class employment was carried on. For various reasons, but mainly because of globalisation and a massive shift in jobs away from the western world as a whole to Asia and other parts where labour was cheaper, we had a fundamental transformation— not only us but also the US and various other economies. We managed for a while by shifting to a variety of service industries and what we might call abstract goods—design, fashion, music, banking and others. There were some highly paid jobs in the service sector and lots of low-paid jobs in retail and things like that. What has now happened is that we have come to the end of that revolution. That transformation has occurred and the news is much worse than most people think.
We have fundamentally to rethink where the competitive areas in which we will create sustainable, long-term jobs are going to be. As my noble friend Lady Prosser said, it is not conceivable that we will get back to manufacturing on anything like the scale that we were at. Perhaps my noble friend Lord Monks is right; we may be able to do something more like the economies across the North Sea. But that requires a level of savings and investment which we have not been able to achieve for a long time. One of the peculiar things that happened during the long boom of 1992 to 2007 was that households steadily lost the habit of saving. We convinced ourselves that there was no need to save as long as you could buy a house. If you bought a house, appreciation in the value of that house was enough to compensate for any savings you did not have. Lately savings rates have gone up but we fell to a practically negative savings rate in the household sector. The same thing happened in the government sector. Our problem is going to be that we will have to recover some of the jobs we have lost and create new jobs. The question will be where those jobs are going to come from.
An additional factor, to which some noble Lords have already referred, is that as our dependency ratio gets very high with fewer active working-aged people compared to retired people, those who are going to retire will have to work longer hours for more years and those who are of an active working age—say, 15 to 55 or 20 to 55—will have to save more in order to finance their retirement as well as the various other demands which are going to be made on us for care of the elderly and so on. We face a profound crisis of undersaving and if we do not tackle that crisis, it will be difficult for us to create the kind of jobs that will sustain our economy. As many noble Lords have already said, the key to recreating those jobs will be investment, whatever the short-term considerations and the seriousness of the recession, which I do not deny. I do not think it will be easy to get out of the recession any faster, but getting out of it is crucially dependent on us being able to find new innovative sectors where investment can take place now, regardless of the state of current demand, and then employing people in those sectors. Obviously green technologies are going to be a major factor, but things like healthcare technologies are also going to be crucial. We will have to adapt our lifestyle to be able to deal with people who not only live longer but want to have a quality of life that is much better than that which their parents had. These are opportunities for us to be able to create jobs. They will be jobs that are skilled in terms of numeracy, literacy and IT; they will also be skilled in terms of training oneself in nursing or personal care. On the one hand, we will need a lot of green technological jobs; on the other, we will need lots of personal care-type, one-to-one jobs. To finance them, we will have to have an economy that is different from that which we have had so far. It will be much more severely restrictive of consumption growth, more discouraging of the wild house-buying business that we have got ourselves strapped into and more encouraging of savings.
This is not an occasion to discuss economic issues—the noble Baroness on the government Front Bench cannot do anything even if I do suggest tax changes. However, I shall say one thing: the time has now come to examine whether national insurance contributions are a good idea. They are a tax on employment. I have never understood why we have a tax on earned income which is paid twice: you pay it once as income tax and a second time as an NIC. I know that the Chancellor is doing something about merging income tax and national insurance contributions, but he should much more seriously examine whether we should relieve taxation on employment. Either the employer or the employee, or both, should be relieved of that kind of tax as we need to encourage employment in the sector. At the same time, we should have policies designed to encourage people to shift away from asset-buying in housing. This is not a debate on housing, but we need an economy where people are much more attuned to renting or making other kinds of housing purchase rather than be caught with assets which are not guaranteed to be wealth-creating.
We need more saving, more investment and more innovation. We have also to find a way of making our workforce think about work differently. I shall make one suggestion about the way in which we measure employment. We measure employment in terms of bodies of people—how many people are in work—but, as we have already found out from our discussion, work is not really how many people are working but how many hours they work. We should take a lifetime perspective on how many years people work, because future generations will have to work for more years and more hours over their lifetime than the previous lucky generation, of which I am a proud member. The good days are gone and I do not know when they are going to come back. One of the burdens that the new working generation will have to face is that of catching up with a lack of savings during the past 25 years as well as financing their own retirement. The question of employment is therefore tied in as much with long-term economic policies and growth strategies as with institutional employment in the labour market.
I join many noble friends in saying that the Government should not be seduced by the idea that making it easier to fire people will somehow solve the problem. Just as nobody fixes the roof when the sun is shining, everybody starts talking about how to sack people when unemployment is high. I never see the logic of that. Everybody has to calm down and realise that there are much more serious issues than a sudden need to make sacking people much easier. I hope that the Government listen and start to think about a long-term strategy of investment and growth.
Baroness Donaghy
I add my thanks to those offered to the noble Baroness, Lady Prosser, for the giving us the opportunity to talk about this extremely important topic. Too often when the world of work is mentioned, it is in terms only of employment law and conflict or of unemployment, rather than employment relations. Yet work is often where people spend most of their waking hours, make friendships and help build dignity and self-sufficiency. That is not to claim that everything is rosy, but to emphasise that the world of work is a vital part of our lives.
I should like to raise the issue of social media and their impact on workplace relations. I am grateful to ACAS for its research and advice on this. Noble Lords will know that I had the privilege to be chair of ACAS for seven years. Social media in this context are mobile phones, e-mails, Twitter, YouTube, Facebook and websites with chatrooms, discussion groups or even avatars. Their impact on employment relations has been and will continue to be phenomenal. They raise legal and ethical questions about acceptable norms of behaviour in a new social space at an individual level. They have the potential to offer new ways of both sharing information and consulting employees. They support a stronger collective voice for employees and change the conduct of collective disputes and collective bargaining.
The key features of social media are their reach, which can be zero or global; their accessibility—they are available at little or no cost; their usability—as little or no training is required; their immediacy—they are virtually instantaneous and can be edited at a stroke; and their permanency, as they are extremely difficult to remove. As millions of digital copies can be made and transmitted instantaneously, they are hard to delete. Twitter, for example, has its archive preserved in the United States Library of Congress.
Phase 1 of the web’s development, from the early 1990s onwards, led to the rise of corporate websites, intranets and the adoption of e-mail and workplace policies to deal with it, together with the growth of e-commerce and websites for campaigning purposes. Phase 2, from 2002 onwards, saw the development of corporate pages on platforms such as YouTube, Twitter, Facebook and Linkedin, interaction with customers through social media channels, including direct sales, and stages in supply chains bypassed. Whoever would have forecast the huge rise in parcel deliveries due to direct online sales? It led also to the adoption of read/write campaigns, location-based awareness campaigns and recruitment campaigns. When we get to phase 3, from approximately 2010 onwards, you have to hold your breath. We will see the development of multiplatform communications, engagements and approaches, real-time management decision-making, rapid business model innovation and, perhaps most importantly, the further loosening of the ties of professionals as knowledge brokers—everyone is a lawyer and doctor now. It will be interesting to see whether this will lead to a looser, less regulated model of workplace relations, relying on professional ethics rather than rules.
Let us look at the scale of social media. Twitter reported in March 2011 500,000 new accounts created each day and 1 billion Tweets written each week. The Google+ social networking platform is gaining 800,000 new users per day. Facebook has over 500 million users, and 250 million of them access the site through mobile devices. In a straw poll of human resources professionals, 50 per cent said that social media had featured in recent disciplinary or tribunal proceedings.
For both employers and trade unions, this new space offers opportunities and challenges to the way in which they engage with their constituents. ACAS is already offering advice—online, of course—to managers and employees about social networking and the importance of mutually agreed guidelines that cover the posting of workplace grievances or being perceived to attack the company brand. We have all read about cases of the dismissal of an employee for commenting on their job on social networking sites. One woman was dismissed for calling her job “boring” online, not to the world at large but privately to a friend. This was then spread around and people put two and two together to identify the workplace. So there needs to be an understanding about when and in what circumstances punitive measures should be taken. They should be proportionate and ethical. A report by the Institute of Employment Studies on this topic concluded that norms of behaviour had not yet been defined, and there was a blurring of private and public areas.
Noble Lords may have read about the virtual strike in 2007 used by IBM workers in Italy. They were protesting against potential pay cuts. The 9,000 workers were joined by 1,800 supporters from 30 countries in a virtual picket line. IBM had signed up to the virtual world website Second Life, and avatars representing users could be seen carrying banners in support of the strikers. IBM was caught off guard by the strike, the first of its kind. It eventually led to renewed dialogue and the workers getting a better deal. While there has not been a huge increase in this activity, it is an example of the potential for different kinds of communication and activism that faces the world of work.
In Germany, some trade unions have adopted the technique of flash-mobbing as an organisational tool. Flash mobs have been defined as,
“a public gathering of complete strangers, organised via the internet or mobile phone, who perform a pointless act and then disperse again”.
The German trade union Ver.di organised a flash mob of 150 people at a shopping centre following disagreements over pay and work conditions between Ver.di and retail employers across the three central German states. The group filled shopping trolleys with a range of products, but when it came to paying for the goods, they handed over cards inscribed with the slogan “fair wages” instead of credit or debit cards.
Lest anyone thinks that I am planting ideas in people’s heads, I will not use any of the many examples deployed in UK disputes. Nevertheless, some employers see only the downside of these developments. If I were a German supermarket owner, I could well see why. However, some employers use the social media tool as a means of engaging with the workforce, not always as an anti-trade union device. Some are setting aside established corporate intranets in favour of what are called “enterprise wikis”—I hope someone comes up with a better name one day. These enterprise wikis become the main means of capturing and disseminating corporate information and knowledge.
Allowing employees to discuss work-related issues on social media can bring real business benefits. Some firms have accepted that they can fully benefit from social media in this way only if employees are given as much freedom as possible in their use of the technology. BT is already removing some of the blocking barriers that it has in place, so it will have less of an overview of what its employees are doing on the internet. There are two main reasons for this. First, it feels confident in this approach as it has a great deal of trust in its employees. Secondly, it will improve both the cost and the efficiency of the organisation and enable its workforce to have global access. Some organisations struggle to come to terms with social media and focus only on the threats. An organisational response to block corporate access to, for example, Facebook, becomes untenable when the most active of its account holders use smart phones to access and update the site.
Some trade unions are suspicious of using public social networking sites, as they are commercial sites with their own agenda. The TUC has referred to Facebook as,
“3.5 million HR accidents waiting to happen”.
However, some unions are adapting social media portals, single-issue campaigning and digital activism. The traditional conduct of employment relations may well change, given the ease of availability of information. Knowledge can be used as leverage in negotiations.
Employers and unions are failing to recruit the very people who are most adept at social networking: the young. According to David Blanchflower, the economics editor of the New Statesman:
“Since May 2010, unemployment among 16-to-24-year-olds has risen … to 991,000”.
We can debate for ever whether these developments represent the tools of capitalism or revolt, but we must be aware that it will change the world of work and we must look to the younger generation, who are much more skilled—let us face it—than we are to be useful in that future world of work.
Lord Haskel
My Lords, in her excellent opening remarks, my noble friend spoke of the past. Most of us in this Chamber are old enough to remember what happened when information and communications technology first arrived on the scene. It was going to change the world of employment. We were all going to work from home and we were all going to have a lot more leisure time. Well, it did not quite work out that way.
Some people's jobs do allow them to work from home—for instance, representatives or currency speculators—but, for the rest of us, we can work from home perhaps one day a week if we are lucky. Indeed, for many of us, working from home is just catching up, because it is the pace of work that has changed, with a corresponding increase in stress. This is thanks to the huge expansion and reliability of mobile ICT, which has transformed business. McKinsey estimates that 25 per cent of UK growth in the past five years has come from online business. Indeed, as my noble friend Lady Donaghy described, in many companies people now work in networks, and they use the social networks to advertise and to contact colleagues, customers and suppliers, as well as to contact family and friends. So the line between home and work is becoming much more blurred in this changing world of employment.
In many companies and organisations, this independence has led to far less rigid management. Employees are trusted more, with a reliance on professional ethics, as the noble Baroness said. This has led to much innovation in the way in which businesses work. You see this attitude celebrated in some of our most successful companies. Many employers now say that they hire for attitude and train for skills. This is an essential attitude, as my noble friend Lord Young put it. Indeed, employers complain about the absence of this attitude in potential recruits. A lot of public money is spent on preparing people for work. I hope that the Minister can assure us that her department is also fostering this attitude, which business wants and needs.
Of course, modern ICT also enables people to set up in business themselves. The web is now a marketplace where people can buy and sell goods and services at very little cost. In these ways ICT has already changed the world of work and employment and it is going to do so even more. Cloud computing means that now you do not have to buy servers and expensive software any more. You just use the storage and bandwidth you need on the cloud. This turns computing from a capital expense into an operating expense. This means that ICT will have an even greater impact on the changing world of employment. I hope that the Minister's department will encourage the internet economy, in both the private and the public sector, especially as this can only help the current financial crisis—it will benefit business, as my noble friend Lady Donaghy said. Indeed, the financial crisis is changing the world of employment as well as destroying jobs, as my noble friend Lord Kestenbaum explained.
The cuts in employment resulting from this financial crisis are falling heavily on public services, particularly those services delivered by local authorities. What is this to do with the nature of employment? The answer is that there was a time when we worked in either the public sector or the private sector. Now we are seeing the emergence of a social sector—half way between the two—which is largely occupied by charities and by social enterprises. But the existing charities and social enterprises working in this sector have had their finances devastated by the tight government financial settlement. So we have to run our welfare state with less money and greater commercial pressure, which makes the nature of employment in this sector confusing. Is the altruism of working in the charitable sector being taken over by the economics of working in the commercial sector? Are public service values being replaced by the values of the market?
What is the nature of employment in this emerging social sector? The big society idea is too fuzzy to answer this. Yet the Government are encouraging social enterprises to rescue the welfare services that we can no longer afford. Indeed, if this is not clarified soon, these enterprises will become a new form of quango and there will be a big political price to pay for that. The real answer is the concept of shared value. According to Michael Porter, this is the key to the next wave of innovation and growth, and I have always found that he is worth listening to. Yet the Government's growth strategies have been silent on this—it would have been nice to hear from some other noble Lords on the Conservative Benches who have experience in business. Thanks to the Companies Act 2006, the recent stewardship code and less rigid attitudes, companies are starting to share the values of their employees, customers, local communities and suppliers. That is having an impact on the world of employment. The environment, fair trade and human rights as well as safety and employment rights have all become issues which employees now have to consider.
This is not “social responsibility”, which is usually on the periphery of a business. It is something central, something that is shared. For instance, if a firm invests in the health of its employees, they and their families benefit and the firm minimises absence and lost productivity. If a firm invests in employee skills, everybody benefits, as the noble Baroness, Lady Brinton, told us when she spoke of Marshall Aerospace. Taking on the apprentices that other noble Lords have spoken about is all part of this.
At one time it was thought that efforts to minimise pollution increased costs and occurred because of regulation. Today, I think that the consensus is that major environmental improvements can be achieved with better technology that pays for itself and produces better resource utilisation and a better environment at work.
The new generation of young people is asking business to create this kind of world of employment, not only because it creates the kind of business culture that they want to work in but because it legitimises business by getting away from the old narrow views. It acknowledges the legitimacy of many of the things that the demonstrators in London, New York, Berlin, Tel Aviv and elsewhere are calling for. Indeed, on 17 October, the Financial Times ran a leading article saying that it would be foolhardy to ignore their anger and frustration. Sadly, in London, the protestors are losing this support by their mistaken action at St Paul’s.
Many leading companies are finding that this concept works for them. Those of us who visited Google this week saw this in action. These changes in technology and the changes in society are changing the world of employment. What the Government have to learn is how to regulate so that these concepts of shared values and technology are encouraged. I agree with my noble friend Lady Prosser that the Prime Minister could start by replacing his backward-looking adviser with somebody more forward-looking. Get this regulation right and regulation regarding red tape and employment falls into place and becomes secondary. I hope the Minister is listening. It would be foolhardy to dismiss the message.
Lord Lea of Crondall
My Lords, my noble friend Lady Prosser has given us a highly opportune moment for debating this issue, as “employment crisis” is a pretty fair description. It will unfortunately intensify this winter. I do not want to be a Cassandra, but there is growing disaffection in many parts of the country, which is not just the result of the economic crisis per se but of the way that this Government have responded to it.
We now have the apotheosis of the Victorian employer’s philosophy being epitomised in a report, we understand, from Mr Adrian Beachcroft, who is described as a venture capitalist. That rather reminds me of the imperial adventurers who ran the East India Company, particularly in the years leading up to the Indian mutiny in 1857. In Britain, the corresponding philosophy is that satirised by my noble friend Lord Sugar with, “You’re fired!”.
What is the status of this Beachcroft report? Was its commissioning a decision just made by No. 10 Downing Street or was BIS involved? Specifically, was Mr Vince Cable involved? Or perhaps BIS knew nothing about it, like it knew nothing about the Chancellor's pre-emptive statement at the Conservative Party conference in Manchester on employment tribunals. Maybe BIS still does not know anything about it. If you read the newspapers, you might find that this report has now been received by No 10. Downing Street. Has it been received in BIS? Perhaps BIS could make a request to No. 10.
What we have now is two examples. One is that of No. 10 doing its own thing, well outside what its normal responsibilities might be, although you would think that there would be consultation in government. The other good example recently is that of the Chancellor of the Exchequer, at Manchester, speaking on employment tribunals. Obviously, we have got to the point where we have two Governments: the Bullingdon Club Government and Her Majesty’s Government. No doubt Mr Vince Cable has already made that point, but I imagine in more colourful language.
The trouble is that the Conservative Party has now brought 100 clones of Mr Beechcroft into the parliamentary party. They seem to have been cloned along with a set of myths on employment rights, which they peddle around the country on all the media outlets, brooking no contradiction by reference to any facts—which of course get in the way—and resting on belief in their own propaganda.
In a sense, we on this side of the House—including many on the trade union side of the House, if I may declare a collective interest on behalf of the trade union movement—must be grateful that as the penny is beginning to drop, pretty sharpish, it will be abundantly clear that this doctrine of “devil take the hindmost” has passed its sell-by date so far as the people of middle Britain are concerned.
One specific example of the myths of employment rights and the effect on employment is maternity rights. On Monday this week, the Prime Minister, in his Statement on the European Council, which was repeated in this House, said, somewhat to my surprise, that he had been advocating maximising the amount of women’s employment in the European Union. I recall that when I was covering that patch for the TUC some 12 or 15 years ago, that was the strong lead taken by the European Commission at Amsterdam. The Commission was then led on social rights and social policy by a most distinguished Swedish former finance Minister, and a distinguished director of social policy, Mr Allan Larsson.
The need to have a far wider and extensive framework of rights for women at work was driven not only by the inherent arguments but by the fact that if we wanted to increase our living standards and output in total, we needed to have more women in the labour market. It has grown in the past 10 years, and I believe that now 70 or 80 per cent of women have some involvement in the labour market. Someone is nodding, which may mean that two of us are wrong, but I think that it has been significant.
Who is to say that this growth would have happened faster if we had not had maternity rights? We need to look at it from the point of view of the 90 per cent of people who are workers or employees, rather than employers or company directors, and hear their view, rather than the myths peddled by the backwoods variety of employers. I agree with my noble friend Lord Haskel that there are many distinguished exceptions to that, but I have to say that the propaganda coming out at the moment is from this myth-creating group, who would look at the downside of employing women—because, gosh, they all go off and have babies.
To state the obvious, it is absolutely vital that we have what used to be called Scandinavian rights for maternity and paternity. I take that as one example of this mythology.
Moreover, all of these rights under the social chapter are thanks to Jacques Delors and the agreement on the social chapter. This was subject to an opt-out by the Conservative Government, but within two or three months of May 1997 Robin Cook went off to Brussels and signed it. I predict that these will be taken as read by the British people, and none of them will be repealed. The Conservative Party will soon wake up and realise what a bad idea that was.
I want to say one other positive thing about the European Union and employment. I was once a member of a “high-level group” on benchmarking. Although it is a candidate for derision in the Sunday Telegraph, best practice in Europe is surely highly desirable as a way of looking at where the British economy ought to be going.
The National Economic Development Council used to be heavily into benchmarking, before the word came into popular usage, and it is rather obvious that we need to create a body of that type in Britain today. I understand why the noble Lord, Lord Lamont—he was the Chancellor who scrapped Neddy—and others believe that this is corporatism gone mad. But you do not need to sit outside St Paul’s cathedral today to say that there is something strange about the modern British model of capitalism, as my noble friend Lord Monks has said. “Us and them” is now, as in the Victorian era, the name of the game on employment. However, I must say that as regards St Paul’s, God and Mammon have got a bit mixed up in the target.
Our own multinationals are quite different in their operations from multinationals in many countries, such as Germany. They have a much higher share of their value added overseas than German companies. I am in conversation with some officials in BIS to produce some more robust numbers on this, as it is a vital question for the economy, but we seem unable to produce those statistics.
In conclusion, I would say that these are the countries which have the greatest social cohesion and have been the least badly affected by the crisis of the past four years. Going forward, we need to emulate them, not ridicule them.
Lord Morris of Handsworth
My Lords, I, too, commend my noble friend Lady Prosser on securing this timely and important debate. Debating alongside my noble friend ignites many happy memories for me but today I am somewhat handicapped, as I no longer have the casting vote—and I never had a block vote. I see this debate as extremely timely, as I sense that the economies of Europe have reached a critical fork in the road, which will significantly impact on the world of employment here, and indeed abroad.
Throughout the ages, the pattern of employment in Britain has been through many phases of change, principally the British industrial revolution of the 1800s, which spread to the United States and other European countries in the 19th century. As I reflect on the history of changing employment patterns, buttressed by a recent visit to my old place of employment—the factory where I worked for 18 years—I was reminded of the first sentence in LP Hartley's famous 1950s novel, The Go-Between:
“The past is a foreign country; they do things differently there”.
The question implicit in the Motion before the House today is: how can we manage the technological revolution for social and economic benefit by doing things differently here?
In his groundbreaking book, The End of Work, Jeremy Rifkin, the president of the Foundation on Economic Trends in Washington, argues strongly that as the industrial age ended slave labour, the information age will end mass wage labour. Faced with that proposition, he goes on to argue that Governments need to promote alternatives, such as shorter working time, more voluntary work—I think that is the big society here—and greater leisure in response to the replacement of jobs by technology. From this economic and social analysis, it is clear that the three forces driving modern economies and employment are finance, knowledge and social capital. Yet whatever the prevailing view is, there is common ground that we must have the skills to meet the challenge in the changing world of employment.
Indeed, the best summary of the response needed is to be found in the foreword to the final report, Prosperity for All in the Global Economy - World Class Skills, by the noble Lord, Lord Leitch, which says:
“In the 21st Century, our natural resource is our people—and their potential is both untapped and vast. Skills will unlock that potential. The prize for our country will be enormous—higher productivity, the creation of wealth and social justice”.
Sadly, we have not followed the positive signposts which the noble Lord, Lord Leitch, left us. The truth is that we are running out of options, and indeed out of time. That is what the debate in Europe in the past week or so has really been about. How else do we have over 2 million people out of work, with the Office for National Statistics reporting unemployment at 8.1 per cent?
On the evidence we see, the Government place almost no value on workers. Indeed, it could be said that the Government have raised the flag of hostility against workers unless they happen to be bankers. Public sector workers are facing attacks on their pensions by being required to work longer, pay more and get less. As we debate today, it is reasonable that we should ask: what is the Government’s response to those gallant groups of Remploy workers who are facing a bleak and uncertain future, and the possible closure of their factories? Where have they fallen down or fallen short of contributing positively to the economy?
As a nation, we have a capacity to destroy what workers in our economy have actually built. Family-friendly policies have been a hallmark of the past 10 years or so. They have been liberating policies which enable people to learn new skills, broaden their horizons and expand their social network. They are about flexibility and the opportunity of choice. But in the last day or so I have read the magazine from the IoD, Big Picture, where we see a concerted campaign emerging to persuade the Government to make no further change or concession in the opportunity for workers to request flexible working. It has set out an argument and a campaign is now in train.
I believe that the attack on workers’ rights has now moved to a very negative and dangerous position. For example, the barriers for access to justice at industrial tribunals are being raised higher and higher. I am somewhat old-fashioned in my views about fairness: I take the view that an unfair dismissal is unfair whether it is on day one or day 100. Why are industrial tribunals the only facet of the British justice system where workers will be asked to pay an entrance fee of £250 just to go through the door to lodge a claim for an unfair dismissal? That is one proposal coming out of the consultation document from the Department for Business, Innovation and Skills, and that £250 only gets you through the door to determine whether you have an arguable case. If the tribunal finds at the preliminary stage that you do, you need to pay £1,000 for that case to go forward to a hearing. I do not know many single-parent female part-time workers who can afford to lay out £1,250 just to test the flexibility and therefore the ability of justice.
The reason why workers are being treated in such an unjust manner is quite simple: we now have a Government, supported by the cloak of a coalition, which believe in the culture of hire and fire. The Prime Minister says that industrial tribunals should no longer be seen as a barrier to growth, but the reality is that the Government’s proposals will be a barrier to justice.
Baroness Turner of Camden
My Lords, I, too, thank my noble friend Lady Prosser for initiating this debate and for the manner in which she has done so. It is very necessary for us to debate employment at a time when so many people are being deprived of it. There is indeed an international economic crisis, but the policies of the present Government are, in my view, making that a great deal worse. It was a Conservative Government, that of the noble Baroness, Lady Thatcher, who first undermined manufacturing industry in the belief that our future lay in concentrating on financial services. I believe that that was all part of the antiunion stance of the Thatcher Administration, but it has been disastrous and everyone now says that it is necessary to rebalance our economy.
The present Government's decision to embark upon the most drastic austerity programme of any major economy has resulted in almost no growth and increasing unemployment. We are now facing youth unemployment approaching 1 million. Unemployment in the public sector has not been compensated for by the growth of employment in the private sector and it is women who are most adversely affected. This is because the majority of low-paid public sector jobs are held by women and these are being reduced as a result of government cuts. At the same time, the Government are introducing their Welfare Reform Bill, currently being debated in Committee in this House. This is designed to “ease the transition from welfare into work”. The media depiction of people on benefits as scroungers seems to have been taken seriously by DWP—but what if jobs are scarce, as they are at present? The pressure will be on for claimants to take anything, otherwise benefits will be lost.
It is in this situation that the Government are currently consulting on their new proposals on employment rights, as has just been referred to by my noble friend Lord Morris. This policy seems designed to make it easier for employers to get rid of people. In future, it is proposed that an employee would have to be in a job for at least two years before being able to claim unfair dismissal, and then, before going before a tribunal, a fee of £1,000 might have to be paid. Even then, the unfair dismissal case would not be heard, as now, by a tribunal consisting of one representative of the employer and one representative of the employee, with a legally qualified chair and lay representatives, who are highly respected because they bring a knowledge of working and industrial practice to bear upon cases. No, these lay representatives would not be there on dismissal cases. A dismissed employee would come before a judge sitting alone and, of course, there would be no legal aid supplied. There is no doubt that the proposed changes are intended to reduce the number of arbitration dismissal cases, but not, of course, of dismissals themselves. The Government admitted as much when challenged in this House at Questions. A recent report commissioned by the Prime Minister would scrap employment rights altogether.
It is quite clear that the Conservatives in government expect workers to “put up and shut up”. Is this what the big society is all about? It looks more like a serf society to me. I do not believe that the trade union movement, which in the previous century achieved so much for working people, will be prepared to put up with that. We can expect strong opposition, despite laws intended to make it as difficult as possible for organised collective action to take place.
When challenged, Government spokespersons are inclined to say that weakening employment protection encourages employers to take on staff. However, in this country there is an economy which, in the private sector, has a low-paid workforce. Small employers have benefited from that and the benefits system supports it through tax credits, housing and other benefits. In other words, the taxpayers support low-paying employers. There is no reason at all why basic employment rights for workers should be weakened—on the contrary. Moreover, the Government’s basic economic policies should be designed to ensure that employment increases, rather than diminishes, in both the public and private sectors. Alternative policies do exist and we have heard some of them in the debate today, particularly from the noble Baroness, Lady Prosser, in introducing the debate. The present policies are not working, but leading over the cliff edge.
Baroness Wheeler
My Lords, I, too, thank my noble friend Lady Prosser for securing this debate. With her considerable experience of industrial relations across the private, manufacturing and public sectors, there are few in the House better able to provide us with the broad-sweep perspective that we need in trying to address and tackle these vital issues.
I want to focus my comments today on the importance of leadership and management across industry, the private, public and voluntary sector, if we are to navigate our way through the enormous changes that have taken place and continue to take place. As recent research from Cranfield School of Management found, improving management capability plays a major role in helping employers improve organisational and financial performance. Developing managerial capabilities is a key step for companies and organisations to achieve growth and manage business transformation and change in tough economic times. In this regard, I draw the attention of the House to the record of the Investors in People management standard in helping large and small organisations to build managerial skills and capabilities and improve employee engagement. IiP has a 20-year track record in driving improvements in workforce behaviour and performance. During that time it has changed and adapted, demonstrating its ability to evolve to reflect the changing and differing priorities of employers and their staff. Increasing evidence shows that IiP can help employers to survive, thrive and grow in the wake of huge change and recession.
Since I have been privileged to be a Member of your Lordships’ House, my contributions in the Chamber have been on the voluntary and charitable sector, or on health and social care in my supporting Front-Bench role. However, my working life, before I retired last year, was in organisation development and human resources, as the national director of the public services union, UNISON. UNISON was the first UK union to achieve the IiP standard, practising for our own staff what we want to see for our members in the workplace. UNISON was formed out of a merger in the early 1990s between three very separate independent unions. We faced all the problems of merged organisations, with all our structures and services in triplicate and the challenge to downsize quickly, while maintaining and improving our services to members and providing the better value for their subscriptions that we promised them would result from merger. Of course, we had to do all this in the increasingly competitive and changing world of public service delivery and trade unionism. We needed to develop our leadership capability, upskill our managers at all levels of the organisation and involve and enthuse our staff in our vision for the future. IiP was for us the key tool that helped us journey down a rocky and challenging road.
IiP is currently undergoing a major review under the auspices of the UK Commission for Employment and Skills. I declare a non-financial interest as a member of the IiP advisory board which has been appointed by the commission to spearhead the review. Currently, over 25 per cent of the UK workforce uses Investors in People in organisations totalling more than 6 million employees. The Cranfield research on IiP analysed financial performance information from Companies House, case studies and a survey of over 400 employers. It showed four key outcomes from using the IiP framework for business development and managing change. First, IiP supports the development of a learning culture in the workplace. Secondly, it enhances the effectiveness of management development and continuous improvement programmes. Thirdly, it creates an environment where there is more focus on performance and employees better understand their contribution to the organisation and the achievement of its goals. Fourthly, it allows managers greater freedom and discretion to achieve priorities and objectives.
There has always been cross-party support for IiP. My own Labour Government strongly supported IiP through its partnership and learning and skills agendas. I welcome the present Government’s support for IiP and their identification of the standard as being critical in helping to deliver economic growth and improved business results. The advisory board has been given the task of repositioning IiP as an improvement tool for helping businesses to grow and to manage change. With this goal in mind, the IiP advisory board has been refocusing the emphasis of the standard from an essentially assessment tool to a model which works with organisations and businesses to achieve their specific needs and provides a model for managing change, managing growth or improvement, or simply survival. I ask the Minister, how do the Government intend to actively support the IiP transformation programme? What role will Ministers play in promoting IiP to private and public business leaders?
Last year the board led the relicensing of the IiP delivery network. IiP regional centres in the UK work closely with clients in large and small businesses, public services and the voluntary and independent sector. The London IiP centre has, for example, been working with Sainsbury’s, which recently became the biggest employer to use IiP. In the north, the centre has focused on small businesses and in the south, it is achieving good and positive results from work with local authorities and voluntary organisations.
To compete effectively, the UK still needs to address the organisational development of our businesses and invest in the potential and capabilities of our business leaders and managers. The UK lags behind our global competitors in terms of investment in leadership and management skills. For example, Germany’s average public investment in training is €4,438 per annum per manager compared with the UK’s €1,625. Several competitor countries, such as Spain, France, Norway and Denmark, all spend more on manager training than the UK.
Born out of the last recession in the 1980s, Investors in People is a key tool that can help small businesses grow. It provides support to enable leaders to be more ambitious. It can act as the bridge between leaders and their employees, building engagement, acting as a catalyst for new ideas and involving people throughout the organisation.
The targeting of small to medium-sized private and public organisations under the new IiP business model encourages them to focus their work with IiP on achieving business growth. Over 42 per cent of Investors in People’s customers are small businesses, and thousands of these find it an invaluable tool for taking the step changes required to achieve growth—for example, when they expand from 30 to 50 employees. Independent research by MORI showed that 80 per cent of employers using Investors in People agree that it helps all types of organisations adapt to change and growth. How will the Government encourage SMEs to use IiP to help grow their businesses?
In conclusion, the message to employers is to take the time to rediscover IiP. They will find that it has kept pace with the changing world of employment; is highly relevant to the needs of employers today and remains at the cutting edge of best management and staff engagement practice.
Lord Campbell of Alloway
My Lords, I apologise to the House for having sought to speak for a couple of minutes at this stage of the debate. What has been said is of great importance to the whole country. The problem with the trades unions is not what it was, nor has it ever been exactly what it was said to be. Surely we must seek recovery, though; if we do not, where are we? I only ask this, with respect, having listened to the speech of my opponent, the noble Baroness, Lady Turner. She and I have always been on opposite sides since the days of Maggie Thatcher. I ask that the Government reconsider the situation. It is not for me to say what they should do but I know that it should be reconsidered.
Lord Stevenson of Balmacara
My Lords, I thank my noble friend Lady Prosser for the broad sweep across the issues that she gave us and for her recommendations. She managed to encourage a large number of noble Lords to join in, and it is a measure of the interest in the topic and the quality of the debate that we have had that we have been able to attract the noble Lord, Lord Campbell of Alloway, to speak. We are grateful for that, as he rarely does so.
Along with many noble Lords, I found this topic very difficult to get into and could not decide where to focus my remarks. In search of inspiration, and perhaps in anticipation of the adjuration from my noble friend Lady Donaghy about the need to consider social media, I turned instinctively to Google and put in the words, “the changing world of employment”. Unfortunately, that did not provide much food for thought; it mainly threw up expensive job retraining opportunities, which I passed up, although many of them were very clever and masqueraded as editorials, which I read. There were also a few rather odd blogs, which I certainly would not recommend.
The top-rated entry, which I shall read for the enjoyment of the House, contained the following insightful if barely literate gem:
“Today’s world of work is changing day by day. Employees and employers are moving towards revolutionary communication advances. The introduction of flexible work arrangement is moving towards the outsourcing and off-shoring different activities of business. This outsourcing and off shoring not only save lot of money but it also saves time”.
I have the reference if anyone wishes to follow it up. There is not much inspiration there, although I think it contains a grain of truth within its rather odd phraseology.
To try to get a handle on something to get started on, I rushed to a poetry book. Do they not say that the Greeks have a word for everything, even in these benighted times? So perhaps that was the place I should go to. I looked at Aristotle, who said in 300 BC that, “All paid jobs absorb and degrade the mind”. Clearly working conditions in Athens in that period left something to be desired. Perhaps this quotation from Voltaire's Candide will redress the balance: “Employment saves us from three great evils: boredom, vice and need”. It probably sounds better in French, but think about it.
The title of this debate is “The Changing World of Employment”, and we have had many excellent speeches. The range of perspectives that we have drawn from include employers and a full array of those with experience as employee representatives, and we must not forget the incisive contribution and recommendations from my noble friend Lord Desai. Once again the House has shown itself to have a depth of experience and knowledge that are able to inform us about the issues of the day.
The key issues that seemed to come up included safeguarding employment rights—several noble Lords spoke on that point; the changing structure of the employment market, including the blurring of the line between the public and private sectors; the scarring effects of unemployment, particularly on the young; the growth in women’s employment, which is welcomed, but also the disgraceful fact that unemployment among women is now at the highest level ever; the growth in part-time working and the problems that that can bring; the fact that many people now work at home, which brings problems but also opportunities; the complexity of modern employment and the stress that that can bring; and the changes in rights and responsibilities in employment, which the law must keep pace with.
We have heard about diversity, talked about pensions and looked at discrimination and prejudice, which are still all too prevalent. We have touched on apprenticeships and the importance of vocational training. It has been a wide-ranging debate and will repay reading in Hansard when it comes out.
Many noble Lords spoke about the wider economic and social challenges facing our country. One of the main themes that have emerged today is the need for an economy that looks and feels very different from what we see today, with more opportunities for more people to get better jobs in good companies. That is the topic I want to focus on.
A recent report from the Resolution Foundation has shown how real-term median earnings flat-lined between 2003 and 2008. The Governor of the Bank of England, no less, has warned that we might be facing six years of falling living standards. Even more worrying, our economy is simply not making the best use of the skills and talents of our people. In 1986, around 30 per cent of workers said they had qualifications at a higher level than were needed to get and do their job. By 2006 this figure was 40 per cent, and by 2009 over half of employees said their skills were underused. The most recent available evidence suggests that at least one-fifth of graduates do not work in graduate-level jobs for several years after they graduate.
In short, we have developed an economy that is dangerously dependent on too many low-skilled jobs. Our growth among employers demanding more qualified and skilled staff is among the lowest in the OECD. We have an economy that is betraying the hopes of the young generation. It is failing to create the skilled well paid jobs that make the most of, and properly reward, their skills and abilities. And let us be very clear about one thing: the growth we need, the jobs we need, will be in the private sector. We will have the modern economy that we need only if we support good private companies that win market share and thus make profits in tough global markets. Equally, though, as my noble friend Lord Monks highlighted, we will not create strong and fair communities unless the workplace is provided by good companies where you are valued and respected and have opportunities to develop your own abilities to the full, and which give you a fair chance to provide for a secure future and live your life to the full.
These are deep-seated issues about the nature of our economy. I hope that the Minister will focus on where the coalition Government think that these good companies, good jobs and better opportunities will come from. There seems to be very little government action that will help us to adapt to and thrive in the changing world of employment. Specifically, what does she think can be done to ensure our economic competitiveness? How do we foster more companies where work is about more than modest pay levels and a struggle for survival? How will we better support companies whose business model is based on recruiting and retaining a skilled workforce, and which have the products and service levels that will allow them to grow and thrive? How do we ensure that these opportunities are in every region of the UK, not just a few?
In the wake of the banking crisis, there is a growing consensus that our economy needs greater relative strength outside financial services. Advanced manufacturing must be part of this, but so must other sectors with growth potential. There must be opportunities across a range of green technologies, in the life sciences and in our creative industries, which have a strong position in global markets, as does higher education at present. Business services, from design and architecture to law and accountancy, have already achieved global reach. What will the Government do to attract world-class companies and encourage the growth of larger numbers of SMEs in these sectors? We need to be a country where the global companies feel that they must be located and able to grow; and a country where smaller companies can innovate, grow and prosper. We also desperately need to support innovation along the lines outlined by my noble friend Lord Kestenbaum.
The Government must be relentless and have a single-minded focus on creating the conditions for private sector growth. In practice, markets are inevitably and unavoidably shaped by what Governments do and what they do not. At present, we are seeing a badly managed retreat from what was and should be an active government strategy—business support dismantled; incoherent policy-making in the green economy; uncertainty over key infrastructure such as broadband; confusion over planning policies; reduced investment in regional growth and the high-tech economy; and muddled thinking on apprenticeships for young people, which were a beacon of hope, as my noble friend Lord Young of Norwood Green called them. Universities are dazed and confused by the implications of the new voucher system and therefore doing less with business. On that point, something that the whole House should be worrying about is the fact that applications to universities are down significantly for next year.
The powers of government go way beyond establishing the right fiscal conditions for the macroeconomy or supply-side measures such as investment in skills and infrastructure, important though those policies are. As we have heard today, what is needed is an activist approach to business and enterprise policy—a recognition that, used wisely and intelligently, government influence can help to create the markets that foster successful companies in the key sectors, which we need. Crucially, an activist approach means understanding what business needs and making sure that public policy is properly aligned and co-ordinated to deliver the confidence and certainty that business needs. Getting bits of it right is not good enough. It is the coherence that counts.
To conclude, I suggest to the Minister that this excellent debate gives her a golden opportunity to give her Government’s support for our recently announced growth initiative. This includes a £2 billion tax on bank bonuses to fund 100,000 jobs for young people and build 25,000 affordable homes; bringing forward long-term investment projects, such as new school and hospital buildings; temporarily reversing the recent VAT rise, which would mean a £450 boost for families with children; a one-year cut in VAT to 5 per cent on home improvements and repairs to help small businesses; and a tax break for every small firm that takes on extra workers. These measures would get the economy going and would certainly change the world of employment for those who are unemployed, those who are currently in education and training, and our children and grandchildren. We would all agree that such change would be for the better, as well as saving us from those three great evils that Voltaire warned us about, “ennui, vice et besoin”.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, I start by congratulating, as have many other noble Lords, the noble Baroness, Lady Prosser, on securing this debate on a wide-ranging topic, on which she spoke with authority and passion, setting the tone for a very serious debate—one that I know the House has been happy to engage in. In the gap it brought to his feet my noble friend Lord Campbell of Alloway—another bonus.
As the noble Baroness outlined and as we can all bear witness, the employment landscape has changed beyond all recognition since the 1960s. Globalisation, technology and social change are still moving at hyper-speed. Europe has expanded eastwards, bringing in cheaper labour, and we face greater competition from the tiger economies. Many British workers will need to reskill to adapt to new job opportunities and many already have.
I will try to answer many of the questions that have been asked during this debate, but if I run out of time all questions will be answered by letter. The good news is that we are living longer but this means that we have to manage the effects of an ageing population. The noble Lord, Lord Young, talked about the removal of the default retirement age. We believe that this will increase the number of older people who are able to be in the workplace, stimulating the economy and leading to more job opportunities for everyone, including young people.
More women are working now than ever before. Part-time working has increased, as has the overall diversity of working patterns. My noble friend Lady Randerson spoke about this growth of part-time and temporary workers. The UK labour market is internationally recognised for its strength and flexibility. Our light-touch system of employment regulation is a key driver of that strong performance. Our labour market has achieved a steady rise in employment, despite cyclical peaks and troughs. During the recent recession employment fell by much less than many had expected, even given the fall in GDP. Part of this success is due to our flexible labour market. My noble friend Lady Randerson rightly pointed out that part-time working is an important choice for many workers, especially some of the older workers to whom she referred, and that part-time staff are a huge resource for business.
The noble Lord, Lord Collins, talked about his concerns over discrimination against lesbian, gay and bisexual workers. The Government’s equality strategy sets out our vision for a strong, modern and fair Britain. It is built on our two principles of equality: equal treatment and equal opportunity. This means building a society where no one is held back because of who they are or where they come from. It is obvious from the most moving speech that the noble Lord made that we must be very vigilant in this. In relation to the world of work, we commend the good work of ACAS in promoting better workplaces. I know that the noble Baroness, Lady Donaghy, used to be chair of ACAS. Britain’s future lies in nurturing a highly skilled, quality workforce, and in harnessing the ingenuity, creativity, diversity and inventiveness of all the British people.
The noble Lord, Lord Stevenson, asked a question at the end of his speech. I have not had much chance to catch up with it but I hope that this will help. Supporting economic growth is our central task. The original growth fund is making a valuable contribution to growing a private sector-led economy in England. In particular, it will support areas and communities that are currently dependent on the public sector in making the transition to sustainable private sector-led growth and prosperity.
Education and skills are vital to our future and essential to building sustainable growth and stronger communities. Here, we agree with the noble Baroness, Lady Prosser. We need a long-term strategy to deal with issues raised in the global market. The Government’s priority is to achieve strong, sustainable and balanced growth, and we are sticking to our plan. We are creating a new model of growth, driven by investment and exports. A whole new government drive to promote trade and investment was announced in the trade and investment White Paper. It includes an expanded remit and updated strategy for UK Trade & Investment and refocusing the FCO on commercial diplomacy and new and improved products from the Export Credits Guarantee Department.
Measures so far to take forward our universities, technical colleges and all levels and styles of education include expansion of the university technical colleges programme to at least 24 new colleges by 2014. Each will offer 600 to 800 14 to 19 year-olds the opportunity to take a highly regarded, full-time, technically oriented course of study. An increased apprenticeship budget of more than £1.4 billion this year is enough to train at least a third of a million apprentices. The noble Lord, Lord Young, an apprentice himself—fast becoming the most famous apprentice in the House—was the campaigning Minister in the previous Government. It has been my pleasure and privilege to build on the work that he has already done. He talks constantly about the need to create apprenticeships for 16 to 18 year-olds. We agree and we are doing many things to advance that. We have seen high levels of employment in the UK due to the flexibility of our labour market, but we must work to build on this strength.
The noble Lord, Lord Desai, spoke of the need to encourage inward investment and suggested that national insurance contributions might no longer be a good idea. I was interested to hear this—I always expect something interesting from the noble Lord, Lord Desai. I have a real answer for the noble Lord, Lord Desai which I hope to give him later. The Government’s role is to put the right framework in place and provide support where necessary. The noble Baroness, Lady Prosser, and the noble Lord, Lord Kestenbaum, spoke of the need to invest in research and innovation. I was interested in the noble Lord’s descriptions, which did not always find favour with some of those on his own Benches.
The noble Lord, Lord Lea, said that the Government should benchmark employment law across Europe. The Government do not have to do that. The World Bank and the OECD conduct such studies regularly and they are always praising this country’s strength and flexibility. I hope that he finds that encouraging. The Government are helping women to continue to develop their careers by making a commitment to implement a system of flexible parental leave. This will give families more choice on how they care for their children and encourage early discussions between employees and their employers about leave plans in the important first year of a child’s life. We agree with the noble Baroness, Lady Prosser, that we need positive action on diversity and participation in the workplace and we are working towards this.
The noble Lord, Lord Lea, spoke about the rolling back of maternity rights and the number of women in employment. Despite the recession, the employment rate for women remains historically high at 65.4 per cent compared with 53 per cent in 1971. I believe that this is the figure that the noble Lord, Lord Lea, could not quite remember in his speech. We have no intention of reducing the total periods of leave and pay available to women. In line with our coalition commitment to encourage shared parenting, we recently consulted on proposals to introduce a system of flexible parental leave so that parents can choose how best to share their caring responsibilities between them. Where families choose, mothers will still be able to take exactly the same amount of leave and pay. Some of the more enlightened companies I have worked with—I particularly remember Unilever 15 years ago—made arrangements to enable women to come in during their parental leave and have their babies looked after while they were brought up to speed and kept up to speed, so that when they returned they had not fallen so far back that someone else had taken their job. I am therefore personally keen to see this piece of work go forward.
Now, more than ever, we need to ensure that the overall system of employment law helps rather than hinders growth. It is essential that the labour market functions in a way that gives employers the confidence to create new jobs. We have an extensive programme of welfare to work policies, but we also need our labour markets to be even more effective. Our aim, therefore, is to set employers free from unnecessary red tape while safeguarding the rights of individuals. Businesses can then concentrate on doing business and employing people rather than filling in forms. To ensure that we have the balance right, we are reviewing employment law. The employment law review has been under way since last May and will continue until the end of this Parliament. The review is an essential element of the growth review, an ambitious and relentless focus on the role government can play to drive, to ensure support and to enable the right conditions for businesses to thrive and achieve strong, sustainable and balanced growth.
The noble Lord, Lord Monks, asked about the current economic model. He thought that the one we had was bust and that we are cutting too quickly. We do not, of course, believe that. It is vital that we renew the balance within the country. Our top priority is to achieve sustainable and balanced growth. We have prioritised capital investments that support long-term economic growth because we believe that is the right way forward to keep our jobs safe and secure. We have launched a growth review and are working closely with industry to create a new model of economic growth, driven by investment and exports. We have taken decisive action to tackle the deficit, restoring economic confidence and stability.
The noble Baroness, Lady Wheeler, spoke of the importance of leadership and management skills and the Investors in People standard. We look forward to considering the recommendations of the review of the IiP standard that the UK Commission for Employment and Skills is currently undertaking and to which she referred. We are already tackling some of the problems that we have identified. Employers regularly tell us that they want to grow, but are put off by the fear of ending up in employment tribunals. We have therefore consulted on a framework that has, at its heart, dialogue rather than confrontation between employers and employees—conversation rather than diktat. We believe that businesses and workers can sort things out better than government.
The noble Baroness, Lady Donaghy, highlighted the labour market’s need to be able to respond to changes resulting from the rise of social media. The noble Lord, Lord Haskel, talked of joint enterprise and employee engagement. We have consulted on plans to improve and streamline employment tribunals and announced that we will extend the qualifying period for bringing claims for unfair dismissal. The noble Lord, Lord Desai, said that making it easier to sack staff will not help unemployment. Our announcement of the increase in the qualifying period for unfair dismissal claims from one to two years aims to increase business confidence in recruiting, which is in everyone’s interest. We believe this strikes the right balance between protecting workers’ rights and giving businesses, particularly smaller ones, more confidence to take on people to train and to encourage them to take many more.
The noble Lord, Lord Morris, spoke of employment tribunals, unfair dismissal and fee charging. Fee charging by employment tribunals is the policy responsibility of the Ministry of Justice and I hope the noble Lord will respond to the consultation on fee levels which it will be launching in due course. We have concluded that it is right to ask users to contribute to the costs of running the employment tribunal system but it is important that we develop a system which is as fair as we can make it for vulnerable workers. The Red Tape Challenge focus on employment related law will help us gather more ideas on how we can improve or get rid of specific regulations. We are considering more than 1,200 comments on employment related laws which we have received through the Red Tape Challenge website.
The noble Lord, Lord Lea, spoke of Adrian Beecroft’s contribution on employment law and protected conversations. Adrian Beecroft has been asked to contribute his thoughts to government to support the work of examining the burden of a cross-government employment related law. This is part of the wider consultation with stakeholders for Red Tape Challenge. His views will feed into that process and we do not plan to publish them. As I have said, we have already announced plans to raise the qualification period for unfair dismissal. This is an outside view that we are taking notice of—that is all.
It is not just about what we enforce. We also need to ensure that the system of enforcement is both effective and cost-effective, and we need to do so in a way that minimises inspections and other burdens on reputable businesses. That is why earlier this month we announced our intention to review whether a streamlined enforcement regime could be implemented. As part of this work, we will consider potential enforcement models, including whether there could be benefits from establishing a fair employment agency. By developing a better system of enforcement we will be able to increase its impact and ensure that the most vulnerable are aware of their rights and supported in their protection. We will report again on progress in the spring.
The Government are determined that employers that operate outside the law must not be allowed to undercut their legitimate competitors by exploiting their workers. Ensuring that workers are properly protected from abuse is not only good for workers; it is good for business and the economy as well.
Ultimately, our vision is for an education system attuned to the changing world of employment, with young people given the skills for work and for life—and for a labour market that is: flexible, by encouraging the creation of jobs by making it easy to get people into work and to stay in work; effective, by enabling employers to manage their staff productively; and, above all, fair, with employers competing on a level playing field and workers provided with a strong foundation of employment protections.
Lord Morris of Handsworth
Can the Minister say whether the Government have any plans to charge users of other tribunals, apart from industrial tribunals, for entry and accessing those facilities?
Baroness Wilcox
No, at the moment I cannot give the noble Lord an answer, but I will go back and ask whether there are other plans that I do not know about and cannot answer on today. I will ensure that the noble Lord gets a proper reply to that question.
Baroness Prosser
My Lords, I am extremely grateful to everyone who has contributed to the debate. It has been rich and wide-ranging, and we have covered all kinds of important issues within the world of work. Skills were mentioned by many noble Lords, as was the growth of technology, the use of social media, equalities and fairness, public and private employment and, of course, employment rights. Importantly, towards the end of the debate, my noble friend Lady Wheeler raised the role of management and the importance of management skills.
Part-way through the debate, a comment was made that the majority of contributors to this debate were people with a trade union background. That is correct, but I should like noble Lords and the House to recognise that as a positive, because the contributions made by those of us from a trade union background represent many years of collective knowledge and experience that we want to use in a debate such as this, not simply to be overtly critical or oppositionist, but to demonstrate that that experience tells us that some of the ideas currently being mooted within government quarters may have unintended consequences. We have been here before. We know just how difficult the world of work becomes when it is out of kilter, out of balance and unfair.
I very much thank the Minister for her reply. There was a great deal of positive comment in it. I again thank the whole House. I beg leave to withdraw the Motion.