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The Labour Market and Employment Relations Beyond the Recession

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The Labour Market and Employment Relations Beyond the Recession A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Lambert, Richard Working Paper The labour market and employment relations beyond the recession Warwick Papers in Industrial Relations, No. 93 Provided in Cooperation with: Industrial Relations Research Unit, Warwick Business School, University of Warwick Suggested Citation: Lambert, Richard (2010) : The labour market and employment relations beyond the recession, Warwick Papers in Industrial Relations, No. 93, University of Warwick, Industrial Relations Research Unit, Coventry This Version is available at: http://hdl.handle.net/10419/48544 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu The Labour Market and Employment Relations Beyond the Recession Richard Lambert Director-General Confederation of British Industry WARWICK PAPERS IN INDUSTRIAL RELATIONS NUMBER 93 April 2010 Industrial Relations Research Unit University of Warwick Coventry CV4 7AL Editors Foreword The Warwick Papers in Industrial Relations series publishes the work of members of the Industrial Relations Research Unit (IRRU) and people associated with it. Papers may be of topical interest or require presentation outside of the normal conventions of a journal article. A formal editorial process ensures that standards of quality and objectivity are maintained. This paper publishes the text of the ninth Warwick-Acas Lowry Lecture, given to an invited audience in March 2010 by Richard Lambert, Director-General of the Confederation of British Industry and Chancellor of the University of Warwick. The annual lecture is organised in honour of Sir Pat Lowry. A former chair of Acas, Sir Pat was for many years an Honorary Professor at the University of Warwick, a long-standing member of the Business School’s Advisory Board, and a source of valued counsel to IRRU in its work. His outstanding contribution to the practice of industrial relations commenced when he joined the EEF in 1938. He went on to become the Federation’s Director of Industrial Relations. He left in 1970 to join British Leyland as Director of Industrial Relations. In 1981, Sir Pat was appointed as Chair of Acas. He stepped down six years later with Acas’ reputation for impartial and constructive advice enhanced, in the face of an often turbulent industrial relations landscape. 2010 marks the 40th anniversary of the establishment of IRRU. We were delighted that the University’s Chancellor agreed to deliver the Lowry Lecture in this milestone year. The public policy agenda has changed considerably since 1970, but the need for independent, critically informed research on developments in employment relations remains vital. These include the crisis-induced innovations in employment practice highlighted by Richard Lambert in his lecture, which are the subject of current IRRU research. The 2010 lecture addressed an appropriately recurrent theme; the impact of economic recession on employment relations across the economy. Several features distinguish this most recent recession from others that preceded it, notably the specific origins in financial crisis and the speed with which their ramifications ranged across the globe. But, the lecture argued, these features alone cannot explain the distinctively cautious response of most British employers, which have contributed to better employment retention than might have been expected. The lecture explored deep underlying changes in the labour market, in the regulatory environment, and in relations within companies to further understand these features, but warned of significant challenges ahead. Trevor Colling and Paul Marginson 1 Good afternoon, today I am going to talk about the labour market beyond the recession and I want to start by addressing the question of why employment in the past two years has not fallen in the way so many people expected, given the steep drop in output that we have experienced. I will also talk about the development of what I consider to be a new employment relationship in the private sector over the past twenty years. My central argument will be that two things can explain the employment resilience we have seen: first, structural changes in the labour market since the 1990s recession and, second, the development of a new kind of relationship between employer and employee. I will argue that these changes have been happening gradually over the past twenty years. This recession has been the first test of the new model – and although there are some big challenges to come, the results, at least so far, seem rather good. But first let me thank Acas and the Warwick Business School’s Industrial Relations Research Unit for inviting me to be here today. It is a great honour to speaking at the unit on its 40th anniversary. And it’s a particular pleasure to be honouring the memory of Sir Pat Lowry, a great figure in the post-war history of industrial relations in the UK. I was a boy reporter on the Financial Times (FT) in the 1970s when his work at British Leyland and later at Acas made him a household name. I was much too junior to meet him, but his reputation for decency and integrity was very well known in a world where there were not a lot of those qualities to spare. One sign of how far things have changed since then, in part no doubt thanks to his influence, is that back in those early days the FT had – if my memory is right - six full time labour reporters and a whole labour page each day, dedicated to covering strikes and union politics. And again if my reading of the bye-lines is right, the FT’s last full time labour reporter has just recently retired. There’s a whiff of cordite in the labour market air today, so let us hope the editor has got his timing right. Features of Current Recession We seem today to be emerging at last from what has been the steepest recession since the war. It has been a time of unprecedented disaster in the banking industry and of a steep collapse in business and consumer confidence. In response, businesses have been cutting back their investment in stock and working capital at the fastest rate in recorded history and investment in plant and equipment has also nose-dived. 2 It seemed a fair bet that the labour market was also going to take a savage blow. The Confederation of British Industry’s (CBI) own forecast was for unemployment to peak this year at above three million and then to decline only slowly. Others, like former Monetary Policy Committee member Danny Blanchflower, were much, much more gloomy even than that. Indeed it has been a tough and worrying time for many people both in and out of work. But with unemployment today at 2.45m, the numbers are nothing like as bad as we had feared. Output has fallen by 6.2 per cent since the start of the recession, but employment is down by just under 2 per cent. Compare that to past experience. In the early 1990s, a fall of 2.5 per cent in gross domestic product led to a fall of 3.4 per cent in employment. In the early 1980s, Gross Domestic Product (GDP) declined by 4.7 per cent, leaving employment 2.4 per cent lower. Of course it may not be over yet but conditions in the labour market have been fairly stable since the Autumn. Employment has continued to decline but firms are not laying off full-time employees at the rate they were last year and our CBI surveys suggest that moderate rates of employment growth are possible later this year. Most people who have become unemployed have moved back into work fairly quickly. More than 4.6 million people have moved off Jobseekers Allowance since November 2008, and the number of people claiming Incapacity and Lone Parent Benefits has remained broadly constant despite the recession. By contrast, between 1990 and 1995, the number of people claiming these benefits rose by around 1 million. For what it is worth, the Treasury in last week’s Budget assumed that the claimant count would peak at just under 1.75 million around the middle of this year, and fall back to around 1.25m by the end of 2012. So what’s going on here? It is true that the figures have been flattered somewhat by the continuing rise in public sector employment. Excluding the nationalised banks, the numbers now stand at around 5.9 million, compared with fewer than 5.2 million when the Labour Government took office. The numbers have also been helped by a rise in part time workers, including a good few who would be in a full time job if they could find one. Other favourable influences include the fact that business insolvency rates have been running at a much lower level than in the early 1990s. And the Government itself has played an 3 important part, with a stream of initiatives like the Young Person’s Guarantee and the work being done at Jobcentre Plus.
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