Ian McCartney - Former Minister of State for Competitiveness (May 1997 - Jun 1999)

Speech to Allied Distillers

I should like to speak to you about the value of partnership in industry, and about our new legislation, especially the Employment Relations Bill.

And I should like to set that in the context of the changing consensus about social policy which is emerging, in which partnership is a key element.

When the Prime Minister addressed the TUC Partnership Conference in London on 24 May, he talked about recognising the realities of the modern world: we live in a global economy, where competitive pressures and technological and demographic change are affecting the way we all work.

To meet the challenges of these changes, we must move away from the old structures of "them and us" in employment relations.

We must work together to invest in our people and in skills. To ensure that businesses are competitive. To ensure that the workforce is properly trained and committed to quality.

For all these reasons, I very much welcome the efforts now being made by employers and employees in many sectors - including your own - to work towards a better climate of employment relations.

In many leading companies, management, employees and their representatives are becoming aware of the benefits partnership can bring in developing businesses and maintaining competitive advantage.

Both employers and employees have a role to play. They must take responsibility for developing constructive relationships in the workplace. Partnership is all about a balance of rights and responsibilities:

• employers' right to expect commitment and flexibility from the workforce and responsibility to treat the workforce fairly and to train and develop them;
• unions' right to represent where that is earned by the support of the workforce and responsibility to use rights wisely and on the basis of commitment to the business;
• employees' right to minimum standards of protection and opportunities for skills development and responsibility to accept changing world of work and to work for success of the business

So partnership presents challenges to employers, to employees and to unions:

• a challenge to employers to make a real commitment to partnership: real involvement, real consultation and real trust. Not just to see it as the short-term means to get out of a crisis;
• a challenge to employees, to make a real commitment to change, to learn new skills and throw their weight behind the success of the enterprise for their own and everyone's benefit; and
• a challenge to unions, to show that they are ready to modernise, that they can contribute to the growth of the business, and that they don't see partnership as a cover for going back to the bad old ways.

Of course, the Government also has its role to play.

We are putting in place a legal framework of minimum standards to underpin the new, partnership approach to employment relations.

In addition to last year's Fairness at Work White Paper, to which I shall return, we have already acted to implement the legal framework. For example:

• the Government now encourages civil servants to join trade unions;
• the introduction of a National Minimum Wage on 1 April this year;
• the implementation of the Working Time and Young Workers Directive, which came into force on 1 October last year - giving workers, for the first time, minimum holiday entitlements and rest periods;
• introduction of the Public Interest Disclosure ("Whistleblowers") Act in July 1998 - which protects workers who disclose wrong-doing in the workplace;

And at the European level:

• we have signed the Social Chapter! - and are implementing the existing Directives under it:

- The Parental Leave Directive;

- The European Works Council Directive;

- The Part-Time Workers Directive;

- The Burden of Proof Directive [ in sex discrimination cases ].

Fairness at Work

And our agenda set out in the "Fairness at Work" White Paper is central to the programme.

It seeks to provide a legal framework of decent, minimum standards, whilst avoiding unnecessary and unreasonable burdens on business.

The key proposals in the Bill, which is currently before the House of Lords, include:

Individual rights

• Prohibiting employers discriminating on grounds of omission on the basis of trade union membership, non-membership or activities.
• Prohibiting discrimination against part-time workers.
• Limit on unfair dismissal compensation: to be increased from £12,000 to £50,000.
• Reducing the qualification period for unfair dismissal from 2 years to one (by statutory instrument).
• Right for workers to be accompanied by a fellow employee or a trade union representative in disciplinary and grievance hearings.

Collective rights and trade union rights

And on collective rights, the Bill sets out in detail how workers can secure [union] recognition where that is the wish of the majority of the workforce.

• Trade Union Recognition will be possible to achieve by three routes:
• by voluntary agreement;
• by a ballot (with twin tests of a simple majority and 40% of the unit voting in favour);
• by the automatic route where more than 50% of the bargaining unit are union members.

The statutory procedure will apply to organisations employing more than 21 people.

We are also proposing to increase the protection of workers dismissed whilst taking lawful, industrial action. Our proposal will ensure that, in general, workers who are dismissed in these circumstances should be able to complain to an industrial tribunal.

This is only fair.

Family friendly policies

We are also putting in place more family-friendly policies.

Seventy eight per cent of parents with dependent children now work or wish to work. Many businesses accept that working arrangements should be flexibly organised to permit parents to fulfil their domestic responsibilities.

The Government is therefore going ahead with all the White Paper proposals to help people combine working and family life. These proposals include:

• extending maternity leave to eighteen weeks to align with statutory maternity pay;
• providing rights to extended maternity absence after one year's service, as opposed to two years at present;
• providing a right to three months parental leave for employees (including those who adopt a child);
• providing a right to reasonable time off for family emergencies;

We were greatly encouraged by the huge number of responses to the consultation on our proposals - 470 in all.

These proposals will help build the culture of fairness - but, as I said, real partnership in the workplace will be essential to realise that vision.

Partnership

So what does "Partnership" mean in practice ?

The key elements, I believe, are:

• first, the need to recognise and value the central role of the workforce in any business;
• second, the need to have a common understanding of the aims and culture of the business;
• third, employers need to have a strategy for developing their employees - and that means all their employees, not just the highly skilled or the high flyers;
• fourth, employees for their part need to be encouraged and supported to identify and enhance their own skills;
• fifth, finally, and crucially, there needs to be an inclusive relationship between employers, employees and their representatives. There should be a joint approach to solving employment relations problems, which respects and balances the interests of all parties and helps prevent and resolve disputes at an early stage.

And the key point about partnership is this: it is crucial to the Government's wider economic policies for competitiveness and job creation. It will stand or fall by the real bottom-line benefits that it brings - by enabling companies to increase their productivity.

So what does this mean to Allied Distillers?

Opportunities in the Industry

As big players in a vitally important industry to the UK, and to Scotland in particular, I know that you are well aware of the need to maintain a competitive edge in a globalised market place.

And you know that in this challenging marketplace, people are always going to be key to the success of the business.

Good companies invest wisely in training and have a clear policy on graduate recruitment. Such companies are also more likely to enjoy the benefits of a committed, loyal workforce.

There is a need to tailor training for different groups. For example, women, part-timers, young recruits.

The aim should be better service to the customer, enhanced competitiveness to the company, better motivated staff.

Coping with change through Partnership

Strong global competition, unpredictable markets and economic pressures are all having a big impact on your industry, and on those who work within it.

This brings opportunities as well as threats.

I naturally welcome the considerable investment which Allied Distillers is making in Dumbarton. You are a key employer in the area and securing jobs for the longer term is vital. I also understand that there will be some job losses in the short term, but that there will be no compulsory redundancies.

Inevitably all this can put strains on the relationship between management and workforce.

I am very encouraged that Allied Distillers has worked to minimise the negative consequences of change by developing constructive relationships in the workplace. Through pay deals, through "The Change Agenda" and through a commitment to training.

I firmly believe that partnership approaches are the best way of dealing with the challenges of a changing market constructively.

I hope that Allied Distillers will continue to develop its own concept of partnership in the workplace and put it into practice.

There is no pre-conceived or prescribed route-map to good workplace employment relations. But, as you know, it is well worth making the effort: good employment relations can provide a business with a real competitive edge, to the benefit of all parties.

Partnership Fund

Like Allied Distillers, many companies in the UK have already realised the potential of the partnership approach to cope with change and to develop the productivity of the workforce. They are reaping the rewards. But the competitiveness of the UK economy as a whole is held back by many companies which are still underperforming.

That is why the Government will be launching its Partnership Fund as soon as the Employment Relations Bill receives royal assent.

The aim of the Fund will be to help companies overcome the barriers to partnership.

Companies are often not aware of its benefits, even though the arguments are convincing. They see it as a cost and so don't invest. I want to change that.

Our vision is:

• to promote the best of modern partnership practices, and;
• to stimulate many more innovative partnership approaches at work.

That is why the Prime Minister announced on 24 May that we will be making up to £5 million available under the Partnership Fund.

The Partnership Fund will support:

• projects at the individual workplace to foster partnership;
• projects which enable successful partnership organisations to share their experiences with others.

The distinctive feature of the Partnership Fund is that it will be based on both employers and employee representatives working together. Indeed, we will expect to receive joint applications.

Support will be available for up to 50% of the eligible project costs and all applications will be required to have matching funding of at least 50% from non-public sources.

We want to encourage a wide range of individuals, organisations and groups of organisations to apply. We will welcome applications from consortia of employee and employer representatives.

The key criteria for support will be:

• that the project should be focused on a partnership approach;
• the level of innovation; there is no one right way of approaching partnership, and;
• the business benefits.

I am firmly committed to the creation of a fair workplace and a new climate of partnership in this country and I am confident that this Fund will play a key role in supporting that great objective.

I certainly hope that, when the time comes, there will be plenty of good applications from a wide range of applicants across all sectors of industry. I hope you will be amongst them.

Conclusion

I have talked about the Government's aims - and my vision - for the future of employment relations in the UK.

To respond to the new realities of the global marketplace, we are building a new approach to relations at work, based on a legal framework of minimum, decent standards, and on partnership between employers and employees.

Partnership is the key to the development of the workforce - the whole workforce - to realise their full potential and have the skills to meet the demands of a changing labour market. This will benefit themselves as individuals and the companies for whom they work.

I believe that this approach will create modern companies and a skilled and flexible workforce, working together in a spirit of partnership to meet the challenges we all face in increasingly competitive world markets.

The commitment and readiness to work together - of employers, employees and their representatives - are crucial to UK efforts to achieve improved efficiency and competitiveness.

I look forward to hearing about the future progress of Allied Distillers towards developing real partnership at work. The benefits are there for all, and acheiving them is vital for all our futures.

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Other speeches by Ian McCartney - Former Minister of State for Competitiveness (May 1997 - Jun 1999)

(the following are available from the archive)
• Launch of NMW Best Practice Materials (07/07/99)
• 'Institutional And Organisational Obstacles To Labour Market Participation' (05/07/99)
• Speech to the British Youth Council (23/06/99)
• "Stimulating Inward Investment within the North West" (17/06/99)
• Address to the AnUMan "Partnership in Practice" Conference. (27/01/99)
• Speech to the ICAEW (30/11/98)
• Working Time Directive (26/10/98)
• Speech to the Communication Managers' Association Annual Conference (11/05/98)
• Post Office Review (24/11/97)
• GFTU Conference (12/05/97)