Department of Trade and Industry

Alan Johnson MP

CIPD Conference on Value and Voice

Alan Johnson MP

LSE, London.

Tuesday, March 20, 2001

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Geoff, thank you for your kind words of welcome and your invitation to take part in this important event today.

I spoke at the CIPD's conference on Employment Law and Practice last July. On that occasion I gave an overview of the recent changes the Government had introduced in the employment field.

Today I shall focus on the Government's current view of the appropriate models for employee/employer dialogue and what steps we are taking to implement our vision.


Geoff has asked me to talk a little about my own experiences. Partnership is the most difficult option not just for management but for the unions. There cannot be progress through panic with partnership dissolved when things improve.

The Government's view, and my strongly held personal view - is that genuine partnership and co-operation cannot be engendered by mechanistic, legal means.

In fact, that approach would directly militate against creating the climate that we want to establish. We have in this country, for the first time, a government committed to social partnership and we are determined to take employers as well as employees with us as we seek to create a different climate for employment relations.

We are in a different situation from that of the rest of Europe because of our traditional love affair with free collective bargaining and our oppostion to any kind of interference from the state. Ironically, whilst we have opposed the industrial relations model prevalent in continental Europe, it was a young British trade unionist, Allan Flanders who helped to establish that model.

The Government's approach is to encourage partnership at work which we believe is essential for companies who want to prosper in today's modern economy.

By encouraging employers and employees to work together to solve particular business problems or avoiding such problems arising in the first place, we believe that we can change the pervading culture.

This government is not opposed to information and consultation. We support the concept of workers being informed and consulted. We abhore the notion that workers leave a democracy and enter an oligarchy when they put on their coat to go to work. But I do not believe we can weld on to our employment relations culture, a works council model with employers who are hostile and unions who are apathetic.

We believe that the benefits of partnership to both employers and employees are clear. Reduced staff turnover and absenteeism and increased productivity are all proven benefits.

The DTI's Partnership Fund aims to enable companies to make the changes towards a partnership approach and benefit from them. Projects can look at partnership for the first time or build on existing efforts.

I know that the CIPD is familiar with the Fund, indeed, you have a representative on the assessment panel and are a partner in one of the projects awarded in the last round.

The Fund is open to many types of businesses and organisation and those that apply, like the CIPD have a desire and commitment for change. Not for the sake of change itself - but to modernise, improve productivity and enhance the working lives of their employees.

Projects for support under the Fund are invited on a competitive basis during fixed rounds, the third of which I was delighted to announce on 19th February. The closing date for applicants is 25 May 2001 and I urge you to look again at using and promoting this excellent scheme.


Some have argued that our voluntary approach is not enough and that we need a compulsory - that is to say statutory - model for employee and employer dialogue.

The 1998 Workforce Employee Relations Survey contains the most up to date and comprehensive figures concerning information and consultation processes. Our analysis of the data shows that:

First, employees in 53% of all workplaces with 25 or more employees have access to a consultative committee of some sort.

These findings are supported by the CBI Employment Trends Survey 2000. This showed that 56% of companies have already established a permanent representative body for informing and consulting employees, and a further 15% are considering their introduction.

Since these are private sector companies - who traditionally have been less willing to embrace formal structures - these responses are encouraging.

Second, larger workplaces are more likely to have formal consultative structures. 80% of workplaces with 250 or more employees have a committee, while 65% of ones with 50 or more employees had one.

Third, formal consultative structures are not necessarily more effective as a channel of communication than informal ones.

Employees at workplaces with both informal and formal arrangements were asked a range of questions about the effectiveness of the information and consultation process, in particular whether management sought and acted upon employees' views. There were no significant differences in the employees' responses depending on whether informal or formal structures were in place.

Fourth, in terms of the range of issues that were the subject of joint consultation at the workplace, foremost amongst these were working practices, health and safety, welfare services and facilities and future workplace plans.

These figures suggest that there is a healthy pattern of information and consultation which is developing in the UK. There is a good spread of formal committees, particularly in larger companies, while informal procedures are thought to be just as effective.


The Government favours the voluntary approach which is one of the reasons why we have opposed the draft EC directive on information and consultation of employees at national level which is currently being discussed in Brussels.

The object of the directive, as currently drafted, is to establish a general framework setting out minimum requirements for the right to information and consultation of employees in undertakings located in the European Community.

An undertaking is a private or public undertaking carrying out an economic activity, whether or not operating for gain. The directive applies to undertakings with 50 or more employees. Or, Member States can choose to apply it to establishments employing at least 20 employees.

The directive would complement the existing ones on European Works Councils, Collective Redundancies and Transfers of Undertakings.

The Government is not persuaded that further regulation at the EU level is necessary on this subject. The EU has already adopted the European Works Council directive. In that case there was a good argument for Community level action, because the aim was to bring about information and consultation on a transnational basis. For the same reason we have recently accepted the directive on employee involvement in the European Company.

But the proposed directive has no transnational elements.

It would achieve nothing that could not be done by the Member States acting alone.

The absence of a directive does not conflict with the requirements of the Treaty.

The existing Member State systems for informing employees do not conflict with the requirements of the Treaty. And they do not otherwise damage significantly Member States' interests. Action at the Community level would not bring clear benefits compared with action by the Member States.

These are the guidelines to be used when assessing whether a proposed action conforms with the principle of subsidiarity.

In summary, the government is not persuaded of the need for a directive, which is difficult to reconcile with subsidiarity and would cut across existing practices in Member States to no benefit.

We have made our position clear to our partners in Brussels, which is why there has been no agreement on a text that was first proposed by the Commission in November 1998.


But no-one can claim that this Government has been inactive in the field of employee relations.

We have put in place measures such as the national minimum wage, trade union recognition and the parental leave, part-time work and working time regulations. These set a minimum infrastructure of decency and fairness for people in the workplace.

And there is already a considerable body of legal requirements in the UK concerning the information and consultation of employee's rights.

These cover collective redundancies, transfers of undertakings, European Works Councils - which we put in place - information for the purposes of collective bargaining, health and safety and company law disclosure requirements.

Beyond that, we are striving to replace the notion of conflict between employers and employees with the promotion of a Partnership culture.

It goes along with our emphasis on education and skills, not over-burdensome regulation, as the best means of equipping business and people for a modern economy.

Informing and consulting employees is an integral part of this process of harnessing the energy and commitment of the workforce.

In certain specific, well-defined circumstances such as collective redundancies and transfers, some legal underpinning is justified and practicable.

But, the Government believes that employee involvement mechanisms must reflect the requirements of individual organisations.

Employee involvement goes to the heart of the way an organisation is managed, and organisations vary greatly in their needs and management styles.

Some are operating in a global context, others national or regional. There are different ownership structures and patterns of employee representation. Some are subject to Stock Exchange rules. Large companies have different preoccupations from small ones, and the private sector has different imperatives compared with the public sector.

So there can be no "one size fits all" approach handed down from on high.


But we are considering this whole issue again in a domestic context. Several recent high profile cases of restructuring have given rise to complaints that employees were not adequately informed and consulted about decisions announced suddenly. They have rightly given rise to concerns that companies are failing to inform and consult employees on crucial issues affecting their future.

That was why Stephen Byers announced on 18 January that we will review the UK arrangements affecting collective redundancies and European Works Councils. The review, which will involve the CBI and TUC, and other interested parties, will consider whether the current laws are working and in particular whether more should be done to promote effective consultation with employees.

We have often heard recently the assertion that it is easier, quicker, or cheaper to sack a worker in Britain than elsewhere.

The government takes this question very seriously. As part of the review of collective redundancy arrangements which we are currently carrying out, we shall gather information on how redundancy and restructuring situations are handled in other countries.


In conclusion this Government believes that genuine partnership and co-operation in the workplace cannot be brought about by imposing minimum standards.

Where there is a strong divergence of views about any proposal (as I believe there is about the proposed directive on national information and consultation!) that is likely to make genuine partnership that much more difficult to bring about.

I would like to thank you once again for inviting me to come along today. It is a pleasure to meet with people that are helping to fulfil the potential in partnership. Many of you have taken the first steps and I ask you to continue the good work.

You will know that partnership is not easy to implement. It is the most difficult option for management and union officials. And it has to be sustained - not just forged in the heat of a competitive threat and discarded when things improve. But there is help - our Fund, the TUC's excellent Partnership Institute and the CIPD itself are just 3 examples. And Partnership is a sure investment, use it properly and you will benefit.

I will be glad to take any questions you might have.

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