To What Extent Do National Institutions Influence Firms Adoption of Work-Life Balance Policies - Essay Example

To what extent do national s influence firm’s adoption of work-life balance policies? and Date: Introduction Work-life balance is a concept where employers and their employees strike a balance between work and lifestyle (Handy, 1997). The concept has been around for decades but it is only in the past one and a half decade that it has gained prominence in the labour industry. The work-life balance differs across the globe because of economic and cultural differences (King, 2008). What citizens in one country view as a perfect balance between work and lifestyle time allocation, others in a different country may feel otherwise. Generally, those countries with weaker economic conditions tend to have low quality work-life balance. Essentially, work-life balance is determined by the prioritization and allocation of working time and personal time because of their conflicting nature (Reynolds, 2005). Ordinarily, employees would desire to have less working time and have more free time to have pleasure and leisure and to attend to their health, family and spiritual needs. In contrast, employers want the employees to devote as much time as possible to working so as to maximise efficiency in production and profitability (Reynolds, 2004). Due to these conflicting demands a balancing agreement has to be struck. These agreements could be reached through various ways and means, for instance, through institutional and regulatory provisions, labour market conditions and forces and, lastly, through management and labour unions strategies. Depending on the country one works in, any of the factors could be dominant in determining the work-life balance for the workers in that country (Wilthagen, 2004). This paper focuses on how national institutions influence on work-life balance policy formulation and determines their extent of influence on the work-life balance policies in a country. To achieve this, the paper explicates the factors affecting work-life balance and then narrows down to national institutions effects on work-life balance policies. The paper then discusses the characteristics of the UK labour industry explicating the regulations and provisions that influence the quality of work-life balance and then compares it with those in other two global locations. The global locations chosen are the US and Sweden and the hypothetical UK multinational firm operating in these two countries is PA Consulting Group. Factors Affecting Work-Life Balance There are, essentially, three broad factors that influence the work-life balance in a country. These a factors are the institutional environment within a country, the labour market conditions and the management and labour union strategies of a country (Berg, Applebaum, Bailey and Kalleberg, 2004). A firm legitimizes its operation in its home country and foreign country by adhering to these regulations and conditions set by national institutions and labour market forces. Failure of a firm to align its strategies with the prevailing regulations may lead to a law suit, if it is in a case of disregarding explicit regulatory provisions, or being phased out of the market by competitors, in the case where a firm disregards labour market conditions (Avery, 2004). The three factors interact together to set the working time of the labour force and determine the work-life balance policies as indicated in Figure 1 below as illustrated by Berg et al (2004). Figure 1: Factors affecting work-life balance (Source: Berg et al, 2004) Institutional Context and National institutions Influence on Work Life Balance As can be obtained from the illustration, there are three factors that determine the extent of employees’ control over working time. This paper’s scope, though, concentrates on the first factor, on the extent to which national institutions and government regulations influence work-life balance policies of a firm. National institutions and their provisions influence the work-balance provisions in a country (Kodz, 2003). As can be observed from the illustrating model, the national institutions form one of the forces that determine the extent of control employees have over the working time. The greater the control the employees have over their working time, the greater the quality of work-life balance they desire because they get increased bargaining power in relation to their employers (Reynolds, 2004). Even though there are three factors, their influences on work-balance policies are not equal. National institutions have greater, substantive influence as compared to labour union strategies and labor market conditions (Berg et al, 2004). In institutional context, the bargaining power of unions and the government regulations influence work-balance policies of a firm. The national institutions relays the government provisions that, for instance, limit the daily working hours, the weekly work hours, the amount of rest break, daily rest, weekly rest, annual leave, and other regulations appertaining to night workers and young workers (Wilthagen, 2004). These government regulations have far-reaching consequences and influences because they affect the entire labour force irrespective of the line of work. Firms operating in a particular country have to align their strategies, for example work schedules and timing, to be in sync with the government regulations, otherwise they will be held in contempt by the government (Bielenski, Bosch and Wagner, 2001). The national institutions that relay government provisions differ according to countries but most are relayed through the relevant ministries in that country, for example, the ministry of labour or the department of trade and industry among many others. The government may make certain provisions or institute certain regulations to protect the market or advance certain interests for public good (Bishop, 2004). These provisions and regulations definitely influence the work-life balance policies of the industry. For example, a government may reduce the daily working time of employees so as to increase the employment levels where there is an increased unemployment levels. Bishop (2004) noted that France, for instance, reduced the standard working hours in a week from 39 hours to 35 hours in 1998 so as to accord others the chance to secure employment opportunities. The idea was to afford the employees and the employers the greater time and flexibility to engage in other activities that generate income or to have the flexibility to contract other persons for working purposes. The government may also make provisions to influence the birth rates and populations. Japan, for instance, also reduced the standard working time so as to promote work-life balance and birth rate through affording employees more time with their families (Berg et al, 2004). These regulations also encouraged more women to enter the labour force because the provisions enabled them to have sufficient time to dedicate to their families away from working time. Lastly, the government may also adjust the working time regulations in a particular industry to influence the demand of particular skills or occupation. Naturally, people like to work for fewer hours. The government may lower working time cap in certain industry to allow for an influx in workers in these industries where there is a shortage (King, 2008). The national institution context does not relate to government regulations only. There are other umbrella trade unions that operate in a national context. In the UK, for instance, there is the Trade Union Congress (TUC) and the Public and Commercial Services Union (PCS) that negotiate working time provisions on behalf of the workers (Eurofound, 2004). These unions have extensive bargaining power and immensely influence the work-life balance policies in a country. They are instrumental in securing favourable collective bargaining agreements for their members and because they are strong institutions in relation to the industry players, they can be effective in altering work-life balance policies in industries. A good example of this collective bargaining power is where the TUC and the PCS are advocating for the reduction of average weekly work hours to be reduced from the current 48 hours to 35 hours in the UK (PCS, 2014). Typical UK Characteristics affecting work-life balance policies The PA Consulting Group is a multinational consultation firm headquartered in London, UK. Just like many other firms, its work-life balance policies are an aggregate of the interaction between government regulations, labour conditions and trade unions’ collective bargaining arrangements. The typical UK characteristics of work-life balance are heavily influenced by government regulations, followed by trade unions collective bargaining arrangements. The government regulations are enshrined in the Working Time Regulations 1998 which is UK’s adaptation of the EU Working Time Directive of 1993 and 1997 (Berg et al, 2004). It is meant to promote work-life balance and, in the process, promote the health and well-being of employees (Watson, 1994). The UK has combined these provisions with Young Workers Directive to form the amended Working Time Regulations. The regulations are meant to apply to all professionals and whether they are working on a full time or a part-time basis and whether they are working as an agency, or house workers or casual labourers. However, the provisions are exempted in some situations, for instance, where the nature of the job demands that one is permanently present and ready to handle duties, or where there is an expected increase in demand for the services or skills like in the tourism sector or where there is an unforeseen circumstances that permit the suspension of the work-life balance provisions (Williams, 2004). The following are some of the provisions in the law governing working time and work-life balance in the UK. Work Time in the UK The standard working time in the UK is 48 hours in a week (Berg et al, 2004). A firm operating in the UK is expected to provide a rest break of at least 20 minutes in between the daily working time. The firms are also expected to allow employees 11 hours of uninterrupted break on a daily basis. Additionally, employees working in the UK should get a 24 hour uninterrupted rest in every 7 days which can also be aggregated into 48 hours in two weeks period (Bishop, 2004). In 2007, the government directed that every employee working in a 5 day a week format is entitled to an annual leave of 4.8 weeks. This was later revised to 5.6 weeks in 2009 provided the employees give sufficient time of notice to their employers (PCS, 2014). Sufficient time in this context was defined as two times that of the time the employee intends to take as leave. So if an employee desires to take a months’ leave, he is expected to give a notice two months prior. It is imperative to note that, in the UK, the employers still had the prerogative to determine when the holiday should be taken. Firms, therefore, are extremely powerful in this sense. Most UK firms’ human resource departments allow employees to work overtime and then recover the extra time at their time of their choice. Even if there is a compensatory mechanism for the extra-daily hours worked the employer is the one who has the final say on when the compensation time should be seized (King, 2008). As a result, most of the UK workers do not actually get the times they wanted. Also, UK firms have been controversial in the sense that they have allowed the enforcement of the opting out provision in the EU Working Time Directive Article 18(b) (Eurofound, 2004). Under this provision, an employee can forfeit his protection under the Working Time Regulations in writing. The rest of the EU countries did not adopt this provision and there has been increased lobbying in the UK to get rid of this provision as it is detrimental to one’s own health and well-being (Eurofound, 2004). The UK working time regulations permit working during the night. It defines night workers as those people who work for more than three hours between 10 pm and 6 am. For such workers, the provisions are that they should not work for more than 8 hours in a day. The regulations further provide that if the job causes physical and mental strain then the 8 hour limit should be strictly enforced and not aggregated in any way (Bishop, 2004). The UK Working Time Regulations also allow young people to work. This is a group of people that have cleared school but are less than 18 years old. For young workers, their weekly limit is 40 hours, with a limit of 8 hours a day as compared to 48 hours for adults (PCS, 2014). They are also expected to be granted a 12 hour daily rest in comparison to 11 hours for adult workers and a 48 hour uninterrupted rest period in seven days as compared to 24 hours for adults in a corresponding period (PCS, 2014). Apart from these working time regulations, the UK also has other laws that permit adoption leave, maternity leave, paternity leave, parental leave and time off for dependants which should be taken into consideration by firms operating in the UK. Firms like the PA Consulting Group have employees who are unionized. Nearly 50% of the UK work force is unionized. This means that trade unions, for example, the aforementioned UTC and PCS have significant influence on the work-life balance policies of firms operating in Britain. The less the number of unionized employees the less the power trade unions and their collective bargaining efforts have on a firms’ work-life balance policies (Reynolds, 2005). In the UK, the national institutions, through government regulations coupled by a significant number of unionized workers, have a considerable influence on work-life balance policies (Berg et al, 2004). PA Consulting Group wishes to expand its operations into Sweden and the US, it is imperative to determine which conditions would hold and which will necessitate the firm to alter its work-life balance policies to its prospective employees in those foreign lands. Sweden Sweden, being a member of the EU, has a number of similarities with UK’s governmental regulations on working time. This means that a considerable number of UK standards can be adapted in Sweden. According to Berg et al (2004), Sweden’s labour industry, just like the UK, is heavily influenced by national institutions through government regulations and collective bargaining by trade and labour unions. Sweden also adopted the EU Working Time Directive. However, unlike the UK, Sweden caps the weekly work time at 40 hours as compared to 48 hours in the UK (Bishop, 2004). The Swedish government has also, generally, prohibited night working where the definition of night work remains the same as that of Britain. In the UK, night working is not prohibited; instead an 8 hour limit is placed on working time. Just like in the UK, an employee can work for overtime hours and then be compensated in form of equivalent free time later or in form of monetary compensation (Berg et al, 2004). This resonates with the conditions in the UK. 80% of the workers in Sweden are unionized with over 90% working under contracts negotiated by unions. This is unlike the UK where individuals negotiate their own contracts and fewer workers are unionized. UK firms cannot favourably cope with unions as they have greater bargaining power. Therefore, in general, Swedish workers have a considerable degree of control over their work time unlike most of other countries (Berg et al, 2004; Bishop, 2004). This also translates to fewer powers owned by firms operating in Sweden. A firm working in Sweden has to adjust its work-life policies to suit these government legislations. The fewer and minor differences make adjusting to accommodate the Swedish government regulations easier for UK firms operating in Sweden. The US In the US, there is less governmental control as compared to the UK (Reynolds, 2004). The corporate sector regulates itself. The only regulation affecting work time is the federal Fair Standards Act (Bishop, 2004). This regulation caps the weekly working hours at 40 hours. PA Consulting Group will have to adapt its work-life balance policies which have been based on 48 hours a week to suit the 40 hour limit. Reynolds (2005) further noted that American workers are less unionized. It is estimated that a paltry 15% of the workers belong to labour unions (Berg et al, 2004). Employees are expected to participate in flextime programmes to negotiate for their work time. This gives the employers the upper hand and immense powers (Berg et al, 2004). Compensatory time for overtime is in existence even though, just like in Britain, it is at the employer’s discretion with regards to when it should be taken. Furthermore, unlike in the UK where the working time regulations protect all types of workers from full-time and part-time to casual workers, the UK has absolutely no regulations against unequal treatment (Reynolds, 2004). This also gives employer’s more power to design work-life balance policies in their interest. In the US, work-life balance is, literally, at the employer’s discretion since there are few government regulations and few of the workers are unionized meaning they have less bargaining powers, individually and collectively, as compared to their counterparts in Sweden and the UK (Berg et al, 2004). Conclusion In conclusion, it is clear that there are several factors that influence the work-life balance policies in countries. These factors are the institutional and regulatory environment, the labour market conditions, and the management and labour union strategies. The extents to which these factors influence work-life balance policies adopted by firms differ from one country to another. Of the three factors, the institutional and regulatory environment is the most prominent as its provisions are non-negotiable (Kodz, 2003; Berg et al, 2004). It is also clear that the UK has adopted an institutional framework that resonates with those of most EU countries making it easier for firms to internationalise their operations to other EU countries such as Sweden. This is because the differences in government regulations are minimal (Wilthagen, 2004). Most EU countries have the work-life balance policies influenced by the government through its national institutions. These institutions, therefore, have immense influences where there is extensive regulation and a high number of unionized workers like in the case of the UK and Sweden. The US is a different case altogether, its minimal government regulation and low number of unionized workers means that national institutions have less influence on work-life balance policy formulation. References Avery, V., 2004. Measuring working time arrangements. Labour Market Trends, pp. 15-17. Berg, P., Applebaum, E., Bailey, T., and Kalleberg, A., 2004. 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