Importance of Changes in the UK Employee Relations - Research Paper Example

UK employee relations have seen significant changes over the last 30 years. Evaluate the importance of these changes and how these may influence future developments. Introduction The globalisation of world was primarily a result of technological innovations and advancements, which later enhanced information sharing and open communication across borders. The business organisations have also expanded their operations across other countries because of availability of transportation and communication networks. Nevertheless, the entities opt to maximise their growth by capitalising new opportunities. For instance, there is intense competition in the marketplace because of a large pool of sellers, which focus on establishing strategies that would tempt maximum potential customers towards their products. Quite unequivocally, the external environment is complex, unpredictable and unstructured; therefore, a firm which is not internally strong and has top quality workforce may not be able to survive. Therefore, it is justified to argue that firms can induct modern technology, plants and machinery in their units, yet they still could not succeed without building smooth relationships and psychological contracts with workers. It should also be noted that expansion of trade and commerce has also created new employment opportunities for employees / workers so it is even difficult for employers to retain existing workers and benefit from their experience, skills, abilities, knowledge and technical expertise for a long time period (Edwards, 1995). This researcher will discuss and evaluate significant changes that have been observed in UK employee relations over the last 30 years. The paper will throw light over changes in management - employee relationships, impact of technological advancements, unionisation, impact of employment and unemployment (recent as a result of inflation) on employee relations across UK. The paper will finally provide how these changes could influence future developments and what strategies should employers formulate and implement to form cordial relationships with employees to ensure their retention. Employee Relations It is worthwhile to mention that the employment rate and the number of jobs / working opportunities to potential workers also impact on employee – employer relationships and psychological contracts with a business firm. For instance, if economy is booming and expanding at a rapid pace then workers will have more opportunities at their disposal. Therefore, they will prefer switching firms that offer the best compensation (tangible and intangible rewards / benefits) including pay package, fringe benefits, accommodation, conveyance, medical, insurance cover, commissions, bonuses, share ownership and promotions. Taking above into consideration, it should be pointed out employment peaks across United Kingdom were recorded in 1968, 1978 and 1989 by then economic pundits and analysts. In fact, the employment scenario prior to 1990s was much better in comparison to situation in contemporary external environment; hence, most of the workers at that time used to switch to organisations with relatively better compensation for sake of their better future. In other words, the bargaining power of employees was high because of positive economic growth. Nevertheless, the situation changed in 1990s when unemployment increased considerably due to economic turmoil followed by a freeze in labour market. At that time, the supply of workers was higher than demand (surplus existed) and wage rate had decreased because of contraction in British economy. However, the problem was tackled in 1993 and UK government observed a continuous decline in the unemployment rates afterward. Eventually, the employees regained their bargaining power. It should be noted that this economic recovery should be attributed to economic / business – friendly policies that enhanced the confidence of investors who then resume their business activities in a full – fledged manner. Consequently, the trade volume increase substantially, British currency strengthened and trade ties of UK improved with foreign nations. Perhaps, the increase in size of market because of rise in population and subsequent increment in consumer purchasing power were also contributory factors towards UK economic recovery in mid 1990s (Goos and Manning, 2003). However, the bargaining power of employees suffered greatly when worst economic recession aggravated business conditions followed by substantive rise in unemployment. This should be recalled that the economic outlook impaired in 2007 – 2008 after collapse of housing sector (property market) and ‘bursting of speculative financial sector’ that resulted in financial difficulties and a credit crunch like situation across UK, Europe, America and globe. For instance, the bankruptcies of various small and large financial institutions followed by closures of manufacturing and services sector organisations led to rapid surge in unemployment and economic contraction. In other words, the decline in consumer buying power and real incomes also adversely impacted relatively strong sectors such as heavy machinery, engineering, arms, information technology, airline industry, electronics and others etc. because of fall in demand from all consumers. Hence, these strong sectors were unable to sustain their business volume and cut down their employees thereby contributing in unemployment across UK In simple worlds, the sharp reduction in aggregate consumption, production, output and saving, in turn, resulted in a decline in economic activities and new employment opportunities for workforce (Gregg and Wadsworth, 2010). Hence, workers were even accepting low-paid jobs, were ready to accept wage / salary cuts and reluctant to get involved in conflicts with employers fearing that would lead to job loss. In short, it is justified to argue that changes in employment rates impacts on organisation – employee, more specifically the employment relations. Blanchflower and Shadforth (2009) have explained another reason behind unemployment in United Kingdom which is the fact that overseas workers migrate every year in large amounts for whom no real employment opportunities are available. They either end up with menial jobs or remained unemployed thus depend on money they receive in the name of unemployment benefits. It should also be mentioned that technological developments are also responsible for job losses across Britain, which in turn, affect employment relationships. For instance, the job market across UK is frozen because of mechanisation in UK industries. The business enterprises have been focusing to attain productive efficiency and effectiveness so that they could save their costs and enhance profit margins. Also, the cost savings would restore competitiveness of UK firms in the marketplace where importers are flourishing because of their competitive pricing strategies for quality products manufactured in developing / emerging nations. It should be noted that the use of sophisticated machinery, state-of-the-art production plants, information technology and automated processes by manufacturing / service sector firms have reduced the demand of human resources. Also, firms that have inclination to induct information systems (such as decision and executive support, operational, office automation, transaction processing, management reporting systems etc.) are facing stiff resistance from workers who fear job losses because of this automation. Obviously, the management – employee relationships are sabotaged due to conflicts as employees raised questions about their fate of their jobs. As a result, the automation has been demotivating the workers due to the fact new jobs are not creating at the similar pace likewise they were created by business entities in past few decades (Stewart, 2005). On the other hand, manufacturing businesses have (although) increased their marginal productivity per labour and profitability after employment of modernised technology and automation, but Britain is moving fast towards deindustrialisation. This means that investors are not inclined to establish factories / industries, which is why manufacturing sector has not been contributing significantly in terms of job creation and employment, which is attributed to technology. In addition, the manufacturing firms demand more contract based or part-time workers who could complete short – term assigned projects, goals and tasks. Taking above mentioned into consideration, it should be argued that employee – management relations are not stronger followed by high turnover rates in capital intensive manufacturing firms. According to the findings from Workplace Employment Relations Survey (WERS 2004) as revealed by Kersley et al (2005), the first aspect of employment relations that did not observe any sufficient change is ‘satisfaction with pay structure’. In fact, the results obtained after in-depth study confirmed that almost similar percentage of workers was dissatisfied with their compensation packages in 2005 compared to 1997 (base year). The second aspect was ‘the incidence of various disputes’ as the study revealed that conflicts among management – employees and employee – employee exist due to various reasons such as role overload, unrealistic expectations etc. Nonetheless, the inter-organisational dispute percentage again did not observe any significant change. The third aspect was ‘the under-representation of women’ at top management level. It should be highlighted that despite the presence of Equal Employment Opportunity’ and affirmative action laws / regulations, the women workers are discriminated on the basis of gender in corporate world and thus not promoted to their deserving managerial positions. The fourth aspect that did not change was ‘numerical flexibility’. For instance, just over 30% business firms had employed workers on ‘temporary or fixed-term contracts in 2004’ in comparison to only 32% in late 1990s, which shows no real change. But, positive 4% growth was observed as more than 82% firms had ‘part-time employees’ in 2004 as compared to only to 79% firms in 1998. It is worth mentioning that part-time workers were more than 50% of over one-third business firms in 2004, while women employees dominated the firms that had hired mostly part-time or temporary workers. The WERS survey confirmed that just over 15% entities had temporary workers in 1998 and 2005. It could, therefore, be argued that proportion of part-time and non-permanent employees has increased overtime (Kersley et al (2005). . On the other hand, most of the changes were recorded in form of decline in unionisation and ‘collective bargaining practices’. Recall that unions comprise of employee representatives that negotiate with employers for improvement of compensation and benefits, workplace conditions, promotions and career advancement, resolution of conflicts and miscellaneous matters etc. Indeed, the unions are also involved in organisational politics, protests, picketing, strikes etc. if organisations do not negotiate and fulfill their demands. However, the role of unions in today’s organisations has reduced considerably because of various measures by employers followed by strict actions by present government to curb unions. Kersely et al (2005) had also pointed out that fewer workers had inclination to become part of unions in 2005 compared to 1997 because of improvement in ‘employee rights’ and workplace conditions by organisations. In addition, the present government has taken steps to curb negative organisational politics and unfair tactics of union members that utilise this platform to manipulate employers. For example, unions in manufacturing organisations may instruct its members to support strike call so that they could pressurise employers to meet their unfair demands (Bryson, 2005). Another significant change was negative growth of ‘joint consultative committees’ that provide employees a formal platform to express their concerns, opinions, ideas and problems. However, there is substantial improvement in employee – employer interaction and discussions because of presence of new formal and informal communication channels (the development of internet, intranet and extranets in 1980s and 1990s has facilitated communication). In other words, if a worker needs mentoring, counseling or advise on certain problems, he / she could directly communicate with bosses / executives at top of hierarchy on individual basis, instead of using union as a platform to raise such issues. A major reason behind this progress is increasingly large focus of corporate entities on socialisation, mutual adjustment, delegation and employee empowerment that enhances workers’ morale, normative and affective commitment, job satisfaction, and trust over their employers. Nonetheless, employees believe they could personally approach their recruiters / hirers for resolution of conflicts, issues or problems instead of using pressure tactics through a union (Rose, 2008). It is worth mentioning that there are certain changes in Recruitment and selection procedures over past two decades. Indeed, the globalisation of world has increased challenges for firms; therefore, they have using various internal and external recruitment techniques to induct top quality workers who could participate and contribute to organisational success and goal achievement. For instance, a large number of recruiters argued in Workplace Employment Relations Survey (WERS) that they did not discriminate selection of workers by preferring either internal or external channels; rather they chose the best technique to induct SMART workers in the organisation. State-owned organisations were largely interested in using both recruitment channels whereas private sector entities argued that internal channels were more beneficial than external to hire top quality workforce at lowest cost (Kersely et al, 2005). No matter what recruitment a company uses, it should ensure there is zero discrimination against potential candidates on basis of race, gender, ethnicity, language, cast, religion and personal contacts. In short, merit-based employment technique should be adopted because it strengthens employee – employer relationships in the long run as well as leads to organisational harmony (Oxenbridge et al, 2003). Managers are penchant to retain workers because they perceive that poor / weak management – employee relationships may compel workers to switch to new workplace. Indeed, this will subsequently lead to high turnover rates and extra costs of recruiting, hiring and training new employees for vacant positions. Therefore, managers are inclined to improve employee – employer relationships by setting realistic goals, flexible working arrangements for work / life balance as well as providing career counseling for employee well-being and career advancement (Blanchflower et al, 2006). Conclusion In a nut shell, the employment relations have observed significant changes in last 30 years. Most of the changes were observed during last few years (2005 – 2010) as the role of unions and ‘collective labour associations’ has reduced significantly amid improvements in government laws / regulations regarding employee’s individual rights, workplace conditions and equal employment opportunities. For instance, United Nations Global Compact has also endorsed employees’ welfare and well-being, thereby impacting employee – employer relationships within an organisational setting. Nevertheless, there is greater emphasis on mutual interaction and socialisation through use of new informal and formal communication channels. Employees are largely interested in resolving issues through face-to-face meeting and personal contacts rather using unions as a platform. These changes will definitely influence future developments because there is greater probability that role of unions will decline further in near future. Also, the ratio of part-time workers or telecommuters may increase tremendously because employers across UK are striving to redefine their cost structure and to maintain competitiveness. Thus, they are eager to employ part-time and ‘temps’ to reduce their costs and enhance profitability. In the wake of above, it is too early to argue that long-term management – employee will continue in near future, mainly because UK firms have been losing cost competitiveness because of cutthroat competition in the marketplace. References Ackers, P. (2002) ‘Reframing employment relations: the case for neo-pluralism’, Industrial Relations Journal, 33 (1): 2-19. Bryson, Alex (2005) “Union effects on employee relations in Britain” Human Relations, Volume 58(9): 1111–1139 Edwards, P. (1995) ‘From Industrial Relations to the Employment Relationship: The Development of Research in Britain" Industrial Relations, vol. 50, no. 1, p. 39-65. Ackers, P. 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