In Focus

HR & Talent

The start of 2023 has seen a raft of strikes by key front-line workers in the UK. Train drivers and support staff, teachers, nurses and firefighters have all walked out at various points, demanding an increase in wages and improvements in working conditions. 

This has resulted in Rishi Sunak’s government drafting new legislation that would curtail the right to strike. The Strikes (Minimum Services Level) Bill would force unionised workers to cross the picket line, introducing minimum staffing requirements in six key sectors: health, transport, education, nuclear decommissioning, fire and rescue services, and border security. Unionised workers that refuse to work would be at risk of instant termination, with their unions subject to lawsuits. 

But the introduction of this law could have profound implications for unionised workers in the private sector too. There are fears it could embolden employers to circumvent negotiations and take part in union-busting activities that could reduce all workers’ right to strike. 

Alan Price, now COO of employment law firm Peninsula, started his career as a trade union representative for workers in call centres at Royal Insurance (now More Than) and the Norwich Union (now Aviva). He believes that many workers in private industries will feel put out by the anti-strike legislation. “In the short term, employees will feel a right has been taken away,” says Price. “It would be a further hurdle to making their voices known. Strike action is the last sanction available to those employees through the trade union.

“It’s going to cause issues,” he continues. “Are employees going to push for overtime, request flexible work or ask for a reduction in hours? That bit of goodwill that exists in all workforces is going to be diminished because of the required minimum level of service.” 

Another dent in Britain’s productivity

This ill-feeling has the potential to seriously impact the UK’s ability to bounce back from recession. While the government would argue that stopping industrial action would improve the UK’s output – brokerage Panmure Gordon estimated that the strikes in the first week of 2023 alone cost the economy £625m in productivity – it could have the opposite effect as employees become disaffected. 

“I believe that growth is necessary to move out of this economic slump and our flatlining productivity,” says Caroline Roberts, a consultant HR director and non-executive director of Barking, Havering and Redbridge University Hospitals NHS Trust. 

“Anti-strike laws do not seem to be the answer. We need to take the long view. Short-termism got us into this situation, and it won’t get us out of it.”

Roberts suggests that HR departments will already be planning for a change in the law, but that they are on the back foot. This is due to a lack of planning by the government, and a feeling among HR leaders that the proposed law may be illegal under International Labour Organization (ILO) principles. “The loss of protection of automatic unfair dismissal if an employee takes strike action suggests that the enactment of the bill would be highly contested,” Roberts explains. 

With the unions likely to oppose any new legislation, employers may become frozen for fear of enacting new policies based in an uncertain landscape. What’s more, private companies that create policies based on the new legislation may lose out on talent themselves. 

“Depending on the labour market, it could have devastating consequences,” says Roberts. “This law feels like it is of an earlier time – not the age of social media, Glassdoor, employee value propositions and ethical statements.”

Inflaming the issue

Despite the mounting opposition to the anti-strike legislation, the government and its supporters frequently point to the use of minimum service requirements in other major European economies. But, as Bernd Brandl, a professor in management at Durham Business School, explains, these laws are not as far-reaching as the UK government’s proposed legislation. “Such minimum service agreements exist in other countries but those are usually very focused and narrow – for example for the Army or for parts of the police force,” says Brandl. 

And these laws often prove ineffective in stopping industrial action. France’s minimum service requirements, introduced in 2007, have done little to stymie widespread general strikes. 

Brandl anticipates that alternative industrial actions would instead become commonplace, from ‘wildcat strikes’ (action taken without the explicit support of union leadership) to tactics such as ‘work to rule’ and mass absences due to ‘sickness’. 

For this reason, Brandl argues that “such minimum service requirements are not the best route of conflict at all”. He instead suggests taking a more harmonious approach to proceedings, cooling off the “conflictual” relationship between government, employers and workers currently blighting the UK’s economy. 

He recommends that all parties should instead work towards “social pacts”, or tripartite agreements – an informal or codified process in which all sides engage in dialogue to achieve a desired outcome. According to the ILO, such agreements were crucial in “minimising social unrest and large-scale job losses” in Europe following the global financial crisis of 2008.

David Liddle, CEO of TCM Group and a mediator between management and workers in the Royal Mail Group salary disputes of 2016, agrees that the tempestuous relationship between the unions and the government is limiting the ability to move ahead constructively. “You can start a conversation by listening to the other party’s position,” says Liddle. “You can still have a tough position, but be empathetic and genuinely listen when we walk into a negotiation.” 

Liddle suggests that the processes typically employed by HR aren’t fit for a world where “draconian” employment legislation is being introduced. Many employees already view the people function as “being on the side of management”, he adds. 

“Many of the HR systems and processes – grievances, disciplinaries, performance processes – in and of themselves are acrimonious, corrosive, divisive and reductive,” he says. “HR needs to look again at the processes they use to resolve disputes and disagreements in the workplace, to create a more human, person-centred and values-based approach, rather than focusing on grievances and resolution.”

How to heal the divide

One idea might be to look at alternative policies such as employee charters – an agreement between unionised workforces and employers that entrench certain rights outside of government guidance. 

But whatever the policy, Price contends that effective communication between employers and employees is crucial to implementing a new working arrangement. “The more employers can communicate, the better,” he says. “Policies such as employee charters still require a collective agreement from recognised trade union position officials, and that communication, that opportunity to really explain what the union feels, what the employee feels, and what the employer feels, must carry all the way through the organisation.” 

To facilitate this, Liddle suggests all HR leaders should undertake mediation training, using the tenets of positive psychology to enter a better dialogue. He believes that these skills, previously seen as “nice-to-have soft skills”, are now fundamental to harmonious and productive workplaces. 

“This is the tough end of the business,” he says. “These skills are the key that unlocks the potential and the brilliance within our organisations. It will help HR to release its vice-like grip on the formal systems and processes, and learn skills like dialogue, compassion and empathy.” 

Done properly – and without the threat of termination being dangled over people’s heads – this should lead to a better future for all parties in unionised negotiations. And not only that, but it should also create better working conditions too, ultimately positioning the people function as a strategic driver of productivity in modern organisations. 

We’ve all seen the words “competitive salary” in job adverts – and probably the occasional post on social that if it’s so competitive, why don’t employers simply state what’s on offer.

But that unhelpfully vague description may be soon outmoded. Some US states have already made pay transparency mandatory, and the EU is working on a directive which will require salary ranges to be disclosed across member states. Last year, the UK government also launched a pilot scheme exploring how pay transparency might benefit women in the workplace, and a handful of individual businesses are loudly pushing for fairer hiring practices. 

Even so, the thought of disclosing salaries – whether internally with existing employees or externally with potential candidates – is a sore topic for most employers. Often, they fear that pay transparency will cause internal mutiny and dissuade candidates from applying. 

But the data paints a different picture. Liberty Hive, a tech-driven talent platform that recently launched The Great Salary Reset campaign, has found that the response time for job ads which disclose salary bands is 50% faster than those which do not, and those postings receive 67% more applications. Likewise, a survey of 71,000 US employees by Payscale has found that talking to existing employees about salary can improve job satisfaction, even if they’re being paid less than the going rate. 

Buffer, a social media company, is a prime example of the effects pay transparency can have on a business. In 2013, the company published the individual salaries of all its employees, as well as the formula it uses to calculate them. The result? The company’s turnover rate hovers at around 5.8% – almost half the industry average of 10.6%.

If companies have so much to gain from pay transparency, why are business leaders still hesitant to talk about it? 

Why are attitudes to pay changing?

Rameez Kaleem, the founder and director of 3R Strategy, an independent reward consultancy, and the author of A Case of the Mondays: How to build a culture of trust through pay transparency, says that the issue is driven by a generational gap in values and priorities. 

“When you look at most leadership teams, they don’t have any gen Z or even millennial members,” he says. “They’ve never seen organisations that had open pay ranges, so they think it would never work.”

Instead, many businesses choose to talk about pension schemes and other perks that don’t resonate with younger candidates. This is in stark contrast with a recent study by software giant Adobe, which shows that 85% of gen Z are less likely to apply for a job without a salary range. 

Kaleem goes on to explain that pay transparency isn’t about everyone being paid the same. Factors like location, experience and skill set all factor into how much somebody earns. The question is more about being fair and letting people know how salary decisions are made. 

This need for fairness extends not only to disclosing salary ranges, but not asking candidates about their current salary – a practice which many US states have banned but which is prevalent in the UK.

“The problem with asking someone about their current pay is that if they’re discriminated against in their job, it will carry forward to the next one, so the pay inequality isn’t tackled,” says Kaleem.

How to audit your salary structure

So, are UK businesses ready to enter the era of pay transparency? Not at all, says Clare Welsh, an organisational development specialist and owner of HR consultancy People Strength. If a law were passed tomorrow to make pay transparency mandatory, many businesses would have work to do. But that shouldn’t discourage businesses from taking small steps in the right direction, she argues.

“Businesses need to take stock and look at their salary structures now. Then think about how they want them to be,” Welsh explains. “That could mean setting up consistent salary scales. But it could also mean thinking about what’s going on in the market.”

Then, once companies have conducted their pay audit, they’ll need to think about how they want to structure their pay incentives. “We need to have clear definitions of how we evaluate a job’s salary range and what we expect from somebody at the lower end of the band, the middle and the higher end of the band,” says 3R Strategy’s Kaleem.

Managers will play a key role in driving that change across the business, he adds, and they will need support and guidance from above to help them have these conversations with employees. 

The price of pay secrecy

It’s also worth remembering that there’s likely to be a price to pay for companies that fall behind the curve on this trend. Keeping pay a secret can cause dissatisfaction, even when there’s nothing explicitly wrong in the workplace. For example, research by Payscale has found that 42% of employees believe they are paid below market rate, even when they are paid above market rate. 

Welsh also warns that the lack of pay transparency during the hiring process can undermine the trust between employer and employee, as well as make the whole experience more expensive and painful. “When someone makes that decision to apply for a job within your organisation, they’re potentially putting in a lot of emotional commitment. So, if they go all the way through the process and at the end the salary is less than they thought, they will feel they’ve wasted a lot of time. And you lose that person’s trust.”

Not having a clear salary range listed on your job ad can also invite candidates who think they can negotiate pay, but your budget might be limited. That creates a lose-lose scenario for employers and potential employees.

For Kaleem, the logic of that lose-lose scenario will make itself felt as we potentially head into a downturn. “Organisations will struggle to recruit and won’t have any option but to go down the transparency route,” he predicts. 

So, does “competitive salary” still seem the right choice of phrase? 

In 2012, the government-commissioned Richard Review called for wide-ranging reforms to apprenticeships. The aim was to deliver high-quality training for what would be a respected industry qualification. Then, apprenticeships could help to meet the changing needs of the economy, shifting the focus from a university education. But more than a decade on, that remains a pipe dream.

GP Strategies Training has nearly 5,000 apprentices on its register but in 2022 Ofsted rated it ‘inadequate’, after an inspection found that “demotivated and disengaged” students were quitting their courses. Last month, the training provider announced it is to cease its UK apprenticeship training – a decision that leaves 4,700 apprentices in limbo and has put 95 jobs at risk of redundancy. 

Unfortunately, GP Strategies Training is hardly alone in its ineffective handling of apprenticeships. A recent report by education think-tank EDSK has unveiled some dire facts about the state of apprenticeships in England. The inconsistent application of centralised standards and certification checks, and the fact that the UK does not have an established history of prioritising vocational training – unlike many of its European neighbours – has led to apprenticeship schemes varying greatly, with some providing next to no meaningful learning. In many cases, apprenticeships have simply become a back-door route to low-skilled, badly paid employment. 

For instance, the EDSK report found that many government-funded apprentices were being hired to make tea or answer the phones. It also notes that almost half (47%) of all apprentices drop out before completing their course. Seventy percent of those dropping out reported concerns about the quality of their apprenticeship. 

“From the outset applicants are kept in the dark, with little information about what an apprenticeship will offer them,” says Tom Richmond, founder and director of EDSK, and co-author of the report. “Even after their apprenticeship begins, learners can find themselves working in low-skill, low-level positions and earning less than the national minimum wage. At the same time, employers have taken advantage of the opportunity to create ‘apprenticeships’ out of fictitious job titles, which typically turn out to be little more than training courses for their existing employees.” 

Indeed, employers in England have spent as much as £2bn in the past six years on generic management apprenticeships, which have benefited existing staff at the expense of younger people, according to the Chartered Institute of Personnel and Development. 

Are apprenticeships fit for purpose?

In his time as chancellor, Rishi Sunak acknowledged this skills challenge, saying, “We lag behind international peers on adult technical skills. Just 18% of those aged between 25 and 64 hold vocational qualifications, which is a third lower than the OECD average, and UK employers spend just half the European average on training their employees.”

That spending is, naturally, part of the problem. According to the Learning and Work Institute, business investment in skills has fallen by 28% since 2005 and, despite the introduction of the apprenticeship levy on bigger businesses in 2017, the problem continues. But problems lie elsewhere, too.

“At its heart, an apprenticeship is a form of education that should give an apprentice the skills and knowledge to get started in their chosen occupation,” says EDSK’s Richmond. “Employers also benefit because apprentices are often loyal and effective employees. And with the right training, apprentices can quickly become productive workers who can help to plug the skills gaps in a company.” 

But apprentices generally aren’t receiving the necessary training from their employer or training provider, with many left largely to their own devices, Richmond explains.

Nevertheless, headline enrolment in apprenticeship schemes would seem to be rising again, with 3.3% year-on-year growth in 2022. Look sector-by-sector, though, and the picture varies. In engineering, for instance, apprenticeship starts have increased at a greater rate than in any other sector, up by 25.8% in 2020-21 compared to 8.6% elsewhere, according to data from EngineeringUK, a not-for-profit organisation that works to help the next generation of engineers. That is still down by 5.5% since 2018-19 and 12.3% since 2016-17.

“Apprenticeships hold huge potential for addressing workforce skills shortages,” says Beatrice Barleon, head of policy and public affairs at EngineeringUK. “In the UK, this is particularly prominent in the engineering and technology sector.” 

She points to a study by the University of Chester, which shows that the UK’s decarbonisation efforts will require an additional workforce of around 350,000 people, across the three stages of pre-construction, construction and operation. “Many of these jobs will be in the engineering sector, and it is estimated that around 70% of those will be at the technician level,” she says. Apprenticeships would be the ideal way to meet that challenge, were they up to the task. 

Why the government needs to raise the bar

When apprenticeships fail to do what they’re set up for, it results in young people lacking the incentive to pursue them. A 2022 survey of more than 5,000 young people found that while 60% of students at schools and sixth-form colleges were hoping to attend university, only 12% were interested in apprenticeships. Of the university hopefuls, 40% didn’t see apprenticeships as a viable path to their choice of career, with an equal number believing employers were more likely to respect degrees over apprenticeships. 

The only way to eradicate poor provision and sub-standard training within the apprenticeship system, says Richmond, is for the government to set a much higher bar for what constitutes “quality”, as well as consistently enforce the rules that are intended to protect apprentices from malpractice and exploitation. “If this change in culture and mindset does not materialise in the coming years, apprenticeships will continue to be considered second class and lack the prestige tied to attending university,” he says. 

Among other things, Richmond recommends the introduction of a new national apprenticeship inspectorate to approve and inspect employers and training providers, which would also be required to publish detailed training curricula outlining what apprentices will learn. At a granular level, EDSK advocates at least 200 hours of the required off-the-job training to be delivered in person, and activities such as homework and writing assignments are no longer classified as training. 

“Improving the offer and uptake of apprenticeships will require an open mind and willingness to work together between employers, government, schools and the other education providers,” says Barleon. “We need to take a holistic look at what will drive demand for apprenticeships, as well as what influences employers to offer them.”