Monthly Archives: May 2020

Do unions make us unhappy? Probably not.

By Professor Andy Charlwood,
Centre for Employment Relations Innovation and Change,

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It is a well-established research finding that union members in a number of countries, including Britain, the USA and France, tend to be more dissatisfied with their jobs than non-members. The American economists who originally observed this phenomenon thought that it was because unions induce their members to complain about aspects of the employment relationship and this union-induced complaining reduces job satisfaction.

If this is true it suggests a problem because employers collectively spend hundreds of millions of pounds a year on surveys and initiatives to try to manage the satisfaction of their workers. They do this because job satisfaction tends to be associated with more engaged and productive workers. If unions cause job dissatisfaction perhaps they undermine these considerable investments?

The theory that unions cause job dissatisfaction has been challenged by two alternative explanations. First, that perhaps working conditions tend to be worse in the union sector and it is this difference in working conditions that explains lower job satisfaction. Second, it has also been suggested that perhaps workers who are temperamentally more inclined towards job dissatisfaction because of their values and priorities are also more likely to join unions.

I first became interested in this question twenty years ago when working for the TUC. I presented the finding that union members have lower job satisfaction to a group of union reps. Some thought this was a bad thing because unions should make work better for their members. Others were pleased because they thought that dissatisfied members were more willing to take action against employers to try to improve working conditions. What wasn’t clear to any of us then was whether or not unions were actually causing job dissatisfaction.

Since then, a number of articles have been published that show that union members are more dissatisfied even after we account for the fact that they might be temperamentally inclined towards job dissatisfaction, but it has proved difficult to convincingly address the issue of whether unions cause dissatisfaction or not.

To study the question of causality, we need to be able to observe an event that we might expect to cause a change in job satisfaction, we can then study whether this event makes union members more dissatisfied than their non-union counterparts. If it does, we can reasonably infer that it is unions that cause the additional dissatisfaction.

My paper, written with CERIC colleagues Danat Valizade and Ioulia Bessa and recently published by the British Journal of Industrial Relations is the first study of the relationship between unions and job dissatisfaction to examine the causal nature of the relationship in this way. We looked at what happened to the job satisfaction of union members and their non-union counterparts in the wake of changes to public sector pensions in the UK, which resulted in public sector workers have to pay more for smaller pensions. We found that this change and the associated industrial dispute did appear to reduce job satisfaction of those affected but there was no difference in the size of the change in job satisfaction between union members and non-members. Therefore there was no evidence that union opposition to the changes made union members more dissatisfied with their jobs than their non-union co-workers.

In the light of this finding we conclude that unions probably don’t cause job dissatisfaction among their members. We think it more likely that union members tend to be more dissatisfied because they experience more changes at work that cause job dissatisfaction.

For me, conducting this study increased my job satisfaction because I have been thinking about whether unions cause job dissatisfaction or not for over twenty years. It feels good to have an answer. Some trade unionists will welcome the findings because they are uncomfortable with the idea that union membership might make their members unhappy at work. As one Irish trade union official Tweeted in response when I shared the article on Twitter “Are we the baddies? Spoiler: No”. However I suspect some union activists may be disappointed, because for them a successful union campaign gets members dissatisfied so that they are fired up to take industrial action. If unions aren’t making their members dissatisfied perhaps they will not be able to accumulate the industrial muscle to bring about change. This divergence of opinion speaks to a wider point. Just because unions did not cause job dissatisfaction in the UK pensions dispute of 2011 does not mean that they never cause job dissatisfaction. More research drawing on our approach is needed to investigate the effects of unions on job satisfaction in other contexts.

Protecting the Industrial Commons: Redundancies at Roll’s Royce and the wider impact on UK industry

By Dr Ian Greenwood,
Centre for Employment Relations Innovation and Change

Ian Greenwood 300x270The announcement by Rolls Royce that in response to the impact of the COVID crisis, worldwide, 9000 jobs are to be cut -most at its aerospace centre in Derby- will reverberate beyond the confines of the aerospace industry.

That the company has been in financial difficulties for a while is no secret. In December 2019 the company announced that it was to reduce its intake of apprentices and graduate trainees by almost a third. This continued a five-year trend and takes place within an ongoing programme of contracting its management head count by 5000. The company has also disclosed that it will experience a £2.4bn cash fall between 2017 and 2023. The crisis in profitability that has beset the company has been exacerbated by serious problems involved in resolving quality issues with its Boeing bound Trent 1000 engines. The aircraft industry is suggesting that 2019 levels of output will take five years to attain.

Further job losses are, therefore, not unlikely and the company has declared there will be a retrenchment in its R&D expenditure. The history of Rolls Royce is one peppered with crises and restructuring (involving nationalisation) and although its share price has dropped 2/3 since mid-February of this year, the demise of the company is not imminent.

The wider impact on the UK’s Industrial Commons

The survival of Rolls Royce is vital to the industrial sectors in which it operates, as well as to the broader UK economy. Clearly one company does not make an economy. Nevertheless, the nature of the jobs that will be lost at Rolls Royce, the contraction of trainees and diminution of R&D effort have significance beyond their headline metrics. Engineering UK, the sector employers organisation, estimates that leading up to 2024, there will be a shortfall in satisfying demand of between 37,000 and 59,000 core engineering roles requiring level 3+ skills. Reducing the demand for engineering graduates and trainees through the contraction of engineering firms might be one solution to the problem of excess demand across the wider occupational labour market. This though, is surely a recipe for a general downward spiral in skills, R&D and innovation and culture for a low skill equilibrium.

Taken together, the R&D, engineering, manufacturing capabilities and supplier infrastructure of an economy has been referred to by Pisano and Shih, as a nation’s ‘Industrial Commons’. Crucially, the health of the Commons depends on a strong and vibrant manufacturing sector, particularly the component of this sector that is associated with high skill, high value output. That is, firms such as Rolls Royce. Pisano and Shih (2012) use the example of the declining international competitiveness of the USA to argue that if this Commons is allowed to wither on the vine, the ability of an economy to innovate and create high tech, high value added products will decline, ultimately depressing wage growth and undermining the health of the wider economy. Furthermore, the ability of innovation to ‘spawn new industries’, will be undermined.

Industrial Commons are often connected to sources of high-level knowledge such as universities, which ensures a vital, symbiotic generation of basic, applied and commercial research.  Commons are also often geographically defined. For example, a feature of the aerospace industry in the UK is that 90% of aerospace jobs are outside the South East, providing a valuable dynamic for a balanced economy. The economic and social multipliers of the aerospace industry are significant. The industry has an annual turnover of £31B. It supports 12800 direct and 14000 indirect jobs with average earnings of £43000, 45% higher than the UK average. Through its supply chain programmes, 330 companies have been helped to ‘boost their competitiveness to world-class levels’.

The focus of concern here is that the retrenchment of a firm such as Rolls Royce rarefies the Industrial Commons that it supports and by which it is -in turn- supported. Pisano and Shih argue that manufacturing is essential for the development of new products: it connects product and process innovation. In contrast, the decline of manufacturing invokes a negative ‘chain reaction’ in which the infrastructure for advanced process engineering and the attendant expertise and jobs are diminished. The high-value up and down stream supply chains that network around firms such as Rolls Royce will be lost or offshored.

Whither the future?

It is not possible for governments to support every company. Governments can, though, act to shape the nature of their economies. UK high-value manufacturing and the Foundation Industries that underpin it, must, however, be supported. UK manufacturing accounts for around 10% of GDP value added. This is an ever-diminishing proportion of the economy and well behind Japan and Germany’s 20% of GDP value added. It should not be allowed to fall further. In 2017 the UK spent around 1.7% of its GDP on R&D. The ambition of the UK government is for this to reach 2.4% by 2027. Assuming other countries do not also raise their games, this will raise the UK from 21st to 12th in the international league table of R&D spending. The government needs to be more ambitious.

Through its Industrial Strategy, (explicitly connected to addressing investment in R&D), the UK government appears to have understood the challenges faced by UK Inc. and specifically, through the Aerospace Sector Deal, companies such as Rolls Royce. This strategy though, must be implemented with great determination, emphasise the local dimension and crucially, it must endure.

In the here and now, the COVID crisis poses a clear and present danger to the economies of all industrialised nations. Through its announcement of, ‘Project Birch’ (26.5.20) to rescue industries badly affected by the COVID crisis, whose demise might ‘disproportionately’ affect the economy, the UK government appears to has recognised this. The call by some in the UK trade union movement for a National Council for Recovery, that would represent a range of stakeholders, seems a sensible, indeed essential, step that must ultimately reflect a broader engagement with manufacturing, hence the future of the UK economy.

Covid-19 and the impact on gender equality

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By Dr Helen Norman,
Centre for Employment Relations Innovation and Change

Covid-19 is the worst public health crisis for a generation that it is fast becoming an economic crisis with gendered impacts. Although men make up three quarters of coronavirus critical care patients, women are at greater risk of contagion due to their higher concentration in frontline work. Of the ‘key workers’ identified by the UK government as essential to the provision of services during the pandemic, 60% are women.

The labour market

Women are more exposed to the risk of redundancy and low pay because of their precarious position on the labour market. Not only do women make up the majority of the UK’s low paid earners, they also comprise a higher proportion of those in part-time employment (74%), part-time self-employment (59%), temporary employment (54%) and on zero-hours contracts (54%). Women and low paid earners have also been some of the hardest hit by the shutdown of businesses. Women are around a third more likely to work in a sector that has now shut down with one in six (17%) female employees working in such sectors compared to one in seven (13%) of their male counterparts.

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Care and domestic work

Women already do twice as much unpaid work at home so are more likely to assume the burden of additional caring responsibilities that has resulted from the closure of schools and nurseries. This is perpetuated by a persistent gender pay gap, which creates a financial logic for the second earner within a couple (usually the women) to reduce or exit paid work, as well as prevalent norms and beliefs about gender roles. Lone parents (90% of whom are women) are likely to find it even more difficult to reconcile work and care, particularly as access to informal networks of friends and family is restricted.
How has the government responded?

A ‘furlough’ salary retention scheme was introduced on 11 March, which will help some but not all – such as the self-employed. It is not possible to request furlough on a part-time basis – an option that would help both parents (within a two-parent household) to divide paid and unpaid work more equally. Where there is a choice, it makes more financial sense for the lower earner (i.e. usually the woman in a two-parent, opposite sex household) to request furlough so that the higher earner (i.e. usually the man) can continue to work. This has the potential to damage women’s earnings and career progression. The furlough scheme also risks pushing many lone parents and low paid earners into poverty because of the further reduction in pay. 45% of lone parents already live in poverty in the UK.

There is no right to be furloughed – both employer and employee have to agree. The recent surge in claims to Universal Credit may suggest that some employers are opting to make people redundant rather than furlough them, or they are reducing hours (and therefore income), which may force people who are in work to make a claim. From 16 March to the end of April, over 1.8 million people applied to Universal Credit – six times the usual claimant rate. This data is not sex disaggregated but women are more reliant on social security payments because of their disproportionate share of unpaid care and precarious position on the labour market.

What are the next steps?

It is important to consider the different economic positions of women and men in the response to the Covid-19 crisis, including the specific challenges that women face such as higher rates of poverty, the disproportionate load of unpaid domestic work and care and the increased risk of domestic violence and abuse.

The Women’s Budget Group rightly calls for a gender-sensitive approach to the crisis that also gives consideration to other marginalised groups such as the disabled and those already suffering race and ethnicity-based inequalities. It is positive that the Women and Equalities Committee have called an inquiry into the disproportionate impact that Covid-19 and the measures to tackle it are having on women and other marginalised groups. However, a more radical reassessment of how ‘low skilled’ work is defined and valued is needed, alongside a review of the systemic undervaluation of so-called ‘women’s work’ – such as cleaning and caring – which are critical jobs that continue to be undervalued and under paid.