Flexibility bites back? Jill Rubery, Damian Grimshaw, Arjan Keizer – University of Manchester SASE Conference July 2-4 Different concepts of ‘flexibility’ • Flexibility as associated with the divergence from standard open-ended contracts with full-time working hours (thus not considering internal flexibility-multi-skilling) Two important dimensions to current flexibility: • Opposing drivers for flexibility: – employer-oriented flexibility to match labour to demand: D flexibility – employee-oriented flexibility to meet work-life balance needs: L flexibility – Standard hours and open ended contracts ‘in the middle’ • The use of flexibility to reduce wages and social costs (either employer or state mandated): C flexibility – In decommodified form: through long-term employment relations – In commodified form: through contingent employment arrangements Flexibility as a dynamic process • not only negatively affects the conditions of non-standard workers but also puts pressure on standard forms of employment. Employeroriented Commodification Decommodification Wage and/or duration penalties, lower overheads/social contributions: e.g. zero hours contracts, agency, bogus selfemployed, short part-time, Without wage/duration penalties but irregular and long hours: e.g. higher level managerial/professional jobs, result-oriented jobs T flexibility C+T flexibility SER Hollowed out SER among noncollectively regulated jobs with wage penalties but regular hours: e.g. subcontracted work Regulated wages, hours and duration e.g. core employees on regular open-ended contracts C flexibility Employeeoriented Preferred hours with wage penalties and lower employer overheads/ social contributions: e.g. some part-time within school hours, term-time jobs etc. Without wage/duration penalties but lower employer overheads/social contributions: e.g. Reduced hours part-time ,Voluntary and high paid agency work E + C flexibility E flexibility blue Trends in the UK • Flexible employment widely interpreted presented by government as employee-oriented flexibility • Strong evidence to the contrary: growth of zero hours contracts, rise of low paid self-employment, rise of involuntary part-time and temporary work, overall rise of low wage employment, continuation of long hours working (often unpaid) • Limited regulation of employer behaviour except for national minimum wage, incentives use/choose short hours/low paid employment (e.g. in-work benefits, thresholds for national insurance) and opt out of the working time directive on long hours Flexibility as a sustainable agenda? Government policy agenda 1. Increase long-term competitiveness in global markets 2. Reduce social exclusion 3. Reduce welfare dependency 4. Reduce public sector deficit 5. Adjust to new social arrangements – dual earners/single parents etc. Potential contradictions 1. Flexibility versus SER platform for cooperation and investment in employment 2. Flexibility as a solution or cause of social exclusion 3. Flexibility as source of additional welfare support needs 4. Potentially negative Impact of flexibility on fiscal capacity 5. Potentially negative Impact of flexibility on capacity to care Further contradictions of flexibility Insider / Outsider Status Ability to provide care D&C flexibility’ Public finances Welfare dependence Flexibility and insider/outsider status: standard argument • Greater overall flexibility will reduce outsider and insider divisions • The apparent protection for workers has opposite effects by increasing employment dualism • Flexibility thus promotes social equity, reduces social welfare costs as it allows greater access to the labour market (e.g. for the unemployed) and improves efficiency • But: be wary of ‘rhetoric of perversity’ (Hirschman). Flexibility and insider/outsider status: contradictions Social equity: • Greater overall flexibility may not necessary provide greater chances to outsiders as they often face discrimination in hiring and more frequent competition for jobs may actually lead to more exclusion Social welfare: • Welfare costs may increase if older workers are displaced by younger as they are more likely to be excluded in spite of the need people working longer due to ageing society Efficiency • Short-term cost benefits of using flexible labour during downturns may turn to long-term costs of higher turnover/lower productivity during upturns as employers struggle to control turnover rates Work programme job outcome rates by age and gender Source: Age UK 2014 Flexibility and welfare dependency: standard argument Flexible labour markets allow for more and faster transitions out of unemployment/welfare dependency into employment due to: • More vacancies or churn in the labour market • More variable contract offers, thereby increasing access Flexibility and welfare dependency:contradictions Employer flexibility in what constitutes a job (wages and hours) is a problem for the state in providing benefits linked to subsistence needs: • In-work benefits needed to make work pay Reinventing the notion of full-time standard job under universal credit ( need to earn 35x nmw) or else have to search for more work- but holding more than one flexible job may be difficult as not constantly available • Employers may increasingly pass costs to state so that flexible jobs may increase welfare costs as more frequent full layoffs and shorter hours to adjust to demand. Employers in flexible labour markets under limited obligations to employees- hire/fire at will and less likely to invest in employment relationship- less likely to update skills or adjust jobs to meet varied needs • More people with limited capacities, with caring needs or with skill change/updating needs coming into the labour market Numbers of families receiving different kinds of tax credits Flexibility and care: standard argument • Flexible employment provides more choice room for care responsibilities • Flexible employment offers families new opportunities to share work and care duties (e.g. one-and-half breadwinner, shared parenting). Case for flexibility based on choice plus opportunities for new combinations of work and care for one or both parents Flexibility and care: contradictions • Focus on choice through worker-oriented flexibility hides the increasing employer-oriented flexibility which is reducing choice (Fleetwood 2007) • Choice is restricted for those out of employment as they have to wait 26 weeks to request flexible work options. Those who took a break from the labour market may thus be still confined to low quality jobs. • Women now need to seek work if their partner is unemployed and if their child is over 5. A full joint adult worker/carer model therefore not supported as only one parent can seek work to fit with care. This indicates limited rights to worker-oriented flexibility and to dual parenting. • Universal credit to increase conditionality on both partners (dual earner model) but maintains notion of main carer and increases deduction rate for main carer (male breadwinner model) The persistence of long working hours ‘People in this workplace who want to progress usually have to put in long hours’ Managers: ‘It is up to individual employees to balance work and family responsibilities’ (%) Source: WERS 2011 Flexibility and public finances: standard argument • Flexibility contribute to a dynamic economy and creates employment • Flexibility reduces unemployment and dependency on state welfare Flexibility and public finances: contradictions • Employers pass costs of short-term demand fluctuations onto the state • Cost arising from the ‘subsidised’ character of much flexible employment (e.g. exemption from social contributions) • Flexible employment thus may undermine universal protection as those paying for benefits constitute a ever smaller group. Tax and national insurance exemptions low-wage employment Source: Corlett, Whittaker, Kelly (2014) Conclusions • Flexibility is freeing employers from – Responsibilities for decommodification through wages, social contributions, duration of employment and volume of hours – Responsibilities for work-life compatibility • This is consistent with neoliberal perspective on employer freedom but not with even residual state responsibility for social reproduction: – Risk of greater social exclusion as disadvantaged groups are exposed to more frequent competition – The need to ‘reinvent’ the full time working week for claimants to minimize welfare costs but few full-time jobs – Extension of the range of people (capacities/responsibilities) seeking work but minimising employer responsibilities to adjust employment, reinforcing gender and other divisions of labour – Undermining the long-term funding for welfare as many are not expected to contribute • The current drive towards flexibility is not sustainable as its indirect outcomes ‘bite back’ ‘Flexibility’ The creation of a flexible and disposable workforce which allows employers to minimise overheads, respond to changes in demand and reduce labour costs. E.g. • Labour with flexible deployment and/or reduced fixed costs through intermediaries: e.g. TWA • Labour with flexible deployment and/or reduced fixed costs through distant employment: e.g. bogus self-employed, outsourcing contracts with fees varying by demand • Labour deployed at unsocial hours and/or for additional hours without higher costs: e.g. zerohour contracts • Labour with reduced social contributions: e.g. part-time • Labour with limited entitlements to mandated employer benefits: e.g. bogus self-employment • Labour willing to accept non-standard employment forms due to specific labour supply conditions: e.g. migrants • Labour willing to accept non-standard employment forms due to ability to draw on family support or welfare: e.g. young people, pensioners • Labour without organised voice and customary employment rights developed through collective bargaining The ‘standard’ criticism: Flexibility and productivity • The management of employment shifts from a dominant focus on extracting greater value out of labour - through investments in training, in organisational processes, increased motivation etc. - to (short-term) cost reductions. • It removes various advantages that the standard employment relationship offers in terms of motivation through aspects such as quasi rents, efficiency wages and income security for more risk-adverse workers, the development of productive firm-specific skills, and the ability to assess workers' contribution to long term goals (e.g. Milgrom and Roberts 1992). • Flexibility thus may increase entrepreneurial dynamism but it remains to be seen whether this dynamism provides ‘more of the same’ or concerns long-term growth in productivity, innovation and competitive advantage Precarious Work and social dialogue: the case of Germany 4th RDW-Conference, Geneva, 10th July 2015 Gerhard Bosch Ines Wagner Claudia Weinkopf Outline • • • Meaning and forms of precarious work Employment trends Policy reforms closing/opening regulatory gaps – Minimum wages – TAW-regulation – Mini-jobs • Summary and conclusions Meaning of “precarious work” in Germany • “precarious” work mostly understood as subset of “atypical” work – deviating from “standard employment relationship” (full-time, openended, fully covered by social security) not every atypical employment is precarious – Depending on job characteristics – Controversial: household context? • standard employment may be also precarious – low pay, discontinuous employment Forms of “precarious work” Standard employment Precarious Low-wage work work Atypical employment Mini-jobs Temp agency work Fixed-term Part-time Contracted out work Solo self-employment: 2.1 million Ambiguous success story • Strong increase in number of employees since 2004 – But partly due to re-distribution of working hours – and accompanied by Incresing rates of precarious work • Share of low-paid employees raised to ¼ of all employees • Temp agency work (TAW) more than doubled over the last decade (800,000) • Solo self-employment increased after 2002, not least due to labour market programmes (Ich-AG) (2.1 millions) • raising number of mini-jobs (7.3 millions), particularly as a second job • Strong increase of regular part-time jobs Employment trends, 1991-2013 1991 2013 Total 34,680 All self employed Change in 1,000 in % 35,631 +951 +2.7 2,859 3,810 +951 +33.3 1,284 2,091 +807 +62.9 31,386 31,701 +315 +1,0 Full-time 27,080 23,859 -3,221 -11.9 Part-time ≤ 20 h 2,555 4,969 +2,414 +94.5 Part-time > 20 h 1,751 2,873 +1,112 +64.1 Fixed-term 1,968 2,524 +556 +28.3 Atypical* 4,437 7,638 +3,201 +72.1 Solo Employees Source: Statistisches Bundesamt 2015 (* without part-time > 20 hours per week) Atypical employment by gender, 2013 (in % of employees) 120 100 13.6 80 35.3 atypical 60 SER 86.4 40 64.7 20 0 women men Source: Statistisches Bundesamt 2015 (SER includes part-time with more than 20 hours per week) Part-time with more than 20 hours per week = SER? • Underestimation of changes in employment relationships • Problematical differentiation because monthly earnings are not taken into account – 21 hours per week for an hourly wage of 8.50 € = monthly gross earnings of 773.50 € • Independent living with part-time job requires high hourly wage and/or working hours close to full-time • Many part-time employees would prefer more working hours Policy reforms closing/opening regulatory gaps • Minimum wages • TAW-regulation • Mini-jobs Minimum wages (1) • 1997: First industry minimum wage in construction industry implemented – based on Posted Workers Directive • 2007: Law on the Posting of Workers opened for other industries (2012: MW in 12 industries) – Based on collective agreements – overall impact too low to reduce share and numbers of low-wage workers • Increasing demand for statutory MW of 8.50 € per hour – Agreed in coalition contract after the federal elections in 2013 • with some exceptions and delayed implementation in several industries (if negotiated lower rates are extended) – Implemented in January 2015 Minimum wages (2) • MW-introduction embedded in a more comprehensive law to strengthen collective bargaining – Higher industry MW can be negotiated in all industries – lower requirements for extensions • First impressions after 6 months with statutory MW – Unemployment decreased by 7.1% (compared to June 2014) – Number of employees (covered by social insurance) increased by 517,000 (compared to April 2014) (+1.7%) – Number of mini-jobs dropped by 206,000 or 5.4% (compared to December 2014) – Increasing number of insurable jobs in industries with high share of minijobs • Hospitality: +50,000; retail and business services: +60,000 each – Over-average increase of wages for low-skilled, women and mini-jobbers De- and re-regulation of TAW (1) • Legal since 1972, but comprehensive regulation (except wages) • Step by step relaxation following pressure from employers (e.g. duration of TAW spell at same company) • 2003: Comprehensive de-regulation through Hartz-reforms – In return: Equal Pay Principle – but little effect in practice due to possibility to conclude lower sectoral collective agreements • Changes in recent years based on social dialogue – industry MW since 1/2012 – supplements for longer spells in certain industries De- and re-regulation of TAW (2) • Since 2011 increase of TAW slowed down and usage of subcontractors (Werkverträge) went up • Current plans for TAW (coalition agreement 2013) – Duration max 18 months in the same company – Equal Pay after 9 months – But most TAW spells and contracts are still very short Strong lobbying against these plans by TAW-associations • More comprehensive proposals aim at an integrated approach to restrict the increasing usage of sub-contractors, too Mini-jobs • Jobs with up to 450 € monthly earnings – No deductions for income tax and social insurance • Higher contributions for employers but in practice frequently compensated – By lower hourly pay and other discriminative practices (e.g. no pay for holidays + sickness) • Illegal but no enforcement of equal pay entitlements in recent years • Change by Minimum wage introduction – No exception for mini-jobs (at least 8.50 € per hour) – Employers in all industries are obliged to document the working time of mini-jobbers Summary and conclusions (1) • Employment growth since 2004 accompanied by increasing number and share of atypical employees – Hartz reforms affected mainly mini-jobs and TAW – Other drivers: • companies seeking to reduce labour costs • requirement for unemployed to take up almost each job (regardless of earnings) etc. • Slight steps for re-regulation of TAW in recent years – Further restrictions agreed but not yet implemented • No changes for mini-jobs – But first indicators that the new MW may have an impact Summary and conclusions (2) • The minimum wage is one of the most important social reforms in recent decades – Particularly if strengthening the collective bargaining system will be successful, too • Shortages of skilled workers might also be a driver for improving employment conditions – e.g. – Higher wages – Reducing the gaps between actual and preferred working hours – Etc. The employment effects of market exposure: Can contract cleaners escape commodification? Damian Grimshaw, Jo Cartwright, Arjan Keizer and Jill Rubery July 2015, ILO Regulating for Decent Work Conference, Geneva Outsourcing and problems of inequality of employment experience • Compared with vertically integrated, hierarchically structured organisations, international research suggests a low-wage labour market of subcontracted workforces is: – More exposed to market pressures of cost competition – Less bound by customary work/employment practices – Less likely to benefit from encompassing workplace collective agreements (societal effect) – At greater risk of unilateral employer prerogative (eg. Cunningham and James 2009, Doellgast 2012, Flecker and Meil 2010, Holst 2013, Houseman The meaning of market exposure in low-wage business service sectors? Subcontracting of labour-intensive services exposes workers to more price-based market pressures associated with product and labour markets (Greer & Doellgast 2013): • Ties workers’ conditions more strongly to a market price for standardised work unit (e.g. units of time for care work; unit of floor space for cleaning) Several factors conspire to push the price downwards: • Procurement conditions – e.g. contract length, risk of contract loss, unit fee level • Contracting conditions – shaped by client and employer The meaning of market exposure in low-wage business service sectors? Weak regulatory constraints –e.g. national minimum wage, TUPE (protections for outsourced workers) and collective agreements But clients/subcontractors may seek ‘exit options’ (Doellgast et al. 2009; Jaerhling & Mehaut 2013) even when regulatory impact is limited So commodification … but outsourced low-wage services still embody a complex labour process: suggests indeterminate outcomes The boundaries of the employment relationship are blurred by inter-organisational relations and overlaps of workplace/work organisation (Marchington et al 2005, Rubery et al 2002) The client and subcontractor are parties to the contract (‘market-makers’), but are also indirect and direct employers: – possible alliance around continuous cost-reducing contract deals that degrades employment conditions – but organisations may also face pressures to sustain quality of employment relationship (operational needs, reputation, regulatory/IR context) – tensions of a fragmented versus consistent HR strategy Escape from commodification? It is likely client (as indirect employer) and subcontractor (employer) will respond to varying degrees to labour process factors that may soften or slow down commodification: 1. Client need for operational integration 2. Subcontractor need for labour availability/ commitment 3. Client & subcontractor reputation effects 4. Valuing the organisational knowhow of TUPEd staff Framework for research and analysis Business strategy & employment relations in Client organisation Business strategy & employment relations in Outsourcing firm UK & EU labour market rules – employment protection (eg TUPE), minimum wage, working time, agency work • Tendering process • Contract type (duration, fees) • Staff transfer • Relationship with supplier •‘Obliged job quality’ (eg. living wage clause) Employment conditions Procurement practices Trade unions UK and EU procurement rules, Headquarters corporate client strategy Labour supply (by sex, young/old, migrant, ethnic minority, disability, sexuality) •Pay (basic rate, premiums, etc) •Working time practices (eg. zero-hour contracts) •Job security Research design LARGE CLEANING FIRM CLIENT ORGANISATION • Senior procurement manager • On-site contract manager • HR manager Research funded by the Equalities and Human Rights Commission, UK and Manchester Business School Procurement & contracting relations • Senior procurement manager • On-site contract manager • HR manager • Cleaning supervisor or union rep. 12 case studies –matched pairs by client sector • • • • • • 2 airport cases 2 higher education cases 2 hotel cases 2 NHS cases 2 local authority cases 2 banking cases • Total number of interviews: Characteristics of contracts • Variation in contract length (3-5 years and 35 years); contract renewed in 6 cases; retendering a recognised cause of business and employment instability • Respecification of contracts in all case: leveraging up of performance, cost-cutting, downsizing (hours and/or headcount) • In 5 cases, consolidation with other business services potentially enhances contract lock-in • TUPE staff transfer in all cases (from 10 to 500 staff): – protects right to employment but no right to refuse transfer and no protection of work organisation, working time, etc – for new employer, TUPE delivers a guaranteed local workforce with experience and knowledge Findings: Low pay Basic rate varied – £6.31 (MW) to £8.80 (London Living Wage); x of 12 cases did not reward experience or qualifications – despite experience often being required x of 12 cases did not pay premiums for unsocial hours or overtime Evidence of gradual erosion of pay with recurrent contracting: ‘And each time, [cleaners] had stories of their terms and conditions and pay, which were supposed to be preserved and protected in some way, but there were always examples of particular perks and privileges that people had being whittled away’ (College2) Piece rate pay in hotels linked directly to contract roomper-hour fee. After one month’s grace, workers at Hotel2 who did not meet the target had two warnings then were fired. Diverse working time, unstable hours • Most cleaners are part-time, but some short, some long and two cases mostly full-time (airports) • Flexible hours a general practice – several cases use zero-hours contracts (standard at Hotel1, for new recruits only at many others) • ‘You come in as and when and you don’t know if you can pay the bills’ (Airport2–cleaner) • ‘The young girl, she couldn’t get housing benefit and she weren’t getting enough hours off her (the manager). She was getting threatened to get kicked out of where she lived’ (Council2) • Only 2? cases offer overtime to staff on guaranteed hours • Only 1 case requires weekend working for all; 2 have dedicated weekend shifts • Evidence of staff wanting more hours: • ‘Yeah, the most headaches I get … is the fact that everyone is looking for extra work, you know, extra hours’ (College2). Labour market rules & exit options Rules Exit options Minimum wage Fire staff whose productivity is less than MW TUPE protections for unsocial hours pay premiums Zero hours contracts Temp agency workers Extended collectively agreed pay and conditions New recruits on inferior conditions Flat pay rate (no additions for experience; extended to higher grades) Not extended to workers on other cleaning contracts Living wage Working-time directive (paid breaks) College2 Short shifts to avoid paid breaks Weak unions and workers’ fear of complaining • Unions present in x of 12 workplace sites • Even where defending jointly agreed terms and conditions, may be too weak to act against non-compliance: • ‘There is a lot of apathy here’, and people fear negative repercussions. ‘I have got women who are cleaners who are only getting time and a half for a Sunday and you say “Why don’t you….?” And “Oh no, no, no, leave it”…’ (Hospital2, Unison rep). But several labour process factors can soften or slow down commodification 1) Operational integration Clients may require cleaning to be integrated with their wider operational needs and therefore willing to support/encourage better quality HR practices: • Airports: work closely with baggage handlers; host passport biometric machines; customer-facing role ‘You could be asked passenger information questions … So, even though it’s a cleaning role, it’s a cleaning role and some’ (Airport2); Airport1 client extends its customer service training to subcontracted cleaners –cleaners job title is ‘General Assistant’ • Hospitals: require tacit knowhow of daily ward routines and be responsive to specific priorities of nursing team Hospital1 client teaches a course on hygiene standards and use of chemicals to subcontracted cleaners; cleaners also trained as ‘patient services assistant’ • Hotels: clean and set up each room to fit hotel’s consistent image/ brand values 2) Labour availability (working hours) The need for labour availability and a dependable supply of workers may encourage clients/employers to address HR problems: • The problem of irregular hours: except Hotel1, cleaning firms offered ZHC and TWA staff access to vacancies with guaranteed hours as they arose • Too-short shifts: many examples of managers seeking to offer more hours to part-time cleaners or adapting work organisation (e.g. mobile teams) -although cutting contract costs sometimes reduced shifts (Hotel1 earlier finish time, Bank1 reduced nightshift, etc) • Inflexible holiday rules: College2 abolished 4-week holidays but lost many migrant workers 3) Worker experience & commitment • Employers & clients may prefer long-serving staff – ‘(our staff) know how these wards work, they know the people on those wards … so there is a consistency day in and day out’ (Hospital2) – College2 client required a LW –’we are not just handing (cleaning firm) money, we expect a very high grade of employee’ – TUPEd staff are the glue holding together a cycle of short-term contracts • High staff turnover is costly to the employer – ‘(the living wage) is a big plus because the costs of re-employing somebody, finding somebody, training somebody, …(College2); – retaining experienced staff cuts training costs (although may also discourage training investment for new recruits –Council2) • Higher pay attracts a better pool of job applicants Discussion • Market exposure characterised by: – Generic nature of procurement and contracting for low-wage services (price-led competition, short duration, frequent re-specifications) • Risks of a contract-led HRM approach for employer-worker relations, exerts strong downward pressures on working conditions – But also the strategic choices of clients and employers: • Client cost focus (eg. standard fee precludes pay premiums) • Outsourcing firms exploit exit options– ability/willingness to sidestep formal agreements and/or informal customary practices (especially reduced/abolished pay premiums, zero-hour contracts, agency use) Outsourcing markets (and the fragmentation of workforces) facilitate employer and client actions that degrade employment conditions Discussion • Prospects for contract-focused modes of regulation? 1. TUPE • • • Protects pay, including progression and enhancements Provides a basis for upwards pay standardisation Reduces instability by smoothing staff transfer – – 2. But effects erode over time if employers do not build on improved standards or clients refuse to cost for them Also a catalyst for employer exit options Union actions • • • Can target the reputational risk to clients (indirect employers) Can diffuse employment standards from client sectors with strong union role (although limited by public sector austerity) But recurrent contracting undermines pressures on employers to invest in training and skill development Equality and Human Rights Commission research http://www.equalityhumanrights.com/publication/invisible-workforceemployment-practices-cleaning-sector