Zero Hours Contracts: The Latest Evidence.

Zero Hours Contracts: The Latest Evidence.
The Office of National Statistics estimates that there are 583,000 or 2% of the total workforce on Zero Hour contracts. The Chartered Institute of Personnel Development (CIPD) estimates a figure of about 3% based on their evidence from employers. Most zero hour workers are in hospitals, about 75% , with 51% in Further Education.

The justification for these contracts is they offer flexibility to both the employer and the employee. The benefits to the employer are clear. They can adjust employee attendance at work to deal with booms and slumps in demand. For the employee the situation is not so clear.

Specifically, there is an exclusivity clause which stipulates that the zero hours worker may not look for work elsewhere whilst with the current employer. Clearly, this limits the flexibility of the worker. The CIPD evidence shows that about 40% of employers use this clause. Further not all workers are aware that they are on this contract, until their wages drop.

The CIPD evidence says that most workers are happy with zero hours, especially nurses in the NHS. Here, these contracts are long established, and well managed. However, it is still the case that zero hours gives more employer flexibility than agency workers, with written contracts
The only right a worker has is to be an employee with a fixed hours contract, after 12 consecutive months of a broadly consistent work pattern. This is important as the worker becomes an employee with a long list of rights, including to be protected for “whistle blowing”. However, this creates a perverse incentive to sack workers before 12 months elapse.

What is to be done? Exclusivity clauses should be made illegal. Workers should become employees as soon as the law can change. Employers should have to provide a brief written summary to all employees of rights responsibilities and pay, within one week of starting work. A much fuller legal contract should follow soon after.

Bank Bonuses time has arrived again!

Bank Bonuses time has arrived again!

Sir John Sutherland is chair of the Remuneration Committee at Barclays Bank. He is responsible for setting this year’s bonuses. Chairing this committee would normally go to a director who is independent; that is not an employee of the bank. Sir John has served as an independent director for nearly 10 years. His independence can now be questioned, and even his objectivity.

Total bonuses are up to £2.4 billion, up from £2.2 billion in the previous year. The average bonus across the whole bank was £17,000 up from £15,600 the previous year. But bonuses in the Investment Bank were £60,000 , up from £54,000. Last year 428 bankers in Barclays received bonuses over £1 million. This year’s figure will be revealed next month.

The new Chairman of Barclays has waived his bonuses; and claims support from shareholders to increase bonuses within the bank. How great this support is is not clear. He has also introduced “allowances” for key staff, presumably in the Investment bank. This is to compensate for an EU ruling that future bonuses must be limited to 100% of salary; or 200%  if shareholders agree.

The Chairman wants his key staff to have broadly similar pay to Goldman Sachs and J.P. Morgan. So Barclays pay levels must be comparable to banks from “Singapore to San Francisco”.  This lays him open to the charge that he is running the bank for the benefit of staff, and not shareholders.

Arguably, this could be a good thing; especially for the large number of staff paid £30,000 and below per annum. However, there is little here about the interests of bank’s customers, apart from good intentions. And finally, the freedom of the bank to pay what it takes to retain top staff ,makes any attempt to control excessive pay seem pathetic.


How to nationalise, and not nationalise, the uk banks.

How to nationalise, and not nationalise, the banks.

Nationalising can take many forms. But the obvious one is to install civil servants on to boards of Directors. This mild form of nationalisation has not been taken by recent Labour Party policy. Instead the proposal is to ask the Competition and Markets Authority to investigate the possibility of a form of cartel between the big 5 banks.

By removing this technical task from the Labour Party, there will appear to be an objective set of recommendations that have apolitical legitimacy. The next step would be for the above Authority to implement these recommendations on the banks.  This leaves the banks as private companies maximising their profits for their shareholders. This is how not to nationalise.

In the current political climate, with an election to win in 2015, there is a need for some creative thinking about nationalisation, and it’s implementation. If the Labour Party retains some distance from actual implementation this may be wise in terms of getting votes. Also, it avoids the traditional fear that the Party is not seen as very efficient in managing the economy.

However, what the Party does after winning an election in using it’s  new authority is crucial. Depending on the technical recommendations, it could implement, some, none, or even add new controls. This may yet not be seen as nationalisation. But it is on the way!

The detail of which controls to adopt is important. But more important is to have at least some controls that have a good chance of working in the short term. This begins to deal with the traditional scepticism about Labour managing the economy. Then more radical controls can be attempted. For example, taking a share of banks’ profits annually would  produce capital for a government controlled bank.  With this annual income the government could do various popular things; reduce income tax for the low paid, give money to local authorities to build new houses etc.. Also the new bank would be seen as increasing competition.

Royal Mail Strike: No Strike Agreement Reached?

Royal Mail Strike: No Strike Agreement Reached?

Both the Communication Workers Union and academic commentators agree that the recent agreement is a model of successful negotiations. Certainly an increase in pay, backdated to 1.4.2013, at around 3% is just above the Retail Price Index; and 3% is higher than a lot of other recent agreements.

But the real praise is for more nebulous agreements. They are called employee protections. The extensive list includes:

The employer will not outsource

The employer will not franchise parts of the business

The employer will not make employees self-employed

The union will meet employers monthly at “Growth Forum”.

The above list does not include a no-strike agreement. However, should the union call a national strike, the employer will withdraw the employee protections above. Thus we have a new style agreement, which both  allows a strike and allows a variety of management sanctions.

This agreement goes to the union members for validation in January 2014. Promised closer union management cooperation seems to be a return to the Corporatism of 40 or more years ago. Mediation by ACAS features strongly.

But will it work? Union leaders sitting on a growth forum is not the same as sitting on the Board of Directors. If at any time over the next 5 years union members vote for a national strike the whole agreement collapses. However, not franchising and not out sourcing will be attractive to members.

Finally,the language of zero hours contracts is not used, but implied in the above list. Why this unclarity?

Royal Bank of Scotland and small businesses.

Is Royal Bank of Scotland wrecking small businesses?

A committee of Members of Parliament accused the bank of deliberately forcing small businesses into liquidation, and making a profit with this process.

Small businesses which had loans from the bank would be looked at by the bank to see if they could be rescued from their problems; or could be “turned around”. If the decision was that such a turn around was not likely, then the business would be removed from the main bank and placed in a “Global Restructuring Group”. Then the business would be forced into liquidation, presumably by calling in the bank’s loans.

The bank could then buy the business at a bargain price, as the business would be seen as bankrupt. The bank could then sell the business on at a profit; and some entrepreneur would get a good deal. As to what happens to the business next was described as “opaque”.

A possible defence for the bank is that the government’s insistence on large reserves to be held by the bank to avoid another financial crisis, implies reducing risky loans. However the Bank of England has rejected this defence, claiming that there is no justification for “predatory restructuring”.

The right level of reserve for a commercial bank is disputed by economic experts. But the opaque nature of this bank’s decision making is clear. On what criteria does a business with bank loans facing difficulties get placed into a Global restructuring Group? Who decides? Is the small business a partner to this decision making, or not?

These are difficult questions for the bank, but it has many years of experience in allocating loans. Indeed making loans is it’s central business!  All this argues for even closer control of banks.

Brendan Caffrey.

Royal Mail Strike : Cancellation or Postponment?

Royal Mail Strike: Cancelled or Postponed?

Yesterday the above strike planned for 4th November was called off by both the union and the new employer. A joint statement agreed legal protection for employees beyond the current 3 year offer. This is a gain for the union as only one year was offered previously.

An improved pay offer, and pensions agreement, was also a union gain. But there is no detail. An alternative dispute resolution process is offered. But again there is no detail. Further, why is there no mention of ACAS resolution expertise over many years?

An agreement on “aligning resources to workload” sounds both vague and a gain for the employer. An agreement on values and principles sounds like more vagueness, but should be easy for both sides to sign up to. Finally, all of 9 separate points must be agreed within 2 weeks, or the agreement falls. This is easier for management to deliver; the  union may have consult with all its members.   This could take much longer.

Protecting wages and conditions is obviously the correct tactic, irrespective of recent privatisation. The ballot for a strike, supported by a 4 to 1 majority, is extended to 20th November. This extension is a significant union gain, as it will not have to do another ballot. The real fear by the union was the introduction of franchising, zero hour contracts and variable contracts. This may well be the stumbling block that produces a strike.

Nonetheless this is a union climb down; similar to another union climb down over Grangemouth in Scotland. It is difficult not be pessimistic for the union in this national political climate. But there are real gains for the union so far in their negotiations with a newly privatised management. Future details will allow a better analysis. In particular wages and conditions details are crucial.

Finally, note there was no discussion of a no-strike deal; indeed the possibility of a strike after 20th November has been agreed.

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Royal Mail Strike: Early Preparations.

Royal Mail Strike: Opening preparations.

Royal Mail decided about 3 weeks ago to privatise on 11th October, in order to be a privatised company before the union called a strike for  23rd November. This meant that the union was put in a weak position as it was objecting to a privatisation that had already happened in law. Reversing this change was neigh impossible.

In a way this made the union’s intention to still call a strike redundant. But the fact that the sale by the government was under valued by 48%, and so lost the taxpayer £600 million, may grant some support to the union. Further, the government paid over £20 million to Goldman Sachs and other banks for advice; including advice on the right price at which to sell.

Now the chief executive of Royal Mail has written to all employees offering £300 pounds to anyone who does not go on strike! Her justification for this provocative move is that she has apparently spoken to some of her employees, who are concerned that if they do not cross picket lines to enter the workplace they will lose the £300 pounds they are owed for not going on strike.

This is a new tactic. But are there practical difficulties? How will one worker prove that they did not cross a picket line; especially, if as is possible, some do cross picket lines. What evidence is required? Photos of oneself in scuffles taken at the picket line? Is it allowed to simply remain at home on strike days? This will make interesting court cases, as each side tries to avoid public blame for disrupting deliveries.

The chief executive has asked “what sort of protections do we need as a company from our people?” The answer seems to be, to pay this £300 as a sort of protection against a strike happening. But how successful will this tactic be? If the majority of the union has opposed privatisation by 96% already, how many are likely to accept the £300?

Finally, showing a need to get protection from her own employees almost shows a real desire for industrial conflict.

Rolling strikes to Christmas are promised. The employees seem determined to get something despite their inability to reverse privatisation. Higher wages?