Examination of Witnesses (Questions 160-179)
UNIFI
10 FEBRUARY 2004
Q160 Sir Robert Smith: And is it having
an impact on people working in the sector where at the moment
there is no talk in their company of offshoring being gone into,
but just a general sort of background climate from the fact that
it is happening in other similar companies?
Mr Sweeney: I think there is a
nervousness about the whole issue. Even those institutions that
have stated, as I said before, that they have no intentions of
offshoring, the caveat is, "at this time", so there
is a nervousness about that. It is certainly a crucial issue for
ourselves as an organisation and it is not for ourselves just
to deal with this in the short term and we see this as having
long-term arrangements for the shape of our industry and the type
of jobs that can be moved about. If I may, the one issue that
is important is that we have been at pains to point out that we
did not want any sort of subliminal racist arguments about this
either and that has been a great concern for ourselves. We pride
ourselves on our international perspective certainly as a finance
organisation, but we have sampled some of it in terms of outside
organisations seeking to use this as a sort of argument with the
benefit of their own political gain and certainly with colleagues
in other unions we have been at pains to push that away. This
is an argument about employment, about the future of employment,
the shape of employment and it is certainly not in anybody's interests
to allow those of far right persuasions to use this as a stick
with which to beat others and we have been very, very keen on
avoiding that sort of argument and I think so far have done well
on that.
Q161 Chairman: What has been the impact
on your membership in terms of numbers?
Mr Sweeney: Well, I think, as
you know, Chairman, in a different light we are a really good
recruiting organisation because we have to be on that side of
it. We have not yet felt the cold wind in terms of how that would
look because the numbers are not that massive yet, but if all
call centres are moved off this island, it would have a dramatic
impact on our particular membership and membership arrangements.
That is why I think in the submission we have said that we have
to have an international perspective about what the situation
is elsewhere in the world.
Q162 Chairman: Do you have many members
outside of the traditional financial sectors? Do you recruit in
call centres per se or is it just that you have members
who work for banks and, as Mr O'Neill was saying a few minutes
ago, in the 1980s and 1990s there was this reorganisation which
meant that back-office functions were centralised in what could
be called call centres, but they are rather different from that?
Mr Sweeney: We organise exclusively
in the financial services industry.
Q163 Chairman: Do you see there being
a different rate of—it is a horrible word, but I think it
is perhaps the most appropriate way of saying it—"churn"
in different centres of employment within the financial sector?
Mr Sweeney: Yes, I think that
would be a fair point. I think the question of how great that
churning is will be something to be looked at in the next six
to twelve months in terms of the projects and the pilots that
are going on. My colleague has just reminded me that in terms
of membership growth, we doubled our membership in Newcastle as
a result of the threat of industrial action against Lloyds TSB.
I am not advocating that, as the General Secretary, as a good
way of a recruiting, but nevertheless that is clear.
Q164 Chairman: The prospect of hanging
often concentrates the mind, I think! I used to work many years
ago in the financial sector and they are not the easiest people
to recruit at times, but there is a gathering rush when a cliff
becomes the only way out. Just on this point though, on churn,
you obviously have high levels of turnover in some bits of your
membership, are these the parts of your membership which are,
as it were, the most vulnerable in the first wave of offshoring?
Mr Sweeney: Yes, I think that
would be the straightforward answer because they are the people
immediately at the sharp end. However, despite my criticisms of
the industry, it is pretty innovative, the financial services
sector, so it is constantly reinventing itself with new product
ranges, et cetera. This is an issue about the shape of jobs from
our perspective and at the sharp end that is in terms of call
centre work and the top-end IT and those are the areas where we
are feeling it at this moment in time.
Q165 Mr Berry: You made the comment that
obviously your membership will be seriously hit if all call centre
jobs were offshored. Is your expectation that in two or three
years' time there might be radically fewer call centre jobs than
there are today?
Mr Sweeney: It is the £64,000
question.
Q166 Mr Berry: That is why I asked it.
Mr Sweeney: I think my own gut
feeling is probably not. I think although the industry is quite
lemming-like and has a herd instinct, the fact that there are
disparities now between the businesses leads me to believe that
there is a more severe questioning of the business model. I think
initially it was, "Let's all race off and get a call centre
because we need one for the Footsie-100. We need to show our share
price. They've got one and we need one", that sort of arrangement,
but the fact that others are now stepping back and there is a
much more clinical examination being brought to light on the business
model, service levels are a big issue, and the jury is still out
on what the service arrangements might well be. If you have got
poor service levels in your current call centres, there seems
little point exporting the problem to somebody else even if it
is at a lower rate and those sorts of areas, I think we would
suggest, are under severe test and when you talk to most of the
employers we deal with, they are very uncomfortable on the business
model, on the business arrangement. It is quite easy, their saying,
"We can save 40% of labour costs", but then you need
to drill down and say, "Hold on a moment, exactly what does
that mean in terms of your corporate identity, your corporate
responsibility, your product range back here? How does your customer
view it, and does your customer know?"
Q167 Sir Robert Smith: And they also
have to ask the question, "How long-term is the differential
advantage and the upheaval versus what happens a few years down
the road?"
Mr Sweeney: That is right. Certainly
from a strategic point of view, from the international unions'
point of view, if there are areas of low wage and low wage arrangements
and demand is increasing there, the Indian market, for instance,
is quite hot in terms of call centre arrangements and those areas
in terms of development have to be done for the Indian unions
then to drive up the rates and clearly the timeframe for when
that differential which exists becomes significantly less, the
biggest issue is as to where the jobs then move later on. India
is an excellent democracy and there is a much more significant
problem in various parts of the world that are export-processing
zones where unions are not allowed access to the normal ILO arrangements
or parts of the world that are simply likely not to welcome independent
trade union representation or, for that matter, democracy.
Q168 Chairman: Would you say that is
a problem at the moment?
Mr Sweeney: I think it could be
a growing problem because the migration of jobs can take place
as technology moves on—
Q169 Chairman: No, I mean have you any
evidence to suggest that jobs are being exported to countries
that do not honour ILO conventions?
Mr Sweeney: We have experience
of pilot exercises in China, which I think is in our submission,
and the Philippines. Again if jobs are in export-processing zones,
it is very difficult for trade union organisations, but that has
led us then to severely question the ethics and the efficacy of
the institution as to where it places the jobs. Our institutions
do not like this sort of public examination of their business
arrangements, as you well know, Chairman.
Q170 Chairman: The other side of the
argument, and I am perhaps being the devil's advocate here, but
it could be argued that India has a middle class with, for them,
a fairly high disposable income, a middle class of around 180
million people, who are not particularly well served by financial
institutions at the present moment, so they relocate call centres
and back-office functions in India with a view to attacking the
Indian market from a base and they could then produce a business
case of an order that would be rather different from the simple
cost-cutting exercise that you have quite correctly identified
at the moment.
Mr Sweeney: I cannot speak for
the Indian Government organisations, but they also have to have
regard for the fact that if they are taking these jobs to India,
there is the question of the type of people who go into these
jobs, highly skilled, and how long they will stay and what is
the impact on the social arrangements within India itself. If
you look at the call centre arrangements we have at the moment,
the qualification level of some of the Indian call centre workers
is exceedingly high, and how long those people will stay is a
question first up. That is a question for the technology and whether
the jobs move on, but also the social impact that has in terms
of those highly skilled individuals going into what is relatively
well-paid employment, but not going into, dare I say it, accountancy,
medicine and other areas and that is a question which the Indian
Government is going to have to address as well.
Q171 Mr Clapham: I would just like to
ask a question on the industrial relations scene internationally
before I go into my area. It seems to me that if we are going
to press for that global social model, there is a real need to
work internationally. Is that happening and is there a response
from the trade unions in some of the democracies like India actually
to work together to create or to achieve that more social dimension
model in their particular part of the world?
Mr Sweeney: It has been a crucial
element of our strategy. Realistically, we are not protectionist,
we are internationalist certainly to a great extent, so work is
being done at every level, at the sort of super level in terms
of Network International, our international trade secretariat,
in terms of developing and expanding trade union organisation
within that. We have to be cautious as well that this is not purely
an exportation of trade union structures. India has to do its
own thing in terms of the support. In another life I am very keen
on the development agenda and I served as the TUC Chair of the
International Development Committee, so I have been quite fortunate
in being able to bring together and garner together other unions
both at international level and also at the internal level about
trying to get a project up and running with regard to that. Our
relations with the unions that exist who organise within finance
are excellent and we are trying to encourage them to say, "This
is a different type of job than you are normally used to. You
are normally used to retail financial services about branch work,
but this is a new structure and you need to start to look at this".
To be fair to our employers, they are quite happy, I think, for
us to push that because otherwise we would shine a light on them
very effectively here about their attitudes to trade union recognition
and organisation. However, it is important that it is an Indian
solution for Indian workers and not seen as a solution from the
TUC, so we have spent a lot of time, and are spending a considerable
amount of time, with UNI, Unions Network International, and also
encouraging the ICFU, the international federation, to bring it
together, and that is really why we have also lined up with sister
affiliates in CWU on the same issue and with Amicus about bringing
this arrangement on. It has been very much a part of our strategy
and it has to start to see fruition within the next six to twelve
months. We are awash with invitations at the moment to send full-time
officers from my own organisation out to India to visit. The only
thing they cannot do is recruit, so I do not send them. It is
an area where we are trying to encourage that side of it. As to
the situation in India, I am a believer in everything being half
full rather than half empty and the major concern would be if
jobs moved to parts of the world where the democracy just does
not exist. That would be the big test in terms of the policies
we want to bring on board.
Q172 Mr Clapham: And trade unions become
even more important in pushing civilised values.
Mr Sweeney: Correct, but it requires
us all to be prepared to make some decisions here about giving
up some of our autonomy arrangements as well. That requires us
to recognise that issue. There seems little point in arguing for
protectionist views here and then knowing that jobs bleed over
to other parts of the world and then not seeking to influence
the terms and conditions there because, in answer to your question
before, that marginal differential then changes dramatically,
and frankly that is the way trade unions have operated. I well
recall certainly the unions in Ford's having their arguments about
wage rates within Ford's between what was being paid in America
and what was being paid in Germany, so it is not a new situation
to us. Maybe it is just a new situation where we have to remember
what we have done in the past.
Q173 Mr Clapham: Could I just go back
to something Mr O'Neill said in terms of the way in which companies
that move offshore undermined the morale of their workers here.
Bearing that in mind and thinking in terms of developments here
in the UK and in particular relating to what was said earlier
about education, do you see any disadvantages for UK business
other than undermining morale?
Mr O'Neill: Do we see any disadvantages
of offshoring?
Q174 Mr Clapham: You said one of the
things that offshoring does is to cause that fall in morale, but
are there any other disadvantages that you would see?
Mr O'Neill: I think it also undermines
the relationship with the consumer. I think there is some evidence
growing now that not all customers are completely comfortable
with what employers are doing in terms of offshoring and there
is anecdotal evidence already of customers who have had to deal
with call centres, find that they are getting a poor service and
then come back into bank branches to talk to staff in the branches
because they know that they will sort out their problems for them.
I think that is a problem for any company that is offshoring,
the relationship with the customer and maintaining customer services
levels. It seems to us that the whole debate and the whole model
is about cutting costs and increasing shareholder returns and
that some employers have forgotten about the customers and the
need to maintain service standards for all of the customers and
they are putting that at risk as well. I think they are also
potentially undermining confidence in the local communities that
support them and that is something that is very important, especially
for the large employers that we deal with who depend on local
communities right across the country, and they need to retain
the confidence and support of those local communities and they
put that at risk.
Q175 Mr Hoyle: Can I take you on to customer
contact centre jobs where there obviously has been a great growth.
Have we now reached the level where there are more going abroad
than there are being created in the UK? Have we now reached that
stage? It seems to me that if the British Rail timetable can be
given in India, where does it all end?
Mr Sweeney: I think that is one
of the purposes of the DTI inquiry, to find out what that level
is.
Q176 Mr Hoyle: But you have not any evidence?
Mr Sweeney: I can only speak anecdotally.
I do not think we have actually reached the full element of contact
centre work within the UK as to what can be put there. I personally
think that is true at this stage.
Mr O'Neill: The Call Centre Association
say that there will be a continuing growth of call centre jobs
in the UK, but that is very much dependent upon the public sector
and what the public sector do, so what is happening with rail
inquiries is quite ominous in terms of if that is where the growth
is and the public sector are going to start offshoring as well,
then that balance will change.
Q177 Mr Hoyle: Because we all know there
is nothing new in offshoring. In fact we are trying to make the
stance now when we have already watched manufacturing going offshore,
and it is interesting that that has now gone. These jobs were
to replace manufacturing, so what will replace these jobs? Is
it going to be the lower end of the market, higher end of the
market, better-skilled jobs? Where are we going and where will
the jobs be?
Mr Sweeney: I think it is the
latter point we want to concentrate on, the higher skill level
for jobs. I do not think you can just hope that something comes
out of the woodwork in terms of brand new jobs growing. There
has always been a view that call centre jobs were relatively short-lived
anyway, that they would move on and move through. I think there
was some work done certainly in Sweden some time ago about the
fact that jobs within call centres will gravitate somewhere on
as technology would take over and voice recognition. The situation
in terms of what jobs replace those has to be high-skill, high-value
jobs and that sounds again very trite, but there is also a question
of the skill level arrangements we have within this country, the
level of educational attainment, how we actually train our people
both vocationally and otherwise, our university arrangements,
and it cannot be seen as a sort of a staccato, a "Let's try
and solve this now". We are at a time in our own economic
cycle where we have had to make some quality decisions and that
involves the Government and all political parties about what we
do in terms of the arrangements for our people. It has to be emphasised
again that it cannot be an accolade to have the levels of literacy
and numeracy skills that we have currently and you have to look
at the whole arrangement. The Government has an opportunity to
set the mood music for that and do something else as well. We
would certainly hope in our industry that it would be the high-skill
jobs that were there because we have the quality of people who
are able to pick up those high-skill jobs, and they are immensely
dextrous and immensely able in being able to change from back-office
branch work to contact centre call work. It is a tremendous change
it has caused to our industry and our people have shown that they
are more than up for making the sort of changes. Now, if you have
got those sorts of levels of ability to change and to diversify,
then it requires greater minds than my own and others' actually
to make sure that the level of jobs and the type of jobs that
we have equate with the skill level of the people who want to
take the employment.
Q178 Mr Hoyle: Would it be fair to say
though that we could reach a doomsday situation in that manufacturing
has gone, call centres have gone and, if you look at it, the solicitors'
advice will be based on who can get three solicitors there for
the price of one here, your accounts have gone there and really
all we are going to end up with is a corporate headquarters with
a nice brass plate outside in the City of London, but what else
have we got to show for it in the UK? Is that not the danger?
Mr Sweeney: I thought you were
going to say that we would only end up with MPs and chief executives!
Q179 Mr Hoyle: That is up to the electorate!
Mr Sweeney: No, I think employment
has to continue in various sectors. As manufacturing was shrinking,
service sector jobs came in to fill that gap, so if you are asking
me, I do not know what the actual type of jobs will be, but all
I know is that what we have to do is get the arrangements right
for the level of skill in the research and design which will develop
that sort of employment, plus the fact that we may also have to
look at the way we work. You cannot look at the question of work/life
balance and the separation for how these things go.
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