House of Commons - Trade and Industry

Select Committee on Trade and Industry Written Evidence

APPENDIX 8

Memorandum by the Equal Opportunities Commission

SUMMARY

This submission sets out the EOC response to the Trade and Industry Committee Inquiry into UK Employment Regulation.

— The EOC believes that the achievement of gender equity has a major part to play in promoting labour market flexibility. By the year 2010 only a third of the work force will be white, male and under 45, so it is clearly in the interests of the economy as a whole that women as well as men should be able to reach their full potential in the labour market. A flexible labour market can enable them to do so.

— Regulations aimed at providing for flexible working need to be backed up by information campaigns designed at raising awareness of employee's rights, and, just as importantly, giving line managers the hands-on support they need to implement flexible working. In particular, more needs to be done to promote awareness of fathers' rights to request to work flexibly.

— We also believe that, while a regulatory framework helps organisations to get policies in place, the key to flexibility is an ongoing dialogue between employers and employees that enables them to reach a mutually satisfactory arrangement.

— We would like to see the development of a national skills strategy driven by a high-level alliance across government, to ensure a consistent approach from all relevant parties to tackling gender segregation in training and work, including opening up flexible working in all sectors and at all levels.

— We very much welcome the Government's pledge to open up the right to request to work flexibly to carers looking after disabled or older adults and would like to see this implemented as soon as possible. We would also like to see the right extended to parents of older children.

— In the meantime we would like to see employers open up flexible working to other employees who also need to adjust their hours of work eg parents of older children and carers.

— We support flexible employment as a means of encouraging older workers to remain in employment, or to return to work after taking time out to care for disabled or older adults. As with any group returning to work after a lengthy period of absence, flexible working will need to be backed up by specialist support and training opportunities.

— Efforts need to be made to overcome long hours working, so as to decrease pressure on workers who are also carers, and enable them to continue to contribute to the economy.

INTRODUCTION

1. The Equal Opportunities Commission (EOC) is the statutory body for sex equality in Great Britain. The EOC welcomes the opportunity to submit evidence to the Trade and Industry Committee in respect of its inquiry into:

— The contribution labour market flexibility makes to the UK economy.

— Whether the current degree of flexibility is appropriate or desirable, and, if not, what measures the Government should take.

2. The EOC believes that the achievement of gender equity has a major part to play in promoting labour market flexibility. With women now making up half the workforce the position of women in the labour market has a major impact on UK productivity.

3. From the Government's point of view three elements of labour markets are seen as particularly important for economic growth: an increased labour supply; flexibility so as to be able to adjust to new growth opportunities; and that "well-functioning labour markets reward workers according to their performance and skills". While the achievement of gender equity is central to these three elements of economic growth it is still the case that both Government and employers remain of the view that gender equity is an "add on", something to be pursued only after greater productivity has been achieved.

4. However, by the year 2010 only a third of the work force will be white, male and under 45, so it is clearly in the interests of the economy as a whole that women as well as men should be able to reach their full potential in the labour market. Future predictions show that the economy will need an extra 2 million people in the next 20 years, only a quarter of whom will be school leavers.

THE ROLE OF EMPLOYMENT REGULATION IN A FLEXIBLE LABOUR MARKET

5. Several pieces of employment legislation underpin the flexible labour market. For the purposes of this submission we are looking at the regulations providing parents with the right to request to work flexibly, the regulations protecting part-time workers against less favourable treatment, and the working time regulations, which set a maximum limit on how many hours people can work. All of these regulations are complex and awareness of them—amongst both employers and employees—is low.

6. While a regulatory framework can help to encourage the changes in practice that are conducive to an expansion of flexible working, the regulations need to be backed up by information campaigns designed at raising awareness of employee's rights, and, just as importantly, giving line managers the hands-on support they need to implement flexible working. More effective use of the existing provisions plus much more support and encouragement to employers would help a lot. The key to flexibility is an ongoing dialogue between employer and employee that enables them to reach a mutually satisfactory arrangement.

WHAT WE MEAN BY FLEXIBLE WORKING

7. For the purposes of this submission:

— By flexible working we mean the ability of workers and employers to negotiate variations in working hours, times of work, work organization and place of work.

— By part-time working we mean hours of work up to and including 30 hours a week.

— By full-time working we mean hours of work in excess of 30 hours a week.

— By long hours working we mean hours of work in excess of 48 hours a week.

THE BENEFITS OF FLEXIBLE WORKING

8. Flexible working can:

— Enable men and women to work in the jobs best suited to their skills and abilities. The UK labour market remains strongly gender segregated by sector, by occupation and by hours worked. This concentration of women and men into different kinds of job, known as occupational segregation, is a key issue for government and employers in Britain today. It damages UK productivity by contributing to skills shortages and the gender pay gap.

— Enable women to maintain continuity of employment after they have had a child. Despite almost 30 years of the right to return to work after maternity leave, a shortfall in childcare places, coupled with an absence of flexible working, mean that for many women the only way to return to work is to drop down into a less skilled, lower paid, but part-time job.

— Facilitate a more equal sharing of caring responsibilities between men and women. Fathers are keen to play a more active role as parents, but rarely have access to flexible working. Mothers, fathers and carers need to be able to choose whether or not to combine caring with paid work and to get the support they need whatever choice they make. This means opening up access to flexible working for all parents and carers in all types of job.

— Enable people caring for adult dependents to carry on working. There are three million working carers in the UK. 1.4 million women and 1.6 million men care for a disabled or older relative or friend. Many carers are forced to give up work due to a lack of flexible employment.

— Enable older workers to carry on working in the years up to and beyond their normal retirement age. With fewer young people entering the labour market flexible working can provide employers with a means of retaining older workers.

FLEXIBLE AND PART-TIME WORKING

9. Flexible working includes, but is not synonymous with part-time work. The two are often confused, with part-time work being seen as offering a worker sufficient flexibility to enable a balance to be struck between work and home. While this may often be true, it is also true that many part-time workers often have little or no ability either to negotiate variations in their hours or patterns of work or to decline changes that are imposed on them. There is a need to ensure that part-time workers, just as much as those working full-time, are able to negotiate hours and patterns of work that enable them to balance work with caring responsibilities.

10. There is also evidence from part-time employees for a desire for more hours, not fewer. The TUC's About Time report found that while over 10 million employees said that they would like to work shorter hours, over two million said that they need more paid working hours. Part-timers accounted for more than half of this group even though they constituted only a quarter of the employee workforce. While overall 8% of the workers in the survey said that they wanted to work longer hours in their current jobs, this rose for occupations with a large number of women working part time for low wages (eg 13% in personal services and 14% in both sales and customer services and "less skilled" occupations.[61])

11. The very welcome improvements to the legal framework for employing part-time workers have served to mask the fact that the part-time work sector remains structured around its origins as a low-skilled and insecure segment of the labour market. Research commissioned for the EOC shows that women are more likely to enter part time work and are less likely to leave it. Women are not using part time jobs as stepping-stones into full time employment, but remain in part time employment for lengthy periods of time[62]. This not only contributes to the gender pay gap, but may also mean an increased reliance on benefits to top up income. Women working part-time are also less able to save for their retirement and often remain in jobs with poor pension provision, leading to a greater reliance on state benefits in retirement.

THE DISTRIBUTION OF FLEXIBLE WORKING

12. An approach to the management of work that is based upon flexibility, rather than upon rigid divisions into full-time and part-time work would help to ensure that skilled women do not get trapped in low skilled, low paid part-time work on account of their caring responsibilities. However:

— The distribution of flexible working across the economy is highly uneven.

— Most flexible workers are women.

— Flexible working tends not to extend to middle and senior ranking managerial and professional posts. This makes it difficult for women to maintain their labour market position once they have had a child. It also makes it difficult for men to take on a greater share of responsibility for caring for their children.

— There is evidence that many women, even when exercising the new right to request flexible working, move to a lower grade job when taking up the option to work flexibly.

OCCUPATIONAL SEGREGATION

13. Flexible working is more prevalent in sectors that employ a large proportion of women, such as retail finance, and relatively uncommon in sectors employing predominantly men, such as manufacturing. It is rarely available in senior jobs. The UK labour market remains strongly gender segregated by sector, by occupation and by hours worked. Women hold only 1% of construction jobs and 8% of engineering jobs, while almost all nursery nurses and childminders are female.

14. This gender segregation is both "horizontal" and "vertical". Horizontal segregation presents a downward pressure on women's labour market position by crowding women into female dominated occupations and limiting access to a broader range of male-dominated occupations and sectors of economic activity. Vertical segregation limits women to lower status jobs within occupational groups, restricting both their opportunities of higher paid employment and the pool of talent available to employers. Both these effects are compounded by the concentration of part-time and flexible work options in female dominated occupations, and their absence elsewhere.

15. This concentration of women and men into different kinds of job is a key issue for government and employers in Britain today. The EOC has recently published the interim findings of a major investigation into workforces that are divided along gender lines. The investigation focuses on Modern Apprenticeships but draws out wider lessons for employment and training in the UK. [64]The investigation identified a correlation between skills shortages and under-representation of women in key sectors. This makes occupational segregation not just a "gender issue", but also a barrier to addressing skills shortages and increasing the productivity and competitiveness of the economy as a whole. Recruiting from only one half of the population prevents women and men from working in the areas best suited to their skills and abilities and can only make it harder to increase overall productivity.

16. To redress this imbalance the EOC would like to see the development of a national skills strategy driven by a high-level alliance across government, to ensure a consistent approach from all relevant parties to tackling gender segregation in training and work. The strategy should incorporate effective incentives for levering real change, including targets for measuring progress. While initially the strategy should focus on Modern Apprenticeships and vocational education the Government should look more widely, with the EOC and employers, at ways of tackling occupational segregation, including opening up flexible working in all sectors and at all levels.

17. Women's occupational segregation is especially concentrated among those who are employed part-time, where the economics of supply and demand result in low pay. The average wage of a woman part time worker is £7.77 per hour, compared to the average male full time rate of £12.87 per hour[65]. For men, the higher the percentage of men in an occupation, the stronger is the tendency to work full-time or even longer hours. Women cluster in those occupations that allow some measure of flexible working—part-time working, term-time working and job-sharing. Extending flexible working to all sectors, in all sizes of organisation and all levels of seniority is key to breaking down occupational segregation and thereby helping to overcome skills shortages in those areas where women are significantly under-represented.

MAINTAINING CONTINUITY OF EMPLOYMENT

18. Anyone who has a period out of employment, for whatever reason, experiences difficulties when returning to it, but all too often women returning to the workplace after childbirth take lower skilled work in order to have some level of flexibility:

This tendency towards downward occupational mobility is particularly marked in the UK. Elsewhere in Europe women are better able to maintain their employment status when they become mothers and this is in part due to a greater willingness to make part-time working available in more senior posts.

19. In jobs where there is an expectation that full-time work involves working far in excess of contracted hours, it is even more difficult for mothers to re-enter full-time work after maternity leave. The lack of flexible working options and the prevalence of excessive hours in managerial posts acts as a strong disincentive for women who are trying to balance work with family responsibilities to seek to progress and increase their earning capacity. It also undermines organisation's ability to make the most effective use of their human capital.

THE RIGHT TO REQUEST TO WORK FLEXIBLY

20. The ability of parents to reach their full potential at work has been helped significantly by the new framework of parental rights that the Government has introduced. The EOC welcomes the new right and hopes that it will lead to an expansion of flexible and part-time work for mothers and fathers. We welcome the Government's commitment to review the new right in 2006 to see how it is working. We would like to see the right extended to parents of older children. In the meantime we hope that employers will open up flexible working to other employees who also need to adjust their hours of work eg parents of older children and carers.

21. There is some evidence that the right is not working as effectively as it could. In the period January to March 2004 the following issues were raised with the EOC:

— Refusal of requested change of hours.

— Refusal resulting in job loss.

— Unfavourable treatment such as being told they were unsuitable for promotion because of their childcare responsibilities.

— Job share problems such as being expected to find a replacement or revert to full-time work if job share partner leaves.

— Policies not being promoted to fathers of young children.

22. In certain circumstances some of the above situations could amount to breaches of the Sex Discrimination Act eg excluding fathers from the option to request to work flexibly. Much more needs to be done to raise awareness of the right to request to work flexibly and of the benefits to both employers and employees of agreeing to this.

THE LENGTH OF THE WORKING WEEK

23. The length of the working week is also a key factor in enabling mothers and fathers, and carers generally, to balance work and family responsibilities. While working hours in the UK average around 38 hours, similar to the EU average, [67]this headline figure disguises the significant polarisation, between full time and part time workers, and between men and women, that distinguishes the UK labour market from other EU countries. If the full time hours of UK workers are compared with other EU countries the UK far outstrips the EU average for the proportion of full time workers doing over 48 hours a week. According to the Spring 2002 quarter of the Labour Force Survey (LFS), 21% (3.8 million) of full-time employees reported usually working over 48 hours a week in the UK, this includes paid and unpaid overtime (equivalent to 16% of all employees). While 26% of full time male workers stated that they usually worked over 48 hours (compared with 10% across other member states), only 11% of full time female workers did so. More effort needs to be made to overcome long hours working, so as to decrease pressure on workers who are also carers, and enable them to continue to contribute to the economy.

A MORE EQUAL SHARING OF CARING RESPONSIBILITIES

24. More than 50% of parents have no access to flexible working, but while employers generally recognize the need of mothers for flexible working, the needs of fathers go largely unacknowledged. Twenty four per cent of workers work part-time and of these 82% are women. Whilst almost 50% of female part-time workers limit their hours as a result of their caring responsibilities, only 4.6% of male part-time workers do so[68]. The largest group of male part-time employees is aged under 25 and therefore least likely to be working part-time because of caring responsibilities.

25. Almost 40% of fathers routinely work more than 48 hours a week, compared to 6% of mothers[69]. Where mothers are working long hours surveys indicate that they still carry the burden for the main household and caring tasks. [70]And where fathers work long hours, they are least likely to be involved in the care of their children. [71]

26. O'Brien and Shemilt's reanalysis of the 2000 DfES Worklife Balance Survey found that while over 80% of fathers were generally happy with their worklife balance, this dropped to 60% for those working over 48 hours a week and 50% for those working 60 or more hours[72]. Excessive hours amongst men, and particularly fathers, cement the status quo on caring responsibilities and prevent parents in particular from balancing work and family life effectively.

27. The type of flexibility that fathers would prefer is generally different to the type of flexibility generally preferred by mothers. Both are keen to see a greater use of flexitime, but fathers are more likely to want flexibility of working hours over the day and week without a reduction in their salary, whereas mothers are more likely to opt for greater reductions in time with the inevitable drop in pay. This suggests that opening up flexible working to fathers might not be as difficult or as costly as it might at fist sight appear to be.

28. However, fathers have reported to the EOC and to others that the fact that the right to request to work flexibly is open to fathers as well as to mothers is not widely known by either fathers or employers. More needs to be done to promoterawareness of fathers' right to request to work flexibly

Caring for adult dependents

29. There are currently 5.2 million carers in England and Wales, with 1.6 million of these providing at least some unpaid care to an older or disabled person, as well as working full-time. Projections indicate that more than one in 10 women in the next generation will at the age of 45 be simultaneously caring for both a parent and a child under 18. We very much welcome the Government's pledge to open up the right to request to work flexibly to carers looking after disabled or older adults and would like to see this implemented as soon as possible.

OLDER WORKERS

30. Britain's birth rate is falling but at the same time life expectancy is increasing and for the first time there are now more over-60s than under 16s in the population. There are moves towards later retirement ages or longer pension contribution periods, greater flexibility in retirement and a relaxation of the barriers to working while receiving a pension. The timing of retirement can be influenced by caring responsibilities. The 2001 census showed that more people in their 50s are carers than in any other age group, about 1 in 5. Older carers commitments are often hidden, with individuals less able to negotiate flexible working patterns with their health and personal life taking the toll, or leading them to leave paid employment.

31. Later retirement will not suit everyone and the ability to carry on working will depend upon an employee's fitness and health. Encouraging flexible working may however, enable workers to remain attached to the labour force for longer, rather than going onto incapacity benefits prior to retirement. We support flexible employment as a means of encouraging older workers to remain in employment, or to return to work after taking time out to care for disabled or older adults. As with any group returning to work after a lengthy period of absence, flexible working will need to be backed up by specialist support and training opportunities.

THE IMPACT OF THE RESTRICTED AVAILABILITY OF FLEXIBLE WORKING

32. The majority of parents and carers would like to be in paid employment, but caring responsibilities and inflexible employers compound problems with accessing suitable and affordable childcare or eldercare. Caring for children or for adult dependents is one of the most important jobs anyone can do, yet often parents and carers struggle to be able to balance caring with other responsibilities. Opening up opportunities for flexible working is one of the most effective ways of providing parents and carers with the support they need.

33. The restricted availability of flexible working impacts on men and women in a number of ways:

— Many fathers would like to be more involved in caring but are unable to be so because they think it is financially untenable, or their employer will not provide the flexibility they seek.

THE BARRIERS TO AN EXPANSION OF FLEXIBLE WORKING

34. The main barriers to an expansion of flexible working are:

— Unfavourable perceptions of flexible working. Senior level employers fear that introducing flexible working will have an adverse effect on profits, while at line management level many managers are unaware of, or sceptical of, the benefits of flexible working. Amongst workers there is a perception, particularly amongst men, that taking up flexible working will be detrimental to their career prospects. An EOC survey found that while around four in 10 workers say their boss would respond positively if they asked for flexible working arrangements, another four are not at all sure and a sixth say their boss would certainly not respond positively.

— Improvements to the legal framework for employing part-time workers have served to mask the fact that the part-time work sector remains structured around its origins as a low-skilled and insecure segment of the labour market.

— A failure to recognise the importance of continuity of employment in maintaining and improving human capital. Anyone who has a period out of employment, for whatever reason, experiences difficulties when returning to it. The unavailability of flexible working, coupled with the shortage of good quality, affordable childcare means that for many women the only route back into employment is through part time work.

— The impact of the domestic economy on the market economy goes largely unrecognised. More attention needs to be paid to building bridges between the domestic and market economies—childcare support, for example, is closely tied to employment and household status, yet if women are to maximise their contribution to the market economy, support needs to be extended to them while they are in education or training.

THE BENEFITS OF OPENING UP FLEXIBLE WORKING

35. We consider that there would be considerable benefits to employers, employees and the economy to opening up flexible working at all levels, in all occupations, and in all sizes of business. These include:

— Improvements in the UK's ability to compete in the world economy. So long as women remain significantly disadvantaged in the workplace the UK economy will continue to miss out on their contribution. The loss of experience, investment in training, and talent from women forced into and then stuck in low skilled part time jobs is a waste to the economy as a whole. An expansion of flexible working would enable more women to work to their full potential. It would also allow parents more time with their children, giving them a better start in life and reducing antisocial behaviour.

— Improved productivity. Businesses not using flexible working are cutting themselves off from a large part of the working population. Skills shortages are already affecting productivity and in some sectors have led to inflated wage costs. Absence levels are also a major cause of concern for UK employers. Flexible working practices can increase productivity by improving recruitment and retention and reducing absenteeism—recent research has found that organisations that have introduced flexible working have experienced reduced absenteeism, often as an unexpected bonus.

— A better balance between work and home. With almost four in 10 mothers, more than one in 10 fathers and almost one in five carers having either given up or turned down a job because of their caring responsibilities the immediate benefits to parents and carers are obvious. In the longer term a labour market wherein all workers are able to negotiate variations in their hours and patterns of working will help to reduce the disadvantages experienced by those whose caring responsibilities make them liable to the perception that they are somehow less committed than other workers, or less able to reach their full potential.

— An end to the demarcation between jobs for mothers and jobs for others.

— Flexible working associated with flexible retirement would reduce the costs to the state of supporting parents and carers who have not been able to build up a sufficient pension to maintain them in their retirement. It would also enable older workers generally to carry on working.

— A closing of the gender differences in lifetime earnings. We would expect to see a narrowing of the gender pay gap, especially in respect of the gap between those working part-time and those working full-time.

CONCLUSION

36. As female earning power is limited by the lack of career prospects and discrimination against part-time workers so gender stereotypes become more rigid. Mothers who want to, or need to, work are mostly forced onto the "Mummy track" as childcare responsibilities are seen as a sign of lack of commitment. And when there is not enough money to allow choice on how people manage the demands of work and home, it sets a pattern that perpetuates inequality in the workplace. We need organisations to accept they cannot make the most of the talent available unless they account for people's caring responsibilities. The EOC will shortly be launching a general formal investigation into flexible and part-time work, which will make suggestions on how to tackle the barriers that prevent Britain's economy from capitalising on parents' and carers' skills. Opening up opportunities—and equalizing pay—for flexible and part-time working will be key to providing Britain's parents and carers with the support they need if people's expectations are truly going to be met.

June 2004