Memorandum submitted by the Public and
Commercial Services Union (PCS)
1. PCS welcomes the opportunity to submit
its views on how globalisation is impacting on the UK economy.
While relevant to many aspects of our lives, it is in relation
to work and employment that globalisation has become a matter
of considerable public interest and concern. The causes and consequences
of globalisation are therefore matters of considerable importance
to trade unions and the millions of workers they represent.
2. PCS is a trade union with 315,000 members.
Most are employed as civil servants in departments such as Her
Majesty's Revenue & Customs (HMRC) and the Department of Work
& Pensions (DWP). As a consequence of privatisation a growing
number are employed in the private sector. At present approximately
30,000 of our members are employed by a number of companies such
as Siemens, EDS and Capgemini. For some of our members in these
companies increasing globalisation has come to be associated with
the threat of "offshoring". There is considerable concern
that some employers will attempt to move an increasing quantity
of work overseas to lower wage nations.
3. There is a view held by some in politics,
the media and academia that globalisation, involving processes
such as offshoring, is welcome and inevitable. We disagree. This
submission begins by outlining what we understand globalisation
to be and why we regard many aspects of it as neither welcome
nor inevitable. The submission then briefly outlines the impact
globalisation is having on our public services. There follows
a discussion of the issues raised by offshoring in the context
of our membership and how we believe policy makers should respond.
The submission concludes by calling on government to implement
a series of measures in relation to matters such as privatisation,
job design and the Services Directive that we believe will protect
the quantity and quality of our public services and the jobs our
4. A common view is that contemporary globalisation
represents a fundamental and inevitable break with past trends
in the organisation of the world economy. It is argued that post-war
national Keynesianism has been rendered impractical by a combination
of new competitive pressures from Asia and Eastern Europe, and
the development of new production and communication technologies.
In this context much industrial and financial capital has become
"footloose", able to roam the globe in a ceaseless search
for the lowest wages and the highest rates of return.
5. It is argued that national governments
have become almost powerless in the face of pressures from multi-national
corporations and the financial markets to deregulate product and
labour markets, and to reduce public spending and welfare provision
to levels consistent with securing low inflationary growth. If
trade unions have any role in these processes at all, it is to
prepare their members for ceaseless change by working with government
and employers to deliver more and better education and training
in new skills.
6. For some, these trends are to be welcomed
because they bring the real world closer to behaving like the
hyper-efficient equilibrium models of neoclassical economic theory.
The more that "free markets" and "free trade"
are uninhibited by "red tape" and "producer interests",
the more the world economy will grow and deliver benefits for
all. Globalisation consists of what are an essentially politically
neutral set of processes that can benefit everyone if they adapt
accordingly. While workers cannot challenge globalisation, they
can adjust to it by increasing their employability and helping
their employers to become more competitive.
7. Our view is different. There are positive
aspects to globalisation. In recent decades there have been welcome
developments in technology and policy that have enhanced the ability
of many to travel, communicate, and access information and knowledge
on an unprecedented scale. This has contributed to increasing
our awareness of economic, political and environmental issues
around the world, and encouraged a greater understanding of the
interdependence of peoples, nations and the problems they face.
8. However, at the heart of globalisation
have been important structural changes to the world economy that
have been intended to increase the vulnerability of many workers
to market pressures and instabilities. In particular, we have
seen the desegmentation, marketisation and transnationalisation
of financial markets. This has been combined with an increased
integration of industrial production into financial market disciplines,
and the uneven development of global markets for certain products
and types of labour. These trends have contributed to increasing
competitive pressures on companies, some of whom have responded
by developing new computer processing and telecommunication technologies
which can facilitate the relocation of some forms of work overseas.
9. These changes have not been the inevitable
result of politically neutral market forces. They are in large
part the product of political choices made by governments of the
main economic powers over the past 30 years. It is national governments,
not "new technology" or "markets", that decided
to relax or abolish most controls on the organisation and movement
of private capital. It is governments, frequently in alliance
with each other, who have constructed a global economic environment
in which they have surrendered some of their national policy discretion
in order to be able to claim to their electorates that international
treaty obligations, such as those associated with the General
Agreement on Trade in Services, make deflationary disciplines
and the deregulation of markets inevitable and irreversible. In
short, some nation states have been the authors, not the victims,
10. In the UK, as a result of these choices
and the competitive pressures they have unleashed we have seen
massive job losses from manufacturing industry, increased job
insecurity, the deskilling and intensification of many forms of
work, and the potential to lose 0.75 million jobs because of offshoring.
11. Many of the roots of contemporary globalisation,
and the pressures it has placed on companies to shed and relocate
jobs, can be found in decisions and choices made by governments.
Therefore, in our view, if sufficient political will and support
can be mobilised the negative results of globalisation can be
halted and reversed. We believe trade unions in the UK and abroad
have a key role to play in that process.
12. Some in government and the labour movement
argue that unions should respond to globalisation by focusing
on equipping their members with new skills. We agree that many
workers in the UK need and want to improve their skills. PCS has
been involved in the Skills for Life project since 2002, and we
have established a Computer Learning Centre at which members can
receive training in the latest IT skills. However, we share the
concerns of many other trade unions that the government's voluntarist
approach to skill formation across the UK economy, with a narrow
focus on supply-side policies, is an inadequate response to a
problem rooted in the short-term pursuit of profit and deregulated
13. In the context of attempting to halt
job loss and the steady erosion of labour's bargaining power across
much of Western Europe and North America, we do not believe acquiring
new skills is enough. The primary focus of trade unions must be
on informing and organising their members, building real grassroots
solidarity among trade unionists around the globe, and placing
pressure on national and supra-national state institutions to
implement measures that increase the democratic accountability
of those who make policy and investment decisions.
14. Globalisation has had negative implications
for many of those who work within and use our public services.
Following decisions by policy makers in the UK, USA and elsewhere
to deregulate global finance, there are now powerful pressures
on many national governments to enhance the value of financial
assets within their borders by pursuing monetary and fiscal policies
regarded as credible by international investors, and as being
consistent with attaining and securing low-inflationary growth.
In part, this involves ensuring levels of public spending and
debt are kept within limits considered by investors as sustainable
and conducive with internationally competitive rates of taxation.
To this end the present government has introduced a range of measures
and rules intended to promote the credibility, transparency and
external validation of its macroeconomic policies.
15. This approach, while admired by institutions
such as the IMF and World Bank, has presented domestic policy
makers with a significant dilemma. On the one hand, there is considerable
public pressure to increase the quantity and quality of public
services. On the other hand, policy makers have chosen to adopt
policy rules, such as the Code for Fiscal Stability, which make
it difficult to satisfy public expectations.
16. In the context of the civil service
the government has sought to resolve this dilemma by hoping that
new technology, combined with the deskilling and intensification
of work, will sustain service levels while costs are cut by means
of privatisation and massive reductions in staff numbers. In many
parts of the civil service, such as DWP and HMRC, the impact of
this strategy on staff morale and service quality has been disastrous.
It is no coincidence that levels of industrial action and instances
of service failure have increased markedly since the Chancellor
announced his intention to implement Sir Peter Gershon's "efficiency"
17. In the context of privatisation and
competition for government contracts there is a clear incentive
for companies to attempt to cut costs and increase their profitability
by offshoring some forms of work to low wage nations. Having established
a policy framework within which the work of some civil servants
is now performed by profit-maximising firms, we do not accept
the argument advanced by some in politics and business that decisions
to offshore work should not be a matter for government to regulate.
18. Some work is vulnerable to offshoring.
However, much work is not. In general, the extent to which work
requires high levels of skill, local knowledge, quality control
and confidentiality will tend to determine how vulnerable to offshoring
it may be. In addition, the extent to which labour costs comprise
a significant proportion of total production costs varies across
sectors and product markets. While employers will always tend
to want to minimise how much they need to pay to obtain the quantity
and quality of labour they need, their overall cost structure
may make offshoring unnecessary. Furthermore, some firms need
to remain close to key suppliers, distributors and markets, in
the context of which offshoring becomes commercially impractical.
19. It is therefore important that trade
unions and policy makers avoid taking a simplistic view of globalisation
that acts to spread fear and uncertainty by overstating the potential
for movement overseas, while remaining alert to the fact that
some jobs are at risk.
20. Our members have cause to be concerned
about offshoring for a number of reasons. Firstly, job designs
rarely remain static. The continuous search for cost savings and
competitive advantage means employers often try to simplify work
so that it can be performed by less skilled workers in other places
at a lower cost. In some civil service departments senior managers
are currently attempting to deskill work. In HMRC such attempts,
involving the imposition of LEAN principles of work organisation,
have recently provoked industrial action by hundreds of our members.
We oppose deskilling, not only because it typically results in
less interesting and more stressful work, but because it makes
that work more vulnerable to privatisation and relocation.
21. Secondly, in the context of current
moves to centralise and rationalise "shared services"
across and within departments and agencies, we have been advised
that in some areas attempts may be made in the future to outsource
and offshore work. This could impact on thousands of our members
working in areas such as human resources, finance, estates and
procurement. These changes, in common with much of the Gershon
"efficiency" agenda, appear to be driven by a crude
desire to cut costs, with little or no regard for how service
quality may suffer.
22. Thirdly, we are concerned that the Services
Directive, if implemented, may lead to more offshoring of work
performed by our members. We are opposed to the Directive. Marketisation
and competition are incompatible with providing high quality and
democratically accountable public services that prioritise meeting
social need over increasing private profit. Therefore, we are
calling for all Services of General Interest and Services of General
Economic Interest to be excluded from the scope of the Directive.
In relation to how it may impact on many of our members, there
are significant ambiguities and inconsistencies in the Directive
as it is presently drafted which make it difficult to estimate
the full extent to which our members' jobs and the services they
deliver may be under threat. However, the pro-privatisation and
pro-market agenda of which the Directive is part appears likely
to make offshoring of our members' jobs more, rather than less,
23. Finally, in some areas where our members
are employed offshoring is taking place. In 1999, 4,000 civil
servants were transferred to Siemens Business Services (SBS) when
it won a government contract to perform work for National Savings.
In 2004, SBS announced its intention to move 240 government contract
jobs to India. PCS campaigned hard against the proposed offshoring.
We argued the offshoring would generate no tangible benefit for
the government, the taxpayer or those who used National Savings.
It was driven solely by the desire of SBS to maximise the profit
it could obtain from an existing government contract.
24. More generally, we made clear our total
opposition to all offshoring of government work. It is not acceptable
for the UK government to seek to directly or indirectly benefit
from the inferior pay, conditions and legal protection of many
workers in countries such as India. Offshoring tends to make controlling
the quality and security of work more difficult. Therefore there
is a risk it will compromise the quality of services available
to the public. Furthermore, offshoring by private contractors,
and the significant cost savings then generated, will make winning
in-house bids for contracts involving established staff almost
25. PCS was unable to prevent the offshoring
on this occasion, but our campaigning and bargaining managed to
secure significant concessions from the company. It was agreed
there would be no job losses in the UK as a result of the proposed
offshoring, and no jobs would be transferred offshore unless replacements
of at least the same quality were identified and agreed with PCS.
Furthermore, the company agreed that staff in India will be paid
above local market rates. Staff in India will have the right to
organise in unions and bargain collectively, and SBS will arrange
for PCS reps to visit India to discuss with staff and their representatives.
26. Despite securing important concessions
in this instance, offshoring remains an important concern. Recently,
SBS has announced its intention to offshore a further 240 jobs
to India. On this occasion the company has made clear they will
not be able to offer alternative employment in the UK, and therefore
redundancies are anticipated. In addition, there are plans by
the Office of National Statistics to outsource the digitisation
of over 250 million records of UK births, deaths and marriages
to companies overseas. PCS will campaign and bargain hard to prevent
offshoring and any involuntary job losses that may be planned.
27. In our view, globalisation in the UK
has contributed to substantial job losses, work intensification
and deskilling, increased job insecurity, and the under-funding
of many public services. This is not welcome, but nor has it been
inevitable. The environment in which these processes have unfolded
is one that has in large part been created by the most powerful
states, policy makers and supra-national institutions. It is within
the remit of these organisations and political actors to halt
and reverse the damage that is being done.
28. As this submission has made clear, a
key concern for our members is the threat presented by offshoring.
Offshoring has the potential to significantly increase unemployment,
poverty and social exclusion in the UK, and exploit low paid and
poorly protected workers overseas. It should be no part of government
policy to attempt to benefit from such conditions, or pursue policies
that contribute to increasing job loss and job insecurity in the
UK. To date, offshoring has taken place in the absence of a full
public debate about the extent to which we wish to see parts of
the work performed in our public services moved overseas. We would
welcome the government initiating such a debate.
29. In our view, action must now be taken
to any prevent any further offshoring of government work. We call
on the government to:
Halt all further privatisation in
the civil service and non-departmental public bodies (NDPBs),
and agree to award or renew contracts with private companies on
condition that no contracted work will be offshored.
Agree to ensure that any internal
restructuring of civil service departments and NDPBs is consistent
with preserving and promoting high-skill and high-quality work
for all staff.
Engage in immediate consultation
with PCS about the "shared services" initiatives and
agree to a joint evaluation of each initiative. Give firm assurances
that any centralisation and movement of such services will not
involve compulsory redundancies, relocations or the future privatisation
and offshoring of work.
Enter into immediate discussions
with PCS and the other public sector unions about how the government
interprets and intends to apply the provisions of the Services
Directive to civil and public services.