Examination of Witnesses (Questions 35
- 39)
THURSDAY 29 MARCH 2007
MS SUSAN
ANDERSON AND
MR TOM
MORAN
Q35 Chairman:
Thank you very much for coming. Obviously employment issues are
of great interest to this Committee. We did publish a report on
the Working Time Directive and we are coming back again to this
area of policy. We are very lucky to have Professor John Philpott
(whom no doubt you know) as our Specialist Adviser for the inquiry.
This session is open to the public and it will be recorded for
broadcasting or webcasting. We will take a verbatim transcript
as well and that will be put on printed record in the report and
on the parliamentary website. You will be sent a copy of the transcript
to check it for accuracy; please advise us of corrections as soon
as you can. If you want to submit supplementary evidence after
the session if we have not covered something or you want to amplify
a point that has been made, then of course that is your opportunity
to do so. The acoustics in this room are good, but still it helps
everybody if you speak clearly, as I am sure you do. Could you
start by stating your names and official titles for the record
and if you want to make an opening statement you are welcome to
do so; if not we will ask our questions.
Ms Anderson: I am Susan Anderson. I am Director
of Human Resources Policy at CBI.
Mr Moran: My name is Tom Moran. I am Senior
Policy Adviser in Susan Anderson's team at the CBI.
Ms Anderson: We will not make an opening statement
on this occasion, thank you.
Q36 Chairman:
We have a report of your news release which reacted to the publication
of the Commission's Green Paper. The Commission's readiness to
acknowledge the need for flexibility in labour markets is welcomed
in that, but concerns are expressed that the Commission is still
considering further employment legislation. Could you summarise
the reasons why you welcomed the Commission's Green Paper; and
what do you know about the views of employers or employers' organisations
in other EU Member States with regard to the issues raised in
the Green Paper?
Ms Anderson: We welcomed the Green Paper because
we felt that it was important that the Commission acknowledges
that the debate has moved on and that in Europe we all need to
have flexible labour markets if we are going to raise employment
and reduce unemployment and, indeed, have greater economic growth.
I think that recognition that flexible labour markets play a key
role in that was very welcome. Our concern is that, having recognised
that actually what we need is more flexibility, the Commission
has a tendency to see more regulation as a way of introducing
more flexibility whereas what many of the Member States need is
possibly less regulation and certainly more flexibility. Whilst
there is much in the Paper that we like, when we look at some
of the detailed questions when they suggest that we need more
action on working time or agency temps, we wonder how that matches
the commitment to greater flexibility. That is our concern. We
think that it is actually down to the Member States to take action.
To answer the second part of your question, that is very much
a common theme with our European counterparts. The organisation
representing European employers and employers' organisations renamed
itself; it is now called BUSINESSEUROPE and it is putting its
finishing touches to its response to the Green Paper, as indeed
are we and we will be very happy to let you have copies of both
those responses hopefully by the beginning of next week. BUSINESSEUROPE's
strong view is that taking a top down approach to legislation
is not helpful. We do not need more legislation. Many of them
are in discussion with their trade unions and indeed with their
governments about how they can introduce more flexibility. They
are very much against more legislation and have taken a very strong
line on that particular point.
Q37 Chairman:
What is your view of the process of determining labour laws at
EU level and what role do the CBI play in that process once it
starts?
Ms Anderson: We have a very active role in the
policy formulation at European level. If the Commission is minded
to introduce new legislation under the new procedures it must
ask the social partners—ie the trade unions and the employers—whether
they wish to negotiate an agreement. If the social partners do
wish to negotiation an agreement then they will sit down, undertake
those negotiations and the European Council of Ministers can either
accept or reject that agreement in its entirety. I was actually
part of the EU negotiating team that negotiated the directives
on part time work and fixed term work and having negotiated those
agreements over a period of some nine months, although it was
informed by previous attempts by the Member States to reach agreement
on those areas, we were able to reach an agreement and that legislation
for that agreement was then agreed by the European Council of
Ministers and then effectively became a European directive and
that obviously led to the passing of the part time work and the
fixed term work regulations in the UK. Having reached successful
agreements—they were legally binding agreements that led
to directives—we failed to reach agreement on agency temps
(not down to the UK I must emphasise, actually it was the Germans
and the Swedes who could not agree at the final hour a draft agreement
on agency temps) and then we looked at other areas. We looked
at teleworking and stress and we came up with voluntary agreements.
These are areas where it is very much for the national level partners
to move forward. On teleworking and stress these were not agreements
that led to directives but they led to action at the UK level
where we worked with DTI, with TUC and came up effectively with
guidance on the issue of teleworking and stress rather than a
regulatory framework. We have had different approaches. I think
they have been equally successful. We are now in a position where
we are looking forward to what we might do next as the European
social partners. In fact Tom has been involved in some of those
discussions and what we are doing now is that we are looking at
the labour market, taking stock of the labour market and looking
to agree a common analysis in order that we can then decide where
we would want to focus our attention next as European social partners.
I have to say that reaching agreement just on analysis is rather
harder than one might expect but we are hoping to do that in the
next month or so.
Mr Moran: Just to add to that, we have a work
programme that is agreed between BUSINESSEUROPE and the TUC which
is scheduled for 2006 to 2008 and that sets out very clearly the
areas of common interest or common agreements or similar procedures
that will be agreed. The next stage, following the labour market
analysis which, as Susan said, is hopefully going to be agreed
and then approved within the next few months, is an agreement
in the work programme which specifically gives the choice between
either something that looks at the integration of disadvantage
groups into the labour market (which is obviously a key concern
across Europe) or Lifelong Learning which is equally important,
it is something we actually addressed in the 2003 to 2005 work
programme but it is obviously something where there is still a
lot of discussion to be had.
Q38 Chairman:
It is a moving target.
Mr Moran: Yes, and obviously there are continually
new challenges on that. We are doing a lot of work at the moment.
Q39 Lord Wade of Chorlton:
What I am going to do is join the next three questions together
because they go together. First of all, I want to try to understand
your view of what the effect of existing labour law—both
UK and European labour law—has been on our industry's global
competitiveness and particularly on productivity levels. I would
then like to understand your views on the cost of existing labour
laws as you see them under British business. Following that I
am going to ask you a further question on small businesses. Perhaps
you could deal with the first two questions together.
Ms Anderson: I would like to say, here is one
we prepared earlier. This is called Lightening the Load
and this looks at European and national legislation on employment
issues. If we are looking at the cost in particular what we did
in this report—we will be very happy to circulate copies
to you—was to indicate the cumulative cost of employment
legislation and looked at the total cost from 1998 to 2006. This
is the cost based on the Government's own regulatory impact assessments.
This suggested that if you put all those costs together the total
cost was just a shade over £37 billion. That is quite a considerable
cost. That said, if we look at the various new rights and regulations
that have come in we have accepted the majority of them as appropriate.
We did not reject the national minimum wage when the Government
was elected on a mandate to introduce the national minimum wage.
We have worked with the Low Pay Commission to ensure that it is
a success. We often say that the national minimum wage is a little
higher than we would like and the trade unions always say it is
lower than they would like, but by and large we have got it about
right and the national minimum wage has been a success. It has
taken over a million people out of chronic low pay; it has helped
close the pay gap between men and women; it has certainly helped
ethnic minorities as well to close the pay gap. If we look at
many of the regulations that have come in, particularly from the
UK, they have been introduced in an acceptable way on a full consultation
and they have not been surrounded with too much red tape. The
national minimum wage, for example, is not surrounded with a lot
of bureaucracy. Similarly rights like the right to request flexible
working, 90 per cent of employees' requests are granted either
initially or after some small changes. These sorts of rights that
we have seen coming in in the UK have added to labour costs, they
have not added necessarily to productivity.
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