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e-Newsletter - April 2010
A note from the Head of IDS
The latest research findings from IDS
IDS news in brief
Conference news

A note from the Head of IDS


During the past six weeks I've had the pleasure of learning about the IDS publications in my new role as Head of IDS. The expertise, rigorous research and in-depth analysis that I've witnessed in the publications, online services and at our conferences have been inspiring. I'm excited to be working with such a strong and motivated team to produce quality products that provide you with the up-to-date, detailed information that you need.

Coming from an editorial and business development background myself, I have been struck by how IDS's editorial expertise is being used as a platform for developing our activities beyond those of a traditional publisher. So, for example, the IDS Research Services team draws on the expertise across the business to carry out bespoke projects for a varied range of clients including government departments, private sector organisations, local authorities, charities and trade unions. Each member of the team undertakes tailored research and consultancy around pay and employment issues for individual organisations. Job evaluation, pay benchmarking, online surveys, case studies and human resources policy research are all in a day's work.

For further information about IDS Research services click here or call Mike Baggallay on 020 7422 4951.

Kind regards,

Lynne Lees
Head of IDS

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The latest research findings from IDS

Equality Act receives Royal Assent

The Equality Act 2010 received Royal Assent on 8 April in much the same form as it was introduced in October last year. The Act consolidates, harmonises and, in some areas, extends over 30 years of equality law covering age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation, and equal pay.

The cull of controversial clauses that many expected to see at the final stage of the Act’s passage through Parliament did not materialise. In its recent report stage in the House of Lords, the Act’s more contentious provisions survived amendments which sought to remove both the duty on public bodies to address socio-economic inequalities and the power to introduce compulsory equal pay audits by 2013, and to modify the wording of the positive action provision which allows employers to choose a candidate with a protected characteristic in a tie-break situation.

Successful amendments at report stage included beefing up the duty to make reasonable adjustments in respect of disabled people by introducing a requirement to provide information in an accessible format for disabled people where they would otherwise be put at a substantial disadvantage, and an enabling provision allowing for caste to be brought within the definition of the protected characteristic of race if the Government deems it necessary in the future.

It should be remembered that the new Act is not solely an employment measure. In addition to the socio-economic duty, which may have employment implications, it covers some non-employment areas, such as discrimination in the provision of goods and services, public procurement and protection for mothers breastfeeding in public.
While the first tranche of the Act’s provisions will take effect this October, the Conservatives have indicated that if they win the election, they would not bring all of its provisions into force.

Click here for an in-depth feature article from IDS Employment Law Brief on the Equality Act 2010, reviewing the main changes that the Act will introduce to discrimination and equal pay law.

For further information on the IDS Employment Law Brief service, click here.



Private sector earnings now reflecting economic recovery...
...but bonuses in finance create a misleading picture

Pay growth is returning in large parts of the private sector after dropping back towards zero in the early part of 2009. The strongest earnings growth is in manufacturing where the rate of growth was 3.2 per cent in January 2010, according to the latest official data from the ONS. Pay growth  in construction was 1.6 per cent. In the large sector covering distribution, retail, hotels and restaurants there was earnings growth of 1.7 per cent.

The stronger pay growth in manufacturing has been building up in recent months as that part of the economy recovers. Short-time working and loss of shift and overtime pay depressed earnings in the first half of 2009 and stronger earnings growth can be expected from a return to near-normal production.

Tail wags dog
However, lower bonuses in January 2010 compared with January 2009 among a minority of City bankers were sufficient to leave earnings growth in finance and business services in negative territory. The effect of this reduction in bonuses was huge, as shown by the drop in overall private sector weekly earnings from £ 448 in December to £426 in January. The drop in finance and business services between December and January was from £ 589 to £ 540. This change is very misleading. The amount of money involved is so large that the ONS calculates that pay growth in the private sector is zero, when in reality most employees in the private sector are seeing modest earnings growth. If bonuses are excluded from the earnings figures for finance and business services then pay growth was close to 1 per cent.

Average weekly earnings (January 2010) total pay growth
 
  £ pw    %change on year
 Sector  3-month average
 Manufacturing  520        3.2
 Construction 564        1.6
 Distribution, retail 303        1.7
 Public sector 455        2.6
 Finance and business    540        -0.1
 Private sector  426        0.0
 Whole economy 442        0.9
 Source ONS

Understanding the trend in earnings growth is important for interpreting what is happening in the economy. Modest earnings growth has returned in recent months and has become more widespread across the private sector. Focussing on the split between pay in the public and private sectors does not give a real picture of pay movements.  Private sector earnings fell back last year from the effects of short-time working and pay freezes. Around two-thirds of private companies gave modest rises as they are doing now in 2010. The current earnings growth in the private sector reflects both modest pay rises and modest economic recovery.

The ONS earnings data is consistent with IDS findings on pay settlements in the IDS Pay Report and IDSPay.co.uk. The wild fluctuations in bonuses, particularly in the finance sector, sometimes make this harder to see, but a close sector by sector analysis gets us closer to what is really going on.



Industrial action is back in the limelight

After a decade in which individual employment rights took prominence over collective action by trade unions, the thorny topic of industrial action hasa been thrust back into the public consiciousness by a recent high profile dispute involving British Airways and the UK's largest trade union, Unite.

At the heart of the disagreement are cost cutting measures introduced by BA in November 2009. Among other things, these reduced the cabin crew complement on most flights. In December, Unite announced a 12 day strike but, as we reported in Brief 895, that move was thwarted when BA succesfully gained an injuction preventing the action taking place. Unite had fallen foul of the complex laws relating to ballots of union members by balloting BA staff who had taken a voluntary redundancy package and were therefore ineligible to vote.However, injunctions are no more than a delaying tactic, as witnessed by the fact that Unite conducted a second ballot this time in compliance with the law and began strike action on 20 March.

So, does the BA strike herald a return to the embittered industrial relations climate of the 1970s? There are a number of reasons why trade unions may be more inclined to take strike action: whoever wins the next election, the public sector is braced for substantial cuts to tackle the budget deficit increased global competition can put a downward pressure on wages; and pension commitments are becoming increasingly expensive as people live longer. Less than a third of the workforce belong to a trade union and, barring a significant turnaround in this figure  which once stood at over 70 per cent industrial action will remain largely confined to the public sector and industries, such as transport, which have a level of union membership well above the national average. However, given the potential for disruption to peoples day-to-day lives, the impact of strikes in these sectors should not be underestimated.

The new IDS Employment Law Handbook Industrial Action is available now.
Click here for further details.for an in-depth feature article from IDS Employment Law Brief on the Equality Act 2010, reviewing the main changes that the Act will introduce to discrimination and equal pay law. For further information on the IDS Employment Law Brief service, .for an in-depth feature article from IDS Employment Law Brief on the Equality Act 2010, reviewing the main changes that the Act will introduce to discrimination and equal pay law. For further information on the IDS Employment Law Brief service, .
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IDS news in brief

Testing times for NHS directors’ pay

These are testing times for those making decisions about how much to pay NHS chiefs, balancing recruitment and motivation against the need to keep tight control of the public purse, but our latest research suggest that the equation fell on the side of high salary awards last year. Analysis of over 400 NHS accounts shows that executive board salaries went up at a faster pace than the rest of the economy, with particularly high rises in Foundation trusts. Behind the headlines, however, the picture is more complex with variations in pay levels evident between different types of trust and different parts of the UK. 
The NHS Boardroom Pay Report 2010 is available now and provides a comprehensive guide to the pay levels of over 2,000 key board positions, covering NHS trusts in England along with related details for NHS board members in Scotland, Wales and Northern Ireland.
Click here for further information. 


Employment in the Netherlands

A bill to raise the retirement age to 67, measures to promote labour force participation of young and older employees, and changes to how court compensation is calculated in the event of unlawful dismissal are just three of the many changes companies doing business in the Netherlands may face over the coming year, according to our latest comprehensive international employment guide.
As well as alerting employers to potential future changes, Employment in the Netherlands 2010 provides key information about the HR environment in Holland. The guide includes details on employer, unions and Government organisations, recruitment procedures, contracts of employment, termination of contracts, employee relations, the structure of reward packages, the rules on working time, holidays and prices, wages, tax and labour costs.
Click here for further information.


The changing HR function

The overriding objective for the HR profession in recent years has been to escape its image as an administrative function tied up in paperwork and bureaucracy and reinvent itself as an indispensable strategic business partner. To some extent, it has been successful. HR has managed to devolve much routine administrative work to line managers and employees or to dedicated HR service centres. But it still has some way to go. In particular, it is often difficult for HR to show how its activities and initiatives impact positively on the bottom-line.
New research from IDS looks at how the UK's HR departments are staffed and structured, and how much HR professionals are paid. Available now, The HR Function examines recent trends in HR strategy and how HR is taking advantage of developments in technology. One key finding is that the recession did not appear to hit HR as hard as some other functions. Although over a third of HR departments shrunk over the past 12 months, almost a quarter took on extra staff. The research report is based on responses from 178 organisations employing over 7,000 HR staff and around 600,000 employees.
Click here for further information.


Pay in the public services

The aftermath of the recession and the debate over the Governments deficit means that 2010/11 is shaping up to be a difficult year for anyone dealing with public sector employment and reward. Pay freezes or low rises are in prospect for most staff, apart from some of those covered by long-term deals. But these will end in 2011, at which point a new administration could be in office, with a new agenda on public sector pay and reward. Emerging issues include the treatment of progression and the possibility of a renewed debate around national bargaining. Pensions may also be on the table as well, with contribution rates and retirement dates potentially in focus. Ongoing issues include equal pay, pay at the lower end, and the way in which pay setting mechanisms have been quietly transformed. Total reward remains a key aim for employers as well. Available now, Pay in the public services 2010 looks at all these issues and more besides.
Click here for further information.


Graduates face muted job and pay prospects

Recession has undeniably taken a heavy toll on graduate job prospects with cuts in recruitment numbers, budgets, starting salaries and even work placement and sponsorship opportunities. But despite the downbeat message there are signs that the worst is over and, if employers stick to their current plans, graduate job growth overall is projected to be positive in 2010, although there will remain distinct sectoral variations.
The recently published Pay and Progression for Graduates 2010 is based on over 100 companies providing information about their graduate schemes, including recruitment numbers, starting salaries, attraction and selection methods and the impact of the recession.
Click here for further information.


Bonus payments in the spotlight

Bonuses and other financial incentives have been a permanent fixture in the news over recent months. In particular, the large sums paid out under many executive bonus plans, especially in the financial sector, have come in for a great deal of criticism from the public and the press. At the same time, many all-employee bonus schemes have failed to pay out any bonus at all in the last 12 to 18 months. However, the basic premise of a properly designed and implemented bonus scheme, that is, one that explicitly and transparently aligns monetary reward with company, team or individual performance, remains a sound business principle. If anything, the recession has helped to highlight that bonus payments offer an effective way of varying earnings in line with performance, with only a minority of bankers arguing that they should be guaranteed.
Bonus Schemes, a new publication from IDS HR Studies, looks at how employers can design and implement an effective bonus scheme. It also includes a detailed breakdown of current scheme structures and payments at 23 named organisations.
Click here for further information.
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Conference news

The Equal Pay Challenge 2010
Thursday 10th June 2010
London

This popular annual conference combines key aspects of legal changes in the area of equal pay with practical ideas for implementing pay changes in the workplace. It will provide you with a clear view of the implications of the Equalities Bill, and bring you up to date with case law developments in relation to job evaluation and pay progression. There will be a practical focus on how to develop pay transparency, how to conduct an equal pay audit and how to introduce job families to replace broad-banded pay structures.

Click here for further details and to book your place.
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