Third Age Employment Network - Archived News May 2004

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Archived News May 2004

Week Starting 31st May

Tribunal Fears Haunt SMEs

A new survey carried out for the Department of Trade and Industry (DTI) shows that three quarters of employers worry about the financial implications of being taken to an employment tribunal and more than two thirds are concerned about the damage it could do to their business reputation.

The survey was conducted with 500 small and medium sized enterprises (SMEs) and it also found that 74% of managers admitted they are worried about the effect a tribunal would have on their own stress levels.

Last year tribunals dealt with 98,000 claims based on work disputes, ranging from problems over pay and conditions, to racial and sexual harassment. But staggeringly in more than a third of the cases the individual and the manager had not discussed the problem at all before approaching an employment tribunal.

This October new Dispute Resolution Regulations come into effect which place new responsibilities on employers and employees to discuss workplace disputes when and where they happen in a bid to resolve them before going to an employment tribunal. The regulations will apply to all employers – irrespective of the size of the organisation .

Employment Relations Minister Gerry Sutcliffe commented, “We are introducing these new regulations to provide a framework for employers and employees to handle disputes in the workplace, ensuring employment tribunals take their proper place as a backstop for individual employment rights rather than the first port of call…..

It is clear that there are too many cases which could be resolved in the workplace ending up in tribunals. This costs time and money, creates unnecessary stress for both parties and slows down the tribunal system. Our aim is to improve this situation for everyone.”

Last year the Employers Forum on Age warned employers that unless they prepared properly for the forthcoming age discrimination legislation, they could end up facing legal claims in the region of £193 million in the first year after it comes into effect (2007).

Britons Keep on Borrowing

Just when you think the level of personal debt can’t get any higher – it does. New figures for borrowing in April show that mortgage lending rose by £9.8 billion in the month - a new record. Also there was a £1.3 billion increase in credit card and other unsecured lending.

Total net lending rose by £11.1billion and now stands at a staggering £985 billion - almost equivalent to Britain’s total annual economic output.

Economists believe borrowing has now reached ‘alarming levels’. They predict the Bank of England will react by raising interest rates later this month to try and dampen it down.

Endowment Mortgages – Claims Regulations Tightened

Its estimated nearly 4 million of the over 5 million people using an endowment policy to pay off their mortgage, will have a shortfall on those policies. The average shortfall is currently £5,500.

New regulations have come into force to make sure the policy providers tell people how long they have left to complain about their failing endowment policies. If they believe those policies were mis-sold to them they will have 3 years in which to lodge a complaint and they must be told when the period to do so will end. Some firms do not impose any time limits on complaints but others do.

Policyholders should receive the warning of any predicted shortfall via a red letter
sent from the policy provider. They can then decide what action they want to take about it.

According to the FSA (Financial Services Authority) just over 450,000 complaints about mis-selling had been made by the end of March this year.

Retail Sector – Mixed Picture on Jobs

Whilst UK retail sales grew at their fastest rate for two years in May and are expected to be almost as strong this month, the picture on jobs is mixed. Despite strong sales, some retailers cut jobs sharply.

According to the CBI’s latest Quarterly Distributive Trades Survey (DTS), 37% of retailers surveyed said they were employing less staff than a year ago as opposed to 20% who are employing more. Retailers expect the rate of job cutting to slow only slightly in June.

John Longworth, Chairman of the CBI’s DTS Panel said, “Strong consumer spending is fuelling the economy and this survey shows it is gathering momentum…..But competition is strong and retailers have only been able to increase prices slightly. With profit margins squeezed retailers have edged back investment plans and sharply cut jobs.”

Meanwhile on the wholesale side employment rose at its fastest rate since November 2000.

Parts of the retail sector have led the way in introducing ‘older worker friendly’ policies and practices, so its overall health and prospects are of real interest to us.
However as in all sectors there are some bad apples…..

Worker paid 29 pence per hour wins £5000 Tribunal Award

The national minimum wage is £4.50* an hour but a worker with learning difficulties
earned only £60 in his first month - despite working up to 10 hours a day. This equated to just 29 pence per hour.

According to the Daily Telegraph a director of the company involved commented that no other employees had complained. “I would like to think that I treat my staff as family”, he reportedly said.

The Tribunal heard that the man, who worked stacking shelves at a cash and carry business in Leicester, later had his wage increased to £1 an hour. It awarded him £5000 in compensation.

* For workers aged 22+.

Week Starting 24th May

TAEN Letters to the Editor

Over the past 10 days we have had two letters published in the national press about matters close to our heart. The first was in the Daily Telegraph about Adult Apprenticeships (click here). The second was in the Financial Times about the Hidden Treasures contained within the 1 million plus ‘hidden unemployed’ aged 50+ (click here).

Public Sector – 162,000 New Jobs Created

The Office of National Statistics reports that in the 12 months to June 2003, an additional 162,000 jobs were created in the public sector. Over 50% of them (88,000) were in education, 63,000 were in the health service, 9,000 were added to the police service and ‘other central government’ departments had an increase of 22,000.

Between them health and education now account for just under 60% of public sector jobs. Twenty years ago they accounted for 40%.

Employment in the public sector has gone up by over half a million jobs (some 10%) since 1998. Prior to that the number of public sector jobs had fallen for 15 years.

But perhaps the tide is turning again. Gordon Brown announced plans in the Budget to cut 44,000 jobs from Whitehall departments (DWP, Inland Revenue, Customs & Excise, Department of Health and the Department for Education & Skills) over the next 4 years. Efficiency cuts are expected to lead to another 40,000 civil servants being axed.

‘Property Can’t Replace Pensions’ Warning

If you read the newspapers it seems more and more people have stopped saving and are regarding their homes as their pension pot for the future. However, according to the Pensions Policy Institute’s that’s not a sensible strategy.

The PPI’s new report ‘Property or Pensions?’ concludes that despite the recent surge in property prices, the majority of people will not have enough housing equity to allow them to retire without saving in other assets.

It points out that although more wealth is held in housing than in private pensions, not all housing wealth can be converted into an income. Equity release products typically allow only 20% of the house value to be realised at age 65.

Only 10% of homes are worth more than £330,000 which is how much is needed for equity release to provide an income of £100 a week.

Alison O’Connell, Director of the PPI commented, “For most people, property will at best be a complement to occupational or personal pensions, not a substitute.”

CBI Raises UK Growth Forecast

The CBI has raised its forecast for economic growth this year and next saying consumer spending is growing more strongly than expected while exports will continue to revive. But it warns of risks to the outlook from rising oil prices and financial market instability.

Their Chief Economic Adviser, Ian McCafferty said: "The recovery has gained a good deal of momentum. With consumer spending rising more strongly than expected, the housing market picking up again and the world recovery on course there is scope for solid economic growth in the UK over the next 18 months.”

On the employment front the CBI is expecting a continuing fall in unemployment over the next 18 months – predicting a drop of 200,000 to 1.42 million by the end of 2005.

Unions Call for New Bank Holiday.

There are fewer public holidays in the UK than in any other country in the now expanded European Union. Topping the league table with 18 days is Slovakia, followed by Cyprus with 16 and Malta with 14. The UK comes bottom with 8 days.

With the EU average being 11.3 days - the TUC is calling for a new bank holiday. It has suggested several possible candidates including New Year’s Eve, the national saints day in England, Scotland and Wales or a guaranteed ‘floating’ day each year to commemorate special anniversaries e.g. the 60th anniversary of D-Day on 6th June this year.

Brendan Barber (TUC general secretary) said, “ We work the longest hours and have the fewest public holidays. Its about time we caught up with the rest of Europe in the holiday stakes.”

People can vote for their choice on www.worksmart.org.uk/holiday

Learning & Skills Council Appoints Director of Skills.

David Way has been appointed as the National Director of Skills. His remit will be to deliver the Government's Skills Strategy and to work closely with the Sector Skills Councils, all key employers and their representative organisations to secure commitment and involvement in learning and skills training.
He was previously the Executive Director for Black Country LSC working on learning and skills matters in the region.

Week Starting 17th May

6 Out of 10 Firms Spending Under £100 A Year Training Staff

The latest ‘Regional Survey of UK Economic Trends’ report from the Confederation of British Industry (CBI) and Regional Development Agencies (RDAs) casts an interesting light on how seriously firms are taking the skill shortfalls so many complain are hindering their growth and performance – and starting to drive up wage costs.

Of the 4000 businesses in Great Britain who took part in the survey, only 37% are investing more than £100 per employee, per annum on training. This represents a 1% drop on the number doing so 6 months ago.

On a regional front, businesses in the E Midlands, North West and North East report the highest training budgets with around 44% currently allocating more than £100 for training per employee per annum. Firms in Scotland, Yorkshire & Humberside and the South East report the smallest training budgets with over 30% of firms spending less than £20 per person.

The expression ‘you reap what you sow’ springs to mind. Those employers who can’t be bothered to take training their own staff seriously, really shouldn’t whinge about skills gaps or the rising cost of recruiting people with the skills they’re looking for. Let’s get serious, how much worthwhile training can £20 a year buy - or even £100 for that matter ?

Of course the truth is that training spend is not divided equally between all employees, it is focused on particular individuals or groups. Normally those who are already well qualified and younger win out over their less qualified and/or older colleagues.

‘New Deal’ Streamlining Proposals

At long last the Government has published its proposals for streamlining the various ‘flavours’ of its New Deal programmes. In launching its ‘Building on New Deal : Local Solutions meeting individual needs’ preliminary paper Gordon Brown said, “Having already created almost two million jobs, since 1997, we are moving closer than ever to full employment. But our aim is full employment in every community, and so we are setting out the next radical steps in our programme of reform. More choice, more devolution, more personalisation to extend and strengthen the New Deal.”

The preliminary paper is promising there will be fewer rules on eligibility, programme mix and length, with more flexibility, variation and local innovation. Its proposals would mean :-

District Managers and JobcentrePlus Advisers have new freedoms and flexibility to tailor a wider range of training and support to each individual’s needs.
A review of the intervention and sanction regimes – with a possibility of tougher, more frequent interviews.
More power and new local budgets controlled by local managers to purchase training and support to tackle local problems and meet individual needs.
Specialist programmes to help people with specific problems (e.g. former drug addicts, alcoholics and homeless people)
Devolved flexible skills budgets to enable local advisers to help people gain the skills they need to move off welfare and into work.
The various New Deal programmes would be amalgamated with advisers able to tailor help for individuals from a flexible menu of provision.

Many of the reforms seem sensible – especially those devolving greater flexibility and purchasing authority to District Managers to meet local needs. It is unclear whether the 6 month eligibility rule to access the scheme will be maintained for older workers and also whether their participation will continue to be on a voluntary basis. There are a number of mandatory ND50+ pilots currently underway.

The new New Deal programme remains a welfare-to-work initiative. It does not appear to offer much, if anything, to help the 1.1 million workers aged 50+ who are out of work and not in receipt of benefits (the so-called ‘economically inactive’), many of whom would like paid work again.

The DWP is asking for responses to the proposals. A copy of the preliminary paper can be downloaded from :

http://www.dwp.gov.uk/publications/dwp/2004/buildingonnewdeal/index.asp

Mystery of New Deal 50+ Numbers Solved ?

Regular readers will know that for the past year we have been trying to get details from the Department of Work and Pensions (DWP) regarding the number of people helped into work by New Deal 50+. We’ve even written to Andrew Smith – the Secretary of State at DWP - asking for the numbers but to no avail.

Up until April 2003 when the Employment Credit was changed into a Working Tax Credit (click here to read earlier article), figures were regularly published on the number of people the scheme had helped. In fact up till that date, from its inception in 2000, New Deal 50+ had helped nearly 100,000 people into work. The Government has regularly quoted this number in its publications and whenever questions have been asked.

We have all suspected the unwillingness to offer up any new figures has been to mask a substantial drop in the numbers being helped. The DWP say they haven’t been able to provide numbers because of difficulties they’ve had accessing the information from the Inland Revenue – who are responsible for operating Working Tax Credits.

Now, at last, in the Preliminary Paper on reforms of the New Deal (see item above) the Government has begun to quote a new figure ;-

“The New Deal has supported over 120,000 older workers in taking up work…”

So does that mean in the past year (since the change) 20,000 more people have been helped by New Deal 50+ ?

Probably not. Older Workers may have been able to access help via one of the other New Deal programmes e.g. New Deal for Disabled People and those doing so will have been included in the new total.

So even though we have been promised figures will be released at some (unspecified) future date, for the time being the mystery remains….

Pension Bill – 11th Hour Amendment on Contribution Shortfalls

One of the reasons so many final salary pensions schemes have closed is that employers took ‘contribution holidays’ during the boom years of the mid 1990s and paid little or nothing into their schemes. This had the effect of boosting company profits and share prices and increasing executive bonuses – but that’s another story.
However, it meant that when the stock market downturn hit in the late 1990’s, there were significant shortfalls in their pension funds. The rest is history…some companies responded by closing their schemes to new and/or existing employees, others have been playing catch-up ever since.

In an attempt to deter companies from letting their schemes fall any further into the red prior to the setting up of the Pension Protection Fund next year, the Government has introduced a last minute amendment to the Pension Bill. If passed, the amendment would mean companies could be served with ‘contribution notices’ compelling them to make good any shortfalls.

Week Starting 10th May

Government Finds £400 million To Compensate Pensioners

After sustained pressure from unions, external campaigners and MPs from all parties, the Government has done the right thing and changed its mind about compensating the estimated 60,000 members of failed occupational pension schemes.

The Government plans to set up a special £400 million pension fund which will phase payments over a period of 20 years to compensate workers who lost their pensions when the firms they worked for went bust.

Andrew Smith, Secretary of State at the DWP, said, “This will give real help to people who have lost their life savings through no fault of their own. I’ve met many of those affected and am convinced that taking action is the right thing to do – it will also be a huge boost to wider confidence in pensions.”

‘Full Employment Is Within Reach’ Claims New Minister

Jane Kennedy, the new Minister for Work, greeted this week’s employment figures by saying “full employment is now within reach”.

There are now 28.35 million people in work, up by just under 300,000 on the same time last year and the highest figure ever recorded. The overall employment rate has risen to 74.9% and there are nearly 2 million more people in work than 7 years ago.

At the same time unemployment (both the claimant figure and the ILO measure) have been continuing to fall with the ILO number down by 91,000 over the last year and standing at 1.41 million and the claimant count at 876,300 – the lowest since August 1975.

As good as these figures are – and they are the best amongst OECD countries – the minister’s ‘full employment’ remark is over-egging the situation. It will come as news to the 7.8 million people of working age who are not working - especially the estimated 2 million plus (half of whom are over 50) who would like a paid job.

Business Optimism Translating Into New Jobs

Four new surveys report continuing growth of business optimism and the impact its having on jobs.

The IOD (Institute of Directors) reports UK business confidence is at a four-year high and according to Graeme Leach (their Chief Economist), “this should feed through into continued employment growth. Around half our members expect employment in their company will increase this year.”

The CBI says the recovery in UK manufacturing gathered momentum over the last quarter with total orders increasing at their fastest rate for nine years. While 16% of firms surveyed said they increased jobs, 22% said they were employing fewer people. The CBI’s Regional Trends Survey predicts that 17,000 manufacturing jobs will be lost over the current quarter but the rate of job losses is slowing.

The 2004 London Financial Services Recruitment Review says that the financial sector is reporting a surge in recruitment. A poll of 128 City institutions showed just under half (48%) had increased the number of permanent employees over the past year and that nearly 6 out of 10 (57%) intend increasing staff numbers this year. More City employers are adopting diversity policies and putting a emphasis on attracting a multiracial workforce.

The Mandis/Adecco Job Creation Index (JCI) claims job creation in the UK went up by 13% in April versus the same month last year. The JCI says the leisure, sports and entertainment industries experienced the biggest rise in jobs and that the telecommunications and internet technologies industries are also experiencing growth. However media, advertising, marketing, publishing and healthcare are down.

Finally, Asda has announced plans to create 4,300 new jobs in the UK by the end of this year. It is investing £400 million extending its existing stores and developing new ones.

Over 50s Outreach Pilots Underway

Seven new pilot programmes aimed at promoting the back to work help available through Jobcentre Plus to people aged over 50 who may not be aware of this help or who do not normally have contact with Jobcentre Plus have begun.

The pilots, each lasting two years, are running in Cardiff & Vale; Newcastle & North Tyneside; Wigan; Liverpool; Dudley & Sandwell; Lanarkshire and Fife.
Taen members (Forty Plus, Pertemps and Working Links) successfully bid for the pilot programmes in their 3 areas.

White Paper Published On Single Equality Commission

The Government has published its White Paper on proposals for the new Commission for Equality & Human Rights (CEHR). The Commission will be responsible for challenging discrimination across society and, for the first time, will promote human rights.

The new body will bring together the work of the 3 existing equality commissions (The Commission for Racial Equality, The Equal Opportunities Commission and the Disabilities Rights Commission). It will also take on responsibility for new laws outlawing workplace discrimination on sexual orientation, religion or belief and age.

Dual responsibility for equality and human rights will mean the CEHR can deliver greater support and advice to individuals, businesses and communities, as well as crackdown on discrimination, while at the same time promoting common human rights values.

The White Paper sets out in detail the proposed vision, functions, powers, and governance arrangements for the CEHR. It outlines the work the new body will be expected to carry out to support key stakeholders and how its work will be implemented.

For the time being the Government has kicked the idea of a single equality act – replacing all the current legislation and regulations - into the long grass. However they are asking for responses to the White Paper’s proposals by 6th August 2004.

The CEHR will not come into effect before the end of 2006 “at the earliest”.

Over 40% of SMEs Want Employment Law Immunity

Normally the most wanted item on small business’s wish-list is a reduction in Government red tape, however 44% of SMEs taking part in the latest survey from the Tenon Forum want the threshold under which small businesses are exempt from employment laws to be raised.

Alan Newton, chairman of the Tenon Forum (an independent SME think tank) said,
“We urge the government if they are serious about encouraging enterprise it is essential for them to give smaller firms the room to grow and the opportunity to develop to a size where they are able to manage the demands of employment legislation.”

This October the small firms exemptions in the present Disability Discrimination Act is due to be removed, meaning that all firms – irrespective of size - will need to comply with the amended regulations.…

Week starting 3rd May

Over 50s Still Bearing Brunt Of Redundancies

Even though the overall redundancy rate in the UK is falling, workers over 50 are still more likely to be made redundant during staff cutting programmes than their younger colleagues.

Official figures published by the ONS (Office of National Statistics) in this month’s edition of Labour Market Trends show that overall redundancy rates have dropped to a nine year low of 6.4 per thousand employees. However, within that falling trend the rate for those over 50 continues to be higher.

The ONS figures compare the redundancy rates for the spring quarter over 5 years (1999 to 2003). In 1999 the rate for those 50+ was 9.1 per thousand employees, whereas in 2003 it was 7.2, having fallen from a high point of 9.5 in 2002 (the worst year throughout the period for redundancies overall). Over the same period the redundancy rate for 25-49 year olds was 7.1 per thousand in 1999 and fell to 6.0 in spring 2003.

The figures also show that irrespective of age, the redundancy rates for men are almost double those for women. This is in large part explained by the fact that women are often under-represented in those sectors experiencing job losses.

The ONS comments that there was a higher than expected increase in redundancies amongst senior managers and officials and skilled trades occupations in 2002 when the redundancy rate for men over 50 climbed to 12.5. It fell back to 9.8 last spring.

When it comes to re-employment following redundancy, once again older workers are at a disadvantage. The re-employment rate for older workers made redundant in the previous 3 months fell from 38.7% in 1999 to 33% in 2003. It had dipped to 27.4% in 2001. Re-employment rates for those age 16-49 were significantly higher throughout each of the five years examined.

Financial commitments in retirement.

Research by DWP shows that a higher proportion of people with mortgages continue to work past State Pension Age, not surprisingly. We have also be highlighting the fact that later start of working life and families is bound to have a knock-on effect to commitments in later years. If there are only 20 years between birth of children (whose further education has to be partly funded) and expected retirement age, then the message is clear.

Now Prudential have published research (April 2004) showing that 1 in 4 homebuyers is still paying off their mortgage in retirement. 21% of first time buyers are over 45 and 42% over 35. With 25 year mortgages this is bound to add to incentives to extend working life and/or to engage in equity release to finance later years .

Despite Offshoring, UK Call Centre Sector Expected to Boom

An independent report into the UK’s call centre industry predicts 200,000 new jobs in the sector over the next 3 years. It forecasts the sector will employ over 1 million people in the UK by 2007 which is four times higher than the number expected to be employed in India call centres in the same year. The report points out that the sector has already grown in the UK by 250% since 1995.

The report’s key findings are :-

The quality of UK call centres is high but that the skills of the workforce need further improvement – particularly ‘soft skills’ like communication and customer service.
The average length of service in a call centre job is 2 years 8 months.
Companies should consider all the implications before taking decisions to move operations offshore – including the cost of relocating senior management, travel costs and customer discontent.
UK call centres need to continue improving the quality of their customers’ experience.

Mike Havard, Managing Director of CM Insight, the customer management
consultancy that led the research project, said:

"For too long the UK call centre industry has been dogged by conflicting forecasts about its future. This report at last gives us a clear view and confirms that the UK can not only compete but thrive. However, there is no room for complacency. The
recommendations of this report must be taken up by industry and Government alike. The time to act is now and the best way to act is to put the interests of the consumers we serve at the top of our agenda."

Fewer Company Insolvencies But Personal Insolvencies Up

Another of the signs that the economy is recovering, along with the reducing rate of redundancies, is the fall in company insolvencies. There were 3,155 company insolvencies in England and Wales in the first quarter of 2004 on a seasonally adjusted basis. This was a decrease of 4.6% on the previous quarter and a decrease of 14.3% on the same period a year ago.

However, there were 10,294 individual insolvencies in England and Wales in the first quarter of 2004. This was a slight decrease (0.5%) on the previous quarter, but an increase of 26.8% on the same period a year ago.

Businesslink.gov.uk Unveiled

The DTI has launched a new website aimed at the UK’s 3.8 million small and medium sized enterprises (SMEs). The new, one-stop Businesslink.gov.uk website provides free and easy access to government information, advice, funding and training.

The site is a cross-government collaboration involving departments and agencies who interact with business. It brings together an easy-to-use, searchable database of over 2,500 government funded business support products ranging from grants and loans to consultancy support to help SMEs build their businesses. There is a training directory with over 500,000 courses, events and seminars to help develop staff skills. There are also simple guides and tools to help employers manage their payroll and human resources.

Businesses will be able to find out quickly and easily what regulations apply to them and what they have to do about them. This is available on a single site for the first time.

Speaking at the site’s official launch, Patricia Hewitt (Secretary of State at the DTI) said, “We’ve listened to business when they’ve told us what would make their dealings with government easier. And we’ve been able to deliver a website that is relevant to these needs. Whether its help with starting up, improving your staff’s skills or working out which regulations apply to your firm, businesslink.gov.uk should be the first stop online if you don’t know where to go or what’s available.”

© TAEN 2006