The Institute for Employment Studies looks back on the past 20 years to find out how the world of work has changed.
Looking at the broad employment landscape facing HR now and two decades ago, the first thing to take centre stage is the changes. In 1988, although the boom and financial deregulation of then chancellor of the exchequer Nigel Lawson were in full swing, unemployment was still at twice the current level. Manufacturing provided 5.3 million jobs (compared with three million today) and, contrary to popular belief, the public sector provided a bigger share of the jobs – 25% compared with less than 20% today.
Employment in the service sector has dramatically grown since 1988, from 19.5 million to 25.5 million.
There are more women in today’s workforce – the proportion of jobs held by women has increased from 43% in 1988 to 46% today.
The workforce has also aged, with nearly one-quarter of workers now between 50 and retirement age (the figure in 1988 was 18%).
Workforce education and skills levels have increased markedly, and more than 40% of 18- to 30-year-olds have been through higher education. In 1988, less than half this number did so.
Perhaps the most dramatic change, however, is that the UK has become a country of significant net immigration. In 1988, there were only 20,000 more immigrants than emigrants. Cautious official estimates show that the peak came in 2004 with net immigration of 250,000, and the current rate remains close to this.
The more things change…
Despite this progress, many things have not changed as we might have expected.
As with today, 1988 saw complaints about skills shortages, low productivity and poor management. Today, we have the Leitch Review back then we had similar lamentations from the National Economic Development Council.
Many of the predictions of the management magazine futurologists have also not come to pass. Charles Handy and others foresaw the end of the job for life, with a proliferation of work forms: self-employment, portfolio jobs, temporary and part-time work, homeworking and teleworking.
However, sober official statistics record that little of this happened. The shares of self-employment (13%), temporary work (6%), part-time work (25%) and multiple job-holding (4%) have changed hardly at all. For most people, the permanent, long-term, full-time job remains the norm.
This lack of change cannot be blamed on the perennial complaint of the increasing regulatory burden, however. The volume of employment regulation has undoubtedly increased since 1988 (to cover disability, age, working time, minimum wages, and many other areas). But despite this, in the Organisation for Economic Co-operation and Development’s (OECD) regular comparisons, the UK still has one of the least-regulated labour markets in the developed world – only the US has less employment regulation.
Of course, the futurologists were partly right: greater mobility and flexibility is now required, but within jobs and workplaces, rather than between them.
Survey evidence suggests that rapid change, greater pressure and reduced autonomy at work have contributed to growing levels of workplace stress. However, despite growing concern about the ‘long-hours culture’, and demands for a better work-life balance, average working time has continued to decline to its current level of 37 hours a week for full-time employees.
The UK is distinguished not so much by a long-hours culture, but by diverse working time patterns (both very short working hours and very long working hours are found here).
From confrontation to collaboration?
Recent headlines also imply some continuity in industrial relations, with workplace strife alive and kicking in 2008, with police marching, strikes by prison officers and threats of action from other public sector workers. Yet the bald statistics suggest that the age of management-union confrontation has passed.
In 1988, although then prime minister Margaret Thatcher’s union reforms had begun to bite, collective disputes still dominated the world of HR, with striking seamen, nurses and ambulance workers contributing to the loss of 3.7 million working days.
Since then, trade union membership has withered. Two decades ago, 40% of employees were union members, now only 25% belong (16% in the private sector).
At the same time, a decline in collective action – about 500,000 working days are now lost each year – has been mirrored by a massive rise in individual employment disputes, at 130,000 cases a year (four times the 1988 rate). Here the volume of employment legislation and a more litigious society are partly to blame, together with the virtual disappearance, outside the public sector, of the collective route for managing disputes.
Lack of union muscle
Until recently, it seemed that management and union partnerships had replaced confrontation in industrial relations. But in the public sector, despite many partnership agreements, we have the same old disputes about pay levels and service modernisation, exacerbated by the tightening in public spending.
The early years of New Labour saw generally tight labour markets the need to recruit more doctors, nurses, police, prison officers and teachers led to relatively generous pay settlements. Arguably the current unrest partly reflects a shift in the power balance as the labour market again begins to slacken.
By contrast, in the private sector, unions now rarely exercise their industrial muscle, their weakness magnified by the move towards a service economy, the threat of offshoring, and the upward social mobility of the working class. In individualised workplaces, small team discussions and informal consultation have largely replaced collective bargaining.
This changing employment scene is mirrored in the way people are managed in the workplace. As Personnel Today launched, human resource management (HRM) was emerging as a new philosophy, maximising the contribution of people to the performance of an organisation through the strategic integration of ‘people management’ initiatives to deliver organisational benefits.
‘Soft’ HR sought to release workforce potential through communication, motivation and leadership, while ‘hard’ HR saw employees as a ‘resource’, or cost, to be measured, managed and controlled. In both models, individual relationships replaced the collective.
HRM not only gave personnel managers a new name, but their roles changed from welfare or administration towards business strategy from industrial relations towards learning, education and organisation development.
The impact of HRM can be seen in the current interest in employee engagement and human capital measurement, and the insistence that line managers must take responsibility for managing people, not contract it out to HR.
Tight labour markets, workforce demographics and the ongoing shift from manual work to knowledge work, have forced employers to consider ‘soft’ HR concepts, such as employer brand and the employee value proposition, to a far greater extent than in previous generations.
Against this background, as the Institute for Employment Studies enters its own 40th anniversary year, our research shows that, so far, large organisations have tended to focus on improving the HR function’s structures and processes.
For the future, the function needs to concentrate on building internal capability so that it has the staff able to understand and respond to the challenges of the global business environment.
Whatever happened to the Japanese model?
Anyone flicking through their yellowing copies of Personnel Today from the late 1980s might be struck by frequent excited references to the Japanese approach to employment, seen as an attractive alternative to the hire-and-fire Anglo-American approach or the rigidities of the European social model.
Based on lifetime employment, progression through seniority and enterprise unions, it seemed to generate high rates of economic growth with low unemployment.
In this model, stable employment was linked to the motivation and commitment of the workforce, training and development were prioritised, and an internal welfare system looked after employees’ social needs. In return for security and progression, the (mainly male) workers were expected to be adaptable and loyal, working long hours with few holidays.
The shine has long come off the Japanese model, however, and it now seems like a quaint footnote in the history of managerial fads. In practice, the approach was only ever available to core workers in blue-chip companies, and it soon came under pressure from declining economic performance, financial instability, new technology, competitive pressures in a global market place, and changing social and demographic conditions.