Economic balancing act

UK employees enjoy more working rights than at any time in history. The regulations are designed to enable staff to work when and where they want, making life easier for them and in turn making them more productive. Unfortunately, if some experts are to be believed, the growth of flexible working could be the economic death of us.

Nine out of 10 employers responding to the recent Employment Trends Survey by the CBI said they offered flexible working. But while staff look for shorter hours, greater pay and more ingenious ways to stay out of the office, India and China are churning out graduates in their millions, who are more than happy to work longer hours for less money. Pound for pound, employment costs in the Far East are estimated to be one-tenth of those in Western Europe.

Does the threat from the East mean, to quote the British Chambers of Commerce, that “Europe is looking for a softer living that it can’t yet afford”?

Digging your own grave
The issue has been more or less ignored by the political parties at their annual conferences. But speakers at the EFQM Forum in Cardiff last week, and at last month’s Economist HR Directors’ Summit in London, set out stark warnings as to where our search for la dolce vita is taking us.

Richard Scase, professor of organisational behaviour at Kent University and a speaker at the EFQM Forum, is in no doubt. “We are digging our own graves – social Europe is a no-goer,” he told Personnel Today. “If we want greater work-life balance, then we have to pay the price, and that is a lower level of economic growth.

“If we are going for competitive advantage in the global economy, we need to make a choice,” Scase added. “If we are not willing to change then we have to opt out of the economic competitiveness league tables because we just aren’t going to be able to compete.”
All very apocalyptic, but is this just scaremongering?

Angela Williams, group HR director at commercial property investors Land Securities, doesn’t think so. She cited figures which showed that UK universities expect to turn out just 200 IT graduates this year compared to one million in India and China.

“How many 35-hour weeks do you think there are in China?” Williams asked delegates at the Economist conference. “This is the challenge – Europe could be dead in 30 years unless it makes changes,” she said.

The bad old days
Unsurprisingly, the TUC doesn’t agree that flexible working is leading us to rack and ruin. Policy adviser Paul Sellers said that taking away employment rights and returning to “the bad old days” wouldn’t work. “We can’t simply beat China and India through longer hours and lower wages,” he said. “The disparity in the numbers is just too great.”

Sellers pointed out that the UK has the second longest hours in Europe as it is, only behind Poland. “If people work long hours, they slow down and make mistakes, more report off sick and there are more accidents,” he said.

Rather than trying to undercut the emerging Eastern economies, we should be trying to be more intelligent about managing our resources, Sellers said. This means using the social agenda to encourage higher productivity and make better products. It also means looking at the 2.5 billion people entering the world economy through India and China as an opportunity rather than a threat.

“We should welcome the fact that countries are developing,” Sellers said. “We want to sell things to them as much as they want to sell to us.”
But most companies do not yet see it this way. A recent survey by manufacturers’ body the EEF found that 80% still regard China as a threat.

HR to the rescue
If companies do not accept that they are destined to eating China’s economic dust, then HR has a big job ahead. If your business wants to come out on top, it will need the best people and it will need them to work to the best of their ability, warned Williams. “If we don’t change how we look at attraction, recruitment and retention, then we are going to have a serious problem,” she said.

Companies need to start thinking globally rather than locally, she said. This means developing global pipelines for talent as well as promoting language skills and cultural understanding among UK staff. And attracting the cream of the crop needs to start earlier than ever, added Williams. “We need to start early and grow them so they won’t want to work anywhere else,” she said.

UK companies also need to change the perennial problem of management looking at presenteeism over outputs, she added.

To help plan for the future, Royal Dutch Shell has created a number of scenarios of how the world economy might evolve, according to the oil giant’s HR director, Hugh Mitchell. “As we think about strategy and process, are we assuming a contingency based on today’s world or are we thinking about what will happen when things change?” he asked the Economist conference.

It is highly unlikely that a political party will choose to take employment rights away any time in the near future so we’re stuck with work-life balance whether employers like it or not.

Just last week, Gerry Sutcliffe, employment relations minister, said: “The government is committed to the growth of flexible working – it is good for business, employees and their families.”

The real battle now lies with HR, which has to find the foot soldiers who will give UK employers the ability to stay ahead of a seemingly unstoppable tide from the East.

The threat grows

The UK risks becoming a “Third World country” because it is not producing enough scientists and engineers, the Independent Schools Council has warned.

Tens of thousands of students are graduating with these skills in India and China every year compared to a “plummeting” rate of students in the UK, according to Jonathan Shephard, head of the Independent Schools Council.

“The decline in maths, sciences, engineering and modern languages is unsupportable and has to be reversed,” he said. “Otherwise we are heading rather rapidly towards Third World status.”

However, India and China are not having it all their own way.

Iain Herbertson, managing director of Manpower in Asia and the Pacific, said the demand for skills would exceed supply in India for at least 10 years.

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