The TUC conference saw sharp exchanges between government and unions on
private involvement in public services. What is the view of the UK’s biggest
Fairness is a principle at the centre of industrial relations and at the
heart of public services. For myself and for the 1.25 million members of
Unison, fairness is a key issue when we talk about private sector involvement
in the public services.
Specifically, we are concerned about the unfairness of the two-tier
workforce and the downward pressure that contracting out places on pay and
conditions. It is my belief that this threatens the quality of public services.
The policies of compulsory competitive tendering in local government, market
testing in the NHS and now Public Private Partnerships have led to dramatic
changes in the way services are delivered.
Tens of thousands of staff have been transferred from local councils and the
NHS to private contractors since the mid-1980s. When a service is
"externalised", the staff are usually protected by Tupe and
transferred to the new service provider on their existing terms and conditions.
More recently, pensions protection has also been strengthened.
However, Tupe protections are fragile and some employers seek to undermine
the pay and conditions of staff transferred under the rulings.
The greatest unfairness arises from the fact that new staff have no
protection at all and are usually offered lower pay and conditions and no
occupational pension, invariably leading to a two-tier workforce. Staff are
working alongside each other, doing the same job but receiving very different
remuneration. This is an unfairness that cannot be sustained.
A recent report commissioned by Unison looked at what it means to be a
private-sector employee on a public-service contract in East London. It showed
that a vicious downward spiral into poverty occurs when companies force down
the pay and working conditions of the lowest paid.
New staff on public-service contracts earned very low wages and had only the
statutory minimum conditions. Many of them were forced to work inhumanly long
hours, some in several jobs, just to eke out a living for their families.
Another study for Unison shows the disparity of directors’ pay compared to
their employees in the companies providing public services. It showed that
executive directors earn as much as 77 times the average pay of their employees
and the gap between boardroom pay and average workers’ pay is getting wider.
I make no apology for saying that this not fair and goes against the public
service ethos. Nor is it right or fair that public money should be spent on
making individuals rich.
Unison has a proposal to remedy the two-tier workforce. It would like to see
the re-introduction of a Fair Wages Resolution into procurement that would
ensure that all workers providing public services received the same rates of
pay and the same conditions.
Until it was abolished in 1983, Britain had a successful Fair Wages
Resolution. It required companies contracting with public authorities to pay
the going rate for the trade or industry.
The International Labour Organisation, based in Geneva, has a convention
(Number 94) that similarly stipulates that public contracts should include
clauses, ensuring the workers concerned have wages and other conditions
"no less favourable than those established for work of the same
character", and this has been signed by 59 countries.
The re-introduction of a fair wages clause in Britain would not only help
solve the problem of the two-tier workforce.
It would also create a level playing field where all potential partners
could be judged on their efficiency and effectiveness and not on the savings
they could make out of cutting the pay and conditions of already low paid
workers. It would bring back some fairness into public services.
By Dave Prentis a general secretary of public-sector union Unison