Investment in skills is key to UK productivity

an exclusive interview with Personnel Today, trade and industry secretary
Patricia Hewitt speaks about the impact that the Skills Strategy, the
Accounting for People Taskforce and European legislation will have on the drive
for productivity in the UK labour market

How important is the work of the Accounting for People Taskforce in encouraging
employers to measure the impact of their HR policies and adopt high performance
people management practices?

Many factors make up a truly great company, but the most successful businesses
now recognise that their greatest and most valuable asset is their people.

is therefore vital for companies to measure and report on the impact their
employees have on the performance of the business. But I know that it is not
necessarily an easy thing for companies to do, and there are still some
companies that are not convinced of the benefits of doing so.

is why the Accounting for People Taskforce was set up, to look at ways in which
organisations can measure the quality and effectiveness of their human capital

taskforce aims to develop best-practice guidance to help organisations put the
tools in place to measure and evaluate their workforce in positive terms as a
business asset.

expect their work to play a key role in helping to educate businesses of the
importance of measuring and reporting on human capital management, and in
helping companies to get started. I look forward to receiving their report

Do you think that plans to introduce legislation on two dates each year will
help employers comply more effectively? Is there not a danger that
organisations will have to introduce a number of new policies all at the same

The change we made to implement new employment regulations on just two dates
each year was made in response to what employers wanted. They told us that
harmonising new laws on regular dates would give them more certainty and enable
them to plan better, so we gave them what they wanted.

of a myriad of dates to remember, employers now know exactly when the new regulations
come into force, and can prepare in good time.

Does the Government has a role to play in educating employers that some
employment legislation (such as the Employment Act) cannot just be dismissed as
‘red tape’, but is actually part of the drive to improve competitiveness and

Definitely. Something I always impress on employers when I meet them is the
host of business benefits that can accrue from the culture change we are trying
to encourage. For example, with work-life balance policies, there is a clear
business case showing that staff are happier, better motivated and more
productive when employers take account of their work-life balance needs. The
cost of recruiting and retraining to replace staff who leave when they have
children is far more than the cost of letting those employees work flexibly.

Are you concerned that the raft of European employment legislation which the
Government has to implement – such as the Information and Consultation
Directive and the Agency Workers Directive, as well as the possible removal of
the UK’s working time opt-out – will undermine the flexibility of the UK’s
labour market?

Labour market flexibility plays a crucial role in achieving our full employment
and social justice objectives. We know that new employment rights and standards
must be employment-friendly and must not block change.

have proved that provided you get the implementation right, there doesn’t need
to be a contradiction between fairness and flexibility, and that both are
essential if we are to get more people into the labour market. Our high
employment rate – which is above the European target of 70 per cent – is
testament to this.

UK, like the rest of Europe, needs an adaptable workforce that has the skills,
training and mobility necessary to cope with change. Labour market reform must
focus on these issues.

Should Department of Trade and Industry officials lean more heavily on the
Chartered Institute of Personnel and Development when drafting legislation to
make sure the people who must ensure that organisations comply with the new
laws – HR professionals – have a greater opportunity to express their views?

We welcome the contribution many CIPD members make to our consultations on
employment legislation. The more we can involve HR professionals, small
business, employees and the unions, the better our legislation and policy will

Will the DTI eventually be forced to bite the bullet and legislate to close the
equal pay gap by introducing mandatory equal pay audits?

It is encouraging that the pay gap continues to close, although there is still
clearly a long way to go. The causes of the pay gap are complex, and pay
discrimination is just one of them. We are committed to ensuring that 35 per
cent of large companies have completed equal pay reviews by 2006 to help reduce
the gender pay gap.

Are there plans to extend the right to request flexible working to parents of
older children, or even all employees?

As your readers will know, the new rights introduced in April were probably the
largest ever overhaul of employment rights for parents. For the first time, we
gave parents of children under six years old and of disabled children under the
age of 18 the right to request flexible working conditions.

have said that we will review the right in April 2006, three years after its
introduction. In the meantime, we are closely monitoring how the right is
received, and taking feedback from both employers and staff on their

What more could they be doing to make UK industry more competitive?

We now know that the key to continued success for the UK is productivity.
And the key to productivity is a highly-skilled workforce. In the past, as a
nation, we have not invested in skills as we should have done, and the result
has been that too many people enter employment without the skills they need for
a worthwhile, fulfilling career. Our new Skills Strategy will give businesses –
particularly HR professionals – greater choice and control over the delivery of
their training. We are working on ways to offer financial support to small
firms who want to train their workforce and improve the skills of their

on HR

What is your impression of HR directors and professionals responsible for
‘people issues’ in business?

The first HR professional I met was in my first job at Age Concern, more
than 30 years ago. She came to see me and asked what my training needs
were. I said I had no idea – and I didn’t. She helped me identify what I
needed to learn to do my job better – including a brilliant short course in
speedwriting techniques that I still use (to the dismay, now, of my private
office). I have great respect for HR professionals, and I welcome the fact
that more of them are becoming board members. We need more of them.

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