Connected Research

Union policy research in the 21st century

Archive for July 2009

Vittoria ai sindacati Italiani

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Last month, BT’s Italian organisation sought to make 320 compulsory redundancies amongst its workers there – a move which resulted in action being taken by the workers in the company in opposition.

We are delighted to say that the action has been successful and that BT Italia has withdrawn the compulsory redundancies, as well as agreeing instead to a policy based on voluntary lay-offs with incentives and a system of temporary lay-offs on a rotational basis where possible, coupled with redundancy for those who do not wish to participate in such a system. The company has also agreed to look into outsourcing at the local level and to consider requests for working time changes made by the company’s workers.

These were the strong demands of the Italian trade unions and, in their view, they have been achieved.

You can read the English language version of the Press Release put out by the Italian unions here.

Forza! Congratulations to the Italian unions and their demonstration of what worker solidarity and determination can achieve when put together in a union.

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Written by Calvin

31/07/2009 at 3:50 pm

BT’s pensions deficit

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BT published its first quarter report and accounts yesterday – a set of numbers which certainly seemed to excite the City although I’m not quite sure that it counts as a green shoot. Certainly Livingston was disounting that in his conference call to analysts.

Anyway, the accounts did disclose a doubling of its pensions deficit, to a net figure of £5.8bn (since the gross amount of deficit can be offset against tax), over the last three months. Despite the overall rise in the stock market in this period, which added over £1bn to the assets of the scheme, taking it back above £30bn, changes in the company’s assumptions about rates of return on those investments and about inflation exacerbated the liabilities by a much higher figure.

The deficit as revealed by the accounts has no implications for what the company needs to do in practice about the scheme. The IAS19 measure – which is the basis of accounting for final salary pension schemes – is a snapshot of the state of the scheme from the perspective of the timeframe of the annual accounts; that is, the position were the scheme called upon to pay liabilities within the year. (Incidentally, the role of this measure in exacerbating the public panic on pensions is one factor in the decline of private sector defined benefit provision that seems to have been forgotten about these days, although it’s also true that the City boys and girls yesterday didn’t seem to notice the size of the deficit, or else they discounted it…) By itself, it changes nothing.

In contrast, the real deficit in the scheme is the one revealed by the triennial valuation of the BTPS, which was due at 31 December 2008. This is the one that will force the company to put more money in the scheme (as is likely) and we don’t know what the size of the deficit as revealed by the valuation is going to be: it may be worse than the above figure; it may not. At the annual accounts presentation in May, the company said that it had reached ‘an advanced stage’ in its discussions with The Pensions Regulator over the valuation (that it was having discussions with the Regulator at all is highly unusual and a sign of the interesting times in which we live), but clearly no public progress has been made to shift that ‘advanced’ stage into the ‘final’ one.

The interesting thing about the publication of the accounting deficit figures yesterday is that they reveal a decline in the AA bond rate (which is used to assess rates of investment return into the scheme), from 6.85% in the annual accounts to 6.2% now; and a rise in the inflation rate, which is used to discount the value of liabilities extending into the future, from 2.90% in the annual accounts to 3.25% now. The decline in the AA bond rate was expected (as Robert Peston explains) but the rise in inflation at this point was less so. The measure focuses on RPI which, as we know, is currently heavily negative although the current position is less important than what will happen in the long-term.

BT’s accountants clearly think it is prudent to allow an increase in the inflation rate at this time, compared to what the figure was three months ago, but I wonder whether this is also the view of the Pensions Regulator?

Written by Calvin

31/07/2009 at 9:40 am

Posted in Pensions

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Exploding the myths about public sector pensions

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The TUC has produced an important briefing for trade union members on public sector pensions.

Set against the backdrop of the increasing volume of headlines and soundbites from opposition politicians attacking pensions in the public sector, the briefing takes six commonly-held myths and seeks to set the record straight:

– MYTH: ‘The cost of public sector pensions is spiralling out of control’; REALITY: costs are set to increase somewhat (as are all pensions costs), but not by an unsustainable amount.

– MYTH ‘Savings could be made by replacing final salary (defined benefits) schemes by a defined contribution scheme; REALITY: scrapping defined benefit pensions would mean increased public spending on public sector pensions in the short and medium term.

– MYTH: ‘The discrepancy between private and public sector pensions needs to be tackled by punishing the public sector’; REALITY: we should level up pensions – not level them down

– MYTH: ‘Most public sector workers retire at 60 on two thirds of their final salary’; REALITY: the majority of workers joining public sector pension schemes will retire and claim their pension at the age of 65.

– MYTH: ‘It is unfair that public sector workers benefit from ‘gold plated’ pensions’; REALITY: the private sector is the real culprit for unfairness.

– MYTH: ‘The Private Sector props up the Public Sector’; REALITY: the UK economy depends on a thriving public sector as well as private sector.

The current race to the bottom on pensions on which the opposition is engaged is in the interests of no-one, whether public or private sector. The discrepancy which now clearly exists between public and private sector pensions provision has been caused by the flight of private sector employers from decent occupational provision. Understanding that, what we can do to support decent occupational provision and the relative costs of public sector pensions is fundamentally important in the debate about pensions over the next crucial few months. As Myth 3 so correctly points out, we should end the discrepancy by levelling up, not by levelling down.

Written by Calvin

30/07/2009 at 10:34 am

Posted in Pensions, Politics

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Tackling the equal pay gap

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The reconvened Women and Work Commission has produced a report with a series of 43 policy actions which it suggests might make a contribution to narrowing the equal pay gap. The report pays particular attention to what can be done in education to tackle occupational segregation characteristics which act to divert women to poorly-valued, underpaid jobs, as well as to what needs to be done to allow women to access continued learning and development opportunities and to encourage a better balance between work and family life for all. The report also looks at what is beng done in the public sector.

The report is produced against the backdrop of an equal pay gap which is not only no longer closing but is actually widening – the gap was 22.2% in 2009, compared to 21.9% in 2007 when the Commission last reported (similarly, the gap for full-time workers has also risen, from 12.5% in 2007 to 12.8% now).

There has been some progress on some issues but, in terms both of education of the under 14s and in terms of balancing work and family life, the Commission highlights that significant progress since 2007 has yet to be made.

The policy actions suggested by the Commission will make a difference – even if some of them are clearly geared to the long-term. That’s the right focus – looking back over the nearly 40 years history of the Equal Pay Act (before which it was perfectly legitimate for there to be four rates of pay in a factory: the skilled rate; the semi-skilled rate; the unskilled rate; and the women’s rate), which is a pretty clear definition of the long-term, progress has clearly been made.

But more needs to be done and, whether or not we’re in a recession, the lack of equal pay remains a travesty (a ‘national scandal’, in the eyes of Rowena Lewis, acting Director of the Fawcett Society). Alongside the Society, I believe that systemic discrimination within pay systems tends to explain a large part of the equal pay gap which remains (almost certainly so amongst Connect members at managerial and professional level) and would like to see every company compelled to produce a regular equal pay audit. Equal pay audits (not one of the Commission’s 43 policy actions) can be a powerful tool for identifying, rooting out and preventing the re-occurrence of equal pay problems but (perhaps as a result) statutory backing for them appears likely to be necessary, with employers tending to be reluctant to engage in such a process on a voluntary basis.

Shame that the employer representatives on the Commission (as I imagine) managed to get this defeated yet again.

Written by Calvin

29/07/2009 at 4:49 pm

Posted in Trade union issues, Working lives

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Sacked by pizza delivery

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Eleven workers peacefully occupying the Vestas Windsystems wind turbine factory on the Isle of Wight in protest at the closure of the plant and the loss of 625 jobs have been sacked by pizza delivery for taking part in industrial action. The sackings – which the workers have lodged appeals against – mean that they will not qualify for redundancy pay.

The pizza was part of a regular food delivery being sent into the workers, who are occupying one floor of the building, by the management of the plant after the decision to put up a chain link fence up to prevent other workers from throwing food up to the workers staging the occupation. It also follows direct discussions between the workers involved and a management representative on Thursday last week – without which the letters could not have been delivered – and when the workers were told of the company’s course of action. The company was in court today to seek to secure a possession order on the factory which will allow it to send bailiffs in to remove the occupying workers. The workers have said that they will leave peacefully if that occurs – but the court’s decision to refuse the possession order on the grounds that the case had not been prepared correctly, with a further hearing now scheduled for next Tuesday, 4 August, is a welcome stay of execution (as well as an interesting demonstration of judicial independence, with the judge being highly critical of the paperwork).

The decision to close the factory was made back in April on the grounds of lack of orders, since which time the company has been engaged in a consultation exercise. Vestas has not commented on the protest but has released a letter justifying its actions.

This is an eye-catching protest, for a number of reasons:

1. The workers involved appear not to be union members, although RMT has provided support and practical assistance. There are a number of points which could be made here about union organising initiatives and the benefits of being in a trade union in this situation, as Johanna Baxter does elsewhere.

2. There is very little tradition of such direct action in the UK, even amongst unionised workers, certainly in contrast to France, where direct action including ‘boss kidnappings’ feature more strongly, as Adrian Askew, General Secretary of Connect, pointed out recently. Back in the 1970s, when union militancy was more widespread, factory sit-ins were more common and there were some legendary examples (UCS) but, apart from the Caterpillar workers’ production of the pink Caterpillar in 1987, more recently they have been almost non-existent. As Gregor Gall argues, perhaps there should be more.

3. Green power ought, in the context most recently of the government’s low carbon plan amidst earlier initiatives on renewable energy, to be a growth area. The plan indicates that 40% of the UK’s energy in the future will come from low carbon sources, including renewables, and joined-up thinking would question the closure of a wind turbine plant in this context at a time when manufacturing jobs are being lost to the recession. Questions do therefore need to be asked as to why Vestas is now closing its wind turbine plant on the Isle of Wight. The electoral change in local councils in England and Wales in May may, if Emma Burnell is right about the political divide in terms of approval of wind farm projects, provide some clues as to Vestas’s decision – at least in the UK (the ‘lack of local political action’ was referred to by Vesta directly). The plant supplies products not just for the UK but for the whole of northern Europe – it is a lack of orders right across this part of the continent that has led to the decision to close the plant. And that’s puzzling.

4. The government this week provided £6m in cash to Vestas in support of a new R&D facility on the Isle of Wight – which will support some additional jobs – but this is a separate issue from the closure of the manufacturing plant (and, it would seem, provided to a different Vestas company). R&D is required to deal with some of the typical objections to wind farms – though perhaps not the one that inspired Chris Madden’s very funny cartoon. So, this is good news – albeit with an orientation to the future rather than to the present.

In the meantime, to return to the present, the campaign to Save Vestas goes on, with workers calling on the company in the light of the court’s decision to refuse the possession order now to negotiate with them. That clearly should happen but, in the meantime, the political fight looks as though it needs to be taken to Europe as well as to Westminster.

Written by Calvin

29/07/2009 at 2:01 pm

Ofcom research into broadband speeds

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Ofcom has today published research into broadband speeds across the UK in conjunction with SamKnows and GfK, a market research agency. The research was based on a series of 60m performance tests conducted on the line speeds received by a representative sample of 1,610 customers receiving packages of advertised speeds of up to 8Mbps in the nine largest ISPs in the UK between November 2008 and April 2009.

Tests conducted in April 2009 revealed the following headlines:

– customers don’t get what speeds they think they are, including a high proportion of people who don’t get even 2Mbps, the figure outlined as a ‘necessary speed’ by Digital Britain and around which the government is intending to set a universal broadband service commitment. The average broadband speed was 4.1Mbps, compared to an average ‘up to’ headline speed of 7.1 Mbps (interestingly, this figure varied little from month-to-month during the course of the research)

– actual speeds received varied widely. Fewer than one in ten of those on 8Mbps headline packages received actual average speeds of over 6Mbps and around one in five received, on average, less than 2Mbps (while 11% never achieved a speed of 2Mbps). The average and maximum speeds recorded by those on 2Mbps packages (just less than one-third of the total) varied little but were, at around 1.7Mbps, lower than 2Mbps

– one-fifth of households never received a speed of at least 2Mbps, while 30% of households received overall average speeds below 2Mbps and 36% average speeds of below 2Mbps during the peak evening period (i.e. 8-10pm). These figures dropped to 11%, 17% and 20% respectively when the research focused only on those with packages in excess of 2Mbps

– urban based customers received significantly faster average speeds (4.6Mbps) than those living in rural areas (3.3Mbps)

– customers of all ISPs experienced a slowdown in actual speeds at peak hours during the evening when speeds were some 20 per cent slower

– upload speeds averaged just 0.43Mbps (10% of average download speeds)

– speed of connection is increasingly important: separate consumer research published simultaneously into a sample of 2,128 customers confirms that speed is the biggest single cause of dissatisfaction with broadband provision, with 26% complaining that the speed they received was not what they expected when they signed up to the service

– rural connections are slower than urban ones: the level of dissatisfaction was higher in rural areas (14%) than in urban ones (7%) and amongst those with lower speed packages (rising to 11% of those on packages of 2Mpbs).

Nothing particularly new or eyebrow-raising here, but the research does produce, for the first time in some cases, some interesting facts to bear in mind when it comes to policy-making, not least among them the percentage unable to get 2Mbps. Getting these people up to this speed by 2012, as stated in the commitment, remains a tough (and expensive) ask even at the headline level, let alone at the level of speed actually delivered.

Written by Calvin

28/07/2009 at 1:15 pm

Posted in Communications policy

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Pensioner poverty: what to do?

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Figures from Eurostat, the EU’s statistical publications agency, have been reported as confirming the relative poverty plight of UK pensioners, some 30% of whom (compared to an EU average of just 19%) have levels of disposable income which are lower than 60% of national median income.

The UK figure was the fourth lowest in Europe, ahead of only Cyprus and the three Baltic States of Latvia, Estonia and Lithuania (where the figure was the same as in the UK). At the other end of the scale were the Czech Republic and Hungary, where just 5% and 6% respectively of pensioners were this far from national median income. Indeed, four of the top five states were central and eastern European states formerly part of the Soviet bloc, the others being Slovakia and Poland (and the interloper being Luxembourg).

The data – based on 2007 figures – was cited by Age Concern and Help the Aged as evidence that the government needed to:

Find a more effective system to ensure benefits reach those who need them and meet the existing commitment to reform the pension system by 2012.

The charities commented that, even before the recession, the UK had made very little progress in tackling pensioner poverty, with levels remaining ‘stubbornly high’ in the previous four years; the supposition here being that, after recession (or during it), progress is even less likely.

As always, what must be done provides the key. The publication of the figures is timely because, on Thursday, the Department for Work and Pensions is due to release a review of efforts to tackle pensioner poverty.

The presence of ex-Soviet bloc countries so high on the list (though others – such as Romania, Bulgaria and, indeed, the Baltic States – were not so high) is perhaps no accident as they are surely likely to have much higher relative levels of state pension (it is relative poverty, not absolute poverty, that we are talking about here). State pensions at the sorts of levels that the international financial institutions would have derided as ‘unsustainable’ (Hungary’s own expenditure on pensions was one of the financial problems which engulfed eastern and central Europe earlier this year) and here where World Bank arguments for the ‘third pillar’ of private pensions saving were made particularly loudly. I wonder where they are now?

A much higher state pension is certainly one of the key ways of tackling pensioner poverty – the right to a basic state pension ‘set above the official poverty level and linked to average male earnings’ for every man and woman is the first point on the Pensioners’ Charter of the National Pensioners Convention. In the UK, we have traditionally relied on a mixture of state and occupational-backed provision – a combination which the Eurostat figures seem to confirm as having hardly been a roaring success. Furthermore, things are set to deteriorate substantially in the future, with the state pension having been allowed to start withering on the vine by the decision to cut the link between the state pension and earnings growth as far back as 1980 (currently due, rather belatedly, to be restored in 2012); while the flight of UK employers from decent occupational provision is in the process of destroying the occupational system.

Some tough choices must be made – and the timing is scarcely auspicious, either in terms of the electoral/political timetable or else in terms of the recession, while the Hungarian situation highlights some aspects of the difficult challenges inherent in improving pensioners’ relative position. Yet, despite the monies invested in counteracting the effects of the recession, the UK remains a rich country and one well-placed to tackle pensioner poverty. Unless the Conservatives are to break the national consensus around pensions established in response to the Turner Commission, the restoration of the link to earnings should take place and that should prevent the further decline in the value of the state pension (even if, by definition, it can’t actually improve its relative position). That, and my contribution to Yvette Cooper’s inbox as regards occupational provision, should be a start.

Anything else?

[Edit 31 July: If you read Polish, you can find a Polish perspective here].

Written by Calvin

27/07/2009 at 4:16 pm

Posted in Pensions, Politics

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