UNISON’s Bargaining Support Group provides economic data and many of the union’s bargaining guides. It also responds to a lot of financial inquiries, and a large part of this work is analysis of company accounts, accessible via Companies House, the Charity Commission or Financial Conduct Authority.
“Negotiators,” explains Kevin, “have access to the accounts. But they’ll frequently come to us to do that work because accounts for bigger companies can be two or three hundred pages long. So, unless you’re used to looking at it, you don’t necessarily know where to go to pull this information.”
Sectoral issues
UNISON members work across the public and private sector. Kevin highlights how sectors — and the density of union membership — can influence how negotiations are conducted, the leverage exercised by reps and officers and the kind of information that is needed.
“For the private sector, on the one hand there are the big energy or water companies and on the other there are the multitude of contractors across local government, the NHS, education etc.
“They’re quite different in their demands, as generally the likes of utility companies record quite substantial profits, which sets the backdrop for negotiations on terms and conditions. But in areas such as facility management, covering the likes of catering and cleaning contractors, the financial background and often lower density of union membership can result in a tough negotiating environment.”
Making successful deals
Successful deals tend to have common features. “One measure is where you’re able to move the employer on their original offer.” This immediate post-settlement assessment is clearly important but cannot be the only measure.
“Is it real terms increase in pay? You can have an impressive headline increase, but does it achieve a real terms increase above inflation? And note, we still take Retail Prices Index (RPI) as our basic measure of the increasing cost of living for workers.”
Though RPI is the best measure for assessing the value of a pay rise, Kevin notes how RPI has been under sustained attack by the UK Statistics Authority (UKSA) for over a decade, since changes in the collection of clothing price data created a larger gap between RPI and CPI: “Unless the labour movement can get the government to shift its position on RPI, that measure will be effectively axed in five years’ time, leaving us without the historical reference point for pay negotiations for the first time in around 70 years.”
Relevant information
Negotiators need to have relevant contextual information to get to a settlement. Kevin (pictured above) explains that it’s “not just what the current inflation rate is but looking back over a period of time to see the way inflation has eroded pay.
“The total lost value can amount to thousands of pounds, requiring a large percentage increase to address it. But to make some inroads into the lost value over time is often something that we’ve sought to achieve. We provide tables to understand what the cut in the value of pay has been in real terms.”
UNISON has its own database of pay and conditions agreements, but he added that:
“Like a lot of unions, we subscribe to the Labour Research Department and its Payline database. We pull on that data a fair amount.”
But Kevin uses a variety of sources, particularly on pay settlements and average earnings: “We use material from CIPD [the HR professionals’ body] including their quarterly report on labour market conditions and the ONS [Office for National Statistics] is a significant resource for us.
“The Bank of England’s forecast and the HM Treasury forecast material is also used heavily for our pay claim guidance documents. There is also Incomes Data Research for analysis on pay awards.”
Affordability
At the heart of the debate between the employer and those bargaining on pay is who defines whether a claim is affordable, based on what criteria and according to what interest group.
Most commonly, an employer’s response to a claim is that it is unaffordable and accounts can disguise their true level of profitability.
“Accounts are a tricky thing because sometimes employers present information that distorts the underlying position, such as in the way that pensions are stated in accounts.”
In addition, “the intersection of public and private sectors in outsourcing can be a reason for a lack of transparency in the finances of an organisation. Although you can be dealing with a large private contractor, for example Compass Group, that makes millions of pounds in profit, on any given individual contract they might be making an overall loss.”
“That is something that is never in the public domain, so making those judgements about affordability can often be quite difficult.
“Also, you’re sometimes caught between targeting a contractor over a pay claim or targeting the commissioning body because the contractor will sometimes say ‘I would love to give you this pay increase if only the commissioning body would fund the contract accordingly’.”
The state of bargaining now
Bargaining on pay covers a great number of linked but distinct topics. It can look at pay structures like the use of scales, how pay might be squeezed at the bottom, of sick pay, shift pay or overtime, bonuses and performance-related pay.
With all these issues in play, what information are negotiators looking for that might give an insight into both workers’ priorities and the current state of the UK economy?
Kevin notes that April’s rise in employer’s national insurance contribution is affecting the context for some negotiations with contractors. “They’re hitting employers and a lot of them are using that as an argument to try to squeeze the pay settlements this year. The extent to which that is valid obviously varies from employer to employer. In some of them it might wipe out their surpluses, while others can absorb it.
“Over the last few months, we’ve been increasingly providing data on finances as a defence against the threat of redundancies, particularly for places like universities.”
A further development is minimum wage rises over recent years. “Obviously, with the national minimum wage on its path up to 2/3 of average earnings, there have been a fair number of employers where they have had to make emergency increases in their pay scale so they’re not violating the law.”
- A version of this article was first published by the Labour Research Department and can be found here.
- UNISON’s full range of bargaining guides can be found here.