Strike action over reward and benefits has reached levels last seen in the 1990s. Will it succeed in changing their terms and conditions – and what is the role of HR here? Nic Paton finds out

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It would be fair to say the public sector has hogged the limelight over the past 12 months when it comes to strikes over pensions and benefits. In both November 2011 and May 2012 there was mass industrial action by thousands of public sector workers, not to mention strike action in June by GPs. It was the first such action since 1975.

Pensions have become a common industrial relations flashpoint for both the private and public sectors – as demonstrated by official government statistics published in July that showed days lost to industrial action over the past 12 months were at their highest level since January 1991.

To cite just a few recent examples, consumer goods giant Unilever saw staff walk out over a dispute about pensions in December 2011 and January 2012. Both Stagecoach, operator of East Midlands Trains, and Ford this year experienced strikes over pay and pensions. University lecturers walked out in 2011, over proposed changes to the Universities Superannuation Scheme, and going further back, both the BBC and the AA experienced high-profile strikes over pensions back in 2010.

Unilever saw staff walk out over a dispute about pensions in December 2011

For private sector workers in particular one of the catalysts behind this trend has been the gradual erosion of generous – but expensive – final salary defined benefit pension schemes. The Association of Consulting Actuaries’ 2011 Pension Trends Survey published in January 2012 pointed to an acceleration in scheme closures to future accruals since 2003. A total of 91% of final-salary schemes had now closed to new entrants and, of these, it is estimated that 37% are also closed to future accruals for existing members of staff.

For employers and HR teams alike this is naturally a sensitive issue – both Unilever and Stagecoach, for example, declined to speak to Reward. Unilever did, however, issue an intriguing statement in January, in response to its strike action which argued “the provision of final salary pensions is a broken model which is no longer appropriate for Unilever”.

Whether or not you agree with this, against the backdrop of an ageing workforce and a challenging economic environment, the way in which employers, workers and society as a whole funds retirement is an increasingly difficult, and potentially confrontational, debate.

The role of HR

How, then, should HR teams be managing this headache? Are strikers, particularly those in the public sector, battling to protect relatively generous pensions, simply on a hiding to nothing? What role are unions now playing? What effect, too, do 1970s-style images of angry workers with placards do for an organisation’s employer brand and consumer profile?

“Strike action generally does damage employer reputation, except where people can see very clearly what it is about,” argues Mike Emmott, public policy adviser at the Chartered Institute of Personnel and Development. He adds: “If you have industrial action over pay and benefits then, from the outside, it may not necessarily reflect on the employer, unless the employer mishandles it. That said, HR teams do need to be communicating, explaining and listening. It comes down to honest communications.”

“In the private sector, there is often a suspicion that profitable companies are using the economic situation as an opportunity to reduce occupational pensions”

Unlike in the private sector, where strike action is often a response to internal change, employees in the public sector are often protesting against the government, but in most cases the government will not be the employer. “More often than not, it will be the local authority, the school or NHS trust,” points out Andy Cook, chief executive of employee relations advisor Marshall-James. Yet if the government is holding the purse strings, the employer’s hands may be tied.

A further complication, highlights Paul Nowak, head of organisation and services at the TUC, is the proliferation of new organisational models adopted by the public sector: “It is no longer even just the case of workers being employed by a local authority rather the government,” he says. “You have local authorities dealing with dozens or even hundreds of sub-contracted organisations, many of which are in private sector.”

He is nevertheless adamant that the sorts of stands we have been seeing over pensions – even generous public sector pensions – are worth taking.

“When you look back over the experience of the past few years, where pensions are one of the proposals on the table, generally when unions stick together or, in the last resort, take industrial action, then the proposal ends up looking a hell of a lot better than it was at the beginning.

“In the private sector, too, there is often a suspicion that otherwise profitable companies are using the economic situation as an opportunity to reduce occupational pensions,” he adds.

Perception is everything

There can be clear perception issues when – as was the case with June’s doctors’ strike – the strikers are by most people’s reckoning already highly-paid professionals protecting generous “extra” benefits, concedes Andrew Hine, UK head of public healthcare at consultancy KPMG.

“Most people, from most walks of life, have seen their pensions being eroded in recent years and their pay has not risen. The average person on the street would be very pleased with the level of reward, the job security and the wider benefits that most healthcare staff can expect,” he points out.

“There is awareness among healthcare trade unions – and I include the British Medical Association within that – that they are walking a fine line in terms of retaining public sympathy for any form of industrial action,” he adds.

Even in this sort of scenario, HR teams probably cannot afford to play hardball because of the potential damage it can cause to goodwill and discretionary effort, he argues.

“It is not that the workforce is any more satisfied than it was, but now it cannot express its anger in the same way as before”

Even the issue of discretionary effort is an elephant in the room contends Dr Jonathan Trevor, lecturer in human resources and organisations at Cambridge Judge Business School at the University of Cambridge. If remuneration – or a lack of it – does not end up as a fully blown industrial dispute, the perceived fairness of the total reward and benefit package can have a huge effect on morale, motivation, retention and productivity.

Days lost to strike action may be at a high but the decline of collective bargaining, the erosion of union power and membership and the toughening of labour laws have all meant we are nowhere near back to the levels of the 1970s or 1980s.

In the private sector the scope for staff to man picket lines is limited – but while disgruntlement and dissatisfaction is less visible on the streets, where it exists, no less insidious or damaging.

“Conflict has become more internal, but it is even more dangerous because of that,” Trevor says. “It is not that the workforce is any more satisfied than it was, but now it cannot express its anger in the same way as before,” he adds. “Conflict is a line management and managerial challenge – it is about ensuring people are aligned to the goals of the organisation from a total reward perspective. If not, it can be a terrific demotivator,” he adds. While HR teams can’t often stop strikes, it’s their job to deal properly with staff demands.

Case study: London Borough of Barking & Dagenham

Like most local authorities, the London Borough of Barking & Dagenham experienced disruption from public sector pension strikes om 2011 and 2012.

Intriguingly the Labour-run council, which employs some 3,500 people not including schools, came out in support of its workers taking action, with council leader Liam Smith pledging personally not to cross picket lines.

As he put it at the time: “This council’s administration believes that the pension reform proposals will penalise hard-working public servants at a time when pressures on family budgets are already intense.”

Smith’s stance highlights the complexity of the pensions situation and, in turn, the difficult position public sector HR teams can be placed in as a result.

“As a Labour council we have strong relations with the trade unions and, in fact, have not been supportive of some of the measures the government has taken,” agrees Martin Rayson (pictured), divisional director of human resources and organisational development at the council.

“For HR directors one key challenge is responding to the pressure to reduce costs while maintaining a motivated workforce, even when it is being reduced. What HR teams therefore have been seeking to do is to redefine what the public sector employment ‘deal’ will be going forward,” adds Rayson, who is also president of the Public Sector People Managers’ Association.

“People feel a sense of being under attack. The ‘mood music’ about public sector workers is not very positive – they are lazy, they take too much sick leave and so on. It does not create a positive environment for people, or HR directors.

“I also think the message has been overplayed about the quality of the pension being undermined. It has been a question of emphasising that despite changes, it is still an attractive pension scheme and staff should still pay in to it.”

Days lost to strike action

  • In the 12 months to May 2012 there were 1.48 million working days lost because of labour disputes, the highest figure since the 12 months to January 1991, according to the ONS
  • The figures, published in July, showed most days lost were down to public sector strikes over pensions, especially the November 2011 strike, with 139 stoppages reported over the period.
  • During May 2012, there were 112,000 working days lost from a total of 20 stoppages.