LUBS5335M Industrial Relations 200260293

The notion that the state should act as a model or good employer was influential
through much of the C20th. Critically analyse how this has changed since the
1980's with reference to the different approaches to public sector employment
relations by both Conservative and Labour governments.

Employment relations within Britain are continuously evolving and are often
characterised by a number of contextual factors external to the workplace. The
political environment for example, is a major influencing factor and can often
determine employment processes which affect the employment relationship. Labour
laws within the public sector are particularly vulnerable to government policies and
throughout time have been susceptible to dramatic changes. These changes will be
the focus of the following analysis, exploring the notion of the state as a model, or
good employer and the extent to which this has diminished over time.

Many commentators such as Fredman and Morris (1989) considered the state to have
been a model, or good employer, pre 1979. Public sector employment was distinct
from that in the private sector and often set an example by endorsing principles
associated with the encouragement of trade union membership and collective
bargaining, also focusing upon investment in training, continuity of employment and
equal opportunities (Kirkpatrick and Hoque, 2005). Public sector employee relations
were traditionally organised centrally and were largely consensual in nature. High
degrees of centralised rule making, national level bargaining arrangements and a
commitment to conciliation often helped to avoid industrial conflicts (Corby, 2000). In
contrast private sector employment was inherently unstable; the need to return a profit
tends to make the tensions involved in the employment relationship particularly visible
and acute. The success of the organisation also directly impacts upon the
employment relationship and employment levels. On one hand workers are valued
and regarded as a productive asset with both parties sharing in a common interest in
the commercial success of the business; on the other, workers are seen as a cost and
may be intensively exploited or disposed of for economic gain (Arrowsmith, 2010).
Hijzen (2007) (Cited in Colling and Terry, 2010) concluded that employment in the
private sector is particularly turbulent, whereas public employment is relatively
sheltered.
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However this idolised representation of state employment and unionisation was set to
change. During the late 1970’s increased strike action began to emerge within the
public sector as the labour government attempted to bear down on wage inflation.
This led to widespread disruption of public services during 1978. This period was
dubbed, ‘the winter of discontent’. A resulting factor of this was the election of
Margaret Thatcher in 1979 who rose to power on a wave of anti union sentiment and
began a reform of the public sector (Bach, 2010). Thatcher believed that there was
insufficient competition for a globalised economy and that public sector organisations
were over staffed and insufficiently focused upon customer satisfaction (Arrowsmith,
2010). She wished to end what she felt was excessive government interference in the
economy and sought to minimise the public sector, therefore the privatisation of many
nationally owned enterprises was undertaken. Share holders and commercial
competition would shape the organisations and free markets and entrepreneurialism
would be encouraged. This also acted to weaken the power of trade unions.
Privatisation was expected to deliver improvements in service while maintaining better
control of costs, the most significant early privitisations were of British Telecomes in
1984 and British Gas in 1986.

Jenkins (2007) explained that Thatcherism had two distinctive strands to public sector
reform. The first was concerned with a move towards market orientation which aimed
to merge the market principles of the private sector in to public service delivery. As a
result collective non-market institutions including trade unions were attacked. For
example those who wanted to remain in government communication headquarters
(GCHQ) had to give up their union membership (Corby, 2000). One of Thatcher
biggest victories was a defining moment in British industrial relations, this was the
defeat of the miners’ strike in 1985 as it acted to significantly weaken British trade
unions and supported the Conservatives free market programme. Services which
were once provided by the public sector began to be outsourced by privatised
organisations as a consequence of market testing, this was a move which led to a rise
in unemployment particularly of women, who characteristically resided in part-time
positions.

The second strand was concerned with managerial reform; this involved reinforcing
the hand of management giving them more autonomy over their workforce and
organisational decisions. Subsequently organisations such as NHS trusts were
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reconstituted as employers in their own rights and given new discretions over
employee relations (Kessler and Purcell, 1996). In order to support this shift towards
decentralisation and public sector reform was a rise in new forms of human resource
management (HRM), which became synonymous with the Conservative government.
HRM was to gradually replace the previously popular personnel function, which was
mainly regarded as an administrative role and questions were raised over the
appropriateness of this centralised people management system. A decentralisation of
control was called for in order for managers to respond to local demands. HRM
offered an answer to this as it was much more concerned with delegating operational
responsibility for employment relations to lower level line managers and focused on
the management of a workforce which enabled employees to work to a maximum
level of efficiency which suited the new market orientated approach (Kirkpatrick and
Hoque, 2005). Kessler et al (2000) explain that the Harvard School see HRM as
encompassing all management decisions, which affect the relationship between the
organisation and employees.

It can be argued that the personnel function initially became intrinsic to the public
sector during the twentieth century and was developed on the back of the growth of
the state. A paternalistic style of management was adopted which purported to protect
and promote the well being of the workforce. Franham and Horton (1996) argued that
while there was concern for staff efficiency and the effective use of manpower the
primary concern was paid to the health, safety and welfare of staff. Standardisation
was also key to the early personnel function, whereby workers performing the same
task had the same terms and conditions irrelevant of the organisation or geographical
area, this is what provided employees with job security and life-time employment.
Industrial relations were collectivised in this traditional model, staff participation and
consultation was encouraged and there was a strong role for trade unions in pay
negotiations. Much attention was also placed upon staff training and equal
opportunities in the workplace and again it was much of this, which helped to create
the notion of the state as the ‘model employer’ (Boyne et all, 1999).

However this traditional role of the personnel function was weakened substantially by
government policies since 1979, competitive pressures were forcing employers to
review personnel practice. Public sector organisations began to emulate the
individualistic behaviour of that which existed within the private sector, otherwise
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known as ‘hard’ HRM. The reasons for altering the personnel function and the ways in
which people were managed was a response to an economic strain on the public
sector which increased the demand for greater efficiency and a better quality in
delivering public sector programmes and services (OECD, 1996) (Cited in Boyne et al,
1999). ‘Paternal management’ gave way to ‘rational management’ this style of HRM
was no longer driven by concepts of fairness and welfare needs of the employee and
the need to maintain good relations with the unions. Instead job performance, high
quality output and value for money became the focus. Power was handed to the line
managers rather than personnel specialists, which in turn reduced the priority given to
issues such as equal opportunities and staff training (Farnham and Horton, 1996).

Standardisation was replaced by flexibility and differentiation, meaning that public

services no longer offered a guarantee of a job for life. Instead temporary contracts
became popular and salary increases and promotion opportunities were based upon
perceived job performance. Cully et al (1999) found that near 3/4 of all public sector
work places had some employees on fixed term contracts compared to 1/3 of private
sector organisations. Collective bargaining also lost credence due to the increase in
managerial autonomy and the freedom individual employers had over applying salary
structures and pay systems. White (1999) explained that this began in 1980 when
there was an attempt to shift collective bargaining arrangements away from national
frameworks and endeavour to link public sector pay to merit, skills and geography.
Finally HRM’s support for a move from collectivism to individualism in industrial
relations, particularly for managerial staff also acted to rapidly diminish the power of
the trade union.

Kirkpatrick and Hoque (2005) assert that the most radical changes were seen in the
civil service following the creation of executive agencies. Perhaps because
government ministers have been able to exercise more direct control here than
elsewhere. 1996 saw the abolition of civil service-wide pay, which lead to a variation in
pay structures (Bach, 2010). Significant changes were also noted within secondary
education Corby and White (1999) noted that head teachers became in some
respects like managing directors of small businesses, taking on extensive
responsibilities for a wide range of staffing issues.
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The Conservative reform of the public sector had implications for labour law and
employment relations. Fredman and Morris (1989) explained that from the 1980’s
Conservative administrations departed from the states role as a model employer,
employing private sector employment practices, undermining job security and national
collective bargaining powers, ceasing to encourage trade union membership. They
believed that public sector employment relations had been transformed. These
changes within the public sector impacted upon the workforce and employee relations,
Pearson (1994) explained that in 1981 29% of employees worked in the public sector,
however this fell sharply in the 1980’s and continued to fall throughout much of the
1990’s. The reform also broke down employee relations which up to the 1970s was
previously consensual with arbitration often used to resolve disputes; however, data
analysis indicates that the proportion of strikes accounted for by the public services
grew steadily from 6.7 percent in 1980 to 43.6 percent in 1993 (Corby, 2000).

Whilst commentators such as Fredman and Morris (1989) and Hepple (1982) argue
that a total transformation of the public sector occurred under the Conservative
government, with a traditional model of the state as a good employer, being replaced
with a new less consensual and idealistic model; others believe more of a transition
rather than total transformation occurred. Colling (1997) (Cited in Corby, 2000)
believes that this ‘golden age’ has been exaggerated; pointing out that before 1979
there were low pay issues and discriminatory employment procedures in existence
within large parts of the public sector, the role of the state as the model employer was
both complex and contradictory. Morgan et al (2000) (cited in Corby, 2000) believes
that the notion of the good employer is informed by a relative standard and in
comparison with the private sector the distinctiveness of the public sector remains to
be apparent. Boyne et al, (1999) found that individualism was still lower in the public
services and there was weaker support for policies which link rewards to the
contribution of individuals to organisational performance, with only 35 percent of public
sector managers supporting such polices in comparison to private sector managers.
Despite efforts to weaken trade union power the WERS survey (1998) found that
union density in the public sector was 57 percent compared to 26 percent in the
private sector.

It would also appear that government attempts at reform had less of an impact in the
NHS. In 1991 although NHS trusts were given the power to set their own terms and
 LUBS5335M Industrial Relations 200260293

conditions most did not. It is estimated only 10% had their own pay systems, NHS pay
review bodies continued to set rates nationally and effectively provided a bench mark
(Corby, 2000). Bach (1999) focuses on nurses pay and argues that continuities of the
past remain and national level terms and conditions have shown their resilience in the
face of government efforts. The threat of nurses strike action in 1995 led the
government to abandon its strategy of implementing variable pay increases
(Kirkpatrick and Hoque, 1995).

However in reality the Conservative government’s attempts of reform and the

decentralisation of the public sector remained to be an unfinished revolution in terms
of the transformation of employment practices, as efforts to increase managerial
authority remained constrained by frequent political intervention and was
characterised by a resistance to highly organised professional groups. A lack of
investment in the public sector culminated in a decaying infrastructure and widespread
staff shortages (Bach, 2010). The Conservative government lost power in 1997 and
was replaced by the Labour party headed by Tony Blair who embarked upon a
‘modernising agenda’ (Arrowsmith, 2010). Although there were some echoes of the
Conservative emphasis on a minimalist state, Labour’s policy approach was distinctive
because the government argued that state intervention and investment in the public
sector was integral to enhanced competitiveness, global competition required effective
public services. In time Labour planned to increase public expenditure significantly
and inevitably public employment grew (Bach, 2002) It was believed that competition
would drive up standards, thus Labour continued to support marketisation and
privatisation.

Rather than diminishing the role of the state, the Labour government altered its
approach. Whilst they embraced most of the public sector managerial changes,
instigated by the Conservatives, Labour replaced an ideological commitment to
markets with an emphasis on performance management (Cabinet Office, 1999 cited in
Bach, 2010). Initiatives such as performance related pay and target setting led to work
intensification within the public sector (Arrowsmith, 2010). Although many opposed the
implementation of pay grading structures and performance related pay, Bach and
Winchester (2003) (cited in Kirkpatrick and Hoque, 2005) argued that it helped with
recruitment and retention problems for key occupations and also addressed problems
of sex discrimination. Labour intimated their commitment to working in partnership with
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public service trade unions to enhance the quality of public services and a partial
return to collectivism was seen. In the civil service the Cabinet Office urged
departments and agencies to once again actively encourage trade union membership
(Corby, 2000). However individual pay structures remained to give unions a very
restricted role and the Fair Wages Resolution, which was rescinded in 1982 under the
Thatcher government, failed to be restored. Trade unions provoked criticisms of what
they saw as the governments, ‘creeping privatisation agenda’ (Whitfield, 2006). The
trend towards public sector job insecurity also intensified rather than reversed, for
instance the Labour government whished to make greater use of short-term contracts
for the civil service, performance measures also acted as a threat to job security
(Corby, 2000)

One of the most contentious issues was the Labour government’s acceptance of the
Conservative parties policy that new capital projects should not be funded by the
treasury, this is known as a Private Finance Initiative (PFI) and was primarily
developed to fund public sector expenditure without increasing its borrowing
requirement (Bach, 2002). Public service trade unions opposed PFI as a from of
privitization, arguing that it provided poor value for money and benefited shareholders
rather than service users. Employees transferring from the public to private sector
under such deals have their employment contracts legally protected by the Transfer of
Undertaking Regulations (TUPE) but unions argued strongly that new staff should
have the same pay and conditions as the protected employees to avoid a ‘two-tier’
workforce. It can also be argued that TUPE agreements do not protect the employee’s
valuable pensions (Bach, 2010)

Labour continued to support the rise of HRM, which had become symbolic to the
Conservative government. However HRM policies may be closer to the traditional
public sector model in Labour rather than Conservative councils (Boyne et al, 1999).
The Labour government was friendlier towards trade unions and the picture changed
again. Public sector organisations were encouraged to rethink the role of HRM and
move increasingly towards emerging ‘best practice’ models of human resource
management. The ‘best practice’ model stems from the idea that the adoption of
certain human resource practices would result in enhanced organisational
performance, manifested in improved employee relations, lower levels of
absenteeism, higher levels of skill and therefore higher productivity and enhanced
 LUBS5335M Industrial Relations 200260293

quality and efficiency ( Bearwell et al, 2004). Industrial relations re-emerged as an

important part of the HRM function once again particularly in the still heavily (in
comparison) unionised public sector. Although importance was being paid to health
and safety, equal opportunities and training and development needs a more strategic,
business orientated role was still being sought. Whilst a paternalistic model was
seemingly readopted, otherwise known as ‘soft’ HRM this was done primarily with a
business objective. Storey (2007) argued that ‘soft’ HRM stresses the ‘human’ aspects
of HRM, resulting in a committed and motivated work force which is a key source of
competitive advantage. The public sector began to realise that by investing in
employees they would in turn be investing in the organisation. This is supported by an
increase in public sector training under the Labour government, only 30 percent of
public managers report that their organisation has no involvement in the ‘Investors of
People’ initiative (Boyne et al, 1999).

However it is important to understand that public sector employment relations are ever
changing as they are not autonomous, instead they are dependent upon state policy,
economic changes and government initiatives, thus this picture is still incomplete.
Therefore it would be foolish to ignore the current turbulence within the economy
which has been highlighted by the recent Coalition government, there is no doubt that
this will continue to shape both public sector employment and employment relations in
general. Proposals regarding the privatisation of higher education, public sector job
cuts which have been provoked by recent spending reviews, and the necessity to
reverse the deficit which has become unsustainable, are some of the key factors
which need to be observed in relation to future changes in public sector employee
relations and policy. In a recent message from Prime Minister David Cameron he sets
out his vision for continued public sector modernisation, stating that he plans to, ‘put
you, the people who use public services, in control’. He believes that for years the
opposite has been true as through the use of targets, inspections and key
performance indicators public service professionals have been forced to answer to
Ministers at Whitehall, rather than the public. Cameron goes on to declare that the
bureaucracy which previously removed authority away from the individual public
service manager will be eradicated. For example, in the NHS (an area that previously
saw the least amount of reform) GPs will take control of budgets and directly
commission services on behalf of the public. Cameron believes this will be a success
 LUBS5335M Industrial Relations 200260293

as they are in a better position to understand individual needs. His vision is for the
public sector to answer to the public, which will ‘inject competition into the system’
(Cameron, 2011).

In analysis, organisational policies, practices and employee relations remain to be

different in many important respects, a total transformation, although some will
disagree has not occurred within the public sector. Paternal, standardised and
collective forms of HRM are still more prevalent within the public sector. Moreover
activities associated with the conventional state role as a model employer, such as,
staff training, and equal opportunities are still more likely to be found in public
organisations. It would instead be fair to argue that distinctions between the public and
private sectors have over time, become less prominent. However the extent to which
changes have occurred vary across public sector agencies. It will be interesting to
continue to observe patterns of public sector management and employee relations as
it is likely that change will continue to occur, and the shape of the public sector will no
doubt be ever altering.

(3,264)

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