Industrial Relations: The Great Unknown?

Why now, more than ever, Boards and Executive Management need to understand the trade union dynamic

In 2019, just under 25% of the working population of the UK belonged to a trade union, increasing slightly for the third consecutive year. The public sector had 3.77 million union members, and the private sector 2.67 million. Female membership is on the rise, reflecting the changing shape of the UK workforce and perhaps the nature of campaigns and workplace disputes that unions support, concerning discrimination and flexible working.

This year, unionised businesses have had to engage with trade unions to consult on change driven by the unprecedented impact of COVID-19. This has ranged from consultation about the government’s Coronavirus Job Retention Scheme, where furlough arrangements were introduced by collective agreement in many unionised organisations, through talks about home and flexible working, to redundancy consultation. Businesses growing under COVID-19 that need to change their working methods rapidly are as likely to be consulting with unions as those facing contraction or closure.

There is no doubt that trade union influence is sector-specific and can be significant, reflected, for example, by the union pay premium which in 2019 was 10.3%. With some notable exceptions, we are often surprised by the limited engagement at Board and C-suite level, with the impact of industrial relations. Collective relationships govern a wide variety of working arrangements, both formally and informally. The larger the unionised workforce, and the longer the tenure of employees, the more likely it is that these are well established. They may in reality only be known in any detail to very few people. Despite being seasoned veterans in other areas, many executives lack experience in this field. It is typically devolved to operational or functional teams, risking silo-led decision making, or sits in a small specialist team in HR which can detach corporate decision making from the realities of implementation. Both of these approaches can lead to a limited understanding of what arrangements are in place, and the evolution of corporate myths about what is, or is not, possible.

As a Board or Executive in a unionised business, understanding the industrial relations framework of your organisation will enable you to ask relevant questions and reach balanced conclusions about how your workforce operates and the options available to you both legally and industrially. Your industrial relations team needs your input, so they understand your risk appetite and can consider the widest possible range of options to reflect this. How long is it since your business stopped to consider these sorts of issues? As the pandemic causes organisations to look for smart ways to restructure, grow and face into the new normal, now more than ever Boards and Executive Management need to understand the trade union dynamic in their business. If properly understood, the relationship can enable (rather than frustrate) meaningful and rapid change.

Please do not hesitate to contact Tom Williams, Julia Harrison, Laura Nadel or your usual PwC contact if you’d like to discuss any issues relating to the issues raised in this note.