Great workplaces address absence better than systems

The best approach to tackling absence is to create great workplaces to work in - not rigid management systems and targets.

Today, I was speaking at a MacKay Hannah conference on ‘Tackling Absenteeism in the Public Sector in Scotland: Prevention and Health Promotion’.

Angela Cullen from Audit Scotland set the scene from their published report on Scotland's public sector workforce. This showed that the workforce has been cut by 7% since the crash, down to around one in five of the total workforce. Council staff have taken the brunt of cuts. The workforce is ageing significantly with young people the biggest losers, down by 25%. Over one third of staff are over 50 and that is the biggest growth area with potential skill and knowledge risks for public services as they come closer to retirement. They have extracted data on sickness absence from their recent report into a useful new publication on their website

Fred Best from Work 4 Wellbeing made the business case for taking measures to improve wellbeing at work. More than a glossy document and a bowl of fruit! Poor data is a problem with 18% of sickness absence reported as 'other' due to IT system limitations. A key message was the cost of presenteeism that can cost 50% more than absence - £105bn in 2010. Workplace conflict costs UK business £33bn per year, taking 20% of leadership time and losing 370m working days. Investment in wellbeing can save £4 for every £1 spent. Behind these statistics is the real human cost of ill health.

Roddy Duncan from the office of the Chief Medical Officer outlined Scottish Government initiatives to create healthy working lives in a very challenging environment - ageing workforce and austerity cuts. Long term absence is a particular issue with 51% of long term absentees in Scotland being disabled. The healthy work strategy is based on premise that work is good for health and workplaces should promote health and wellbeing of the workforce.

Dame Carol Black's independent review of sickness absence was referenced by several speakers. That emphasises that worklessness is harmful for most people. Equally useful is the work of The Scottish Centre for Healthy Working Lives.

My presentation was on the reality of the ‘sickie culture’ in the Public Sector: policies, support and management. I started by debunking some of the myths about sickness absence in the public sector. It may be cliché that the only certainties in life are death and taxes, but there are others. For me, one is the Daily Mail asking me to respond to the latest CBI claim that public sector workers have a 'sickie culture'.

The main response to the headline data is that the two sectors are not comparable workforces. The public sector is an older workforce with more women and with major occupational differences. For example, staff in the care sector are 45% more likely to be sick. Public sector staff also tend to work in larger organisations with sick pay agreements and better recording systems. One consequence is that public sector staff have more long term sickness absence but less short term absence than in the private sector. Overall, public v private is simply irrelevant to the debate, you need to look at other factors.

We do know that there is greater and growing presenteeism in public sector. A CIPD survey showed 39% in the public sector compared to 26% in the private sector. Unpaid overtime is also more common in the public sector - 1 in 4 compared to 1 in 6 workers in the private sector. All of this is reinforced in a UNISON Scotland survey we published last year.

Instead of a puerile public v private debate we need to focus on positive absence management. This is my list of measures:

• Agreed absence management policies with proper training
• Regular reviews of data at safety Committees
• Less reliance on formulas and triggers
• Measures to facilitate and promote employee health
• Involvement of quality, independent, occupational health professionals
• Minimise workplace stress
• Employee assistance programmes for personal or workplace problems.
• Maintain contact during long-term sickness absence
• Structured return-to-work plan with adequate adjustments and support.

There was some discussion about the new government occupational health assessment scheme. This is right in principle, but I suspect it will become an ATOS style tick box exercise. Sickness absence rules and targets in the public sector can be very similar - chasing short term solutions at the expense of more sustainable long-term solutions. We also need to recognise the impact of later retirement ages on particular occupational groups.

My main message was that if you are serious about tackling absence you need to focus on making workplaces great places to work in. The speaker from Investors in People described this as the soft stuff, but in their view still absolutely vital. A friendly, varied, fair and supportive working environment is more effective than any set of absence management rules.

Fair Pay Fortnight

The Chancellor is in retro mode with our coins, sadly, he is in similar retro mode with wages and the economy. When what Scotland and the UK really needs is a pay rise.

When we last had a thrupenny piece, in the 1960s, up to 61 per cent of the economy went on wages. Since the 1980s, it has never gone above 56 per cent. These small percentages make a big difference to our living standards. George Osborne could equally go into retro mode with our stamps – perhaps reintroducing the Penny Red, or for Tories, probably Penny Lilacs. This would reflect that fact UK workers have experienced the longest real wage pay squeeze since 1870.

Measures in the budget were clearly targeted on the comfortably off, rather than those who have been hit the hardest by austerity economics. Changes in tax thresholds may take some out of tax, but they are actually pretty regressive. As this slide from the IFS post-budget presentation shows.

The much vaunted hard working families would gain more if this cash was used for increased tax credits.

Help for savers in the form of tax cuts and bigger ISA allowances are again targeted at the upper middle income groups. How many low paid workers can afford to save anything, let alone £15,000 a year. One in three Scots has saved nothing in the past three months.

There was nothing in the budget for hard pressed public sector workers who are promised more real pay cuts and further increases in pension contributions from 2015. Also, no recognition of the damage low wages generally is doing to the economy. Real wages have been cut for 44 months, a record unmatched since records began and a loss of £1600 per year for the average worker. This is why the recovery from recession has been so slow.

One measure that would boost pay for those who most need it is the Scottish Living Wage. Let’s be clear, Scotland’s public sector has been doing well at backing the living wage, far better than any other part of the UK, and politicians of all parties deserve credit for this. They have recognised that paying the Scottish Living Wage, currently £7.65 an hour, is good for staff, employers and the economy.

It is good for workers who benefit from higher pay, improved health and job motivation. At our Ethical Care Charter event in Renfrewshire last week a councillor told me how a constituent had come to his surgery and told him just how much paying the Scottish Living Wage had meant to her family. She said it literally meant she didn’t have to choose between shoes and food on the table.

The Scottish Living Wage is also good for employers, because it reduces turnover, improves productivity and attracts better staff through reputational gain. And the wider community gains through cash into the local economy, lower benefit costs and less stress on the NHS.

Many can see how a pay rise for Britain’s low paid could benefit us all. Small businesses will benefit from the 90 pence in every pound they spend in their local community. Why do we pay a cleaner less to pay her more in tax credits? A rise of £1.50 to the minimum wage would help the nation pay off its debt by cutting the welfare bill by £5 billion. Something the Chancellor might want to consider as the deficit is double what he said it would be in 2010 - with the consequence that austerity grinds on causing even more damage.

Despite these advantages one in five Scots still earn below living wage levels. And many public services are outsourced to the private and voluntary sectors, including in vital areas such as social care.  It is time to roll out the Scottish Living Wage to all those employed on public contracts. The Procurement (Scotland) Bill is a real opportunity for the Scottish Government to show leadership on this issue.

Lawyers will always find legal reasons to urge caution on ministers, but if Boris Johnson can do it, then surely the ‘progressive beacon’ that Scotland aspires to be, can do the same. If its money that worries ministers, then as we suggested last week, let’s use some of the budget’s Barnett consequentials. We could also clamp down on the tax dodging companies by banning them from public contracts.

We are regularly told that Scotland is one of the richest countries in the world - yet we run food banks and a fifth of the workforce don’t earn enough to live on. Everyone in Scotland and the UK deserves a pay rise and during Fair Pay Fortnight let’s shout that loud and clear.

Public sector pay is actually lower than in the private sector

One of the regular media inquiries we get in the Bargaining and Campaigns Team is how we can justify higher wages in the public sector compared with the private sector. This ritual is usually played out when the ONS publish headline pay data that appears to show just that. I am also pre-empting similar arguments used by the Chancellor in justifying his pay policy in today’s budget.

Our response is usually, we are not comparing like with like, similar to my July 2011 briefing in response to an ONS paper and goes as follows:

• The figures exclude other benefits such as bonuses and other perks that are more prevalent in the private sector. The research is based on snapshot in April after the Jan-March bonus season.
• They exclude the self-employed.
• These are UK figures and in England many lower skilled and paid jobs have been outsourced to the private sector.
• The average age of public sector workers is higher and older workers are paid more.
• Public sector workers tend to have higher qualifications. In 2010, some 38% of workers had a degree or equivalent qualification in the public sector, compared with 23% in the private sector. Comparing the pay of these graduates flips the pay gap around, with public sector workers earning 5.7% less than those in the private sector.
• The key to the difference in pay is the higher proportion of higher-paid jobs in the public sector.
• Also within the two sectors, the gap between the highest earners - in the top 5% - and the lowest 5% of earners is greater in the private sector than in the public sector. This shows that public sector pay is fairer than the private sector.

Helpfully, you don’t have to take our word for this today. There is an interesting analysis of pay data by Professor Graham Cookson in ‘The Conversation’ hard evidence series. He makes similar arguments and adds the impact of working for large organisations that tend to pay higher wages. The public sector workforce is concentrated in larger organisations.

He concludes: “So who earns more? What is clear is that personal and job characteristics are far more important than whether you work in the public or private sector. Yet having controlled for all of these factors, the evidence points towards a small pay gap in favour of the private sector.”

So if you get any calls on this issue today – answers as above.

Low wages and living costs squeeze households, but tax allowance cuts are not the answer

The latest labour market statistics show that inflation is still rising around twice as fast as average weekly earnings and so household budgets remain tightly squeezed. Even if wages start to pick up the real pay gap that has opened up looks set to take years to close.

According to the ONS wages have hit minus 2.2% on average since the first quarter of 2010, the last quarter before the Tory-Lib Dem coalition came to power. In comparison, wage growth averaged 2.9% in the 1970s and 1980s, 1.5% in the 1990s, and 1.2% in the 2000s. This follows a report by the Institute for Fiscal Studies (IFS) which said that while the fall in household incomes had now probably come to a halt, living standards were still “dramatically” down on what they were before the global financial crisis hit in 2008.

Another report shows how the wage squeeze is impacting on saving. One in three Scots has saved nothing at all in the last three months.  Those who do have savings are less likely to dip into them than anywhere else in the UK but when they do, they are likely to raid the household piggy bank for a far larger sum than in most other areas.

For many on low pay even generous wage rises would leave their households in need of additional support via tax credits and benefits to keep them anywhere close to above the poverty line. New TUC research shows just how important this support is for working families with children. The study features a range of fictional households to show how taxes and in-work benefit entitlements change as pay goes up.

Measures that increase earnings (higher wages and/or tax cuts) provide a greater overall income boost for adults without kids than they do for low earning families with children. Wages are of course still important, but not enough to meet the needs of low income working families. This shows that reducing tax allowances is an expensive way to help those on low earnings. It doesn't replace the ongoing tax credit cuts.

This research shows that with more than half of benefit cuts hitting working people, any real programme to enable those on low pay to share in the recovery needs to recognise the role of in-work credits along with stronger pay growth, and focus on reversing tax credit cuts rather than on delivering further poorly targeted personal allowance giveaways.

At the other end of the pay scale a new High Pay Centre analysis shows the hidden cost of big pay differentials within organisations. Workplaces with big pay gaps between the highest and lowest wage earners suffer more industrial disputes, more sickness and higher staff turnover than employers with more equitable pay differentials.  On average:

• Bosses earning 10 times more than the lowest-paid staff in their organisation experience industrial action at least once a year. Those with lower pay differentials do not.
• Workplaces where top earners get 8 times the pay of junior staff report at least one case a year of work-related illness. Workplaces with pay differentials of 5 or less do not report any.
• Organisations with average pay ratios of 7:1 experience higher staff turnover.

High Pay Centre director Deborah Hargreaves said: “High executive pay is not only frequently unmerited but has a huge hidden impact on the rest of the organisation and society as a whole. Whether it’s through staff turnover, sickness, low morale or industrial action, big pay gaps undermine employees’ loyalty to the company and their managers. Employers suffer lost productivity, have to pay more sick pay and legal and recruitment costs as staff left feeling the financial and emotional strain are driven even further into the ground.”

Low wages and living costs are still squeezing household spending and savings despite the limited economic recovery. But tax allowance cuts are not the answer for low income families. Meanwhile, high and unequal pay is not only unfair, but damages organisations as well.

Zero-hours contracts - bad for workers, services and the economy

The growing use of zero-hours contracts (ZHC) is primarily a conduit for the exploitation of working people.  The growth in casual employment is contributing to the growth in in-work poverty, damaging public services and the economy.

Today, I was giving evidence at the Westminster Scottish Affairs Committee inquiry into zero-hours contracts. My evidence was largely based on our experience of the growing use of these contracts in the care sector. 

There is no recognised definition of zero-hours contracts and considerable confusion amongst workers and employers as to their legal status, as the recent CIPD survey shows. Equally, the data on how widely they are used is incomplete and the ONS is currently looking at how they can make the data more reliable. Estimates vary, but it likely to apply to at least one million workers in the UK, possibly just under 100,000 in Scotland.

In the social care sector our survey indicated around 10% of our members are on ZHC, but this is likely to be an underestimate as we have more members in council employment where ZHC are less prevalent. The SSSC workforce data says 21% are not on permanent contract, so the figure could be as high as 20,000 care workers in Scotland. Scottish Universities are another big user of ZHC with 18,500 atypical workers, more than the 16,700 permanent teaching staff.

The main issue for workers is the lack of employment rights that give legal force to basic fairness, and grant employees redress where those rights are breached. They also deny stable employment that is vital to day-to-day life such as getting a mortgage, paying the bills, and reducing the reliance on the benefits system. Employers claim the flexibility ZHC bring is good for them and workers. While this may be the case for some workers on ZHC, it is not the norm. For most it is simple exploitation. A particular problem is the requirement, stated or implied, of exclusivity even when the employer is not paying them. Even in feudal times there was a duty of mutual obligation!

But it's not only workers who lose out in the growing use of ZHC. The creation of uncertain employment means that workers are less willing to question dangerous safety practices involving themselves and others. Even more worrying in the care sector, they are less likely to report care abuse. With the growing use of personalisation, care workers tell us that they wouldn't be thanked by their employer for raising these issues. ZHC workers are also likely to be less well trained. The combination of poor employment practice means higher turnover and a loss of continuity of care.

The economy also loses because the lack of stable employment impacts on economic demand. An ILO study shows that economies with high levels of self employment are also low per capita GDP states. The growth of self employment in the UK is a feature of underemployment, not entrepreneurial zeal. 

So what's the solution?  While an outright ban might be appropriate in some areas, in practice employers would just find another way of exploiting staff. Another solution is to tightly regulate the practice to remove abuses and then agree appropriate contract provisions for each sector.

The regulations should start with a legal definition of a ZHC as a contract that fails to specify guaranteed hours; or that specifies guaranteed hours but the worker is expected to be available for work longer, sometimes called short hours or nominal working hours. There should be a right to a written notice of hours upon commencement of work and a right to equal treatment compared to fixed term and regular working hours staff, together with normal remedies for detriment when exercising statutory rights. To address exploitation there should be a right to request fixed and regular hours every six months and a right to be offered a contract after 12 weeks of continuous employment. Exclusivity clauses should be prohibited.

These are all matters that could be regulated by Westminster, although the current UK Government consultation is unlikely to go much further than an employer led code of practice. As much use as a chocolate tea cosy in addressing abuse. The Scottish Government could take action directly as an employer and also through procurement. Public bodies could do the same.

Zero-hours contracts are bad for workers, bad for the services they deliver and bad for the economy. Time for concerted action at all levels of government.

£20bn 'black hole' in UK budget

A briefing in today's Financial Times (£) shows that the Chancellor faces a black hole of more than £20bn in the UK public finances. Bad news ahead of the UK budget later this month.

The FT has replicated the economic models used by the Office for Budget Responsibility (OBR). This indicates that the government should no longer rely on an economic recovery to eliminate part of the budget deficit. The consequence is an extra year of austerity before the books are balanced, with a further impact on services and jobs.

While the UK has had a short term recovery, indicators of the economy’s capacity for future growth have deteriorated. With unemployment falling quickly, the figures show that companies may have little room to expand production rapidly.

The FT Briefing explains that:

"The black hole stems from the difference between the actual deficit – expected to be close to £111bn in 2013-14 and the cyclically adjusted deficit estimated to be £85bn this financial year. So far politicians have assumed that they only need to look at the lower figure. Changes in the OBR’s cyclically adjusted estimates have already been the primary cause of the government’s extension of austerity policies from the five years planned in 2010 to the nine years currently thought needed."

This warning comes after Martin Wolf, also in the FT, questioned the underlying basis for the economic recovery. He reminded us that the last time the UK tried the credit-expansion route to growth, it ended up in a huge financial crisis. He therefore asked, "Why should it rationally expect a different outcome this time?"

He went on to say, "Indeed, it is astonishing how little this crisis has shaken conventional wisdom. On the contrary, it is widely believed that it is safer to rely on private borrowing than on public borrowing as a source of demand. An expansion of private borrowing to buy ever more expensive houses is deemed good, but an expansion of government borrowing, to build roads or railways, is not. Privately created credit-backed money is thought sound, while government-created money is not. None of this makes much sense."

It will be interesting to see how much the OBR decides to rain on George Osborne's budget party. The current draft of his speech will doubt tell us that austerity economics works and the recovery proves that. What it won't remind us is that it took more than five years to get to an uncertain and possibly unsustainable 'recovery'. Entirely unnecessary pain, born mostly by the weakest members of society. Today's analysis shows that austerity economics is a disaster that keeps on going.

Childcare Costs Higher Than Mortgages

Lots to read on supporting Scotland’s children this week: A new reporting highlighting the costs of childcare and then two reports focusing on education early years and inequality from The Scotland Institute and the Jimmy Reid Foundation.

For many childcare charges mean that in the short term there is very little financial advantage to working. Twenty-five hours in a nursery now costs on average £102.04 a week in Scotland and an after school club £49.54. For an increasing number of families childcare costs now outstrip their mortgage payments. The high cost of childcare is therefore acting against both UK and Scottish government programmes to tackle poverty and inequality and support mothers into work.

We agree with the institute when it states that local authorities should become the providers of childcare. What this cannot become though is just starting formal school earlier. Early year’s education is very different from formal schooling and must remain so. We need to develop the best early years provision suited to the needs of our children not force them into a school system that doesn’t meet their needs just because buildings have space. Local authorities will be the most cost effective method of provision. They already employ the best qualified and most experienced childcare workers and are therefore best placed to expand their workforce while maintaining a high standard. We need to introduce a requirement that, at a minimum, local authorities are responsible for identifying the demand for childcare in their authorities as soon as possible. It will be very difficult to improve and expand childcare without out knowing what demand is for the service. This duty exists already the case in the rest of the UK.

The new Common Weal education report rightly highlights the transformation that has taken place in Finland where they top the international rankings regularly for excellence and equity. The Finnish system doesn’t start formal learning until 7, before that children learn through play. Excellent parental leave also gives babies much more time with their parents before entering into childcare.

A publicly funded and delivered early years service via by local authorities offers the best way forward. Transforming childcare will cost money, we can’t pretend otherwise but it will both generate more tax by directly creating jobs and by supporting women to return to work after maternity leave. There will be a short term return on that investment. We will also make savings if we invest in getting it right in the first place rather than the high costs we currently pay to overcome the effects of poverty and inequality. These reports show why we need to get on with investing in childcare and the benefits we will gain from that investment.

Housing Bill could be more ambitious

Housing is about to get some long overdue scrutiny in parliament with a generally worthy Bill. However, it doesn't address the big issue, which is building new houses or take radical steps to strengthen tenants rights in the private sector.

The Housing (Scotland) Bill covers a wide range of issues concerning social and private housing. The big ticket item is the abolition of the right to buy. This is very welcome although the three year implementation time period is too long. Tenants are already being bombarded by adverts from lenders.

There is welcome flexibility for social landlords in allocating housing and new tools to tackle antisocial behaviour. Additional protections for tenants, particularly those with a short Scottish

Secure Tenancy is also a good idea. However, the criteria on 'tolerable standard' and 'overcrowding' should remain in order to safeguard quality of housing and tackle overcrowding, which is a problem in both private and social housing. The inclusion of a 'local connection' criterion should also be considered.

Transferring jurisdiction for civil cases relating to the private rented sector from the sheriff court to the First-tier Tribunal should make it easier for tenants to get redress. However, that's only useful if they have rights to enforce. There has been a big increase in the amount of privately rented accommodation in Scotland, from 7% to 12% of the housing market. Private tenants in Scotland have very few rights and some of the worst abuses are in this sector. The solution is the introduction of rent controls, security of tenure and other regulatory measures. It is often argued that this would reduce the supply of properties onto the market. However, in Germany they have highly regulated tenancies and a growing supply of properties - so it can be done.

Measures to establish a registration system for letting agents is a welcome step forward. Some in  the sector argued for a voluntary code that would have been toothless, so credit to the Scottish Government for taking a tougher line. Provisions that amend the site licensing requirements for mobile home sites with permanent residents are also welcome.

Strengthening local authority powers to enforce repairs and maintenance in private homes are also welcome, although they could have gone further with improvements. The upkeep of communal areas is a particular problem.

That leaves the need to build more houses and to have a long term strategy as Audit Scotland highlighted last year. Investment in social housing is the key to solving Scotland's housing crisis. In UNISON Scotland's housing policy document 'Making Homes for a Fairer Scotland' (June 2013) we argue that there is an acute shortage of homes - with official figures showing 335,000 households on social housing waiting lists across Scotland and 71,000 overcrowded households - 65 per cent of which included families with children. Shelter Scotland estimated a need to build a minimum of 10,000 affordable homes a year, almost twice the current level of social house building. We also show how new houses could be financed using council pension funds.

Improving our housing requires more than just the regulatory reform as proposed by the current bill. The housing crisis requires a massive programme of social housing investment from the public sector. The private housing sector needs stronger regulation to make it a realistic choice, rather than a tenancy of last resort. 

How Scotland compares with the rest of the UK - social indicators

The Office for National Statistics (ONS) has published a Compendium of UK Statistics bringing together comparable official statistics for the four nations of the UK. There is always a time lag with this data with most figures relating to the 2010-2012 period.

Here are a few snippets from the social indicators.

The wealthiest country is England
• England was the wealthiest country of Great Britain with a median total household wealth of £238,600. This compared with £231,500 in Wales and £182,500 in Scotland.
• Average weekly household expenditure was £491.00 in England, £480.90 in Northern Ireland, £437.30 in Scotland and £411.30 in Wales.

But Scotland has fewer low income households
• Based on a three year average ending in 2011/12, 16% of individuals in England were living in relative low income, before housing costs. The equivalent figures were 19% in Wales, 15% in Scotland and 21% in Northern Ireland.
• The proportion of children living in households where income is below the relative poverty threshold (before housing costs) was highest in Wales and Northern Ireland, both at 23%. This compared with 18% in England and 17% in Scotland.

Scots still die earlier, have poor healthy life expectancy (particularly men), but actually drink alcohol less frequently. The stereotype is clearly slipping a bit!
• Death rates per 100,000 population of 523.9 in England, 567.8 in Wales, 640.1 in Scotland and 567.0 in Northern Ireland.
• Healthy Life Expectancy (HLE) at birth for males was 5.2 years higher in England (64.4 years) than in Northern Ireland (59.2 years). For females, the difference between England (66.4 years) and Northern Ireland5 (61.9 years) was slightly less at 4.5 years. HLE in Wales was identical for males and females at 63.0 years. In Scotland it was 59.8 years for males and 64.1 years for females, showing the largest gender gap in HLE with more than 4 years separating males and females.
• An estimated 12% of persons aged 16 and over in England had drunk alcohol on five or more days in the last week, compared with 8% in Wales and 9% in Scotland.

Scots are educated to a higher level but we also have more people with no qualifications.
• Scotland had the highest proportion of usual residents aged 16 to 64 with an NVQ Level 4 or equivalent and above qualification (Higher National Certificate, Higher National Diploma or degree level), at 38.5% (1.3 million). In England, the proportion was 34.2% (11.5 million), the same as for the UK as a whole. Wales and Northern Ireland had the lowest proportions of usual residents aged 16 to 64 with an NVQ Level 4 or equivalent and above qualification, at 30.3% and 27.5% (572,500 and 315,800) respectively.
• The country with the highest proportion of usual residents aged 16 to 64 with no qualifications was Northern Ireland at 18.4% (211,200), compared with the UK average of 9.9% (4.0 million). In Wales, 11.4% (216,100) of usual residents aged 16 to 64 had no qualifications and in Scotland, the proportion was 10.7% (361,000). Usual residents of England were least likely to have no qualifications at 9.5% (3.2 million) of those aged 16 to 64.