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Better deal for UK workers?9th of March 2012
This edition sees the start of a new series of articles focusing on the major economies of Europe. The first of these is the UK – with an overview of the economy and its particular challenges and a look at how that impacts the professional cleaning sector. Andrew Large at the British Cleaning Council talks exclusively to ECJ.
The cleaning industry was estimated to be worth almost 12 billion euros to the UK economy in 2011- with around 450,000 workers employed by the sector, working within 33,000 companies. The industry is also predicted to grow at around 11 per cent in the next five years, making it a significant contributor to the Britain’s economic performance in the foreseeable future.
While the cleaning industry may play a leading role in the economy, production has run into trouble. All over the world, the private and public debt hangover from the credit boom of 1999-2008, and the deep recession that followed, has shaken the foundations of capitalism to its core - while the post-mortem of the events that led to the crash and its aftermath is marshalling industry leaders and politicians towards a fundamental rethink about how we run our economy.
So the biggest challenges for the cleaning industry for the next few years, both in the UK and across the developed world, will be having to operate in a world with less economic activity than we have been used to, coupled with the momentum behind ‘responsible capitalism’. Squaring these two factions off with each other will be a major challenge, primarily because it will be more difficult to invest in worker welfare and training, environmentally sustainable practices and higher pay, when the economy is forcing down profits for everyone.
Let’s focus first on responsible capitalism. To better understand what form this might take, we can look at recent speeches on the topic from the leaders of each main political party to assess the direction of travel on this relatively new theory.
Ed Miliband, Labour party leader, has led the charge for responsible business by pushing the most comprehensive vision of how he sees the dynamics of commence working in the future. Miliband was the first major political figure to outline a vision of post-2008 economics when he used his conference party speech in September 2011 to call for an end to 'predatory capitalism' - where companies run roughshod over their obligations to society as they pursue bigger and better returns for managers and shareholders - and move towards 'producer capitalism', that rewards creativity and hard work while boosting the UK’s exports.
Miliband did not name any companies by name but he clearly has companies that underpay or lay off their staff to cut costs then divert the profits to the owners in his sights. He also spoke about the need for long-term shareholders to have greater voting rights in takeovers, placing workers on company remuneration committees, and said he wanted to see unwarranted private sector monopolies broken up to ensure more competition and greater consumer choice.
Miliband was widely-criticised for his line at the time, but three months later the deputy prime minister Nick Clegg picked up the baton and outlined his vision of a 'John Lewis economy', which would see worker co-operatives regain the prominence of old and wider share ownership among employees. He also called for greater transparency on executive pay and external scrutiny on how money is distributed down through companies.
Finally and most significantly, prime minister David Cameron weighed in with his vision of 'moral capitalism', stating that he wanted to improve market based economics so that they "created a direct link between contribution and reward, between effort and outcome". While defending the principles of the free market as it stands, he added that he wanted to see shareholders empowered to have greater control over pay committees, while the rules on forming co-operatives should be simplified so that it is easier for workers to start companies of this kind.
Politicians in sync
On the face of things, it is easy to see why the major political forces now seem to be moving in sync. The recession which began in 2008 has endured longer than many predicted, and the UK is not expected to return to pre-crash output levels until at least 2013. When people stop getting the returns they have come to expect, deeper and more serious reconstructive surgery is required to return the patient to health.
Meanwhile, the growing inequalities that festered during the boom years, addressed through Blair and Brown’s redistributive tax policies and easy private credit, are no longer a viable option. When both crutches are taken away, addressing wage stagnation amongst low and middle income workers will need to be addressed for the sake of society.
In the face of lower profits and lower returns, this could mean fairer wage distribution, with executive pay reduced, while employees operating lower in the company's hierarchy will have a chance to own a piece of their employers and access a share of the profits if the company performs well.
Any company that puts profits ahead of ethics and responsibilities, while failing to invest adequate resources into the long-term development, will find that their behaviour is no longer acceptable. Likewise, stripping company resources to the bone for the sake of shareholder returns will not be tolerated; this could mean better staff ratios and a less demanding workload per employee.
The case for better pay for cleaners has been strengthened by the Living Wage campaign, orchestrated by the community group Citizens UK. The group has recently collaborated with Queen Mary University in a major project on the productivity, staff retention and absenteeism levels for workers that are paid the living wage - currently just under 10 euros an hour.
In each major respect, the study revealed that living wage employees work harder, take less time off through sickness and display greater loyalty to their employers, resulting in a net gain to companies who sign up to the policy. They are able to have a single job instead of two or three additional part-time roles, improving quality of life and energy levels when they are at work.
The cleaning industry is also heavily dependent on migrant workers - across the UK around 40 per cent of cleaners are of non-UK origin, a number that rises to 60 per cent for those working in London. If the predictions of long-term economic stagnation prove correct, this will mean fewer migrants will be attracted to Britain for employment, and cleaning companies will increasingly need to look towards domestic workers for their labour supply.
British workers will be less likely to accept low pay, placing pressure on companies to reassess their pay policies, while long-term unemployed entering the industry after a spell of inactivity will need greater investment and nurturing than migrant workers.
Squaring the anaemic growth with improved sustainability should not be as difficult as many assume - it is a common misconception that sustainability costs more money. Many companies across the cleaning industry have showed that working within the parameters of responsible capitalism is both possible and profitable. Outside of the cleaning industry, the Co-op, John Lewis and InterFlora have shown that businesses can be hugely successful and take their all their employees along for the ride.
If the political classes are really serious about responsible capitalism, environmental regulation will also need to be tightened to ensure companies do not behave in a way that sees profits rise at a cost to society; this will mean that efficiency will be need to be improved through wider recycling, alternative energy supplies and better waste management.
The clear consensus that the cleaning industry should pay attention to is that the responsible capitalism will have to work better for everyone involved, and despite a recession with no end in sight, industry can still triumph with better trained, highly motivated and well-paid workers who make a worthwhile contribution to the wider economy and society. The cleaning industry may be forced to accept lower profits and smaller returns for company shareholders, but the deal received by the workers is likely to improve significantly.
•In the next edition, where we preview ISSA/INTERCLEAN in Amsterdam, ECJ focuses on the Netherlands.