Outsourced economy presents new challenges for unions
One of the larger transformations in the UK employment landscape over the past decade has been the rapid rise of outsourcing. The development has been driven by a welter of interconnecting factors, such as advances in technology that have enabled services that were once delivered face-to-face to be done online or by phone, standardised software systems, the appearance of specialist service companies operating at an international level, and increasing global pressures to improve efficiency while reducing costs.
Outsourcing is now a substantial part of the UK economy. Last year, the outsourcing sector was thought to employ 3.1 million individuals or one in ten of all workforce jobs, and to account for 8 per cent of GDP, according to a report from Oxford Economics Research.
The recent Acas discussion paper Outsourcing and the fragmentation of employment relations: the challenges ahead [814kb] claims that outsourcing has had a significant impact on employment relations. The traditional model of employees and unions on one side and employers on the other is becoming harder to apply to the contemporary picture.
In The Blurring of Control and Responsibility [126kb], which responds to the paper, author Stephen Overell goes further, saying that the outsourced workplace is 'multi-polar', with power shifting between interested parties both within and outside an organisation. Outsourcing distances and blurs the traditional connection between control and responsibility; the client company stays in control of workers, but delegates responsibility for them to another employer. As a result, it sometimes becomes 'hard to know where one organisation ends and another begins'.
It's no longer possible to take for granted a model of employment in which colleagues sitting alongside each other have the same employer or the same terms and conditions of employment. All of which makes it far harder for unions to know who to bargain with and from where to draw support.
The unions' ability to recruit, represent and bargain collectively is complicated by the spread of smaller, subcontracted workplaces in which terms and conditions have not necessarily been determined by their direct employer but by the client company. In such cases, negotiations can be difficult and protracted, requiring the employer to go back to the client to renegotiate terms.
The discussion paper says that the unions have responded by expanding their reach vertically up the outsourcing supply chain, as well as horizontally. They are working and campaigning with community groups and customers at one end, while applying pressure on large client firms for improved pay and conditions at the other.
The danger of a fragmenting employment model, the authors suggest, is that the trade unions become increasingly detached from the key decision-makers in the often large, sometimes multinational, client companies. It's therefore vital that these organisations do their bit to bolster communication and collaboration through the supply chain to protect and promote good employment relations.
Acas provides practical training for managers and HR professionals on TUPE and outsourcing, as well how to work effectively with trade unions, (details listed under trade union recognition). Visit the Acas Training and Business Solutions area for more information.