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Week ending 05/03/2010
TALENT A PRIORITY BEATING RECESSION
Companies must put their people first in the recovery or risk experiencing deep talent erosion and sustained underperformance, employers have been warned.
According to a worldwide survey of senior managers, sponsored by StepStone Solutions, two years of cutbacks have undermined workplace trust. Combined with increasing demand for executive talent and a sharp drop in graduate recruitment, the survey has found that companies without the right talent strategies risk developing a major skills shortage just when they need employees' energy and commitment the most.
In Companies at the Crossroads, researched and written by the Economist Intelligence Unit, it is claimed that nearly one third (29%) of the business executives said employee engagement is low and they expect to lose key people as talent demand grows. At the same time, graduate recruitment has also been dramatically affected, with 6% of respondents saying graduate recruitment would be a focus for their organisation in 2010 - compared with 50% of respondents in 2009.
Meanwhile, talent has moved fast up the boardroom agenda. The availability of talent has risen to overall third as a driver of growth (voiced by 46% of respondents), sitting behind only economic recovery and credit availability.
More than four out of 10 employers (41%) agreed they have a shortage of talent in their organisation and 44% find it increasingly difficult to recruit talented employees.
Week ending 05/03/2010
FIRMS NEED SOCIAL NETWORKING POLICIES
Employers have become vulnerable to employee abuse through social networking sites as they do not have clear policies in place for staff. According to Manchester based law firm Pannone, which surveyed more than 100 HR directors, 79% of employers do not have a social networking policy in place, while 62% fail to actively manage their online reputation.
Despite these findings, 73% admit the biggest threat to their organisation from social networking sites was employee abuse, in terms of the amount of time spent on such sites or from posting inappropriate comments about the company or colleagues on sites such as Facebook or Twitter. Employers were also concerned that encouraging the use of professional networking sites such as LinkedIn allowed staff to have easy access to the employer's client base (18%).
Other business threats identified included breaches of confidentiality, customers putting bad reviews on websites, disclosure of key business knowledge, electronic security, giving competitors too much information and the time taken to actively manage social networking issues in the workplace.
The survey highlights the risk that companies face in the wake of the social networking phenomenon. It is not surprising that employee abuse of social networking sites is a big concern for employers; hardly a day goes by without stories emerging about employees being disciplined for activities on social networking sites. The findings come after British Airways suspended 15 flight attendants who wrote Facebook comments about pilots on a ‘name and shame' list who had allegedly volunteered to break a strike, and last year, Virgin Atlantic sacked 13 cabin crew after they criticised some of the airline's passengers on Facebook.
The survey also revealed, while 35% said that their business used social networking sites as a business development tool, almost two-thirds (62%) are putting their brand at risk by not effectively monitoring their online reputation. Of those employers who admitted using social networking sites to vet potential candidates, one in three (33%) said it had influenced their decision whether to offer/reject an application.
Week ending 05/03/2010
EMPLOYEES FEAR TALKING ABOUT DEPRESSION
Scores of British adults avoid talking to their boss about mental health problems out of fear of losing their job or being considered 'mad.' A survey, published by mental health charity Rethink, shows nearly six in 10 British workers (59%) admit they would feel uncomfortable talking to their line manager if they had a mental health condition such as depression, anxiety or bipolar disorder.
Fear of losing their job was the main reason people gave for feeling uncomfortable, closely followed by concern about colleagues finding out about their diagnosis. Nearly one in five (18%) respondents said they would be concerned that their line manager would think they were ‘mad' or overlook them for promotion (17%). Just under a tenth (9%) of British employees say they would feel ‘very' comfortable talking to their line manager about a mental health condition, 24% say they would feel ‘fairly' comfortable.
More than a quarter (27%) would feel ‘not very' comfortable and a third (32%) ‘not at all' comfortable. More than a quarter (26%) of respondents who said they wouldn't feel comfortable talking to their line manager would be worried about losing their job. Nearly one in five (18%) would worry that their line manager would think they were ‘mad', 19% would be concerned that their colleagues would find out and 16% would be afraid they would be overlooked for promotion.
Antonia Borneo, Rethink's policy manager, said: "These statistics confirm what our members tell us. Even when employers have mental health policies in place, line managers often feel ill-equipped to deal with mental health issues among staff. However, line managers have a huge role to play in tackling workplace stigma and helping people with mental illness to remain in work. We know the practical steps that can help people affected by mental illness to continue working and want to share this knowledge with employers so that all employees feel comfortable asking their manager for help."
Week ending 05/03/2010
WOMEN HIT BY FALLING EMPLOYMENT LEVELS
While US employment levels are set to gather pace, UK levels will continue to decrease for the first quarter of 2010, according to the CIPD. The sharp fall in employment intentions in the UK public sector accounts for the difference, with net employment intentions falling to -33% (the difference between the percentage of employers expecting to employ more staff in the first three months of 2010 and the percentage expecting to employ fewer) in the public sector.
The fall will have a disproportionate effect on female employment prospects. Until now women have fared better in the recession, as they make up a far higher proportion of the public-sector workforce than of the private sector.
Across all sectors, the UK survey records a negative balance of -5%. This represents a modest fall compared with the -3% figure recorded in the previous quarter's report. In contrast, the US Labour Market Outlook (LMO) records a positive balance of +11%, compared with +6% in the previous quarter, which is the most positive figure since the US version of the survey began a year ago.
Just over a fifth (21%) of the UK workforce is in public-sector employment, whereas 17% of the US workforce is in public employment.
And according to the CIPD, the number of people in public-sector employment in the UK was 6.09 million in September 2009, up 23, 000 from June 2009 and up 910,000 from 1997. The number of people in private-sector employment was 22.82 million, up 15, 000 from June 2009 and up 1.19 million from 1997. More than a third (35%) of the public-sector workforce was made up of women in the fourth quarter of 2009 while the figure for the private sector was around one in six (17%) over the same period.
The Society of Human Resource Management's (SHRM) US Labour Market Outlook survey, based on the same questions as the UK report, found approximately one in 10 (12%) US employers plan to cut jobs in the first quarter of 2010. This marks a reversal from the first quarter of 2009, when almost three-quarters (73%) of employers planned to make job cuts. The improvement is much less marked in the UK, where the number of organisations planning to make redundancies has fallen from 40% in the first quarter of 2009 to 28% in the same period this year.
Week ending 05/03/2010
INDUSTRY NEGLECTED FOR A DECADE
A forecast made ten years ago that unless the government supported industry the sale of British-made goods would decline precipitously has proved accurate, says the manufacturers' trade body, EEF. Stephen Radley, EEF policy director and the organisation's chief economist at the time of the prediction, said it was one forecast he would have been happy to have got wrong. "Although there are now some more positive signs (from government) we are reaping the results of neglect in the early years of this decade. It's vitally important we learn from those mistakes and don't repeat them in the next decade," he said, adding that the EEF called for more "focused and consistent" government policy on procurement, skills, security of energy supplies and regulations towards manufacturing, which represents almost 12% of the economy. The organisation also criticised the tax system for its "bias" against manufacturers that invest large sums in capital equipment.
Week ending 05/03/2010
TAX BURDEN PUTTING JOBS AT RISK
The finance directors of Britain's largest companies have warned the government that the tax burden is damaging investment and job creation. The One Hundred Group, whose members represent household names shuch as Marks & Spencer, HSBC and BP and employ almost 6% of the UK workforce, has caluculated that the government took 56.6% of their gross profits in taxes last year, up from 48.6% in 2008. The findings increase pressure on the government to cut the 28% corporation tax rate and to scrap plans to raise £7 billion by increasing employers' national insurance contributions in April 2011. Ashley Almanza, chairman of the group and finance director of BG Group, said planned increases in income, employment and savings taxes from April would further hinder the creation of skilled jobs
"What this clearly says to us is that, all other things being equal, the cost competitiveness of the UK will suffer as a result of the rising total tax rate. Ultimately our competitors in North America, Europe and the Far East will be able to afford the same sort of skills at a lower cost," he said.
Week ending 05/03/2010
MOST WORKERS NOT EXPECTING PAY RISE
Sixteen million UK employees have accepted they will not receive a pay rise this year, as the economy struggles in an unstable recovery. A report from YouGov independent price comparison and switching service uSwitch.com reveals the recession is far from over for millions of consumers. Despite the economy being on the mend, over 16 million workers (57%) do not expect a pay rise this year, and those who do can expect a rise of just 1.9% - a net monthly increase of £27.
The average gross salary this year after a 1.9% increase will be £24,425, but the report highlights the gap between public and private-sector pay is shrinking. 2010 pay rises show a 26% gap between the two groups compared with a 66% gap in 2008. Public- sector workers are set to take home an extra £23 a month while those in the private sector can expect an additional £35 in their pockets.
Despite the closing gap, nurses, civil servants and teachers believe that they face a particularly gloomy year. While 40% of nurses surveyed do not expect any increase this year, those responding more positively estimate a 1.4% rise; 43% of teachers do not expect a rise but those who do anticipate a 1.8% boost; and while over half (53%) of civil servants foresee a zero increase, the lucky few expect a 1.6% rise. According to the report, among those set to be best off this year are bankers and lawyers, anticipating pay rises of 2.7% and 2.9% respectively.
And with the cost of living rising at nearly double the rate of salaries, 5.4 million consumers (11%) are spending more than they earn while over one in four (26%) have nothing left in their bank accounts at the end of the month. With the majority of those asked seeing no clear signs of recovery on the horizon in terms of pay, 31% of consumers believe they will be worse off this year than last.
Nearly half (48%) of those spending more than they earn rely on overdrafts to fill the gap between their income and their outgoings, while over a third (34%) use credit cards to keep them afloat. The nation's love affair with plastic shows no sign of letting up with 21 million using their credit card at least once a month, up 4% from 2007. Excluding mortgages, the average household debt in the UK is £9,000, which increases to £18,722 when unsecured loans are taken into account. In total, households are faced with average debts of £57,937 including mortgages.
According to the Bank of England, January's 3.5% inflation spike was directly due to three factors: the rise in VAT from 15% to 17.5%, a 70% increase in oil prices and the impact of a sharp fall in sterling in 2007 and 2008 which pushed up import prices. While these factors are considered to be temporary, the Bank's prediction that inflation is likely to remain above the Government's 2% target for the next few months offers no comfort to the millions of homes struggling to make ends meet.
Week ending 26/02/2010
FIRST CORPORATE MANSALAUGHTER CASE ADJOURNED
The first Corporate Manslaughter and Corporate Homicide case has been adjurned due to the ill health one of the defendants. The case against Cotswold Geotechnical Holdings and its MD Peter Eaton for 18 weeks, due to Eaton's poor health. Mr Justice Field heard submissions in private and directed that the trial be listed to resume in early October 2010.
He took this step because Mr Eaton must undergo urgent medical treatment of a character which would render it "unfair and oppressive" for him to have to participate in the trial at the same time.
Charges were laid by the Crown Prosecution Service in April 2009, following the death of an employee of the company, Alex Wright, in September 2008. The case against the company is the first to be heard in the UK under the new Corporate Manslaughter and Corporate Homicide Act 2007. Eaton has been charged with manslaughter by gross negligence and a health and safety offence in his own personal capacity.
Week ending 26/02/2010
INCREASED TAX ON JOBS TO GO AHEAD
David Cameron has admitted that he cannot rpomise to reverse planned increases in National Insurance contributions if the Conservatives win the general election. The so called "tax-on-jobs" was expected to be reversed, at least in part, the Tories have hinted in the past. But now the Conservative leader has conceded that because of the state of the country's finances, he cannot find the necessary public spending cuts need to halt tax increases. In a speech at the British headquarters of Microsoft Mr Cameron admitted he was resigned to keeping Labour's main tax rises: the 50p income tax rate for top earners; the one off levy on bankers' bonuses and the NI rise. He said: "Today, as things stand, all those taxes are going ahead. The state of the country's finances is so bad that we cannot pledge to get rid of all of them. It's not possible to into this election with lots of lovely plans for tax cuts. If you're going to announce a tax cut, you've got to show where the money is coming from. National Insurance contributions will rise by one percent from April.
Week ending 26/02/2010
ECONOMY FACES 'VOLATILE' FEW MONTHS
Mervyn King has warned that the British economy is in store for a 'volatile' few months adding that the Monetary Policy Committee was on stand-by to extend its £200 billion quantitative easing programme if necessary. Addressing the Treasury Committee for the last time this Parliament, the Bank of England governor said that while the economy had embarked on a "process of healing", many challenges still remained. The goernor said that much of the impact of the asset purchases was yet to be felt, and that without QE, a very serious monetary contraction would have taken place. Mr King said that among the major challenges facing the UK economy was the large deficit, adding there was political consensus that sharp deficit reduction was necessary and that ratings agencies would expect a detailed plan of how the deficit would be reduced either in the Budget or soon after the election.
Week ending 26/02/2010
EUROPE PLANS 20 WEEKS MATERNITY LEAVE
The European Parliament's women's rights and gender equality committee has voted through plans to force firms to pay pregnant women 100% of their salary for at least 20 weeks. The introduction would leave British businesses facing the prospect of a crippling £2 billion burden to implement the measures. MEPs have predicted that the EU would rubber stamp the measures at next month's vote in the European Parliament. However, the power of an apparently unaccountable committee to make such a radical policy has infuriated many in British business, particularly as Britain no longer has a right to block the proposals because it surrendered its veto on employment law. It is understood British ministers will work behind the scenes to persuade EU allies to vote against the plans next month. If ratified the plan would effectively treble statutory maternity pay in the UK, which currently provides women with six weeks at 90% of their salary, followed by a longer period on a basic £123 a week.
Week ending 26/02/2010
MANUFACTURING CONDITIONS STABILISE
Credit conditions in the manufacturing industry are beginning to stabilise, but financial systems are yet to be tested, warns the EFF, the manufactures' organisation. New reasearch by the organisation found that a quarter of companies sought finance for working capital in the past two months and in the majority of cases their needs were met. However, with signs that an economic recovery is now under way, manufacturers need certainty and confidence that the banking system will be able to provide the finance they need to meet growing demand. Lee Hopley, chief economist of the EFF, said: "Evidence that credit constraints have strated to calm down will help build some confidence across the sector. But we are only at the early stages of a reccovery and as demand for finance has been subdued the financial system has yet to be tested. The key question is whether the banks will be there for manufacturers as a return to growth generates greater demand for finance. Maufacturering has been one of the worst affected sectors in the recession, however, the EFF research revealed that many manufacturers expect their finance requirements to increase in the next two months.
Week ending 26/02/2010
TORIES PLEDGE TO HELP BUSINESSES
The Tories will announce a cut to the rate of Corporation Tax within two months of taking offie as they attempt to bolster comapnies' shaken faith in the UK, shadow chancellor, George Osborne has pledged. He said that he would publish his first budget 50 days after the election declaring it would introduce immediate steps to "boost enterprise." The budget, he said, would also introduce draconian deficit-cutting steps to shore up market condifence. Mr Osborne added that the Tories would follow a three-step plan to restore stability to the public finances starting with the creation of a new Office for Budget responsibility within days of taking power. This would be tasked with publishing a 'truly independent audit' of the Treasury's finances. The subsequent Budget would contain a clampdown on public sector pay and pensions in a bid to 'help put our public finances on a sustainable footing,' said Mr Osborne. He added that failure to tackly Britain's near-£850 billion public debt mountain would undermine Britain's recovery and endanger market confidence in the national finances. It could also lead to a jump in borrowing costs, as the market demands higher rates when it lends to the Treasury.
Week ending 26/02/2010
CIPD LEGAL WORKSHOPS
The CIPD has launched a tour to help HR professionals focus on employee conduct, performance and attendance issues and on fair procedures that are needed to deal with them. The programme has been developed as a direct response to the sharp increase in unfair dismissal cases brought in the recession. The 2009 Acas Annual Report cited a total of 52, 711 claims made in that period, a 29% increase on the previous year. This increase in claims is a direct result of organisational downsizing, but it has also increased because former employees are more willing to make claims about the lack of opportunities for alternative employment.
Mike Emmott, employee relations adviser, CIPD, says: "An increase in claims was inevitable given the scale of redundancies in the past year or so, but the extent of the increase is particularly worrying. It's a clear indication that far too many employers are not adopting good practice around employee performance and discipline. In cases where everything has been done properly and in accordance with legal requirements, employers are evidently failing to get the right message across.
"Our workshops have been designed to help employers ensure they have robust and fair procedures in place. They're for anyone considering reviewing how to ensure that their organisation can show evidence of fair and appropriate process, and have confidence in demonstrating that. In tough times, employees under financial pressure have less reason to shy away from making claims and employers can ill afford the cost in money and reputation of not getting it right."
Week ending 26/02/2010
SMEs LACK UNDERSTANDING OF EMPLOYMENT LAW
Small businesses are suffering from lack of confidence and awareness of managing employment law, according to new research from the Department for Business, Innovation and Skills (BIS). The study shows that almost a third (32%) of the total sample report feeling confident in their understanding of employment law and their role as an employer but 34% of respondents feel employment law obligations are ‘not relevant' to their business and a further 20% report that they understand their obligations but worry about getting it right.
Almost half (42%) of the sample consider it ‘important' to stay up to date but a quarter (25%) admit that they do not keep up to speed with legislation changes.
A further 28% report they are ‘vaguely aware' of their legal obligations. This group of employers feel that they are unable to find the time to keep abreast of their legal requirements.
Commenting on the BIS findings, employment relations minister Lord Young said: "We know that running a small business is both challenging and rewarding - and that this combination often fuels a successful enterprise. The essential job of managing employment law need not be one of these challenges.
"This study helps us identify the knowledge gap, and the reasons behind this, to enable us to continue to improve the advice and support we offer. I expect all small businesses to access this help for free on the Business Link website to make sure they know their responsibilities."
The research also found women place a greater emphasis on keeping up to date with employment law compared with their male counterparts, but worry more that they will get it wrong. Over half (54%) of women report that they feel it is important to keep informed of changes, compared with 38% of males.
Over a quarter of male small business owners (26%) admit they don't keep up to date with employment legislation, compared with a fifth of women (21%). Despite this, over a quarter (26%) of women worry that they will manage it incorrectly compared with 17% of men.
The Government offers free advice and simple online tools on the Employing People section of the Business Link website to help SMEs manage their legal obligations. This advice is tailored to small business owners, to suit different requirements.
Week ending 26/02/2010
EMPLOYMENT TURNOVER RISES
Resignations have increased in the year to February 2010, despite growing fears over job security. The 2010 National Management Salary Survey, published by the Chartered Management Institute (CMI) and XpertHR, reveals a labour turnover rate of 13.6%, up from 12.4% in 2009. Resignations stand at 4.7%, compared with 4.5%, last year.
The survey results also imply employers are failing to persuade staff to stay, with requests for ‘internal transfers' as an alternative to leaving dropping to 3.6% from a high of 5.8% last year. According to the survey of 43,312 individuals in 197 organisations, earning power has dropped dramatically in the past year, with take home pay heavily influenced by where people work and what they do.
Asked what lies behind this desire to change jobs, more than half the employers questioned (53.8%) admitted restructuring and job insecurity caused many of their staff to ‘jump ship'. Almost four out of 10 (38.5%) recognised their ‘failure to offer career opportunities and training' contributed to employees leaving and 61.5% admitted headhunters and recruitment consultants had turned their employees' heads.
With unemployment figures currently quoted at 2.47 million, an additional unexpected result from this year's survey is that employers are struggling to recruit staff. According to the data, 46% of employers admitted they couldn't fill vacancies, with the majority (77%) citing the lack of specialist skills among candidates as a key reason. Almost one quarter (24%) blame the salaries they are able to offer and 15% suggest their location is a factor.
Ruth Spellman, chief executive of the CMI, said: "A year ago employers were looking at job transfers as a way of halting growth of the dole queue. However, with the latest figures showing that staff are prepared to run the risk of unemployment by jumping ship, questions must be asked about employee engagement levels in organisations up and down the country. "It is clearly time for business to grow up. We can no longer afford to reward people with pay rise after pay rise especially as all the evidence suggests that money isn't the main motivator anymore. Instead, employers must concentrate on building remuneration packages that incorporate earnings with development opportunities, offer flexible approaches to work and recognition of the need to better engage with staff."
Week ending 26/02/2010
DIRECTORS 'BLINKERED' ON STATE OF THE ECONOMY
The UK's business environment will "never return to pre-recession normality" and weak economic growth is likely to continue untile 2015, according to some of the UK's top economists. In the meantime UK boardrooms are "blinkered" about the true state of the economy and some companies' business models will "wither and die away." The stark warnings are based on forecasts from senior economists from bodies such as the CBI, the Institute of Directors and the Institute for Public Policy Research. They are contained in a new report by BDo, the accountants and the think tank, the Centre for Future Studies. Even though the UK has technically emerged out of recession, the report warns that there will be "no return to business as usual" for some time to come. The report accuses UK boardrooms of being "blinkered" following research that showed half of UK directors--44%-- predict that their companies would return to "pre-recession normality" and that their businesses would not fundamentaliy change in the next five years. The report, called 'Transitions', says: "Many executives clearly think that there will be a return to business normaility in the next two years. However, the world is changing and there's a need for UK businesses to reinvent themselves if they are to survive. UK businesses needed to use the period to transofrm themselves and adapt to a "new environment." Peter Hemington, a BDO partner, said: "The global economy has become unnaturally skewed through the rise of India and China. Although we hope that this recession may be over, the consequences still remain. As a result, the conomic environment will remain tough for some time to come. Linked to this we are going through a period of profound societal and technological cahnge which will mean that some business models will wither away and die, while others will thrive and grow."
Week ending 19/02/2010
HOUSE PRICES "TO TUMBLE" AS CREDIT CRUNCH RETURNS
A second mortgage credit crunch that will send UK house prices into a new tailspin is looming, economists and credit experts are warning. The squeeze on debt will begin to be felt in January next year when lenders are due to start repaying £319 billion borrowed from the Government during the original crisis in 2007 and 2008---a quarter of the UK's entire £1.3 trillion stock of mortgages. To pay the money back, credit-ratings agency, Moody's, said banks and building societies may "limit their lending through tighter credit criteria" -- in other words reducing availability and making mortgages more expensive. Credit is already tight. In 2009, societies removed £7.4 billion from the mortgage market and approvals dropped to 1.3 million, compared with 3.4 million annually from 2005 to 2007. Lobby groups have called on the authorities to delay the timetable, but last week Mervyn King, the Bank of England governor, confirmed that the main state-backed liquidity scheme, providing £185 billion of funding, would end in January 2011 as scheduled. The full £319 billion must be repaid by April 2014.
Week ending 19/02/2010
MANAGERS USE GUT INSTINCT RELATING TO PEOPLE
Seven out of 10 line managers doubt their decision-making capability when it comes to people management. According to the results of a study by workplace psychologists OPP, 71% of all line managers would change the people decisions they've made if given a second chance. It's an indictment on the ‘gut instinct' culture that costs UK businesses millions of pounds in performance issues each year. Nearly four in 10 (39%) line managers said they still rely on gut instinct as one of the most important factors when making any decisions about their people. A quarter also admitted that whether they like someone personally was also a major influence.
But people who had taken a psychometric test in the course of their career were twice as likely to find this kind of data important to them in making a range of decisions about people. This group is also much more likely to look for evidence in past behaviour than those who have not received feedback on a personality test in their career (68% vs 51%). A major factor in this is managers' mistaken belief that they truly know their people - a view not shared by employees: 97% of managers feel they know their people fairly well or better; only 74% of workers agree with them.
Almost half (47%) of managers even say they know a great deal or everything there is to know about their people, while only 23% of employees share this view. Moreover, 45% said that they don't trust their manager's instincts on staff decisions relating to them or to others. The result is a workforce that is becoming increasingly distrustful of management decision-making.
Week ending 19/02/2010
TORIES TO REVAMP PAYE SYSTEM
The Conservative Party is planning to tackle on the the heaviest burdens on business by scapping the existing PAYE system in the most radical shake-up of the UK's tax collecting regime since 1945. The Tories are working on a pilot for a new automated bank-based system that would remove the responsibility of deducting and paying income tax from employers. The new system could save businessess up to £5.5 billion, they say, as well as increasing revenues to the Exchequer by £1 billion. Rather than leaving employers to process different tax codes and pay income tax for employees, the new operation would authomatically deduct income tax and National Insurance contributions directly from an employee's gross pay as it is paid into their bank account. The Tories, who are in talks with various technology providers who are developing the system, believe the plans have been made in response to the increasing failures of the current system. Critiscs have argued that the current system, which is still paper based, is ill-equiped to cope with individuals who change jobs more frequently and often have multiple sources of income. The Public Accounts Committee said that HMRC has a backlog of 17 million PAYE cases to address and the National Audit Office, last year, estimated that 4.5 million people paid too much tax under PAYE and 1.5 million not enough.
Week ending 19/02/2010
BANKS LENDING LESS TO UK COMPANIES
Lending to British businesses fell by £4.3 billion in December, the Bank of England has announced, in further evidence of the banks' persistent unwillingness to lend. Net lending on an annual basis was down 8.1%, the weakest growth rate since comparable records began more than a decade ago. The Bank said in its Trends in Lending report that lending in the fourth quarter fell across all the main sectors of the economy for a third consecutive quarter. The trend partly reflects a reluctance to lend on the part of Briatain's banks as they seek to rebuild balance sheets in the wake of the financial crises and increase the amount of capital they hold. Larger companies are now turning to alternative sources of funding, including corporate bond and equity issuance. Reflecting this the Bank said that demand for corporate borrowing from the UK's major lenders covered in the report remained weak. Separate figures from the Bank showed the slowest annual growth in M4--the broad money supply--since February 2000, with growth of 5.1%. The figures are a worry for the Bank which had hoped they would be boosted by quantitative easing.
Week ending 19/02/2010
SMALL FIRMS LOSING OUT ON CASH DEPOSITS
Small businesses are paying a heavy price for failing to shop around for cheaper export finance and better deals on their cash deposits, according to new research. SMEs could be saving £1.7 billion a year along on export finance, says Moneycorp after surveying 1,000 companies involved in overseas trade. Switching deposits from high street banks offering a low rate of interest to accounts offering a better return could provide them with a £1 billion boost on the £54 billion they have in bank accounts, says Investec Private Banking. Reliance on expensive bank finance means small buisiness are suffering a double blow at a time whne sterling depreciation is improving the export outlook, says Money corp. The research also showed that almost one-in-two small firms suffered on currency trades because they failed to understand the risks involved, while one-in-three experienced a significant or serious impact because of the volatility of sterling.
Week ending 19/02/2010
SMEs RUN RISK OF HMRC FINES FOR PAPER TAX RETURNS
Employers running small businesses risk being fined up to £3,000, even if they meet deadlines for filing annual returns to HM Revenue and Customs under the terms of changes being introduced shortly. HMRC is insisting that all businesses with between five and fifty employees submit Employer Annual Returns electronically by May 19th, and is warning that any employer still using paper forms could be penalised. The government's tax collector says: "If you file your return on paper, even if it's before May 19th, you could receive a penalty." Employers with more than fifty employees have been required by law to send returns online since 2006. Amended regulation, introduced last year, extend the provision to virtually all employers. One of the few exceptions is religious groups whose beliefs are incompatible with electronic communications. Some small business organisations have protested that HMRC is being heavy-handed. The National Haairdressers' Federation describes the decision to end the paper option as a major blow for small employers because the element of choice has been removed. The federation says that not all salons use computers in their businesses and is questioning the HMRC's data security record. HMRC is offering its own software for free to help small employers file online. It says submitting returns online cuts out delays and the time taken to process paper forms manually. Employee records are also upadated more quickly, resulting in fewer enquiries. Employers are being reminded that new penalities are being introudced this year for late payment on PASYE, including National Insurance Contributions, student loan deductions and Construction Industry Scheme offsets. The penalities will be calculated as a percentage of the amount paid late, ranging from 1% to 5% of the amount overdue. The stiffest penalties are for employers consistently late with payments scheduled during the tax year with the percentage increasing in line with the numder of late payments. Employers facing difficulties in meeting payment schedules are bieng advised to flag up the problems with HMRC's Business Payment Support Services in advance and told penalities will be waived if they reach agreement about phased payments.
Week ending 19/02/2010
DEFINED BENEFIT PENSIONS TO BE EXTINCT BY 2020
Employers are under increasing pressure to transfer company pension liabilities as they struggle to de-risk their schemes, leading three quarters to believe defined benefit (DB) pensions will be extinct in 10 years. According to a report from Buck Consultants and Economist Intelligence Unit (EIU), transfers of pension liabilities will become more widespread over the next three years.
The future of corporate pensions survey, reveals over a quarter (27%) of company pension schemes plan to de-risk their portfolios over the next three years by transferring some of their liabilities to a third party. One in ten admitted they expect to transfer all of their liabilities. According to Buck, the speed with which this trend has emerged is all the more surprising, considering 7% of companies transferred liabilities in the past three years.
The desire to transfer liabilities is fuelled by the fact 41% of employers claim managing increasing pension scheme deficits will be their biggest challenge of the coming years. Coupled with the fact that nearly three quarters (73 per cent) of companies believe that defined benefit schemes will be extinct by 2019, this move signals a new phase in the pensions landscape.
Fraser Smart, director at Buck Consultants, explained: "The DB system will be a thing of the past a generation from now - it relates to a job for life culture, not the working environment we have today. Instead of helplessly fanning the dying embers of DB, companies, employees and the government should embrace planning for the future. If the UK is to fireproof the next generation against poverty in retirement, we cannot rely solely on the state to provide. This important research shows that companies do recognise the need for them to play a role in helping employees plan for retirement. The next step for corporates is to develop appropriate schemes for their employees that make a decent contribution and are flexible enough for the needs of our current workforce."
Week ending 19/02/2010
DADS SEE ADVANTAGE OF FLEXIBLE WORKING
Working dads are increasingly seeing the value of flexible working, Government research reveals. According to new figures by the Department for Business, Innovation and Skills (BIS) 56% of fathers surveyed, who have children aged 16 and under, said they would look for an employer who offers flexible working when choosing a new job. And 91% of those with children aged five or under think it is important fathers have the option to take paid paternity leave. Nearly two thirds (62%) believe a father's relationship with his child will suffer if he is not at home after the baby is born.
But some remain unsure of the rights currently in place to help them. A fifth of working fathers with children aged 16 or under - who, by law, are entitled to request flexible working from their employer - did not know if their company offered flexible working to fathers. More than a third (34%) of parents with children aged nought to five did not realise that paid paternity leave is required by law and 22% wrongly assumed that fathers only needed to approach their employer to ask for this leave when the baby was born or before it was eight weeks old. To benefit from legal paternity rights, fathers must speak with their employer 15 weeks before the baby is due.
Employment relations minister Lord Young said: "We know that rights for dads at work are valued by people and that businesses also see real benefits in offering them. But our research shows there are still some dads out there that are not aware of what they are entitled to and therefore risk missing out. Our campaign is all about making sure dads know what they can do and to help them have more confidence as they weigh up what works best for them and their family. The key is to talk to their employer."
The research has been launched to coincide with a BIS campaign to raise awareness among fathers of their rights at work to help them care for their child.
Currently fathers are entitled to:
Request flexible working - parents of a child 16 or under are entitled to request flexible working such as part time or working from home, and an employer must consider the request
Paid paternity leave - new fathers can take two weeks' paid leave. They need to notify their employer 15 weeks before the due date
Parental leave - dads have the right to take up to 13 weeks' unpaid leave until their child is five years old
Week ending 19/02/2010
DWP OFFERS NEW "FIT NOTE" GUIDELINES ON SICKNESS ABSENCE
New guidance to help British businesses manage staff sickness absence has been launched online by the Dept of Work and Pensions explaining what the new fit note means for businesses.
The new guidance has been created by the Department for Work and Pensions with the CBI, Acas, Federation of Small Business, Chartered Institute of Personnel and Development, EEF, Association of British Insurers and the British Retail Consortium. The Royal College of General Practitioners and the British Medical Association have also worked closely with the Department to advise on policy. The fit note reflects medical evidence that work is generally good for health and well being and can aid recovery for many health conditions.
According to the (DWP) the introduction of the fit note on 6 April 2010, in place of the traditional sick note, is set to cut the cost of sick leave for British employers and benefit the UK economy by an estimated £240 million over the next ten years.
Under the new fit note system, GPs will be able to advise if a patient "may be fit for work" and will offer advice on the effects of their health condition. Doctors will also have the option to suggest that their patient would be able to work, subject to the employer's agreement, if temporary changes such as reduced working hours or amended duties could be accommodated.
Dame Carol Black, who was responsible for conducting an independent review for the Government on the health of Britain's working age population, added: "Work plays a significant role in determining a person's health. The fit note is a hugely important development, which means that GPs will be encouraged to think about their patient's ability to work and provide more helpful information to patients to discuss with their employer. This is why the fit note is a win-win for both employees and employers."
Week ending 19/02/2010
COMPANY CULTURE BARRIER TO FLEXIBLE WORKING
Company culture remains the single biggest barrier to flexible working.According to a survey of 1,000 business people by Lumison, in many instances bosses simply don't trust their staff to work from home, even though staff 73% of staff believe they would be happier and more effective. The findings reveal that 65% of employees claim to work longer hours when they are at home and 63% already have all the technology they need to work effectively from home. But half said their bosses remain sceptical about whether people are really working if they aren't in the office, only 33% of respondents said their company has a set policy on flexible working and 27% even went so far as to say their bosses ‘value being present over being productive'.
Aydin Kurt-Elli, CEO of Lumison, said: "Many businesses are stuck in a Dickensian mindset of presenteeism. They must embrace the fact they will have a healthier, happier and more effective workforce if they support flexible working practices. This isn't about going soft on staff, it's about making the business more effective and that should be the top objective for any boss. Bosses who don't understand this will lose out. As the economy picks up and hiring gets back on the agenda, the very best employees will pick those companies that help them work most effectively. Companies that limit themselves to only hiring staff who need to be in an office, at a desk, with somebody breathing down their neck in order to even look productive are going to get very uninspired staff. In the course of this research we heard stories of bosses making staff walk for hours through the recent snow fall rather than get a full day's work out of them from home. Then there were staff who couldn't get in because their company had no flexible working provision, and simply got a day off. That kind of shortsightedness all has a cost attached to it."
Week ending 19/02/2010
WORKING WEEK OF 21 HOURS INEVITABLE
A 21-hour working week is inevitable, according to the New Economics Forum.
According to a report from the think tank there will be a 'major shift' in the length of the formal working week as a consequence of dealing with key economic, social and environmental problems. And this can be seen as a positive opportunity, say the researchers, rather than a threat. The NEF believes there are several forces pushing us towards a shorter working week: lasting damage to the economy caused by the banking crisis, an increasingly divided society with too much over-work alongside too much unemployment, and an urgent need for deep cuts in environmentally damaging over-consumption. These combine with a growing interest among people in spending more time producing and delivering a share of their own goods and services - from co-produced care and neighbourhood-based activities to food, clothing and other necessities.
Anna Coote, co-author of the report and head of social policy at NEF, said: "So many of us live to work, work to earn, and earn to consume. And our consumption habits are squandering the earth's natural resources. Spending less time in paid work could help us to break this pattern. We'd have more time to be better parents, better citizens, better carers and better neighbours. And we could even become better employees: less stressed, more in control, happier in our jobs and more productive. It is time to break the power of the old industrial clock, take back our lives and work for a sustainable future."
The report shows many people work longer hours than 30 years ago. Since 1981 two-adult households have added six hours - nearly a whole working day - to their combined weekly workload. Today, nearly 2.5 million people can't find jobs. Cutting labour to save money without changing working hours means some are burdened with overwork while others lose their livelihoods. And as a result of this growing inequality in working time, the unpaid components of life are suffering. Family life, neighbourhood networks, time with children and quality of life for older people are all diminished, with painful results for society that sometimes get lumped together and lamented as ‘Broken Britain'.
The authors of the report argue that a shorter working week could help to tackle a range of urgent and closely related problems: overwork, unemployment, over-consumption, high carbon emissions, low wellbeing, entrenched inequalities, and the lack of time to live sustainably, to care for each other and simply to enjoy life. It would enable many more people to join the workforce and allow for measures to reduce damaging levels of inequality. The report examines the case for a radical re-think of what most people regard as immutable: a nine-to-five, five-day working week. The study claims working 21 hours a week - or the equivalent spread over a calendar year - could bring benefits across a range of areas including distributing work across the population, reducing carbon emissions, get the population more involved in civic issues, more time to care and work in the home and stronger public services.
Week ending 12/02/2010
ELECTION IR35 RULES REFORM PROMISE
The Conservative party is promising to reform the tax system so that it no longer assumes the self-employued are "on the fiddle." One radical option being considered is to allow the 600,000 people who sell their services through "one man" companies to opt out of employment. Instead of paying 11% Class 1 National Insurance Contributions on their income, they would pay the £2.40 a week due under Class 2NICs, which is paid by the self-emplyed. Anyone doing so would lose the right to statutory redundancy pay, maternity pay and jobseekers' allowance. The change is being discussed as part of wider Tory plans to reform small business taxation. Before the IR35 rules, contractors were able to work for customers through their own limited companies, paying themselves low salaries, charging expenses and taking large dividends so as to minimise their income tax and NICs liabilities.
Week ending 12/02/2010
CHILD CARE COSTS OVER 20,000 A YEAR
Childcare costs in England are continuing to rise at twice the rate of inflation, forcing some working parents to fork out more than £22,000 every year. According to the Daycare Trust's ninth annual childcare costs survey, sponsored by Imagine Co-operative Childcare, there has been a rise in costs above the rate of inflation for all types of childcare, despite the UK being in recession. In England the cost of a nursery place for two year-olds and over has risen by 5.1% (which is almost double the rate of inflation). The average yearly expenditure for a parent in England is £4,576, in Scotland the average spend comes in at £4,368, while Welsh parents are paying on average £4,056 for 25 hours nursery care per week, for a child aged under two.
An average parent in England working part-time can expect to spend more than half their gross earnings on a nursery place for a child under two. On average 25 hours' nursery care costs £88, compared with average part-time earnings of £153 per week. But parents in London facing the highest reported costs can pay up to £11,050 per year for 25 hours childcare per week, or £22,100 for 50 hours.
And 58% of Family Information Services across the UK - and shockingly 69% in Wales - revealed parents had reported a lack of childcare, with half of all local authorities reporting insufficient childcare for older children and disabled children.
Daycare Trust's chief executive, Alison Garnham, said: "Over the past year, families across the UK have been hit hard by the impact of the recession, with parents facing the strain of losing jobs, having their hours cut back, or facing pay cuts - all of which is compounded further by childcare costs shooting up.
We know that whatever the outcome of the election there are tough spending choices to be made. However, we hope that all parties will recognise what a central issue childcare is for parents, and take up our policy recommendations as they build their manifestos."
The Daycare Trust has urged future governments to adopt the following policies:
Sustain and build upon investment in childcare and early years provision, given its impact on child outcomes, and its potential for return on investment
Increase the proportion of help with childcare costs through tax credits to 100%; increase the maximum levels that can be claimed by disabled children per region to accommodate high cost areas
Extend the provision of the free entitlement to all two, three and four year-olds, building on the number of hours available so that 20 hours a week is available by 2020.
Increase provision of out-of-school childcare, given the growing number of working parents and the impact of the welfare reform programme
Provide subsidised out-of-school activities for all school-age children, ultimately aiming to make them free for all
Continue to invest in the quality of childcare and early years provision, through initiatives such as the Graduate Leader Fund
Conduct a national evaluation of 2011 Childcare Sufficiency Assessments for England and Wales
Week ending 12/02/2010
PROFESSIONAL WORKERS ENTITLED TO LEGAL REPRESENTATION
The Equalities and Human Rights Commission has won a Court of Appeal case that should pave the way for professionals, at risk of being struck off, to have legal representation during disciplinary proceedings. The equality commission intervened and sought a review after an unnamed teaching assistant was accused of inappropriate behaviour towards a 15 year-old, but was denied legal representation at an internal disciplinary hearing, and was subsequently dismissed. In a unanimous decision the Court of Appeal's Lord Justice Laws agreed with the EHRC that, given the effect that having an advocate might have on the disciplinary proceedings and the high stakes involved, the teaching assistant should be afforded the opportunity to arrange legal representation should he wish.
Susie Uppal, head of the Equalities and Human Rights Commission enforcement team, said: "The right to a fair trial is a cornerstone of the rule of law. It is clearly a violation of a teacher's human rights if they are denied legal representation at a hearing in which their working future is at stake."
The EHRC believes this ruling will now mean other employees, who could face similar accusations, will now be able to demand a right to legal representation.
Week ending 12/02/2010
WORKERS HAVE DIFFERENT COST-CUTTING VIEWS
Employers and workers disagree about which cost-cutting measures work best to save businesses, new research reveals. According to IFF Research's Attitudes to Work study, two-thirds of UK employees have seen cost-cutting measures taken by their employers as a result of the economic downturn. But while the principle of cost reduction in a recession is widely accepted, the research highlights a conflict between employers and employees over which measures are best.
Freezing recruitment, freezing salaries and implementing voluntary redundancies have been experienced most widely and are also the measures least likely to generate opposition from employees. Although 21% of employees have experienced changes to staff expenses in their organisation, this registers as one of the less popular moves among employees: just 6% of staff would choose this as their preferred measure. Salary cuts and compulsory redundancy rank among the most unpopular measures taken by employers (1% of employees favour them). But the proportion of businesses to have implemented these measures is far higher, at 12% (salary cuts) and 20% (compulsory redundancy) - ahead of cancelling bonuses or introducing unpaid leave.
Despite 20% of employees have seen enforced redundancies in their workplace - more than have seen cut salaries (12%), reduced working hours (15%) or reduced benefits (9%) - employees would rather endure softer measures across the workforce than witness colleagues being laid off (1%). The message from employees is to share the pain as evenly as possible.
Week ending 12/02/2010
ATTITUDES TO OLDER WORKERS MUST CHANGE
Public policy and employment patterns must change significantly to accommodate older people in the workforce, according to Harriet Harman, minister of state for women and equality.
Speaking at the Employers Forum on Age (EFA) annual conference, Harman said: "Society as a whole needs to acknowledge that the over-60s also have aspirations, and employers have to draw out the skills and talents of the individual to ensure good future prospects.
"Above all, the UK needs to make more progress in challenging the status quo and deal with the old-fashioned attitudes that still exist around this age group."
The announcement came as the Government is to review the default retirement age later this year and less than a month after Harman announced a shake-up that could see an end to the controversial mandatory retirement age for workers.
Research of HR staff by the EFA revealed found 76% of organisations that have removed a mandatory retirement age considered it kept valued people in the organisation, 85% said it maintained valuable skills, 52% believed it improved morale among employees and 44% said that it had improved their company's customer-facing image.
Denise Keating, chief executive of EFA, said: "We have been campaigning for the removal of the default retirement age for a long time, and are obviously delighted that the Department for Work and Pensions announced that the Government is bringing forward the review into this year, neatly demonstrating the need to address one of the most pressing problems for this generation - how to fund our longer lives. Ultimately, a fixed retirement age is fundamentally discriminatory, as age is not an indication of capability. Recent research by McDonald's proved that mixed age teams, which include at least one person over 60, deliver improved business performance. Every employer should look to those companies - B&Q, Nationwide, JD Wetherspoon, BT and Marks & Spencer to name but a few - that have successfully removed mandatory retirement ages, and follow suit. A change to the rules is inevitable, and needs to happen as soon as possible."
Week ending 12/02/2010
BT ATTACKED FOR DOUBLING BUSINESS CHARGES
The Federation of Small Businesses has criticised BT for doubling the price it charges business customers whey they choose to pay their bill by cash or cheque. In recent weeks the annual fee has doubled from £18 to £36. John Wright, chairman of the federation, said: "Charging small firms £36 every year just because they choose not to pay their bills by direct debit is an unreasonable overhead that many of the smallest firms could completely do without. It effectively amounts to penalising those small businesses that might decide to stay on top of their finances by paying bills using a different method."
Week ending 12/02/2010
INTEREST RATES TO DOUBLE OVER NEXT DECADE
Interest rates on government bods and across the whol spectrum of finance will more than double over the next decade, pushing Britain back towards 1970s-style levels, according to an authoritative new study. The combined effect of an ageing population and a more stable economy will lift the cost of borrowing radically in the coming years, Barclays has warned. In its closely-watched Equity Gilts Study, the bank predicted the average long-gilt yield--the government interest rate which effectively influences borrowing costs across the entire economy--would rise from its current level of around 4% to 10% or beyond. Tim Bond, of Barclays Capital, said the increase in yields will be a direct result of the sharp increases in government deficits, likely as the populations of Western economies age and older workers retire, dampening broader growth. "We are moving from a world of capital abundance to a world of capital scarcity and scarcity of savings. From here on, yields should probably double over the next decade. This will happen as pensions liabilities come due and as there is decreasing savings to support the economy," he says.
Week ending 12/02/2010
POOR SALES BRINGS FEARS OF SECOND RECESSION
Fears that Britian may already be succumbing to a "double-dip" recession have materialised as it emerged that 2010 opened with the worst January for the high street since comparable records began 15 years ago. The VAT increase and the blizzards last month contributed to an unexpected collapse in retail sales, according to the British Retail Consortium. Its sales monitoring registered a 0.7% drop in like-for-like sales in January, compared with the previous year--the steepest January fall since 1995 and in stark contrast to economists' expectations of an increase of 0.5%. The figures come amid concers about Britain's capacity to finance itself in the international capital markets, with the spread between interest rates on benchmark UK gilts and German Bunds widening to a two-and-a-half year high.
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