Why rising unemployment might be good for the economy

In this article Roger Bootle, Economic advisor to Deloitte, looks at what has been driving unemployment higher over the last year and considers what impact the jobless are having on the UK economy. His Executive Summary is:

• The downward trend in UK unemployment seen for more than a decade has gone into reverse over the last year. The Jobless total has climbed by more than 200,000 already and looks likely to rise further.
• This rise in unemployment may not have the adverse effects on the economy of those seen in previous decades. For once it has been driven, not by large scale job loss, but by sharp rises in the workforce.
• This in turn has reflected the strong inflows of migrant workers for the new members of the EU, as well as a rise in activity rates amongst older workers presumably concerned about their provision for retirement.
• The upshot is that rise in unemployment has acted as a useful pressure valve in easing capacity constraints in the economy and keeping wage and inflation pressures subdued. This could help to prolong the period of expansion in the UK economy.
• Elsewhere, the economy has shown encouraging signs of re-balancing in recent months as the industrial and external sectors have benefited from the strength of overseas demand.

To read this article in full click here

Source Deloitte Economic Review

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Directors hiring illegal migrants to be struck off

COMPANY directors could be struck off and their firm’s assets seized if they are caught employing illegal workers, under proposals being drawn up by the home secretary.

John Reid’s measures are designed to tackle the estimated 570,000 illegal immigrants, many of whom are believed to work in the construction industry, the rag trade, in pubs or as cockle and fruit pickers. However, Reid’s plans will cover any company that is caught employing illicit entrants, and the effects may also be felt by large firms such as the supermarket chains.

Under the proposed new laws being discussed by the Home Office, there will be a “two strikes and you’re out” rule, under which the board of a company could potentially be dismissed if two or more breaches of the law are discovered. The new laws would also allow police to seize the assets or profits of a company that are proved to have been made through work carried out by illegal workers. The rules would also apply if illegal workers were employed by any sub-contractors used by the firm.

Reid plans a big increase in fines for businesses that break the law. His proposals are designed to counter Tory criticism by taking a hard line on illegal immigration.

Reid’s plans have raised concern at the Department for Trade and Industry that the powers are too draconian, and the Confederation of British Industry says they place too much of a burden on businesses. Officials are still working out how far prosecutors would have to go in establishing whether companies knowingly employed illegal immigrants who might have fake documents.

Ministers admit their estimate of 570,000 illegal immigrants is uncertain. The pressure group Migration Watch claims it could be up to 1.5m. Reid faced embarrassment when it emerged, a few weeks into his new role, that illegal immigrants from Nigeria were working as cleaners at the Immigration Directorate in London

Source The Sunday Times

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Entitlement to Pay Whilst Asleep

The EAT has held that a hotel night manager was contractually entitled to be paid for work even whilst he was asleep.

The manager's contract entitled him to be paid on an hourly rate basis but the employer did not pay him for periods when he was required to sleep over at the hotel. He was regularly required to sleep over even though he only lived a 10 or 15 minute walk away. He was only required to work on one occasion to deal with rowdy guests. The hotel manager's claim was not brought under the Working Time Regulations, but was a claim for unpaid contractual wages.

In a survey by the Forum of Private Businesses (FPB) almost 40% of SMEs surveyed believed that raising the minimum wage would be "bad" for their business and a further 24% believed that it would be "very bad".

The EAT disagreed. Although the claim was not one under the Working Time Regulations, it took account of case law in that area on what amounts to working time when employees are "on call" at the employer's premises but not actually working. It held that time during which the manager was contractually obliged to be present at the hotel was plainly working time even if he was not actually working and he was entitled to be paid under his contract of employment.

It took into account the fact that the hotel was under an obligation to have two employees present overnight for health and safety reasons. The manager was clearly required to be at the hotel – he had been disciplined on one occasion for leaving the hotel for a period of half an hour – and his presence at the hotel met a need of the employer. The EAT said that to take the view that he could only be regarded as working if he was carrying out some specific activity during the sleep-over simply missed the point.

The issue of whether periods when a worker is on call but not actually working should count as working time for the purposes of the Working Time Directive is one of the matters which was part of the review of the Working Time Directive. However, the review has been delayed because of disagreement over whether the UK should be permitted to continue with the opt-out from the 48 hour weekly limit on working time. The review is expected to be revisited later this year.

(Anderson v Jarvis Hotels Plc)

Source Pinsent Masons 2006

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Encore Develops Overseas Recruitment Credentials

IN July 2006 Encore sent a delegation of Senior Managers to the Polish Town of Rzeszow to investigate the opportunities to resource skilled and unskilled workers for the UK domestic market. Whilst Encore was already actively employing workers especially from the EU accession states it had not made any proactive steps to resource from there.

Working with the Michael Dembinski of the British Polish Chamber of Commerce the Encore team had a series of meetings with district lawyers, local employment consultants and the City President to evaluate the potential market. As a result Encore has now created a new division to develop the employment of Migrant Workers with the recruitment of Overseas Recruitment Coordinators (ORCs)

‘Having worked with so many local contacts we are now in a strong position to not only resource highly skilled and unskilled labour but probably more importantly administer the social aspects of recruiting from abroad.’ Said Encore Technical Divisional Manager, Ray Metcalf.

‘We are now better placed to intelligently recruit for our UK client base and handle enquiries. For example, we know that it would be unwise to direct the recruitment of skilled engineers from Warsaw when that city only has unemployment of 5% and the main engineering workers live in the South East of the country.’

If you would like more information about the Overseas recruitment services that Encore can offer please contact Ray Metcalf on 01162620651or email to rmetcalfe@encoreperosnnel.co.uk

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Supermarket inquiry into 'strawberry slaves'

Two leading supermarkets are investigating their supplier of British strawberries amid allegations that the workforce is being subjected to "modern day slavery".

Tesco and Sainsbury are meeting executives from S & A Produce - which supplies a third of all strawberries sold in Britain - to discuss allegations of cramped living conditions, poor pay and long hours.

Evidence compiled by the Transport and General Workers' Union alleged that fruit pickers, mostly migrant workers from Eastern Europe, had worked more than 14 hours a day and seven days a week, with only 30 minutes break per day.

The complaints - strongly denied by S & A Produce - further alleged that up to 10 workers were expected to share a cramped caravan with little or no medical care available. They claimed that workers - who had been known to sign contracts written in a foreign language they do not understand - are expected to pay £300 just to work at Brook Farm, in Marden, Herefordshire.

Chris Kaufman, the TGWU's national secretary, said: "We have a principle that migrant workers should be treated the same as indigenous ones, but if British people were treated the same way as some of the migrant workers are, there would be uproar.

"[They claim that] they are paid so little that often by the time they have been paid they actually owe money to the employer for the privilege of staying and working there. It's like bonded labour whereby the workers have to stay with the employer until they have paid what they owe."

The British strawberry industry has grown hugely in the past five years. While the fruit used to only be available for a six-week period producers have extended the season to six months to maximise profits and meet demands.

With it, however, has come controversy over workers' conditions.

Earlier this week the farming minister, Lord Rooker, said he would look at allegations that strawberry pickers at a farm in Pett Bottom, Kent, which supplies Sainsbury and Marks & Spencer, were being underpaid.

To read this article in full click here

Source Daily Telegraph

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GPs 'see big rise in sick notes'

A third of GPs have noticed a big increase in the number of people needing to be signed off work for at least seven days, a survey has found.

Most (94%) of those quizzed blamed employers for failing to take responsibility for their workers' health and wellbeing. They warned the current £13bn a year bill for absenteeism could soar without better help for employees.

Norwich Union Healthcare polled approximately 250 GPs. The company also surveyed human resources specialists at 214 businesses across the UK. They report that the major health problems affecting workers are stress (76%), back problems (63%) and depression (57%).

In all cases, these problems can be caused or exacerbated by the working environment.

Nowhere to turn

Forty-two percent of companies said they had struggled with key members of staff being off for long periods of time, causing widespread disruption.

However, the survey reveals only 38% of companies see employee wellbeing as an HR priority. Four in ten companies ignore it completely as they do not have any system in place for health management. Instead, 43% said they chose to manage health issues on a case-by-case basis. And 70% of companies admitted they did not see employees' health as their responsibility.

The poll of GPs reveals most believe firms do not do enough to prevent workers falling ill, and blame companies for failing those who are ill, and not doing enough to help them back to work.

Furthermore, doctors are concerned that inadequate NHS frontline services for conditions such as depression leave employees with nowhere to turn.

This article can be read in full by clicking here

Source The BBCi

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New migrants take students' summer jobs

THOUSANDS of students are sitting idly at home for the summer holidays because east European immigrants have moved into the low-paid casual jobs they used to do — such as serving behind bars, helping in offices and picking fruit.

Already burdened with overdrafts and student loans and facing the introduction of top-up fees, students are now struggling to find summer jobs to help fund their way through university.

Many affluent parents, who have reaped the benefits of cheap labour from eastern Europe, are for the first time experiencing the downside of mass migration.

Frank Field, the Labour MP and critic of the government’s immigration policy, said: “Some middle-class and upper-class parents, who until now have enjoyed cheap nannies and plumbers from eastern Europe, are seeing the negative impact of this new pool of labour.

“Their children, who had planned to work through the holiday in a bid to pay off some of their debts, are suddenly finding themselves in a difficult situation.”

The heightened competition for summer jobs comes after the arrival of an estimated 400,000 migrant workers from eastern Europe since 2004. Last week some of Britain’s biggest hotel and pub chains admitted that eastern Europeans were often preferable to students looking for summer holiday work.

Su Beacham-Cacioppo, head of employment at JD Wetherspoon, the pub chain, estimated that half the bar staff in London were from eastern Europe. She admitted they were filling jobs previously taken by students. At InterContinental hotels, which includes Holiday Inn and Crowne Plaza, a third of its 8,500 employees in Britain come from eastern Europe.

Typically, pay rates for student-level jobs range from about £4.25 an hour — the minimum for 18-21 year-olds — up to about £7. East Europeans are more willing to work for amounts near the lower end of the scale. Caroline Galloway, 21, spent seven weeks without work when she returned home to Amersham, Buckinghamshire, after finishing her history and politics degree at Cardiff University.

She first tried to find work at the hotel where she had been a waitress for the previous three summers. “Over the past few years I have seen more and more foreign workers in the hotel,” she said. “This time they didn’t have a job for me at all. All the jobs were filled by Polish people.”

Source The Sunday Time

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Non Smoking Ban – Are you Prepared

A blanket ban on lighting up at work and in other public spaces has been proposed by the government so what should employers do in preparation for kicking the habit? Emma Capper, Associate at Reed Smith employment law firm reports.

Through the Draft Health Bill, the government is proposing to introduce a total smoking ban in the workplace and other enclosed public spaces, with the objective of improving the nation’s health.

The smoking ban will come into force in Summer 2007, and all employers should prepare a non-smoking policy ready for implementation.

The Bill bans smoking in premises that are open to the public or used as a place of work by more than one person. It also includes areas where members of the public might enter the premises for the purpose of seeking or receiving goods or services. It also includes premises where voluntary work is performed.

In summary, all employers should prepare a non-smoking policy that will be ready for implementation at the very latest when the smoking ban becomes law in summer 2007. Some are taking steps to put policies in place already now, in keeping with the spirit of the Bill

This article can be read in full by clicking here

Source HRZone.co.uk

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Consultation on National Minimum Wage and Accomodation off-set

The DTI has published a consultation paper in relation to proposed guidance on the accommodation off-set under the national minimum wage (NMW) legislation.

Under NMW legislation, if an employer provides accommodation to an employee it can count towards a worker's pay for NMW purposes. However, there is a limit on the amount that an employer providing accommodation can count towards the NMW and this is known as the accommodation off-set. The purpose of the accommodation off-set is to ensure that employers cannot avoid paying workers the NMW by making excessive charges for accommodation.

Source Pinsent Masons

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Employers face ethnic quotas for public work

COMPANIES that bid for multimillion-pound Government contracts will be rejected if they do not employ enough black and Asian workers.

A powerful committee that includes seven ministers has drawn up plans to question competing companies about their attitudes to race before choosing which to employ. Firms will be asked to provide figures showing the numbers of their black and Asian employees. This figure will be compared with the proportion of people from ethnic minorities living near the company’s offices and will be a factor when deciding the winning bid.

Three pilot schemes have been authorised with the support of Downing Street — the first time that “positive vetting” in procurement has been approved by a British Government. It follows the release of figures showing that people from ethnic minorities are twice as likely to be unemployed as the white majority.

Programmes of “affirmative action” have proved controversial in America, where some business leaders say that they can hinder the employment market and discriminate against white workers.

The British plans were approved last month by the Ethnic Minority Employment Task Force, which brings together seven government departments. Iqbal Wahhab, a member of the Task Force and the chairman of the Ethnic Minority Advisory Group, a government-backed think-tank, said the plans were moving ahead quickly.

“These new procurement policies are required to assist employers in making more enlightened recruitment decisions,” he said. “It may be unpopular in certain quarters, but the fact remains that we should not have been in this kind of position in the first place.”

If the pilot schemes are successful, positive vetting across other all government departments could be introduced in 2007, a source said.

This article can be read in full by clicking here

Source The Times

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Factories must respond to new fire laws

COMPANIES that bid for multimillion-pound Government contracts will be rejected if they do not employ enough black and Asian workers.

The Regulatory Reform (Fire Safety) Order, which comes into effect on October 1, will mean existing fire certificates are no longer valid. Law firm DWF say the new rules place full liability on the ‘responsible person’, usually the employer, deemed to be in control of the premises.

The law applies to all non-domestic premises including self-employed people who have premises outside the home. A risk assessment must be carried out to identify hazards in the workplace and people who are particularly at risk. This includes people who are working near to ignition sources, disabled people, visitors and members of the emergency services, LDW say.

The assessment should look at ways to remove or reduce the risks, such as providing adequate alarm systems and fire-fighting equipment, and ensuring there are suitable escape routes.

David Collins, senior safety consultant at DWF, said: “The new rules are the biggest shake-up of fire safety legislation in decades and oblige employers to be more proactive in preventing fires and protecting people on or around the premises. Employers should ensure a thorough risk assessment is carried out and look at how fire incidents can take place.

“When every foreseeable eventuality has been considered, they should document the findings as evidence that they have thought about the issues and taken all reasonable precautions to prevent fire and protect people at risk.”

Source: FPB.org

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Issue 28– August 2006

Welcome to the August issue of Encore enews.

The review by Roger Bootle in our opening article makes interesting reading. Roger says that although higher unemployment can never be a good thing for an economy, he believes that this latest rising trend may not have the same adverse impact as we saw in the 1980s and 1990s. He says that the key distinction is that this time higher unemployment has not been driven by swathes of people losing their jobs but rather sharp increases in the workforce as immigration has risen and many older workers have decided to work for longer – presumably because they are concerned about their provisions for retirement.

Greg Latham

Managing Director