Restructuring in the UK credit sector

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Transcript Restructuring in the UK credit sector

Restructuring in the UK finance
Stefanie Ledermaier
Warsaw, 30 September 2013
the institute for employment studies
Role of the sector and impact of the crisis
 London is Europe’s most important financial
centre and important contributor to the UK
economy (around 9% of GDP)
 Banking sector hit hard by the crisis:
banks facing bankruptcy
nationalisation of major banks
government capital injections
changes to the regulatory and supervisory
system of the UK financial sector
Impact of the crisis on employment in the
 The crisis has resulted in the estimated loss of around
187,000 jobs in the UK finance sector, or 25% of the
sector’s workforce
All major UK banks have implemented large-scale
redundancies – still ongoing
Consultation on redundancies follows legal provisions.
There are statutory minimum levels for redundancy
payments, but a majority of employers offer higher
Alternatives to redundancy include “natural wastage”,
retraining, redeployment, shorter working week
Managing restructuring in the finance
 Collective bargaining takes place at company level in
the sector (25% rate of unionisation and 20% collective
bargaining coverage in the sector)
 No specific role for the state
 Restructuring measures include:
● Wage reductions
● Offshoring and outsourcing
● Voluntary redundancies
 Increased incidence of social dialogue in the banking
sector in recent years, due to a need to engage in
response to the crisis
Positive and negative aspects of
Positive aspects
Negative aspects
Good overall relationship and communication process
between management and employee representatives
No employee representatives/bad relationship between
employee representatives and management
Advance notice of potential restructuring
No notice of restructuring
Timely and inclusive information of employee
Minimal information on restructuring
Timely consultation of employee representatives, in good
faith (ie consultation takes on board employee
representative views)
Minimal consultation on restructuring
Negotiation over restructuring process
No negotiation over restructuring process
Active skills development policy
No or limited skills development
Restructuring package negotiated with the involvement of
employee representatives, including aspects such as internal
redeployment, reskilling, working time flexibility and other
measures designed to avoid redundancy
No negotiated package and no measures put in place to
avoid redundancies
Where redundancies are inevitable, help is given to
redundant employees to help them increase their
employability and find alternative work: eg outplacement
No help given to redundant workers to help them find
alternative employment: overreliance on severance
Difficulties around restructuring
 Trade unions protest against:
● Job losses
● Lack of redeployment opportunities, due to
geographical location, or skills mismatch
● Reductions in terms and conditions such as
holiday entitlement and sick pay
● Closure of final salary pension schemes
● Increased use of temporary workers
Positive examples of restructuring:
Cambridge Building Society (1)
 Major change programme to improve performance
announced in 2007 and implemented in 2008-2009
 Number of new positions and a small number of
 Formal announcement of the detail of the plan and
regular communication through a Change Programme
Director and steering committee
 Measure to limit redundancies included:
reviewing temporary work
natural wastage
early retirement
voluntary redundancy on enhanced terms
Cambridge Building Society (2)
 Closure of 4 branches in 2009 – most staff were
redeployed to new positions in other branches nearby
Travel costs paid and positions trialled on a six-week
Small number of redundancies on better than
statutory terms and with full consultation
Redundant staff also offered outplacement
Engagement and performance programme put into
place following the restructuring, in order to maintain
staff motivation
Final thoughts
 UK banking sector has been severely affected
by the crisis – substantial job losses and
 Within the legal framework, the management
of restructuring takes place at company level –
there are many good practice examples of
employer engagement and meaningful
collaboration between the social partners
 The crisis is not yet over – there are now fears
about the future of the Cooperative Bank
… thank you