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What the Conservative government means for HR

How will the first solo Tory government in 18 years address the issues facing our country? Will its policies benefit business?

The Conservative party’s surprise win in the general election, albeit by a wafer thin majority, has resulted in the first pure Tory government since 1997. Prime minister David Cameron has wasted no time building the new “blue collar Conservative” image of his latest administration. 

“I want everyone around this table to remember who we’re for,” he told his newly-formed cabinet as he addressed them together for the first time. “Every decision we take, every policy we pursue, every programme we initiate, never forget: we’re here to give everyone in our country the chance to make the most of their life,” he said. “I call it being the real party for working people.”

The headline pledge in what Cameron called the “manifesto for the working people” is, of course, the EU referendum to be held by the end of 2017. While this has no immediate repercussions on business or workers, other proposals will.

Included in those are plans to exempt workers earning less than £12,500 and those working 30 hours on the minimum wage from income tax, to raise the tax threshold for those earning under £50,000 and to cap public sector redundancy payments at £95,000. 

Industrial action

Taking over as business secretary from ousted Vince Cable is Sajid Javid. The former banker and confirmed Thatcherite was outlining his priorities within hours of his appointment.

Under his remit will be continued work around zero-hours contracts and the banning of exclusivity clauses, the ongoing red-tape challenge that aims to cut £10 billion of costs to business as well as a business rate review due in 2016. Most pressing, however, is legislation on industrial action making it much harder for workers to strike.

Speaking on the BBC’s Today programme, Javid said that a minimum 40% backing from eligible union members and a minimum 50% strike ballot turnout would be needed for industrial action to take place. The ban on using agency staff to cover striking workers would also be lifted, he confirmed.

Speaking to HR magazine, director of consultancy The Jobs Economist John Philpott says that a clampdown on trade union activity will weaken employee rights and drive down wages.

He adds: “In a labour market that is already heavily weighted to the employer, the likelihood is that the next five years will see the balance shift even further in that direction. The key question for HR is whether that is a good thing for the people they are employing.”

Philpott says that “progressive HR functions” could provide workers with a better deal within their organisations, but in those without an HR role, conditions will likely deteriorate. 

Productivity puzzle

Philpott adds the Tory manifesto “continues in the current direction of travel” in terms of reduced business taxes, improving access to work and focus on apprenticeships. But he is disappointed, he says, with the lack of reference to helping boost productivity levels.

“There is nothing in the manifesto that suggests any initiatives. The two main drivers of productivity are investment in physical and human capital; government must provide a bedrock for that but businesses also need to invest,” he says.

The latest figures from the Office for National Statistics show that UK productivity – measured by workers’ output per hour – is slightly lower than in 2007, putting growth at its lowest since WWII.

Earlier this month Bank of England governor Mark Carney told BBC’s Today programme “this is one of the great costs of the financial crisis” but that “it’s going to start picking up over the next few years”.

Director of employment at solicitor Lupton Fawcett Denison Till Iain Jenkins says that the government’s pledge to create three million apprenticeships over the next five years “should go some way towards addressing productivity issues”.

“It should give us a good chance of attracting inward investment and further investment if we can show that we have plenty of skilled workers,” he adds. 

Skills, skills, skills

CIPD chief executive Peter Cheese echoes Jenkins’ opinion but he points out that although apprenticeships are part of the answer, a more holistic approach is needed.

“Apprenticeships are an important route to work, but it’s about balancing that with further education and university education as well as an improvement in careers advice,” he says.

It is a view backed by REC chief executive Kevin Green, who says the government must take a serious look at education in order to address skills and productivity issues.

“They need to improve careers advice and incentivise people to think about studying subjects such as engineering, technology and science where we have real skills deficits,” he says. “Some of the Tory commitments go some way to addressing these things but we will be looking for more.”

Executive director of managed infrastructure at Fujitsu UK, Helen Lamb says apprenticeship schemes must add proper value.

“It’s not just about giving someone an experience. It’s about making sure you are giving them an opportunity to have a full career. That’s how we can help create long-term sustainable employment and skills,” she says.

“My concern would be if the proposed approach was just for people to get experience for a particular period of time rather than leading up to a full-time position,” she adds. 

Migration issues

Green believes immigration also has a significant role to play. The government’s pledges to maintain its cap on the number of skilled non-EU immigrants entering the country while clamping down on foreign students that stay to work in the UK are bad for British businesses, he says.

“We are not saying we should have an open door policy but if businesses can’t find what they need here, they should be able to look elsewhere, certainly in the short term.” He calls it “absurd” that foreign graduates are denied the chance to work in the UK despite widespread skills shortages. “We want to see that changed,” he says.

It’s early days yet for the new government, and while some of its pledges have clearly been welcomed by the business community, it is clear there are questions still to answer.