To hell in a Chelsea tractor?

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The news that Vauxhall in Ellesmere Port is to move to a four-day week, albeit with no cut in basic working hours, highlights the predicament facing the UK motor industry. The industry appeared to have recovered from the worst of the recession.

Indeed, luxury and niche producers, like Jaguar/Land Rover - which is now the sector's biggest employer, mainly because of sales of the all-terrain vehicles derided as "Chelsea tractors" - and BMW/Mini are doing extremely well. However, continued recession and the impact of austerity means a drop in demand for cheaper "mid-market" models, especially in Europe.

What will this mean for the industry's workforce? In May Vauxhall signed a new agreement on pay and conditions with the unions, using the threat of closure to make a series of major changes. In particular, while the deal provides for the creation of 700 jobs, these will start at lower rates of pay than existing shopfloor staff - initially just 70 per cent of the full rate.

The onset of recession in 2008/09 brought the problems of overproduction in the industry to crisis point. The UK vehicle market fell by almost a third. While many jobs were lost at this point, other firms were able to push through deals that protected jobs at the same time as pay was frozen and working time was cut, in the hope that an upturn was just around the corner. Since then, while production has recovered, it is still below pre-crash levels. As a result the focus has shifted to pay and conditions, and the structure of employment.

Employers have increased their use of agency staff because they are generally cheaper. This is despite the introduction of the Agency Workers' Regulations (AWR) in October 2011, which provide for pay parity with permanent staff after 12 weeks. But the AWR doesn't cover company pensions, sick pay or redundancy payments. Agency staff are also easier to sack, and they can sometimes be harder to organise. However the chance for employers to divide and rule is all the more reason why unions need to organise agency workers, and press for them to be made permanent as soon as possible.

The AWR looks to have had one important effect. Because it provides for pay parity between agency and permanent staff, it is likely to have played a role in prompting car firms to introduce lower rates for new starters. This is because they didn't want to have to hire agency staff at the previous rates paid to permanent shopfloor staff. So to reduce their wage costs, many firms have put in place lower rates for all new hires.

What has been the unions' response? Unite's strategy has been characterised by a tension between senior officials' desire to be seen as responsible 'partners', and the need to defend the terms and conditions that underlie union organisation. Where the former has won out, it has led to major concessions around lower rates for new starters and the closure of final salary pension schemes to new staff (as at Ford). This is leading to a "two-tier" approach to pay and conditions that represents a real threat to union cohesion. The fact that it has been traded for generally high pay increases for existing staff is small comfort.

But the very existence of worse terms has led to pressures for parity. The deals at BMW, Jaguar/Land Rover and Vauxhall all contain timetables for equalisation of new starter pay rates with those of existing staff. And in some cases the union has won agreement that agency workers can be made permanent after a specified period. The new deal at Jaguar/Land Rover is a potential example of this, with promises that some 2,500 agency workers will get permanent contracts in November.

The risk to this strategy is that it might fit when firms are expanding. But what about when employers want layoffs? This is when agency workers are likely to find themselves in the firing line and it's precisely what happened at BMW in Cowley back in 2009.

This was a shameful episode in which the Unite convenor stood beside managers as they told agency workers that this shift would be their last. It's a warning about the dangers of unions failing to stand by workers who are being sacked, regardless of their employment status. And it's a reminder that union activists will need to insist on solidarity and fight against attempts to play off sections of the workforce against each other, in good times as well as bad.
Kevin Devine