research-report-96-coming-clean-contractual-and-procurement-practices.doc

4 this last scenario typifies many examples of public

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4 This last scenario typifies many examples of public services outsourcing (Martinez Lucio, 2013). 10
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FRAGMENTING WORK Code lives on as a local annex to many Private Finance Initiative (PFI) contracts in the NHS and obliges the subcontractor, typically a supplier of facilities management services, to extend Agenda for Change conditions to its local workforce. Where applied, the Two Tier Code has standardised and raised employment conditions for subcontracted workers and also increased prospects for integration among supplier and client workforces (Grimshaw, 2009). Regulations of temporary agency workers are a third influence on employment conditions of subcontracted workers. In the UK, agency workers are covered by the Agency Workers Regulations (from 2011), a response to the EU Temporary Agency Work Directive, that provides for equal treatment of pay and conditions with permanent employees after 12 weeks continuous employment doing similar work. The regulations reduce the incentives to outsource so as to avoid social dialogue with worker representatives or to reduce labour costs. In Germany, for example, a rapid rise in the outsourcing of jobs to temporary work agencies has been interpreted as a clear strategy by many organisations to avoid works council participation as well as to impose reverse pressure on internal collective bargaining conditions (Holst, 2013). A final institutional effect arises from the relative position of a country’s statutory national minimum wage. The higher the level of the minimum wage relative to client and supplier organisation’s wage structures, the lower the cost incentives to procure services and the more limited the impact on pay for transferring workers. As shown in evidence of outsourcing of public services in France, where a rising minimum wage has tended to catch up with or even overtake the lowest rates of pay in a client organisation’s wage structure, then one of the major cost components underpinning the subcontracting decision is neutralised (Grimshaw et al., 2012). A similar situation in fact describes the English local authority sector which is characterised by a base rate of pay only marginally above the national minimum wage, thereby reducing public-private cost differences (Johnson, 2014). 2.5 A framework for analysis Drawing together these different themes and issues from the international research, Figure 2.1 presents a visual mapping of the key factors and inter-relationships that inform the questions and design of this project. It shows procurement practices can directly influence employment practices in subcontracting organisations, including pay, use of agency contracts, working time (part-time and zero-hours contracts), training, appraisal, discipline and grievance and equality policies. Also, while better procurement may improve employment practices and working conditions, the effect is mediated by contracting partners’ business strategies. Wider institutional conditions (especially related to TUPE protection and the role of unions) play a significant role in shaping the relationship.
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