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

Studies of low wage sectors have shown managers are

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studies of low-wage sectors have shown, managers are often happy to put up with higher staff turnover to keep wage costs down. Moreover, only one cleaning firm (the hospital case) provided pay enhancements for all staff for overtime and unsocial hours working. As we discuss in section 13, the abolition of such enhancements is in line with those by employers in low-wage sectors in the UK over the last two decades or so. 81
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COMING CLEAN: CONTRACTUAL AND PROCUREMENT PRACTICES Table 12.1 Pay conditions for cleaners employed by cleaning companies Basic pay Standard company rate or specific to local contract? Pay increment for experience or qualifications? Pay enhancements for overtime and unsocial hours? CleanA1 (airport) TUPE staff from cleaning firm £7.50 TUPE staff from airport £8.50 Others £6.31 Non-TUPE staff on standard company rate No TUPE staff from cleaning firm yes (£1 per hour); TUPE staff from airport yes (£1.50 nights) Others (£1 per hour nights) CleanA2 (college) £6.50 Local rate No n.a. CleanB (hotel) £6.31 Standard rate - no supplement for 4* hotel No No CleanC (hospital ) £7.33- £7.70 Local rate Yes Yes CleanD (council) £8.80 Local rate No TUPE staff yes (except overtime in social hours) Others no CleanE (bank) £8.80 Local rate (but seeking company- wide living wage) No TUPE staff yes (weekends not evenings) Note: the National Minimum Wage for adult workers at the time of data collection (March-April 2014) was £6.31. 12.2 Downwards pressures on pay arising from contracting practices The power of market competition to drive down pay Cleaners in the commercial cleaning sector are subject to two powerful sets of market forces that, unchecked, tend to drive pay downwards. First, labour market conditions are rarely favourable since access to cleaning jobs is not regulated by skill requirements (as defined by an organisation or a sector-wide apprenticeship system for example) or membership of an occupational or professional community. Also, 82
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IMPROVING PAY strict job search requirements on unemployment benefit claimants, coupled with a reduced real value of welfare payments, increase the competition among applicants for vacancies. Second, competition for contracts among cleaning companies tends to be strongly influenced by price. The price focus translates into a need to reduce wage costs, given that labour costs make up the bulk of costs in this labour-intensive sector, which in turn can lead to a strategy to hold down pay levels, reduce hours of work or downsize staff. In four of the six cases, price was the deciding factor in the selection of a successful subcontractor, along with other factors such as innovation, service quality and so on (Table 12.2). Many cleaning company managers identified the apparent oxymoron of a client request for high quality service at a low price. The consequences of the strong price pressures were twofold, either a focus on a low pay policy (as at the hotel and college cases) or a swift policy of downsizing. At the council, CleanD quickly reduced staff numbers from 75 (the number of transferred staff) to 56, involving a 35% reduction in hours delivered. In this case, CleanD had to honour a
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