The financial uncertainty that has gripped the globe in recent times has brought insecurity not just to the world markets and economy but also to staff who work in financial services in the UK.
It could be suggested that finance sector employees in the UK, those who work in/for banks and building societies – both branches and offices – insurance companies, call centres and the like, have been largely overlooked in some quarters during the financial furore. Criticism is rightly and robustly deserved to be heaped on the heads of those high up in financial institutions whose reckless and ridiculous behaviour has all but brought world economies to breaking point.
Yet the media headlines of seven figure salaries, preposterous pay offs and pensions is a far cry from the reality of decent, hardworking employees. Starting salaries in a number of our financial institutions are barely above the minimum wage and average full time salaries for cashiers and clerks are around £14,000 per year.
There is a skilled workforce who deserve recognition for the commitment and professionalism they have brought to the industry over the years and through troubled times of late. Yet, these engine room employees have seen their job security continually threatened as companies making billions of pounds of profits focus on short term rewards for those at the top, rush to offshore and make purported ‘efficiency savings’ without consideration on the effects on staff, customer service, customer satisfaction and proper international standards.
Job losses are accelerating with regular, if not weekly, announcements of restructuring and redundancies. The irresponsible actions of senior executives should not distract from the hard work of the majority of those who work in the industry. Payback should not fall on the shoulders of this majority of cashiers and backroom staff and be used as an exit strategy, or to put it more bluntly, an excuse to implement mass compulsory redundancies and/or off shoring. The bankers have to understand that things have changed. The public will no longer believe that these job losses are a panacea to the troubles of the badly regulated global markets.
Eroding employees’ rights and conditions to right the wrongs of the few is wrong and cannot be allowed. In addition, the pay and conditions of financial industry staff must be respected and agreements honoured when it comes to the many mergers and buy outs. We must not forget that employment security is inextricably linked with the skills agenda. If the road to redundancy must be taken then job losses should be managed by utilising redeployment, retraining and voluntary redundancy registers to mitigate against compulsory redundancies.
It is true that the financial industry has a damaged reputation and clear commitments and changes are needed not just to secure jobs and training but also to make the industry more transparent and accountable. It would not be without exaggeration to say that this is the biggest challenge facing the industry in modern times. Despite massive government intervention and investment, banking institutions still remain a law unto themselves.
The short termism that rewards top level risks must be tackled. This is in stark contrast to employees in the sector who are increasingly involved in performance-based pay systems – pay systems that are often founded on unrealistic or unachievable targets which are rarely agreed through two-way dialogue, and failure to reach targets can result in disciplinary action and zero percent pay increases.
Short-term incentives have also replaced pensionable pay increases. Decent pensionable pay increases should be rewarded to workers for ‘fair work’ along with an end to rewarding staff with bonuses that do little to protect finance workers and our long-term financial stability.
The banks’ ongoing outlook and treatment of their staff makes it all too clear that they are continuing – despite massive government assistance – as before, with a ‘business as usual’ attitude. They need to think again.
There is a democratic deficit at the heart of the financial system. The Financial Services Authority (FSA) has undoubtedly not delivered in its role as regulator. For example, earlier this year the FSA carried out ‘stress tests’ on UK banks to determine their ability to withstand losses amid the recession. Yet the FSA has refused Freedom of Information requests to release the test results, with the Treasury citing that it could bring ‘uncertainty in financial markets’ and the FSA stating that to release the information would be ‘too costly’. To not release the results causes more uncertainty in the future, putting pressure on both the job and market place. Such test results should be made public to improve risk management – if the FSA are refusing to do so then this hardly bodes well for a new era of openness.
If the US is insisting on transparency, with other countries starting to follow suit, how long can the UK stand back and allow the cloak of secrecy at the centre of our financial systems to continue? The prime minister himself has said the current worldwide crisis calls for global solutions.
The need for a new international regulatory architecture is clear, with regulators getting tougher and more transparent on enforcement; increased powers to hold those who contribute to massive failures to account; and with new measures to deal with renumeration policies.
Trade unions have a role to play in rebuilding a successful and responsible industry. Board members at both individual organisational and FSA level need to be redressed and reviewed with the introduction of ‘public interest representatives’ on boards. Government has chosen to focus predominantly on ‘consumer’ interest, but it is essential that front line workers have representation. It is vital that the voice of the employee is heard at board level, for both their own and industry interest – they can offer a valuable and instrumental insight to the industry.
In addition, it has been proven that, where there is positive union-employer relationship, workers are much more likely to report greater satisfaction with job security, pay, training and development and quality of work.
If our financial institutions of the future are to be successful agents of wealth creation, in terms of the economy, society as a whole and as a decent employer, then new rules must be made that recognise corporate financial responsibility. We need a financial system consistent with democratic aims, financial stability, effective and better regulation and social justice for both workers and the world.