This Christmas will be difficult for Rolls-Royce workers in Barnoldswick, a town on the edge of the Yorkshire Dales in northern England. Workers there last month launched the company’s first strike in 41 years, in a bid to protect 350 jobs due to be lost as Rolls-Royce reorganises its manufacturing sites.
If the strike fails to win a reprieve, there is little prospect in this largely rural area of these workers finding similar employment, especially in the wake of the Covid-19 pandemic.
Supporters cite the historic nature of the Barnoldswick facilities. Established in the second world war, it was where the world’s first turbojet engine was built. History can be a powerful contributor to corporate culture. Unfortunately, history alone is not enough to save these jobs or other historic sites in Europe.
Thyssenkrupp, founded in 1811 as a high-quality steelmaker, is looking at quitting that business and will take out 6,000 steel jobs. Bridgestone, the Japanese tyremaker, is shutting its factory in northern France where it has operated for almost 60 years and which is one of the region’s biggest industrial employers.
In many cases these sites have not been starved of investment. Rolls-Royce has put £100m into Barnoldswick since 2013. But the crisis afflicting the global aerospace industry in the wake of Covid-19 makes restructuring inevitable. It does not help that labour negotiations over the years have left some categories of workers with inflexible contracts and unusually high salaries.
The issue for all these companies, however, is whether enough has been done in the years leading up to the crisis — and long before job cuts were on the cards — to ensure that the workers and communities heavily reliant on these facilities have the skills needed to move on.
This is a question that will be posed with increasing frequency in the coming months. Restructuring activity around the world will soar next year as government support programmes wind down, according to a PwC report. “Businesses will have bled themselves dry of all financial cushion,” said Edward Macnamara, partner at PwC. “There will be 18-24 months of reasonably hard restructuring.”
It is not just about demand. The pandemic will accelerate longer-term shifts such as digitalisation and robotisation. The human cost of that transition will be substantial. While companies and shareholders can minimise their risks through portfolio or business diversification, employees cannot.
Jeffrey Gordon, a law professor at Columbia and Oxford universities, argues that governments have a duty to develop a form of social insurance to help workers cope with these growing risks. Job security has disappeared and guaranteed pension payouts eroded.
“There has been a risk shift away from the shareholders . . . and toward employees and all the other stakeholders who benefit from, and indeed depend on, the existence and stability of particular corporations,” he said.
In the UK, for example, a survey of employers published last month found that companies were providing fewer training days to a smaller percentage of the workforce than in 2017. Businesses cannot complain about a lack of skills and at the same time cut back on training that increases productivity.
Companies cannot be absolved of all responsibility for training and education given the amount of time their employees spend in the workplace. It is not enough merely to provide advice and training when redundancy looms.
In the post-coronavirus world, where change will come at an ever faster pace, there is a need for a new partnership between business, government and unions to devise a system of life-long career replenishment, in particular for lower-skilled workers.
For example, could those stakeholders join forces to ensure a certain number of days of subsidised training a year? But the training offered needs to leave employees marketable when their jobs are at risk. That means offering courses that are externally benchmarked and recognised.
Companies understandably fear that better qualified employees might leave. But perhaps it is time for a little rebalancing of the risk. Businesses will have to ensure there are other incentives for valued workers to stay.
As Prof Gordon suggests, this would increase expected returns across the economy — benefiting not just workers, but the companies too.
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