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Pitching for parents, by Maria McHale

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01 April 2005

With the parties vying for the votes of 'hard-working families', Maria McHale talks to Trade & Industry Secretary Patricia Hewitt about the government's plans to give parents and carers a real work-life balance

It's the end of the world as we know it. Productivity will suffer, small businesses will crumble and be unable to compete with Chinese productivity levels, the UK workplace will face meltdown. What calamity are we talking about this time? Touchy-feely working arrangements, of course.

Business leaders and the Daily Mail are apoplectic about the government's latest plans to allow workers in Britain the right to choose more varied and flexible working arrangements if they become parents or need to care for members of their families.

Trade and Industry Secretary Patricia Hewitt set out the bones of the government's proposals at the end of February in a consultation document entitled Work and families: choice and flexibility.

In the Budget, the government made a further attempt to woo parents with £1bn in means-tested tax credits, plus a mini-manifesto of quality of life issues. Number 10 policy wonks have reportedly identified time-poor, responsibility-rich 'sandwich woman' as a prime target for electioneering. And this week the Conservatives launched their bid for the votes of 'hard-working families'. The papers are full of health warnings about our 'binge working' culture.

Labour's plans to improve the work-life balance include extending paid maternity leave from six months to nine months by 2007, allowing fathers to take up to seven and a half months off work in place of their women partners to look after new babies, as well as extending the right to request flexible working – currently available to the parents of pre-school children – to the parents of older children and those caring for sick and disabled relatives.

Unsurprisingly, the CBI is not happy. Amid claims of job losses, business bosses have also suggested that small firms will not take on women of childbearing age if the plans go through, because of the increased costs.

John Cridland, deputy director general of the CBI, has warned that 'extending family-friendly rights to this extent threatens to make life extremely difficult for small firms' and said the proposal for shared maternity leave could pose an 'administrative nightmare'.

In the public sector, the attitude is less confrontational. All public sector organisations must be seen to be talking the talk although, off the record, several have stressed that there are complications in how the arrangements will work. Many have a written policy on their approach to parents and carers.

The Metropolitan Police says it is committed to helping people with caring responsibilities. As well as a contact person who can offer advice and support and a commitment to flexibility in the use of leave and working arrangements, it offers five days' carer leave over and above the provisions for annual and compassionate leave.

Flexible working in local authorities has been a selling point for many who cannot rely on wage competitiveness to attract staff. The London Borough of Barnet has adopted a range of systems and techniques to make working for the council attractive. For example, it offers flexible working, career breaks, the option to work from home and annualised hours (where employees are paid a monthly wage based on the hours they work in a year, but the hours they do each month can vary according to their needs).

At Essex County Council, staff can make use of flexible hours and homeworking, annualised hour contracts, zero hour contracts (where individuals can negotiate the hours they wish to work to fit their personal circumstances), 'home-working' days and remote working (facilitated through the IT systems).

It is this kind of approach that Hewitt is keen to foster and, unfazed by the initial outrage, she is determined to tackle business head on. She argues that the changes aim to give greater choice to families, while also recognising that employers can benefit from adaptable and flexible working arrangements.

In an interview with Public Finance, the secretary of state played down the impact the proposed changes would have on business. She said: 'We want to ensure any measures balance the needs of business with those of their employees, which is why the proposals to support working families are coupled with some important proposals to make parental leave easier for businesses.

'I'm determined that we "think small first" with these changes. Our consultation includes proposals for streamlining the administration process for businesses affected by parental leave. We have included ideas to support communication between employers and employees during maternity leave, so businesses can plan ahead with more certainty.'

Backed by Prime Minister Tony Blair, Hewitt has been waxing lyrical about the benefits business will get by adopting a more flexible approach.

Unsurprisingly, it's a move widely welcomed by organisations that support parents and carers. It also chimes with a recent poll of 5,000 employees by the Cranfield School of Management, which found that people moved on from jobs not only for better pay, but also for the chance to balance home and work lives.

Cranfield said its Recruitment Confidence Index would surprise many bosses because recent surveys had shown that few employers believed flexible working was important.

A spokeswoman for the Daycare Trust, a childcare charity, said it was keen for the changes to be implemented as soon as possible. 'Any moves to give parents more opportunity to work around their children is very welcome,' she says. 'We are keen to see better maternity and paternity pay, which would have a significant impact on the number of mothers taking their full maternity leave entitlement and would encourage more fathers to take paternity leave.'

Hewitt is aware that money is an issue. Currently, mothers get six weeks leave with 90% of their salary but this then goes down to £102.80 a week for the remainder of the maternity leave.

For fathers, paternity leave pay is the same £102.80 per week, a figure cited by many as the reason why only 40,000 men have so far taken the chance to spend time at home after their baby is born.

Hewitt says the government is aware that the amount of money does affect the take-up of maternity and paternity leave. She adds: 'We hope to increase the flat rate of maternity, paternity and adoption pay over time and are asking for views on what that level of pay should be in the consultation.

'However, it is not necessarily the only issue. For example, workplace culture can make a difference and it is encouraging to see that outdated attitudes are beginning to change. Employers, as well as parents, are increasingly seeing the benefits of a good work-life balance.'

The Daycare Trust would like pay to be set at minimum wage levels, currently £140 a week. It denies that flexible arrangements will affect UK businesses. 'It is a fact that employers who help staff balance work and family responsibilities are better able to retain them, reducing the cost of recruiting and training new employees.'

Hewitt backs this up. 'There are employers who are saying, "I'm not going to take on a woman of child-bearing age",' she says. 'But people said this 30 years ago when the Equal Pay Act came into effect, and the number of women in work has gone up and up since then.

'All the surveys of businesses that do provide good maternity leave find that they keep their staff much longer and get higher productivity. I would be astonished if anything more than a handful of employers deny themselves the benefit of employing women with family responsibilities. Women make up 45% of the workforce, and by 2010 there will be 2 million more jobs, with four in five of them filled by women.'

At Carers UK, the solution is simple – make the option universal and open to all employees. Madeleine Starr, the charity's carers and employers project manager, says the overwhelming worry of businesses is the administrative burden they face if leave is requested by one of their employees. 'There is no reason at all why these proposals are not workable. The majority of flexible employers currently extend the right to leave across the board to all their employees. As a small organisation, it makes a lot of sense to make it universal.'

She denies the changes will affect productivity. 'In fact, I would argue the exact opposite. Flexible working does not reduce productivity. If you have a workforce that is able to work and manage what are increasingly complex lives, it has to be a good thing for productivity, not a bad thing. Carers, if they are pushed to the wall, will give up work to care because there isn't a choice, and that goes for parents too.'

Accusing the CBI of headline-seeking, Starr says many small businesses do not share the doom and gloom picture painted by the CBI. 'Most small companies share the same characteristics of a family and just get on with it. They know that they can make it work.'

And she issues a stark warning to employers who try to dig in their heels to resist change. 'The demographics are changing and we will all be working longer, older and harder. We will, all of us, be subject to the care of an aging population. We can't escape from it. Three out of five people will care and if employers don't respond then how are we going to find the people we need for our skilled workforce?'

It's a view backed by the Organisation for Economic Co-operation and Development, whose Babies and bosses report on reconciling work and family life said flexitime work reduced sickness absenteeism and attracted more women into the labour force.

Mark Pearson, head of the social policy division at the OECD, says: 'Clearly, the culture and attitude is still that flexibility merely causes problems and headaches. That will take time to change.'

He cites the Netherlands as an example of positive change, saying it has gone further than any other country. 'Employees have the right to request changes in working hours and the burden is on employers to prove it will damage business. Of course business hated it, but in reality it has not caused any problems at all.'

Where Pearson does foresee problems with implementing changes in the UK is with the infrastructure. 'The UK has clearly been moving in the right direction to make it easier for parents and carers to work. There are a number of successful initiatives, including extending maternity leave, nursery places for three- and four-year-olds as well as after-school clubs. These are all great, but there are still gaps for care of younger children in that infrastructure, and for parents to be truly free to work, they need much fuller support and that is not in place at the moment.'

Money is certainly at the heart of this issue. Hewitt has pointed out that businesses will not have to fund the changes, with all the costs being met by the taxpayer. What those costs are is harder to predict. The DTI has admitted that costings are impossible without knowing the take-up rates.

It suggests that the ongoing cost to employers of allowing carers to request flexible working varies from £10m to £223m a year, depending on whether the right applies to partners only or to the carer of any disabled dependant. The cost to employers of extending flexible working for parents varies from £40m a year for children under nine to £87m a year for those under 17.

Putting a positive spin on the figures, the DTI believes employers will gain greater productivity and savings on recruitment and absence costs. But the consultation paper admits the costs are 'extremely difficult' to forecast, given the lack of data on likely take-up rates.

Hewitt will not be drawn on the issue. 'We are consulting on a range of options to extend the scope of the flexible working law. The measures we are proposing aim to give greater choice to families, whilst also recognising that employers can benefit from adaptable and flexible working arrangements.

'We have carried out an assessment of the likely costs of the proposals, but the final costs will obviously depend on which course of action we decide to take following a full and thorough public consultation with all parties, particularly employers.'

What is crucial, according to Hewitt, is that we all bear the costs, if we fail to support parents as they bring up their children. 'All of us, whether we have children or not, have a real interest in making sure children are brought up well. Children who don't grow up well end up imposing the most enormous cost on the whole of society.'

The flexible working arrangement for parents will allow both father and mother the chance to be involved in their child's upbringing in the early days.

She told Public Finance: 'The proposal to enable a mother to transfer some of her maternity leave and pay to the father offers choices to parents that they don't have now. Mothers will have more choices about when they return to work, enabling them to do so when they feel ready. Fathers will be able spend more time caring for their children. This reflects changing family patterns, the different choices families are increasingly facing and helps support greater equality at home and at work.'

It's a point borne out by academics at Colombia University in the US, who published research in March which found significantly reduced infant mortality rates among families where the mother took extended maternity leave.

Hewitt wants a more progressive approach to work across the UK. 'I want to give parents the choice denied to previous generations of a decent work-life balance, which helps improve the life chances of their children – something all of society can benefit from – and will make our economy more productive as well.'

So the government's proposals will be implemented in some form. How radical and far reaching depend on Hewitt's nerve in the face of a business backlash. Cleverly, the changes will not be finalised until after the next election.

But, as with the Equal Pay Act and the introduction of the national minimum wage – a succession of earlier reforms that are now embedded – business's bark will probably be worse than its bite. And if the government is to be believed, flexible working looks unlikely to do anything to British business except make its workers happier and more loyal.

PFapr2005

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