Restructuring in the UK finance sector

1. Restructuring in the UK finance sector Stefanie Ledermaier Warsaw, 30 September 2013

2. Role of the sector and impact of the crisis • London is Europe’s most important financial centre and important contributor to the UK economy (around 9% of GDP) • Banking sector hit hard by the crisis: • banks facing bankruptcy • nationalisation of major banks • government capital injections • changes to the regulatory and supervisory system of the UK financial sector

3. Impact of the crisis on employment in the sector • The crisis has resulted in the estimated loss of around 187,000 jobs in the UK finance sector, or 25% of the sector’s workforce • All major UK banks have implemented large-scale redundancies – still ongoing • Consultation on redundancies follows legal provisions. • There are statutory minimum levels for redundancy payments, but a majority of employers offer higher payments • Alternatives to redundancy include “natural wastage”, retraining, redeployment, shorter working week

4. Managing restructuring in the finance sector • Collective bargaining takes place at company level in the sector (25% rate of unionisation and 20% collective bargaining coverage in the sector) • No specific role for the state • Restructuring measures include: • Wage reductions • Offshoring and outsourcing • Voluntary redundancies • Increased incidence of social dialogue in the banking sector in recent years, due to a need to engage in response to the crisis

5. Positive and negative aspects of restructuring

6. Difficulties around restructuring • Trade unions protest against: • Job losses • Lack of redeployment opportunities, due to geographical location, or skills mismatch • Reductions in terms and conditions such as holiday entitlement and sick pay • Closure of final salary pension schemes • Increased use of temporary workers

7. Positive examples of restructuring: Cambridge Building Society (1) • Major change programme to improve performance announced in 2007 and implemented in 2008-2009 • Number of new positions and a small number of redundancies • Formal announcement of the detail of the plan and regular communication through a Change Programme Director and steering committee • Measure to limit redundancies included: • reviewing temporary work • natural wastage • early retirement • voluntary redundancy on enhanced terms

8. Cambridge Building Society (2) • Closure of 4 branches in 2009 – most staff were redeployed to new positions in other branches nearby • Travel costs paid and positions trialled on a six-week basis • Small number of redundancies on better than statutory terms and with full consultation • Redundant staff also offered outplacement • Engagement and performance programme put into place following the restructuring, in order to maintain staff motivation

9. Final thoughts • UK banking sector has been severely affected by the crisis – substantial job losses and restructuring • Within the legal framework, the management of restructuring takes place at company level – there are many good practice examples of employer engagement and meaningful collaboration between the social partners • The crisis is not yet over – there are now fears about the future of the Cooperative Bank

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