Innovation, Workplaces and Public Policy

1. Innovation, Workplacesand Public Policy Roy Green ‘The Workplace of the Future – Innovation policy, skills, work and management systems’ CPP Symposium, Melbourne, December 10 2004 .

2. Innovation at work • By April next year, the EU25 must give legal effect to a sweeping new directive on information-sharing and consultation at the workplace • What is this legislation about, why has it been enacted and how will it contribute to workplace innovation? .

3. What is the ICD? • This EU directive provides new information and consultation rights in undertakings (50+) or establishments (20+) • Consultation will be with employee/union representatives – covering the economic situation, employment issues, work organisation changes etc • Sanctions for breach must be ‘effective, proportionate and dissuasive’ .

4. Related measures The ICD supplements recent and emerging legislation in this area: • European Works Councils in large MNCs in more than one member state • European Company Statute for companies incorporating at EU level • Cross-Border Mergers by limited liability companies in the EU .

5. Why now? • Traditionally, a moral case has been made for involving employees in decisions, addressing the ‘democratic deficit’ at the workplace • Now this case has been joined, if not superseded, by the economic, social and technological imperatives of the European ‘single market’ and knowledge-based economy .

6. Social model This approach is “embedded in the social structure and…depends on that structure for its capacity to operate effectively… It sees a need for the active cooperation of workers in the work process… and it recognizes the importance of institutions and the role they play in creating a framework in which a market operates, in mediating the relationship between the economy and society, and in reconciling economic efficiency with other social goals.” (Osterman et al, Working in America, 2001) .

7. Lisbon update • Europe’s aim is to be the world’s ‘most competitive and dynamic knowledge-based economy’ by 2010 • However, implementation required major structural reforms across the EU combined with ‘greater social cohesion’ • The Lisbon strategy has been reviewed by the Wim Kok report and last month’s European Council .

8. Productivity gap • The Kok report highlights concern about the decline in EU labour productivity growth from the mid-1990s, compared with increases in the US • The report criticises Europe’s failure to meet the Lisbon targets, particularly those relating to the development of ‘national innovation capacity’ and key factors in competitiveness .

9. Growth in labour productivity (per hour, moving average) Source: EU 2004 .

10. “The problem is… that the Lisbon strategy has become too broad to be understood as an interconnected narrative. Lisbon is about everything and thus about nothing. Everybody is responsible and thus no one. The end result of the strategy has sometimes been lost. An ambitious and broad reform agenda needs a clear narrative…” (High Level Group, Facing the Challenge, 2004) .

11. Irish narrative? • Ireland’s narrative is still evolving but has begun to focus more clearly on the need to build national innovation capacity – andto createhigher skill jobs • While Ireland’s exports now embody the highest R&D intensity of any OECD country, the technology for the most part originated not here but in the home base of inward investors .

12. Share of high and medium high technology industries in manufacturing exports, 2001 .

13. ICT sector trade balance (%), 2001 .

14. Technology balance of payments(% of GDP) OECD TBP Database, 2003 .

15. New enterprise model “Whereas in the past, products manufactured in Ireland were designed elsewhere, in the future, more of the ideas, the designs and the technology must originate here. Companies in Ireland will have to innovate and gain leadership positions in their target markets” (Enterprise Strategy Group, Ahead of the Curve, 2004) .

16. This emerging innovation narrative is not just about technology but also institutional support and, crucially, effective delivery at the organisational level. NCPP Forum on the Workplace of the Future, 2004 .

17. Organisational innovation “Few countries have developed a coordinated and focused policy for organisational innovation: this is an area where Ireland, with its positive experience of social partnership, can gain early mover advantage” (Enterprise Strategy Group, Ahead of the Curve, 2004) .

18. Workplace of the future • The National Centre for Partnership & Performance (NCPP) has established a ‘Forum on the Workplace of the Future’ • This Forum has conducted research, taken submissions and promoted debate for the last 12 months • The Forum will report findings and make recommendations early next year .

19. Research evidence • International evidence on ‘high performance work systems’ and their characteristics (Osterman, Ichniowski, Weinstein & Kochan) • Link between ‘bundles’ of high performance work practices and economic performance (Macduffie, Huselid, Ichniowski) • Key role in high performance work systems of ‘employee voice’ (Applebaum, Boxall & Purcell, Dundon, Marchington) .

20. ‘Intensity of collaboration’ “the role and impact of consultative schemes in improving workplace performance was found to be directly related to the ‘intensity’ of collaboration between management and workforce” (Alexander & Green, ‘Workplace productivity and joint consultation’, 1992) .

21. Employees consulted prior to decisions affecting their work (%) ESRI survey of 5,198 employees .

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24. ‘Readiness’ for ICD • CISC case study analysis of 15 public and private sector organisations in 2002/03, with union and non-union workforces • Analysis based on interviews with senior management, employee representatives and employee focus groups • Steering Group for research comprising DETE, LRC, NCPP and Forfás .

25. Representation gap • Mix of ‘direct’ and ‘indirect’ mechanisms for employee participation (including JCC, EWC, collective bargaining, upward problem-solving, communications) • Balance towards ‘shallow’ level of participation, based on trust, informality and employer initiative • The full report may be accessed at www.nuigalway.ie/cisc .

26. Dynamics of involvement No Involvement incorporationist UNSTABLE by-passing channel Strong union-management partnership Non-union consultative regime STABLE EQUILIBRIUM managerial sponsorship substitution UNSTABLE Weak Consultation

27. People create knowledge “Knowledge creation and diffusion are at the core of economic activity. Knowledge is embodied in people, and it is the quality of the human resources that will determine the success or otherwise of firms and economies in the years ahead.” (Enterprise Strategy Group, Ahead of the Curve, 2004) .

28. Catalyst for change • For ICD legislation to provide an effective catalyst for change, its rationale as part of the ‘innovation narrative’ must be robust, well-communicated and understood • Ireland’s commitment to social partnership and the knowledge economy provides a unique opportunity to lead workplace transformation in Europe .

29. Implementation strategy • Successful implementation of the ICD at the organisational level will require active policy support, on the model of Finland’s Workplace Development Programme • It will also require a national training programme, which would encompass initiatives such as the UK’s workplace learning representatives .