ASDA deal not model solution

Commenting on recent reports about the deal struck between supermarket chain ASDA and the trade union Unite in advance of the Agency Workers Regulations that are due to come into force next year, the Association of Recruitment Consultancies (ARC) urges caution against adopting the model ahead of Regulation.

ASDA has won kudos for its agreement to liaise with its suppliers, unions and temporary worker agencies to ensure the workers are paid the same as permanent staff and its competitors, and other businesses will now be under pressure to follow in its footsteps.

However The British Chamber of Commerce has estimated the cost of the Agency Workers Directive to be £1.5 billion per year. By the Government’s own estimates, there are 1.3 million agency workers in Britain, about 5 per cent of the working population. That figure is likely to rise as companies start to come out of recession but do not want to take on extra permanent staff that may be expensive to shed if things get worse again.

Adrian Marlowe, Chair of ARC, said “what has been largely overlooked in the mainly media and union comment about the deal is that ASDA is in a totally different situation from most other employers and the deal it has agreed is likely to be far less problematic for it, than for most others. It is unrealistic to claim that ASDA is trailblazing a path that everyone else should follow.”

He points out “Firstly, ASDA is owned by the giant US Wal-Mart, the world’s largest public corporation by revenue, and the largest private employer in the United States. Thus whatever the cost, it is hardly likely to make much difference to its balance sheet.

Secondly, ASDA, along with other supermarket chains, has enormous power over its suppliers, and is in a position to squeeze their margins further in order to recoup any additional costs. Very few will have the financial muscle of ASDA. Accordingly they are likely to be seriously affected.

The reality of enforcement of the Regulations is that it is likely to be the suppliers who will have to meet the increased bill. Of course there is the option of ending the agency workers’ hire in advance of the twelve weeks qualifying period, but this would be disadvantageous to swathes of temporary workers. Furthermore, it may be more attractive to end the employment of regular employees on a redundancy basis – those likely to be most subjected to this would be new employees with less than 12 months service. This again would disadvantage existing employees.”

Marlowe adds that in the anxiety to be politically correct in favour of agency workers some hard economic realities appear to be being ignored. “ARC has consistently encouraged a realistic approach to these Regulations and we continue to warn against an over zealous implementation of the EU Directive which undoubtedly will threaten jobs and the benefits of a flexible workforce. One of Newtons laws of motion was ‘to every action there is always an equal and opposite reaction’. We should not lose sight of that.”