By Daniel Hunter

Contrary to the rhetoric from some unions, companies are working together with their staff to overcome challenging economic conditions, a survey by the CBI and recruitment specialists Harvey Nash reveals today (Monday).

Facing the Future, the CBI/Harvey Nash Employment Trends Survey, covers 319 businesses, employing 1.9 million people in the UK. It finds that two-thirds (67%) of firms say that employee relations in their workplace are either co-operative or very co-operative, with staff remaining resilient despite the economic climate, and two-fifths (40%) of firms describing morale as high or very high.

“In the UK we have a good story to tell about collaboration in the workplace during the worst of the economic crisis. By working pragmatically and flexibly together, employers and employees have been able to safeguard and create jobs," Katja Hall, CBI Chief Policy Director, said.

“With two-thirds of businesses reporting high levels of co-operation in their workplace, employers clearly understand the value of engaging their employees and keeping them informed about business challenges being faced.

“The interests of employees, employers, and the economy as a whole will continue to be best served by maintaining these positive employment relationships. Businesses do not recognise the more adversarial, political rhetoric being adopted by some unions as representing the reality on the ground.”

Highlights of the survey’s findings include:

· Just one-in-twenty businesses (5%) describe the employee relations climate as adversarial or very adversarial, while 67% say it is co-operative or very co-operative - giving a balance of +62% of firms reporting a co-operative employee relations climate

· Most companies (85%) are confident their employees recognise the need to contain costs and adapt patterns of work in response to market pressures, while only 15% are not — giving a balance of +70% of firms where this is understood

· Looking ahead, the top workforce priorities for businesses in the next 12 months are securing high levels of employee engagement (60%), containing labour costs (48%) and recruiting to key vacancies (38%).

“People are the greatest asset of any business, and companies recognise the value of good communication with their staff," Albert Ellis, CEO of Harvey Nash, said.

"So despite the tough trading conditions and economic uncertainty we’re all facing, it’s not surprising that employee engagement has emerged once again as a top people priority for the year ahead.

“The fact that two-fifths of companies say that morale among staff is high or very high paints a picture of a positive, can-do atmosphere in the private sector, where businesses and employees are working together to weather economic storm clouds.”

Recruitment and pay

The survey shows that jobs are being created throughout the private sector. While 30% of employers plan to increase permanent recruitment in the next six months either across or in parts of their organisations, 18% predict lower recruitment, giving a balance of +12%.

Pay restraint remains the norm, with nearly half of all firms (48%) planning a below-inflation pay award or targeted pay rises, and one-fifth (20%) planning a pay freeze in order to remain competitive.

“There’s a growing realisation among employers and employees that to stay competitive in tumultuous times, businesses are increasingly having to take a cautious approach to pay," Katja Hall said.

“Given that workplace relations remain positive and morale high, it seems people are accepting that pay constraint is now the norm, and we will only be able to pay ourselves more in the long-term by improving productivity and competing more effectively around the world.”

Employment regulations and agency workers

The survey found that, while two-thirds (67%) believe employment regulation is a threat to UK labour market competitiveness, firms are cautiously optimistic about the future, with two-fifths (43%) believing the UK will become a better place to do business in the next five years.

Six months after the implementation of the Agency Workers’ Directive, almost half of firms (46%) have been affected by the new rules. Many businesses (57%) have been forced to cut down on their use of agency workers, while 8% have stopped using them altogether.

The regulations are having a detrimental impact on work opportunities, with 12% of firms reducing headcount, and 17% preferring to increase overtime for existing staff rather than use agency temps.

Other adaptations to firms’ resourcing plans include over a third using more fixed-term contracts (36%), and others using other temping arrangements such as the ‘Swedish derogation’ model of paying between assignments in return for no equal treatment rules on pay or managed service contracts (27%).

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