Trade unions and Telework

Report produced for the International Trade Secretariat FIET, Autumn 1996

C. Back offices and call centres

Relocation of work

Teleworking, as defined in this report has two attributes: the idea of distance working, and the use of information and communication technologies (ICT). It is important, therefore, to look wider than simply the models of home-based teleworking. Indeed, there is a strong argument that the use of teleworking from back offices and call centres is much more important as an issue than the perhaps limited development of home-telework.

Clearly, since much traditional clerical and administrative officework may make use of ICT, there can be difficulty in deciding just where to draw the line on what constitutes teleworking. Our focus in this section will be on the relocation of work brought about by the use of ICT.

That relocation may be to centralised offices within urban areas (for example, the removal of banks' administrative functions from shopping areas to specialist centres elsewhere in the same city). It may involve the establishment of larger back offices, servicing several cities or regions. It can alternatively involve the deliberate decision to relocate to much more remote parts of the country, for example to rural areas where overheads and labour costs may be cheaper.

* Hertz handles car rental enquiries in Sweden from a centre in Arvidsjaur, a small inland town 900 kms north of Stockholm

* Citycorp in Germany runs its credit card operation from Nordhorn, a small town close to the Dutch border, where salaries are reportedly 20% lower than Frankfurt

* In Spain, many banks and savings banks have based their telemarketing and data processing operations in Madrid, because employment conditions and costs are lower there than in other areas of the country. The banking union FEBA-CC.OO. reports that as a consequence there are attempts to persuade Madrid workers to learn Basque and Catalan, in order to deal with Basque and Catalan speakers calling from their own areas of the country.

Many of the examples in this section will be drawn from the banking and financial services sectors, where the effects of these developments are already being widely felt. But the same trends can also be detected in other sectors.

"We have encountered the transfer of work from small outlying bank branches to the main/central office, eg the processing of loans that were previously done by individual branches are now centralised in the main office. This has resulted in the drastic cut in the number of staff in the smaller branches."

[Sabah Banking Employees' Union (Malaysia), response to FIET telework questionnaire, 1996]

This process of relocation is not necessarily a new phenomenon. For example, the banking industry in the United States went through a major process of change in the 1960s and 1970s, which saw much clerical and data processing tasks removed from metropolitan headquarters to areas with lower land and labour costs. American Express, for instance, located its travellers cheques division in Salt Lake City; Citycorp's credit card operation went to Sioux Falls, South Dakota. Other companies had policies of 'suburbanisation' - ie, moving to the outskirts of large cities - often linked to a deliberate attempt to avoid trade union organisation by workers.

Developments over the past few years, however, take this process further. Technology now makes it easier not only for back office administration but also for interaction with the customer or end-user to be carried out at a distance. In particular, we are seeing the growth in the use of specialist telephone call handling operations, known as 'call centres' (see below).

Outsourcing

A corporate decision to relocate work functions may be accompanied at the same time by a decision to outsource this work to external contractor(s).

Outsourcing of IT services has been a familiar feature in the past. More recently, however, outsourcing has been extended to include other work processes, such as data centre operations and back office processing. The theory is that companies should specialise in their own core business areas, keeping control of their decision-making and strategic areas, but passing out other functions to firms for whom this work is their core activity. This could mean a company divesting itself not just of IT technical support and networks operations but also such things as correspondence, telephone calls and company mailings.

As MSF (UK) has pointed out, "The latest stage of development is described as the move from tactical to strategic outsourcing, in which the provider is required to manage the client organisation's business.. This is sometimes referred to as business process management or co-sourcing." [The Outsourcing of IT Services: Leading Edge or Bleeding Edge?, MSF (UK) 1996]

Outsourcing has been a feature of the reorganisation of the banking industry in Spain, especially in the provision of telemarketing, telemanagement and telesales and also in electronic data processing. The banking union FEBA (CC.OO.) has criticised the working conditions found in outsourcing centres, and the anti-union attitudes of employers: "The absence of any State Agreement for this type of activity, the unfair competition as the result of deregulation, the low costs and the job insecurity are entirely at the expense of the workers in this sector, subjected to abominable working conditions (poor health and safety), low salaries and wages and job insecurity." [FEBA (CC.OO) response to FIET telework questionnaire, 1996]

The union adds that it faces a difficult challenge in reconciling the interests of its members in traditional banking institutions with members who are working in subcontracting firms: "There exist strong contradictions between the majority of our members, who work in the large banking institutions, have steady jobs and many years of seniority on the one hand, and the tiny group of members who work for enterprises at the periphery on the other. The former see their jobs threatened by the latter."

"The lessons of MSF experience with oursourcing are simple: where trade union organisation is strong, employment conditions can be protected...

MSF has identified the following key strategic objectives to pursue:

- maintenance of the highest possible levels of skills intensive employment

- maintenance of the original employing organisation's control over strategic technologies and any R&D capacity

- maintenance of existing terms and conditions of employment

- maintenance of an occupational pension to which the employer contributes

- maintenance of any recognition agreement with MSF"

[The Outsourcing of IT Services: Leading Edge or Bleeding Edge?, MSF (UK) 1996]

Call centres

The development of call centres (the term has already entered both the French and German languages, and looks set to become universal) represents a major change in the way in which some white-collar office-based jobs are structured and undertaken.

Call centres are made possible by automated call distribution (ACD) technology, which automatically feeds incoming telephone calls to available staff. Unlike a conventional office, a typical call centre sees staff spending their days seated at consoles, receiving calls through headsets and inputting information on to PCs or terminals in front of them. Increasingly, call centres are also making use of new technological developments in computer-telephony integration (CTI). Although structured around the telephone, the one thing never heard at a call centre is the sound of a phone ringing.

Call centres can be used for a wide range of telemarketing, telesales and teleservice functions, including central reservation handling (eg for hotels), customer support, computer technical support, market research and even telephone fundraising for charities. One industry source suggests that there are currently about 6,000 call centres in western Europe alone.

Call centres have been a central feature in the development of telephone-based banking services and insurance for consumers, the so-called 'direct' operations which are transforming these sectors.

"There is an all out struggle to compete in offering financial services to customers by telephone. This has meant that customers are being encouraged to telephone the workplace, rather than turn up in person, and the call is answered at a remote location. So far, these locations have been in the major centres. Sometimes the customers know that they are calling a phone centre, sometimes they believe they are phoning the branch where they believe their records are held... There has been job loss attached to this and now we are faced with a considerable number of bank branches closing with the stated reason being "electronic banking has replaced this service"."

[Finsec, the Finance Sector Union (New Zealand), response to FIET telework questionnaire, 1996]

One pioneer of telephone banking was First Direct, set up in the United Kingdom in 1989. As the Trades Union Congress (UK) recently pointed out, "First Direct handles over half a million customers with around 1,000 equivalent full-time workers, whereas its parent Midland Bank services four million customers using 36,000 staff." First Direct is based in two units on industrial estates in Leeds, a city in northern England well away from the traditional banking centre of the City of London.

Similarly in Germany, Commerzbank AG has based its direct banking subsidiary in a utilitarian unit beside a motorway exit in the small town of Quickborn north of Hamburg. A recent press report described the premises as being located between a trucking company and a factory, and commented on the contrast with traditional bank head offices in Frankfurt: "Instead of a broad marble staircase there is a narrow, tiled entrance. No doorman, no canteen."

Some key issues

a) Work organisation and management

Moves by employers to establish relocated back offices have not, in themselves, necessarily led to changes in the way that the work is actually undertaken. They may, however, have consequences for staff affected, particularly those asked to move to a new area. Women may be less able than men to move with their jobs.

The UK banking union BIFU, commenting on the introduction by the Midland Bank of 'customer service centres', identifies some issues:

"There is difficulty in getting people to transfer [to the new centres] because of:

- downgrading of the work

- travelling distance

- working conditions..

As a result a number of people have accepted a redundancy package while at the same time Midland is recruiting up to 30 people a month.. This is obviously a ridiculous situation.." [letter from Jo Seery, BIFU, March 1996]

The use of call centres generally involves much more considerable changes in work organisation and management.

Call centre staff are under the control of technology in a way which is normally unfamiliar in white-collar working. The similarity rather is with Fordism, the assembly-line method of working which has long existed in manufacturing.

Automated call distribution (ACD) technology enables employers to automatically monitor employees' work performance, such as the time taken in dealing with callers. In many countries, a feature of call centre life is the random secret monitoring of calls for supervisory purposes. (The legal rights of employers to undertake this vary between countries, a topic investigated in the ILO report on Workers' Privacy, Conditions of Work Digest vol 12 1/1993). There is no technical reason why these employers cannot record all conversations as digital files on computer, though this may produce problems with the sheer quantity of information accumulated.

Nevertheless, the problem of motivating staff in a potentially tedious work environment has tended to encourage employers not to rely on electronic supervision and other forms of overt policing of employees, but instead to make use of 'modern', more participative and informal management styles. Many call centres give the impression of being much more informal working environments, with an absence of traditional signs of staff hierarchies. Many companies encourage team working, with competitions between teams and incentives for sales or performance targets met.

b) Staffing

Because the organisational culture of call centres is different from traditional office working, trade unions may find that they need to work harder and in different ways to recruit members. Traditional collective bargaining agreements may not apply: both Citycorp's Nordhorn operation and Commerzbank's Comdirect-Bank, for example, are run outside the collective agreements for the banking industry, and normal employment conditions (such as premium pay rates) do not apply.

Call centres tend to have a high percentage of young workers, including those in their first jobs. (In some countries, students may also be employed part-time whilst undertaking their courses.) With some exceptions (eg the computer support industry) call centres also tend to have a high level of staffing by women, often working part-time shifts.

"Our employees are young, all in their early 30s and they slave away like they're building up the East," enthuses the managing director [of Comdirect-Bank] of his 125-strong staff culled from a deep pool of applicants."

[Bankenbranche wächst vor allem in der Provinz, article by Thomas Franke, Frankfurter Allgemeine Sonntagszeitung, 15 Oct 1995]

"A further problem compounding the situation is the number of such centres which are run with casual labour. There is an extremely high turnover of staff in some of these centres. In New Zealand any negotiated employment agreement does not apply to new recruits, so there is the constant opportunity for the employer with a high staff turnover to undermine the agreement. It is also equally difficult to unionise a place with a high turnover. The only call centres which are unionised are those with a relatively stable work force and where the employer wants to provide a high skill quality service."

[Finsec, the Finance Sector Union (New Zealand), response to FIET telework questionnaire, 1996]

c) Shift working

Shift working is a feature of many call centres, especially those dealing direct with the public.

When First Direct, for example, was launched in Britain, part of its selling point was that staff would be available for handling banking transactions by phone, 24 hours a day and every day of the year. Internally, bank policy was that each hour of the working day would be paid at exactly the same rate, with no premia for night or weekend working. (Limited overtime rates are now in force, partly as a result of pressure from the banking union BIFU.)

In France, the Banque Directe service of Compagnie Bancaire (a subsidiary of the Paribas Group) also operates 24 hours a day. This is contrary to a banking hours decree of 1937 which restricts the opening hours of most French banks, and was subject to a legal challenge in 1994 by French banking unions. The FO, CGT and CFDT union federations subsequently engaged in negotiations which led to an agreement with the bank, signed early in 1995. Significantly, Compagnie Bancaire pledged not to reduce the number of full-time employees or equivalent during the thirty months of the agreement. Shift patterns and pay were agreed, so that an effective premium was payable for less sociable hours of working.

"Staff affected by this work emphasise that staggered hours of work can lead to difficulties in family life and in particular to problems of getting to and from work."

[Services Bancaires à distance: la Position de Force Ouvriere]

Computer software programmes are now extremely sophisticated in predicting the level of incoming telephone calls likely to be received over the course of a period of time, allowing employers to roster exactly the number of staff needed at the right times to handle these calls. The process of handling outgoing calls is also increasingly controlled by software, known as predictive dialling.

This could, potentially at least, lead to the increasing segmentation of working hours or even to employment practices where staff are temporarily laid off during the slack times of the working day (a process already tried by a British fast-food outlet, where staff were not paid for these periods).

The location of call centres, often in industrial areas away from public transport, raises issues of safety, particularly for staff working twilight or night shifts and particularly for women workers.

d) Career development

One implication of the flat management structures and lack of traditional hierarchies in many call centres is that career progression for staff is often very limited. This, combined with the tedium of the work, tends to encourage a high turnover of staff.

Clearly moves in sectors such as banking towards greater use of call centres in their operations will challenge the traditional idea that employees can make a career for life with a particular company or industry. This may have implications in terms of social benefits, pension provision, etc, traditionally provided by employers. This also poses a challenge to trade unions seeking to organise the workforce.

e) Future employment trends

Whilst currently call centres are expanding fast, in the medium term some threat to employment can be identified from technological innovations. Interactive voice response technology using touchtone phones permits customers to bypass the need to talk to call centre staff to obtain information or undertake transactions. Already, for example, some direct banking services allow interaction by the public with the banks' computer systems in this way, enabling customers to obtain statements, transfer funds or pay bills.

The development of PC-linked banking, using the Internet or proprietory on-line services, is a further development. However, there are reasons why the replacement of humans by technology may be limited. This is not primarily because many people prefer to deal with other humans. More significantly, call centre operators are trained to look for selling opportunities in dealings with customers, adding value to the services already being provided.

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