‘Operation Preparation’: parallels between the UK’s business and employment planning for Brexit and WWII
5 Aug 2019
Peter Reilly, Principal Associate
Proponents of Brexit argue that the UK survived World War II so it can thrive after Brexit. Moreover, the new prime minister has set up a ‘war cabinet’ to deliver this goal 'by any means necessary'. That started me thinking whether this comparison makes sense in terms of preparation and whether there are lessons for business leaders from the past.
A report IES wrote for CIPD which looked at how business was readying itself for Brexit, found organisations to be in a general wait and see mode. As I write, the full Brexit story has not been written, but we have moved from the certainty of exit to more question marks about whether it would happen and then back to Brexit by the 31st October ‘whatever the circumstances’; and a second referendum though unlikely may be necessary to decide the UK’s departure or more likely a general election. And then there is the nature of the event: what will Brexit mean, what form will it take. This uncertainty has made it hard for most to plan.
However, the report noted exceptions where organisations are taking decisive action. For example, the European Medicines Agency relocated from London to Amsterdam. Companies like EasyJet put contingencies in place by opening offices on the Continent to repair to if need be. Others were building up and developing their internal resources or finding new recruitment sources to guard against their existing labour supply chain being threatened. Task automation, such as robotic vegetable picking or using drones in construction, was a third option considered by some organisations to reduce dependence on a human workforce.
Obviously, there are numerous differences in the circumstances between EU exit and a world war, and the consequences are of a very different order. Nonetheless, there are similarities in the build up to WW2: the growing fears in the late 1930s of an upcoming conflict, assuaged for some by the 1938 Munich deal and then the growing inevitability of war.
In response, there were seemingly much greater attempts at government/industry coordination in the key economic areas than now, helped by the presence of numerous trade associations with which the government could consult. In 1938 the Coal Commission was created to own and manage coal reserves in line with the ‘national interest’. An Oil Board was established to determine the UK’s wartime needs and sources of fuel supply. To confront Brexit, the May government has produced 39 sectoral analyses of varying detail and content but without summing up Brexit’s potential impact and stakeholder consultation (redacted in the published version).
In terms of labour planning and deployment, before WW2 there was a Manpower Sub-Committee of the government’s Committee of Imperial Defence. It received no forecasts of the numbers and skills of people required by the Armed Services or in the critical industries. Labour turnover was known to be a critical issue, but it was one that seemingly was not addressed in policy terms. The Committee proposed that the government should take powers to 'control and transfer civilian labour according to national needs', but this advice was not accepted until 1942.
You could say that the situation is not much different today, demonstrating a continuing weakness in national workforce planning. Labour supply is not given much attention or is approached on a laissez faire basis. In the late 1930s, the focus was on using the unemployed (a pool of 1.3 million in September 1939) and bringing women into work to fill roles in the expanding parts of the economy. Today, the challenge is that the employment rate is historically high. Although, there are probably many more available hours than this figure would suggest, given the numbers of part time, zero hours and agency workers not working at full tilt, there is little attention to how the workforce will adjust to post Brexit economic conditions.
There was a similar reluctance to control wages in 1938. Wage bargaining was to be left to trades union/industry to undertake and without a system of compulsory arbitration. The exigencies of war changed this position with strikes and lockouts effectively banned in July 1940, forcing disputes to come to arbitration.
Government distance from wage control has also been a feature of the 21st century UK industrial relations, except in the public sector under its austerity programme. As a consequence, wages have been growing (currently at 3.6% pa) just as they did more rapidly between 1938 and 1940 , and perhaps in both cases due to actual or feared labour scarcity.
So, what can we learn from a comparison between now and 1938 as far as national management of the labour force?
- Without proper preparation it takes time to mobilise the workforce, skill it up appropriately and direct/incentivise it (in so far as it is possible) to go where it is needed.
- Techniques for dealing with uncertainty are helpful in assisting this preparation. Risk analysis (eg where will the economy be stressed, what workforce groups are vulnerable to change); contingency planning (giving your organisation room for manoeuvre in the event that difficult things happen) and scenario planning can all be useful.
- The devil is in the detail in all the analysis work – location, skill, occupational, sectoral differences all make broad brush statements of limited planning value. You have to have a degree of precision. You must too recognise the connectivity between workforce groups – which are dependent on other groups?
- The political environment is dynamic, and employers need to be fleet of foot in responding to changes in government attitudes and priorities.
- National emergencies cannot be dealt with on an ad hoc basis. As we found out in WW2, to survive, the government had to take actions which it felt would be repugnant in 1938.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.