26.9.1 More Home Improvements
Businesses in the retail sector supplying the home improvement market are susceptible to swings in demand which can have a dramatic effect on bottom-line performance in a market where annual consumer spending in the UK exceeds £7 billion. There are a number of drivers for home improvements. Research conducted by the retailer Homebase found that the main reason why people embarked on home improvements was to make their homes more comfortable to live in, increase their value prior to putting them on the market to sell, carry out necessary repairs and create more space. However there are a number of pressures on consumer spending, such as job security, the cost of living and the state of the economy.
The years between 2004 and 2010 have proved to be difficult for the UK home improvement market, more recently due to the world financial crisis and the subsequent turmoil in the European Union. Different research agencies are predicting the market is likely to shrink from the aggregate sales figure of approximately £9.0 billion in 2008 to £7.8 billion in 2013.
Indicators of the struggle emerge, for instance, when the media announces job losses such as occurred in 2005 when B&Q shed 400 jobs. The overall UK home improvement market shrank by around 1% in 2006, recovered marginally in 2007 and then shrank by some 3.6% in 2008.
In 2010 Chancellor George Osborne increased VAT from 17.5% to 20%, which exacerbated the fall in sales. The leading players in the market are B&Q (a subsidiary of Kingfisher).
Homebase, Focus and Wickes. They all have to consider new entrants to the market, buyer power, supplier power, the threat of substitutes and rival behaviour.
26.9.2 Motherhood, Marriage and Family Formation
The UK Office for National Statistics publication “Social Trends No 40, 2010 edition” provides a view of family formation and motherhood, and specifically evolving changes in society. This report, while published in 2010, refers to statistics for 2007 and 2009. There are very few surprises. Previous trends appear to be continuing down the same path.
• Since the 1970s, there has been a fall in the proportion of babies born to women aged under 25 in England and Wales.
• There is an increasing trend towards smaller household sizes. The average household size in Great Britain has fallen from 3.1 people per household in 1961 to 2.4 people in 2Q 2009.
• Apart from a small number of exceptions, the number of marriages per year has continued to fall since the 1970s.
• The number of divorces has increased year on year since the 1970s, other than the period 2003 to 2007 where there has been a small percentage decline.
• As a result of the choice women are making in terms of living independently, continuing their education and participating more fully in the labour market, the average age of women marrying for the first time reached 29.8 years in 2007. Between 1971 and 2011 there has been an upward trend in the proportion of women in employment and a downward trend in the employment rates for men (ONS 2011b).
• Along with changing attitudes to motherhood, the average age of mothers having their first child within marriage in 2007 was 30.3 years.
26.9.3 Health
The government report “Health, Social Trends 41” published by the Office for National Statistics in 2011 provides a summary of the key aspects of health matters in the UK as follows:
• In the UK, in 2008, health expenditure per head and life expectancy were ranked 16th and 17th respectively by the 32 Organisation for Economic Co-operation and Development (OECD) countries at$3281 and 79.9 years.
• In 2008, within the 32 OECD countries, the highest health expenditure per head was in the United States where life expectancy was ranked 24th. The highest life expectancy was in Japan where health expenditure was ranked 20th.
• In 2008 life expectancy at birth in the UK was at the highest level recorded for both males and females at 77.6 years and 81.7 years respectively: both had increased by about 20 years since 1930.
• Not only are life expectancies increasing, but both men and women are staying healthy and free of disability for more of their lives.
• The proportion of adults reporting that a long-standing illness or disability limited their daily activities changed very little between 1981 and 2009.
• In 2008/09 more than half of males and females in Great Britain were classed as overweight or obese (60% and 52% respectively).
• In the UK, between 2006 and 2008, the highest incidence of cancer in males was of the prostate (100.0 per 100 000 population) and in females was of the breast (123.0 per 100 000).
While UK companies need to take cognizance of local social trends, those that have interests overseas will have to reflect within their international operations on the local prevailing social issues. Of prominence is the HIV/AIDs pandemic (see Box 26.1).
Box 26.1 The HIV and AIDS pandemic
HIV was first identified in 1983. HIV stands for Human Immuno-deficiency Virus (HIV), and is the virus which causes Acquired Immunodeficiency Syndrome (AIDS). HIV attacks, and slowly destroys, the immune system by entering and destroying the cells that control and support the immune response system. After a long period of infection, usually 3–7 years, enough of the immune system cells have been destroyed so as to lead to immune deficiency. As a result the virus can be present in the body for several years before symptoms
Social Risk 507 appear. When a person is immuno-deficient the body has difficulty defending itself against many infections and certain cancers, known as “opportunistic infections”. Around half of all people who become infected with HIV do so before they reach the age of 25 and most will die of AIDS or related illnesses before they are 35. This means that HIV/AIDS is affecting some of our most creative and economically active people.
Companies are recognising the impact that the virus is having, in terms of the human, financial and social costs, to its operations and host communities. While the countries most affected are on the African continent (such as Botswana, Ethiopia, Ghana, Kenya, Namibia, South Africa, Uganda, Zambia and Zimbabwe), global mobility and high levels of immigration in the UK has meant that UK firms have not escaped workforce problems arising from the pandemic. The rapid spread of the disease is directly linked with the development of the global economy and the significant growth in international trade and travel. Without such extensive and interlinked transportation systems, the disease would never have moved as quickly as it has. HIV and AIDS present companies with enormous and varied challenges. The degree to which HIV and AIDS will affect a company will depend on the degree of adoption of globalisation of production, and the search for new workforces and markets around the world. In particular it will relate to the number of employees infected, their respective roles in the company, the ability of the company to cope with absenteeism, mortality rate, and the benefits provided by the company such as health insurance and pensions. A survey completed by Stellenbosch University, South Africa in 2004 found that more than a third of the companies surveyed indicated that HIV and AIDS had reduced labour productivity or increased absenteeism, and raised the cost of employee benefits. The problems encountered by firms with subsidiaries or manufacturing plants in the worst affected countries have experienced the following problems:
• Higher absenteeism and staff turnover.
• Reduction in the productivity of the workforce.
• Increased production costs and an increased production cycle.
• Overall labour costs increase.
• Recruitment costs increase.
• Training costs increase.
• Insurance premium costs increase.
• Manager’s time and resources eroded by HIV-related issues.
• Payouts from pension fund cause employer and/or employee contributions to increase.
• Returns to training investments are reduced.
• Morale, discipline, and concentration of other employees are disrupted by the frequent death of colleagues.
• Additional recruiting of staff required.
• Fall in revenue and profitability.
26.9.4 Less Healthy Diets
Health experts are alarmed at the unhealthy lifestyles of children in the UK. Doctors attending the National Obesity Forum conference in London in 2004 called for smaller portions and for play areas for children. Professor Thomas Wadden, of Pennsylvania University, said: “People, particularly children, are being ‘swept along’ with the environment [and] obesity is always
treated as if people have a lack of will-power. But we live in a society where there is a high-fat, high-sugar diet and low physical activity.” He said, around 22% of adults in the UK were obese and the same proportion again were overweight. “It’s an epidemic where everyone is being affected.” He considered society had to make it easy for people to make the right choices.
More recently a British Medical Association (BMA) report issued in 2005 called for a junk food advertising ban and rules for the nutritional balance of school meals and pre-prepared food. The BMA warned that without strong action, children would increasingly develop adult diseases such as type-2 diabetes, cancer and bone problems. In 2005 it was estimated that in the UK, about 1 million children under 16 are now obese. In addition, the BMA’s Board of Science has warned that if current trends continue, it is estimated at least a fifth of boys and a third of girls will be obese by 2020. The BMA report called for the government to intervene in a range of areas, including schools, the food industry and advertising. Unhealthy children will grow up to be unhealthy adults. Hence, there is a concern that businesses will experience sickness levels and lost man-days that will far exceed current levels.
26.9.5 Smoking and Drinking
Government figures show that in 20096 21% of the adult population of Great Britain were cigarette smokers. The overall prevalence of smoking has been at this level since 2007. The prevalence of cigarette smoking fell substantially in the 1970s and the early 1980s, from 45%
in 1974 to 35% in 1982. The rate of decline then slowed, with prevalence falling by only about one percentage point every two years until 1994, after which it levelled out at about 27% before resuming a slow decline in the 2000s. Smoking prevalence was higher among men than women from 1974 until 2008, but in 2008 the difference between men and women was not statistically significant. In 2009, smoking prevalence was slightly higher among men (22%) than among women (20%). There were striking differences between the various socio-economic groupings. Smoking prevalence is lower among those in higher professional households (10%) and highest, at 32%, among those in a routine occupation. As smoking is the leading cause of preventable illness and premature death in Great Britain, reducing its prevalence is a key government target in improving public health. Legislation came into force in February 2003 banning cigarette advertising on billboards, in the press and in magazines in the UK, and further restrictions on advertising at the point of sale were introduced in December 2004. A ban on smoking in enclosed public places came into force in Scotland during the spring of 2006 with similar bans in England and Wales being introduced in 2007.
On 1 October 2007 it became illegal in Great Britain to sell tobacco products to anyone under the age of 18. Since smoking is estimated to be the cause of about a third of all cancers, reducing smoking is one of three key commitments at the heart of the government’s NHS Cancer Plan, which was published in 2000. In particular, theCancer Planfocused on the need to reduce the comparatively high rates of smoking among those in manual socio-economic groups, which result in much higher death rates from cancer among unskilled workers than among professionals.
6The General LiFestyle Survey (GLF) is a multi-purpose continuous survey carried out by the Office for National Statistics (ONS). It collects information on a range of topics from people living in private households in Great Britain. The survey started as the General Household Survey (GHS) in 1971 and has been carried out continuously since then, except for breaks to review it in 1997/1998 and to redevelop it in 1999/2000. The survey presents a picture of households, families and people living in Great Britain.
The GLF and GHS have been monitoring smoking prevalence for over 35 years.
Social Risk 509 The Department of Health estimates that the harmful use of alcohol costs the NHS around
£2.7 billion a year and 7% of all hospital admissions are alcohol related. Drinking can lead to over 40 medical conditions, including cancer, stroke, hypertension, liver disease and heart disease. The government’s statistics illustrate that during the 1990s there was a slight increase in overall weekly alcohol consumption among men and a much more marked one among women. Following an increase between 1998 and 2000, there has been a decline since 2002 in the proportion of men drinking more than, on average, 21 units a week and in the proportion of women drinking more than 14 units. The proportion of men drinking more than 21 units a week on average fell from 29% in 2000 to 23% in 2006. There was also a fall in the proportion of women drinking more than 14 units a week (from 17% in 2000 to 12% in 2006). The risk for businesses is that drinking habits lead to absenteeism, poor performance, accidents and behavioural problems. Sustained problems of excessive drinking may lead to long-term illness. On the reverse side of the coin, an increase in the popularity of drinking increases demand for suppliers in the brewing industry.
26.9.6 Long Working Hours
Studies have found that working long hours can greatly increase employees’ exposure to the risk of injury or illness. Research by the University of Massachusetts7 found that workers who do overtime are 61% more likely to become injured or ill, once factors such as age and gender were taken into account. Plus working more than 12 hours a day raised the risk by more than a third. The study of US records from 110 236 employment periods found that a 60-hour week carried a 23% greater risk. The study looked at data from 1987 to 2000. Report co-author Allard Dembe said that risk was not necessarily associated with how hazardous the job was. “Our findings are consistent with the hypothesis that long working hours indirectly precipitate workplace accidents through a causal process, for instance, by inducing fatigue or stress in affected workers.” Also, he said the findings, published in theOccupational and Environmental Healthjournal, supported initiatives such as the 48-hour European Working Time Directive to cut the number of working hours. From the records, researchers found 5139 work-related injuries and illnesses, ranging from stress to cuts, burns and muscle injuries.
More than half of these injuries and illnesses occurred in jobs with extended working hours or overtime. The researchers concluded, not surprisingly, that the more hours worked, the greater the risk of injury.
26.9.7 Stress Levels
Stress is a common adverse reaction to excessive pressure. It is the duty of employers to make sure that employees are not made ill by their work. Stress can make employees ill. The costs of stress to a business may show up as high staff turnover, an increase in sickness absence, reduced work performance, poor time keeping and more customer complaints. Stress in one person can lead to stress in other staff who have to cover for their colleague. Employers who do not take stress seriously may leave themselves open to compensation claims from employees who have suffered ill health from work-related stress. Outward signs of stress in individuals are changes in mood or behaviour such as irritability, deteriorating relationships with colleagues, indecisiveness, absenteeism or reduced output. Those suffering from stress may also smoke
7BBC News (2005) Long working hours “health risk”. 17 August. http://news.bbc.co.uk
or drink alcohol more than usual or even turn to drugs. They may, not surprisingly, complain about their health, which may suffer in a number of ways.
Stress is considered a major contributor to the initiation and continuation of addiction to alcohol as well as to subsequent relapses. Addiction is considered a complex problem determined by multiple issues, including psychological and physiological factors. While many studies have demonstrated an association between alcohol addiction and stress, they have been unable to establish a direct causal relationship between the two. However, stress, and the body’s response to it, are thought to play a role in the vulnerability to initial alcoholic misuse and relapses after treatment.
26.9.8 Recreation and Tourism
Living standards, disposable income and the amount of time available for leisure pursuits for the working population have a direct impact on the amount of time spent on recreation, sportswear, sport and tourism. This includes fitness centres, sports centres and clubs, attendance at sports fixtures and holidays and the whole of the tourist industry. The tourist industry includes tourist operators, hotels, airlines and airports.