Strikes in the UK are at a record high. February’s Chart of the Month examines the causes behind this unparalleled increase of discontent in wages and its implications on the UK’s economic recovery.
In the last 10 years, there have been two spikes in working days lost to strikes. Over several days in July 2014, millions of people took part in protests, including teachers, firefighters, care workers, and other civil servants. The protests arose from a culmination of budget announcements. In 2010, George Osborne, Chancellor of the coalition government, initiated an austerity programme, increasing taxes and decreasing spending in order to close the budget deficit; public sector wages suffered as a result. In 2012, a 1% pay cap was introduced for public sector workers. This was particularly disastrous since it was so near to the 2008 financial crisis, and workers were already facing job insecurity and low wages, as well as increasing inflation.
Then, in 2022, the UK saw the highest inflation since the 1980s coupled with a period of stagnating growth. This arose from two fronts: the supply chain issues from COVID and the war in Ukraine. Public sector earnings have fallen in real terms by 7% since the financial crisis, as nominal wage growth was incredibly slow, reaching 3.3% over the same period. In the three months to November 2022, real wages decreased by the fastest rate in two decades, as inflation eroded another 2.6% of earnings. But even in the private sector, wages are not growing as fast as inflation. Some workers are literally unable to pay for the goods and services they need. This scary loss of living standards was what prompted the strikes that now pervade several industries in the UK.
Tens of thousands of teachers currently are marching in London, and hundreds of thousands more across the country. Over the past decade, the average real wages of a secondary school teacher have fallen by 12%. Both of the UK’s largest teachers’ unions have demanded a pay rise to at least keep pace with inflation, but the offer they received was a meagre 5%.
The story is the same for Royal Mail workers as well as civil servants. Both saw decreasing real wages and are asking for wages to rise in line with inflation, and both have rejected offers which are far below their demands. Due to these strikes, first class mail takes a week to deliver, and government hotlines take hours to answer.
The Royal College of Nursing (the Nurses’ union), went on the strike for the first time in its 106 year history. Their average pay had fallen in real terms by 8% since 2011. The government’s offer of 4% pay increase was swatted aside as it fell short by a large margin of the demanded 19%. One in five hospitals in London will see walkouts in March, in comparison to two-thirds in the South West.
Unlike the aforementioned strikers, railway workers on average have actually received an increase (of 6%) in their real wages over the last decade. Yet their strike ballot had the largest turnout (85%) and the largest proportion (93%) of workers in favour. Their demands are also for wages to match inflation, and drivers across the 14 biggest railway companies refused to drive for several days since July. Fortunately, the ONS states that only five percent of rail commuters were unable to work due to strikes, with the majority embracing work from home after COVID revolutionised employment.
Theoretically, strikes depend on the bargaining power of workers; the more workers that strike, the more likely they are to achieve what they set out to do, as their lost output is more valuable. Moreover, higher skilled workers are less replaceable, and so employers are more likely to agree to their demands to retain them rather than search for a replacement. For example, criminal barristers were given a 15% raise in October 2022, since their skills are relatively rare.
The strength of the strikes also depends on public support. In 2014, Cameron spread propaganda, villainising the strikers, which was effective, as strikes cost users of the services too. The public turned against the underpaid workers and the Conservatives were able to pass tighter anti-striking laws.
However, this doesn’t explain the government’s reluctance to even hold talks with the strikers. For example, nurses have unique skills, are difficult to replace, and have large public support (66%) after COVID. But the government still refuses to increase the nurses’ pay. This is because the UK’s budget deficit, already wide due to spending during COVID, is getting worse. Government debt is at 101% of GDP. The strikes are unfortunately timed during a recession and unemployment is increasing, resulting in higher spending on benefits, and to increase their spending on public workers’ wages would require excessive borrowing. Moreover, increasing wages would lead to higher demand-side inflation, as corporations increase prices, which would continue the problem of lower real wages, leading to a vicious cycle.
The fact that even workers who have received pay which outpaced inflation for a decade are now striking is a testament to workers’ dismal expectations for the future. The current strikes mark the greatest number of working days lost to strikes in a year since 1990. Since the government is reluctant to offer high pay rises, there is no end in sight to striking. The billions of pounds of lost output would have contributed to the UK’s economic recovery by boosting demand, but unfortunately, it appears that this downturn will last a while more.
Today’s Question of the Month is: Which, if any, of the ongoing strikes in the UK do you think is justified?
Written by Zihan Tian