Strike Threats Leave Next UK Leader Facing Winter of Discontent

Echoes of the 1970s with pay falling in real terms, growth slowing and workers angry

Bloomberg News
Philip Aldrick
Publishing date:Jul 26, 2022 •
(Bloomberg) — This is the second story in a six-part series on the political and economic landscape facing Britain’s new prime minister.

Britain’s next prime minister will inherit the worst relations with unions and workers since the 1970s, with millions of public sector employees angry their pay is slipping further behind inflation.

Discord among government workers is likely to be the most immediate legacy for Boris Johnson’s successor, whether it’s Foreign Secretary Liz Truss or former Chancellor of the Exchequer Rishi Sunak who wins the race to be decided in early September.

Last week’s pay settlements for 2.5 million of Britain’s public sector workers prompted a chorus of disapproval. In almost every case, the government’s offer was below inflation. Unions are now sounding out members — including teachers, nurses, and civil servants — about walking off the job in protest this autumn.

That follows damaging rail strikes that brought London to a standstill earlier this month and are likely to do the same twice this week. The summer of discontent, marked by waves of striking barristers and staff in formerly nationalized industries like rail, mail and telecoms now looks likely to stretch into the remainder of the year.

There are even mutterings among union officials of a “winter of discontent,” with its Shakespearean undertones and memories of the rolling industrial action in 1978 and 1979 that brought down the Labour government and catapulted Margaret Thatcher’s Conservative Party into power.

“There is a level of anger like I’ve never known,” said Kevin Rowan, head of organization and services at the Trades Union Congress.

The pressure on public-sector pay is just one of the major challenges facing the next prime minister. This week, Bloomberg News is looking at the cost-of-living crisis, the crisis facing the National Health Service, the costs of Brexit, and what happened to Johnson’s election promise to “level up” deprived parts of the country.

The last major public sector strike was in 2011 in protest at pension reforms, when up to 2 million teachers, civil servants, National Health Service workers and others walked out together for one day. “This time is worse in terms of how people are feeling,” Rowan said.

Across the economy, wage growth is struggling to keep pace with inflation racing ahead at a 40-year high of 9.4%. While some private-sector workers are getting a big boost — especially in hospitality and other trades where workers are in high demand — the pay of public sector workers has lagged for more than a decade and is falling further behind.

That’s delivered the biggest squeeze on consumer spending power in at least two decades — a cost-of-living crisis that research groups say will lead to more people falling into poverty. Traditionally middle-class professions are not immune.

Teacher unions, including headteachers, are consulting members over strike action. So are civil-service unions and the Royal College of Nursing, whose General Secretary Pat Cullen dropped a less than subtle hint by welcoming “the growing public support, including over strike action.”

Rowan said the number of consultations unions are having with members is extremely unusual. He expects further ballots on whether to strike to under discussion in the coming weeks.

Including local authority and ancillary workers, there are 5.5 million people in the UK public sector, about 15% of all workers in the economy.

Ballots and strike threats are often an attempt to bring employers to the negotiating table. For the moment, though, both Truss and Sunak are standing firm. They insist the public sector deals are fair.

But it may be a hard line to hold in the face of increasing public support for industrial action. Sympathy for strikers increased after 50,000 rail workers walked out in early June demanding better pay and terms, according to an Opinium poll.

“There has been a mood shift,” Frances O’Grady, general secretary of the TUC, told members of Parliament last week. “We saw that with the public sympathy for some of the strikes that we have had recently.”

That support may reflect the special place key workers secured in the national consciousness during the pandemic. Week after week., people across the country stepped on to their doorsteps to “clap for carers” in hospitals and the emergency services that looked after Covid victims.

Yet the pressure on the public sector workers is only increasing, making them more indispensable than ever. A record 6.6 million patients are waiting for treatment on the National Health Service. There also are more than 100,000 jobs that need filling. Anxiety, stress and depression are rising, leading to more issues with sickness rates and employee retention, according to the independent NHS Pay Review Body.

A similar story can be told in education, where staff retention is poor. A third of new teachers quit the profession within five years. Pay is one way of boosting morale.

“Pay is not everything, but it does not half help,” O’Grady said.

The trend toward weaker public sector pay has accelerated in the past five years, most starkly this year. The latest public sector settlements were around 5%, below the 7.2% private sector average, according to the Office for National Statistics. That compares with inflation at a 40 year high of 9.4%.

“To give you three examples, the TUC has calculated that since 2010 nurses are worse off in real terms by more than £5,000; porters by £2,500; and paramedics by £6,700,” O’Grady added.

Aggravating the matter is the fact that government departments have been told to find savings of up to £2 billion to cover some of the pay rises. The next prime minister will be under pressure to borrow that additional money.

Then there’s the argument that public sector pay restraint is needed to prevent a wage price spiral, which economists have trashed. The Institute for Fiscal Studies said, “Fears of a ‘wage-price spiral’ in the public sector are overblown, given the fact that most public sector goods do not have market prices that can rise in response to higher wages.”

Health workers and teachers do not like striking, given the vital public service aspect of their roles, so it’s possible that some of the disputes are defused. But with anger rising, the unwelcome echoes of the 1970s are growing louder, raising the risks of another era of industrial action and stagflation.