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UK Unions Threaten Strikes as Public Sector Pay Lags Inflation
(Bloomberg) -- The UK’s biggest trade unions threatened further strikes after the government offered below-inflation pay raises for some 2.5 million public-sector workers, signaling growing unrest over a cost-of-living crisis.
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Unions representing teachers, doctors and other public sector workers said they will ballot their members about taking industrial action. Unison described the award for National Health Service staff as “short-sighted” and a “big mistake,” while the GMB union called it “another kick in the teeth” for the NHS that will turn the current “staffing black hole” into a “gaping chasm.”
UK Confronts 1970s-Style Problems With Strikes and Inflation
“This is a grave misstep by ministers,” Royal College of Nursing General Secretary Pat Cullen said in a statement. “Living costs are rising and yet they have enforced another real-terms pay cut on nursing staff. It will push more nurses and nursing support workers out of the profession.”
The government offered a 4% pay rise for nurses next year, 4.5% for doctors and 5% increases for police and experienced teachers. Those compare with inflation that’s currently running at a four-decade high of 9.1% and forecast to hit double figures later this year.
‘Summer of Discontent’
A rift between the Conservative government and public sector workers risks erupting into what the press is calling a “summer of discontent,” with echoes of turmoil in the labor force in the late 1970s. That would add to the challenges facing whoever wins in the contest to replace Prime Minister Boris Johnson.
Rail workers and barristers, whose pay is not directly set by the government, have already been on strike, and postal workers on Tuesday voted to take industrial action. That left Royal Mail Plc facing a potential walkout by more than 115,000 workers.
The government says it is trying to strike a balance between ensuring key workers are able to cope with rapidly rising living costs, while avoiding stoking an inflationary wage-price spiral. Chief Secretary to the Treasury Simon Clarke earlier described the pay settlements as “fair” and “sustainable” in a meeting of Boris Johnson’s cabinet, according to the prime minister’s spokesman.
But public sector workers are unlikely see it that way, especially as those in the private sector receive bigger increments. On Tuesday, Office for National Statistics data showed private-sector pay growth averaged 7.2% in the three months through May, though some of that has been granted through one-off bonuses. By contrast, public sector wages grew just 1.5%.
The dispute also comes at a sensitive time for the economy, with both the Treasury and Bank of England struggling to rein in inflation. BOE Governor Andrew Bailey on Tuesday signaled his willingness to accelerate interest rate increases to hold off a wage-price spiral. Previously he urged restraint on pay decisions, noting policy makers would act forcefully to prevent inflation from spreading.
The pay deals will cost about £4 billion ($4.8 billion) more than the Treasury set aside in last October’s spending review. Departments will have to find the money from savings elsewhere as no further funds have been set aside.
Tense Talks
While negotiations over the annual £100 billion public sector pay bill are typically tense, this year the stakes are even higher. Inflation is on course to hit 11% -- well in excess of the usual pace of pay increases -- workers in hospitals and schools are at risk of walking out.
“Very high inflation-driven settlements would have a worse impact on pay packets in the long run than proportionate and balanced increases now,” Health Secretary Steve Barclay said in a statement, commenting on the pay award for doctors and nurses. “It is welcome that the pay review bodies agree with this approach.”
Pay rises for all but the lowest waged NHS staff will be below inflation under the latest settlement. The average basic pay for nurses will increase to about £37,000 from about £35,600 in March 2022 and the basic pay for newly qualified nurses will increase by 5.5% to £27,055.
Strike Threats
The starting salary for teachers working outside London will rise by 8.9%, the Department for Education said in a statement. Teachers in the early stages of their careers will see rises between 5% and 8%.
“We cannot stand by and watch the biggest real-terms decline in teacher pay this century,” said Kevin Courtney, joint general secretary of the National Education Union. “If it continues on this course into September, we will have no hesitation in recommending that our members take action.”
The RCN’s Cullen also hinted at a walkout by nurses, saying: “We are grateful for the growing public support, including over strike action.”
The debate on pay seems to be centering around “how big a cut can workers stomach without putting up some resistance,” Frances O’Grady, general secretary of the Trades Union Congress, told the the House of Commons Business, Energy and Industrial Strategy Committee on Tuesday.
“At a time when people are also looking at what is happening at top pay, looking at the protection of profit, dividends to shareholders and thinking: why us again? Why are we expected to take the hit?,” he said. “Pay isn’t everything, but it doesn’t half help.”
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