“Spoiling for a fight.” That, Labour and the unions fear, is the mindset of ministers. This cabinet is so incompetent, pig-headed and inexperienced that they charge headfirst, eyes tight shut, into a mighty confrontation with the public workforce. Lost in dreams of Margaret Thatcher’s glory days, they imagine there is something called “victory” to be had in screwing down public wages. Unless they back off, they will fail and look very foolish indeed.
Talk to trade union leaders, a worldly wise cadre of often female negotiators, and it’s clear who the grownups are. They warn and educate employers, public and private, in the basic facts about pay deals in an era of galloping inflation and acute labour shortages. Employees will either strike or walk off the job for better pay elsewhere. For all its harrumphing belligerence, the government has no armoury for this “fight” with nurses, ambulance drivers, border guards, train drivers and others in their wake.
Ministers patrol TV studios to call pay rises “unaffordable” and say they risk triggering a vicious wage-price spiral. The Tory party chairman, Nadhim Zahawi, tells nurses they play into the hands of Vladimir Putin, boasting that the army will see off strikers. There are always old colonels itching for the chance: GB News found a retired colonel, Richard Kemp, to praise strike-breaking soldiers: “The beauty of our armed forces is that whatever they’re told to do, they go and do it and they don’t worry about these sorts of things.” So far just 600 soldiers are being readied to fill in for hundreds of thousands of ambulance drivers, border guards and firefighters.
This infantile posturing ignores settlements made in the private sector where Unite, the GMB, the Communication Workers Union (CWU) and others are winning agreements far in excess of the 2.2% average for the public workforce. Other employers closely watched BT’s first national strike for 35 years, involving 40,000 of its workers. Karen Rose, the CWU’s president, describes how BT refused talks even when its workforce voted to strike. Its engineers are in great demand in the labour market. Any pay rise over 5% was deemed “unaffordable” by BT’s CEO Philip Jansen, the union said. As the gloves came off the union pointed out that 60% of BT’s profits went to shareholders, claiming only 5-6% of profits went to wage increases.
Jansen’s 32% pay increase was contrasted publicly with the food banks set up for staff at EE’s north-east call centres (EE is part of the BT group); BT says this is a “community pantry” for shift workers with no time to nip to the shops.
Jansen caved in and emerged badly bruised from the onslaught. The final deal gave workers an average 10% rise. Victory? Only partly. The company has a backlog of work, strikers each lost about £1,000 in wages for strike days, and that 10% still doesn’t restore pay to its real value three years ago. Other employers seem less eager to copy BT’s fight, reckoning everyone gains more from civilised settlements. Harrods, owned by the Qatari state, may not have got the message: it has sent in agency workers this month to cover for Unite’s striking CCTV and security staff. But in over 450 recent disputes, Unite claims an 80% win, the GMB likewise.
The government hasn’t got the message. Ben Zaranko, of the Institute for Fiscal Studies, says it would cost the Treasury £13bn to increase its present 2.2% public sector pay rise to the inflation rate of 11.1%. Tax Justice UK says that equalising the tax on unearned capital gains and income tax would raise £14bn a year. Zaranko points out that a public sector pay rise doesn’t cause a direct wage-price spiral. Putting up public sector wages isn’t like putting up the price of bread: it doesn’t raise the rate of inflation, although it injects more demand into the economy. And, unfairly, the official consumer prices index used to calculate the inflation rate doesn’t include rising housing costs, which the less commonly used retail prices index does.
Wages stagnated or fell for well over a decade when inflation was low, yet that wasn’t the right time to rebalance pay and profits. Now inflation is high but it’s not the right time either. Share and property values soared for years, but those asset price rises were never damned as “inflationary”. CEO pay leaps up but the Bank of England doesn’t decry inflationary boardroom behaviour and nor does it protest about the abolition of a cap on bankers’ bonuses, confining its warnings to ordinary wage rises.
Britain needs a pay rise is the TUC’s mantra. But let’s suppose the Treasury’s fears of a wage-price spiral are sincere. How might it persuade workers to abate their demands? Start by reining in top pay and make it clear we’re “all in it together”. Pledge to put pay before profits when growth is restored. Adopt Labour’s policies: fair pay agreements across every sector, an end to zero-hours contracts and fire-and-rehire cuts and a legal right for unions to recruit in every workplace. Andy Prendergast, the GMB’s national secretary, says everyone can now see the “union premium” – the cash value of joining a union.
From Liverpool docks to the cardboard packaging industry, G4S cash services to transport and refuse companies, employers are settling. These settlements are compromises, almost all well below the actual inflationary rate. One union leader tells me he has never won the rates he originally demanded. For instance, Scottish nurses just settled for an average pay rise of 7.5% – much more than the original £2,205 uplift they were offered, but still less than what they originally asked for.
In England, the health secretary, Steve Barclay, refuses to discuss his 3% pay offer to workers, posturing as the tough guy while ignoring public opinion. Forget talk of union “militants” and consider instead the decades of remarkable union passivity during real pay cuts. The RMT leader, Mick Lynch, emerges as a voice of good sense, with wide public support.
This is less a test of union strength than of incompetent employers blundering into needless disputes. Royal Mail and the railways are prime case studies in long-term managerial failure. But the government tops that league table. Its amateur grandstanding is destined to end in one humiliating climbdown after another. Instead of a winter conflagration, it could sit down quietly and talk to the grownups experienced in industrial relations.
If not, there will be fewer in the public workforce to talk to. Telegraph writers have urged strong-arm Thatcherite tactics. Yet Thatcher took on miners only after stockpiling coal; these idiots take on a public workforce whose walk-away power gives them the upper hand. A government fearing the next election with voters abandoning its regime of chaos has few cards to play. It’s almost painful to watch it play those cards so exceptionally badly.
Polly Toynbee is a Guardian columnist