Why private sector strikes aren’t just about money

If only it was about money.

The UK private sector should have it easy compared to the poor state of the public finances. Wage growth may not have kept pace with inflation, but it was still roughly three times as generous in the private sector as in the public sector last quarter. Nevertheless, there are still strikes.

BT shows what can be achieved when pay is the only issue. The former monopoly faced eight days of strike action earlier this year after the union believed April’s fixed £1,500 pay rise was off the mark. But it appears all that was needed to end the first strikes in more than 30 years was an extra £1,500 for those earning £50,000 or less a year – and part of that was paid for by savings from the Government’s energy scheme.

Now £1,500 is clearly nothing – it represents an average increase of 9 per cent for eligible employees. But there will be no additional salary increase in April, the normal time for a review. The next round of wage negotiations will take place in September.

The problem elsewhere in the private sector is that it is not just wages that are at stake. And that makes the strikes much more difficult to resolve.

Take Royal Mail, where the Communication Workers Union has rejected management’s “best and final offer”. Pay is one of the sticking points: much of a promised 9 percent increase is not backdated under the proposals, some of it is one-off in lieu of a pay rise, and only 2 percent came without conditions. But the acrimony really sets in with accusations that management is trying to turn the group into a “gig economy-style package delivery service, dependent on casual labour”.

It’s not hard to see why the union doesn’t like the package on offer. Mass redundancies are on the way: voluntary for now, but the guarantee that there will be no compulsory redundancies only extends to March. The problem for the CWU is that Royal Mail, the UK arm of what is now called International Distributions Services, is losing money – and currently a lot of it. That’s at least in part because of more rigid workforce structures and employee protections that make it harder to accommodate profitable parcel customers as flexibly as competitor bids can.

The outlook for the business may not be as bleak as management makes it seem. It is hardly in its interest to bring it up during a conflict about working conditions. But at least one part of the business – letters – is in structural decline, and the outlook for parcels is not peachy either. IDS threatens to split the profitable international arm. A return to partial state ownership is far from the likely final outcome. But it is not unthinkable.

Any prospect of the government anywhere near the business should worry posties. The lesson from the rail operators’ dispute – which bears striking similarities to the Royal Mail dilemma – is that having the government as the right hand behind industrial relations does not make things any easier.

Once again, a pay offer from employers (the train operators; there is a parallel dispute involving Network Rail) has been rejected as insufficient in the context of inflation. There are concerns about job security and changing conditions that employers say are needed to overhaul outdated practices. So far, so familiar.

In the pre-Covid era, the train operators were able to bargain with the unions on an individual basis rather than collectively, which made it easier to obtain accommodations. That changed when the pandemic ended the franchising model and train companies became fee-driven operators bearing none of the revenue risk, with the taxpayer taking it instead. And with the government behind the budget, it inevitably ends up setting the terms for the pay package. It leaves employers – brought together as the Rail Delivery Group – scrambling to agree difficult nationwide reforms such as driver-operated trains which, while acceptable on some parts of the network, are a red rag for the RMT union on others.

Both Royal Mail and the railways face years of potentially unpleasant workforce reforms. Bigger salary bumps just make them a little easier to swallow.

cat.rutterpooley@ft.com
@catrutterpooley

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