By Abhay Venkitaraman
Rather than antagonising unions, the government ought to address their concerns so that workers are treated fairly
2022 was an unusual year to say the least. Primarily caused by the War in Ukraine and significantly aggravated by Brexit, supply chain disruptions and stagnant productivity, the cost of living crisis entered full swing. The end result has been backsliding living standards and substantial increases in poverty and economic insecurity.
The year was also marked by a degree of trade union militancy that the United Kingdom has not witnessed in decades. The UK is estimated to have lost a million work days to strike action just this year; in 2019 that number was only 234,000.
"trade unions and left-wing politicians have lambasted the legislation"
In response to this strike wave, the government looks set to push through the Strikes (Minimum Services Levels) Bill. The legislation would give the business secretary the power to mandate the minimum levels of service in six sectors – including education, health, and transport services, with unions facing the risk of legal action from employers if these levels are not met. The law would also give employers the right to serve ‘work notices’, which would allow them to identify specific workers, requiring that they go into work on strike days. Those that refuse would face the threat of dismissal.
As such, trade unions and left-wing politicians have lambasted the legislation, arguing that it violates the right to strike – something that is enshrined in international law. A worker’s ability to withhold their labour in the face of exploitative employment practices is fundamental to redressing the imbalance of power between employees and employers, and to deny a worker this ability is a fundamental betrayal of labour rights, so the argument goes.
However, one could argue that the right to strike was never absolute, and that it shouldn’t be. Members of the armed services, police officers, and prison officers have been prohibited from striking for decades, and there’s good reason to believe that this ban is justified. A soldiers’ strike has the potential to be an unadulterated disaster, for example, with dramatic implications for Britain’s national security. One could also argue that a citizen’s right to basic needs like fire services and healthcare takes precedence over a worker’s right to strike, since industrial action in these sectors runs the risk of dramatic loss of life.
With this being said, there’s arguably a very simple solution to prevent further strike action: meet union demands and pay workers fairly. The government has countered this point by suggesting that increases in pay run the risk of ‘wage-price spirals’: a vicious cycle whereby wage rises cause prices to rise, which then leads wages to rise even further. This self-perpetuating cycle, were it to occur, would significantly aggravate inflation and cause considerable economic damage.
"there are a plethora of revenue-raisers at the government’s disposal that they could tap into"
This is a flawed argument. In the public sector, where the bulk of strike action has taken place, wage increases cannot directly cause wage-price spirals because the public sector does not offer its services at a price. Raising teachers’ wages won’t cause the price of public education to rise, nor will raising nurses’ wages cause the price of public healthcare to rise, since in both cases provision is free at the point of service. Of course, public sector pay rises could be inflationary if they are not paid for through taxes, but funding them should be easy enough given that there are a plethora of revenue-raisers at the government’s disposal that they could tap into if they wish; levies on rents and externalities, such as land value taxes and carbon pricing, could add billions of pounds to the public purse without creating a single penny’s worth of deadweight loss. In the private sector, wage-price spirals are currently just as unlikely, given the feeble strength of private sector unions and the fact that private sector wages currently lag well behind inflation.; Aas economist Swati Dhingra has pointed out, pay rises would have to exceed inflation in order for a wage-price spiral to become a likely prospect.
Even if strikes do not pose a direct threat to public safety, one could oppose them on the basis that they disrupt people’s lives and cause considerable economic damage. Rail strikes, for example, significantly inhibited people’s ability to travel and are estimated to have cost the UK economy £1bn.
The threat of disruption is especially present in situations where sectors that generally lack competition – a condition that applies to the bulk of sectors covered by the government’s legislation. Not only does this lack of competition harm consumers, but it also inhibits union discipline, sometimes causing the interests of workers and the general public to become misaligned. Suppose that workers at a nearby Aldi store decide to unionise. In this instance, workers have strong incentives to maintain wage restraint and support productivity-augmenting practices that benefit consumers. If they refuse to do this, the store will likely get outcompeted by other supermarkets in the local area, and the unionised workers risk losing their jobs. In situations where this competition is lacking, firms cannot get outcompeted by definition. This can incentivise unions to engage in excessive strike action, oppose measures that improve productivity, and display ‘rent-seeking behaviour’, where workers demand wages well in excess of their productivity. In situations where this occurs, a tiny subset of workers wins out massively to the detriment of literally everyone else.
"Public services are currently crumbling precisely because workers are being treated unfairly."
However, in sectors impacted by the proposed legislation, this is clearly not happening. Rather than being diametrically opposed as figures within the Conservative Party may posit, the interests of unions and the broader public are clearly in sync. Public services are currently crumbling precisely because workers are being treated unfairly, having faced years upon years of real wage cuts and abject working conditions. This has significantly weakened the ability of public sector bodies to retain and recruit staff. The NHS, for one, reported over 130,000 vacancies in September 2022. Better pay and working conditions – exactly what the unions are currently requesting – would not only improve public sector workers’ lives, but also indirectly benefit the general public by improving public service quality. It’s arguable that the Strikes Bill would do the opposite; denying workers the opportunity to voice their discontent through strike action could compel workers to leave industries that the legislation covers, aggravating labour shortages and hampering public services’ ability to function properly.
Even in situations where the government cannot directly increase pay – such as private sector jobs – the state can do better. With the average private sector worker currently experiencing real wage cuts, welfare state expansions such as the uprating of Universal Credit could go a long way towards stabilising workers’ incomes. Moreover, in many instances – such as in the case of universities – some of the onus also lies with employers, who could be doing much more to reverse deteriorations in pay, private pensions, and working conditions.
All in all, the Strikes Bill is completely unwarranted and counterproductive. Not only does it fail to address the root causes of recent strike action – many of which have been fueled by the government – but it has the potential to cause further harm to public services by exacerbating labour shortages. Rather than antagonising trade unions, it is imperative that the government does everything in its power to address their concerns, guaranteeing that workers are treated fairly and that they are able to enjoy dignified standards of living.