Rachel Reeves confirmed today that she will agree to pay review recommendations for 5.5% increases for over half a million teachers and 1.3 million NHS workers. This commitment includes an inflation-busting offer to the junior doctors which – though it’s complicated – seems to amount to 22% over two years. It’s by no means certain that this offer will be accepted, as it is some way short of the 35% initially claimed by these doctors, but it’s certainly a big increase over what was offered by the last government.
All these headline pay hikes, incidentally, underestimate the cost of settlements as they ignore Employers National Insurance and, more importantly, the generous public sector employer pension contribution. In the case of teachers this amounts to over 28%. The minimum employer contribution to pensions in the private sector, for comparison, is 3%.
I also understand that direct negotiations are to begin with the train drivers union, ASLEF, cutting out the train operating companies which are still nominally the employers. An expected above-inflation settlement will have largely to be funded by the Government, already paying more than half of the costs of running our railways following the collapse of fare revenue during and after Covid.
It appears that none of these proposed deals, which together must be expected to cost taxpayers around £5 billion more than the Conservatives will presumably have budgeted for, involve any commitment to reform or productivity improvements. Whatever the Government claims, this addition to the fiscal Black Hole is the result of their own decisions.
These deals may temporarily buy off some of the most obvious industrial disputes. But there are plenty more in the queue for higher pay in the public and quasi-public sectors – civil servants, local authority employees, universities and 1001 assorted quangos.
The Government will hope that these big payoffs will dampen down the explosion of trade union militancy since the end of lockdown. If so, they may be too optimistic.
The planned trade union legislation will make it easier for unions to strike; the 2016 Trade Union Act and the 2023 Minimum Service Levels Act are to be scrapped, electronic balloting is to be permitted, union recognition will be made easier and TU reps will be allowed to enter employers’ real and virtual premises to recruit. Other measures, such as restrictions on zero hours contracts and the end of ‘fire and rehire’, will also boost union power.
Unions have long memories, and will not be satisfied with a one-off settlement. They will aim permanently to outstrip the cost of living, and will be back again and again for higher pay. Productivity improvements are off the agenda and restrictive practices will continue; indeed new proposals for four-day weeks, the Right to Disconnect and one-way flexibility will add to management’ headaches. Activists long to roll back the years to the pre-Thatcher era when militants ruled, and the wind is now in their sails.
Nobody in this Government has any experience of dealing with union militancy. Keir Starmer, a comparatively elderly (61) member of the cabinet, was a teenager probably earning pocket money at his Dad’s toolmaking factory during the Winter of Discontent in 1979 when some unions disgraced themselves and hard-bitten politicians such as Jim Callaghan gave up in despair.
Most of today’s Labour politicians think that talking nicely to the unions will resolve any problems, and that organised labour can be a partner in the effort to secure faster growth. I fear they are likely to learn the hard way that it ain’t necessarily so.
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