Alarm raised on UK recovery

With Britain buffeted by a wave of strikes this winter, experts warn that the industrial campaigns could hold back the country's economic recovery.

The strikes in the public sector, disrupting millions of people, have been called in response to skyrocketing living costs and stagnant wages — and the government has stood firm in resisting the demands of a wide range of unions.

Nurses, rail employees, ambulance workers, customs and immigration staff, bus drivers and postal workers are all either in the middle of strike action or are planning so.

"The reason why there are so many strikes is that costs of living have increased dramatically, which means that real wages decreased dramatically," said Bernd Brandl, a management professor at Durham University Business School. "If wages are not adjusted to rising living costs and inflation, employees have to bear the costs for the increases."

According to the Office of National Statistics, or ONS, inflation in the UK has been hovering at around 10 percent since July. The rate hit a 41-year high of 11.1 percent in October, before easing to 10.7 percent in November.

However, average wages have risen much slower than inflation, at around 5.7 percent. The ONS reported that in the public sector, regular pay growth from July to September 2022 was just 2.2 percent, compared with 6.6 percent in the private sector.

Nora Colton, director of the Global Business School for Health at University College London, said: "This situation means the real wages of employees in the UK are not keeping pace with costs, so the purchasing power of the pound is weak. Alongside this, essential goods like food and fuel have risen in cost and, in some cases, at a rate higher than average inflation.

"Given the inflation levels in the UK and concerns about a looming recession, public sector employees who are worried about their future and ability to keep up with the uncertain economic outlook are striking for more pay."

Mick Pender, a lecturer in human resources at Keele University, said: "It is also important to recognize that the current disputes to some extent represent the culmination of a number of years of wage stagnation, especially in public services, where government has attempted to freeze or keep pay rises to very modest levels since the 2008 financial crash."

But it would be a mistake, Pender pointed out, to view all of this action as purely economic. In many cases, workers have also seen their workloads increase as a result of spending cuts in public services and, in some sectors, understaffing has added to work intensification.

In an escalation of their pay dispute with the government, nurses are set to walk out at dozens of hospitals across England for two days, on Jan 18 and 19, while railway workers started a fresh wave of strikes on Tuesday.

Despite the disruptions, the government does not seem willing to reopen pay negotiations, insisting high pay demands will hit the fight against inflation and jeopardize the recovery.

Demanding pay rises

Chris Bovis, a law professor at the University of Hull, said: "The government does not want to give in during the industrial disputes, because such action will affect adversely the perception of the government and allow every sector of the economy to demand pay rises, which in turn will escalate inflation even more."

The government is hoping the frequent disruption to public services will result in public support for the campaigns fading away, Bovis said. However, such an assumption is unsound because the cost of living and the poor economic outlook in many sectors could instead galvanize support for industrial action and even prompt other sectors to join in.

"My worst feeling is that the industrial disputes will be widespread over the next year, often with disruptive effects which have not been seen in the UK for at least 40 years," he said.

Brandl said the reason that Prime Minister Rishi Sunak's office is standing firm is that it wants to show strength and the ability to resist demands, and the government has the impression that it has more chances of winning in the medium run.

"It is very much unknown if the government's solution impacts spiraling inflation at all," Brandl said. "The main reason for this is that the reason for the inflation is not caused by higher wage demands… even though politicians and some media are saying that there will be a wage inflation spiral. This is far from true since the cause of inflation is imported inflation."