Just over two years ago, Rishi Sunak stood outside 11 Downing Street, flanked by TUC leader Frances O’Grady and Carolyn Fairbairn, the boss of Britain’s main employers’ group, the CBI. The photo shoot aimed to demonstrate a new spirit of tripartite solidarity that would help Britain through the pandemic.
The TUC had been instrumental in the plans for the furlough wage subsidy scheme and the Chancellor was eager to show his gratitude. Announcing the government’s emergency economic package in parliament, Sunak thanked the TUC for its “constructive conversations” with the Treasury.
This spirit of consensus has disappeared. The talk of a new era of ‘beer and sandwiches’ – shorthand for the days when ministers, unions and employers sat down to seek agreement on pressing issues – has been replaced by the bashing of unions. Sunak is now accusing the railroad unions of being irresponsible for taking industrial action over wages, jobs and working conditions.
The government’s overtly aggressive approach to unions is relatively recent and was certainly not evident at last year’s Conservative Party conference, where Boris Johnson said he was ‘happy’ to see wages rise faster than before the start of the pandemic. There will not be, the prime minister added, a return to the “same old broken pattern” of low wages, low skills and low productivity. The message was clear: the Conservatives were on the side of the workers.
Tony Wilson, director of the Institute for Employment Studies think tank, says he is not surprised that relations between the government and unions have deteriorated. “It was always a false dawn that the furlough scheme would herald a new era of partnership. It was a marriage of convenience. »
Three things changed the atmosphere. First, the government is far less popular than it was in March 2020, when Johnson was still enjoying a honeymoon after winning an 80-seat majority in the December 2019 election.
Second, workers have emerged from the pandemic in a much stronger position than they or ministers anticipated. Despite fears that the shutdown of the economy will lead to mass employment, the unemployment rate has returned to pre-crisis levels and there are labor shortages in many industries. Even though union membership is half the peak of 13.2 million reached in the late 1970s, employers have been forced to pay more to attract and retain staff.
But the most important factor has been the crisis in the cost of living caused by the strength and duration of inflation. Desperate to find a scapegoat for the stagflation plaguing the economy, ministers focused on unions seeking to protect their members’ living standards. The ministers sought to take political advantage of the social unrest by speaking of “workers’ strikes”.
Paul Nowak, the TUC deputy general secretary who was part of the furlough talks, said: “Unions have worked closely with the government to protect jobs and keep people safe during the pandemic. Ministers could have continued in this constructive spirit.
“But they decided to fight with the unions to distract people from their failures and the urgency of the cost of living. Instead of stoking tensions and pitting workers against workers, the government should bring people together to find a fair solution to this rail dispute.
Nowak says government plans to bring in agency staff to replace strikers are “unworkable” and will simply poison industrial relations.
Some Conservatives think the government is taking a high-risk approach. Writing on the ConservativeHome website, former Cabinet Minister David Willetts said: “Overall wages are rising less than inflation. It is not an inflationary spiral. Part of the adjustment to our poverty seems to be through wage rates. The disappointment in expectations brought about by inflation is particularly felt among workers. They are upset, but they don’t get an explanation of what is happening around them that is honest about the economic pain and acknowledges who is bearing it.
Torsten Bell, director of the Resolution Foundation think tank, says Britain is not used to high inflation, which puts “enormous pressure” on relations between employees and employers.
In the private sector, Bell adds, the debate revolves around whether workers should suffer from falling real wages or whether employers should bear the pressure by raising prices or cutting profits.
“It’s a little more acute in the public sector because the trade-off is between salary and taxation.
“The government has announced big tax hikes and has a red line against announcing further increases. It wants to cut taxes and is desperate not to put pressure on spending. It’s all about taxes than a possible wage-price spiral.
“But the government needs a narrative to make unions and Labor the problem.”
History suggests ministers will struggle to regain the political initiative even if workers heed warnings about wage-price spirals and accept settlements below inflation. Governments that lead periods of rising real wages and living standards tend to be popular; those who are not are often impeached in the next general election.
“A lot of it is about politics,” Wilson says. “It is the only conceivable way for the government to make the cost of living crisis the fault of Labour. But it’s hard to blame 10% inflation on the RMT.