With trade unions promising further strike action despite generous pay settlements, Labour have found themselves in a bind of their own making, say Matthew Lesh
Throughout the election campaign, Keir Starmer repeatedly pledged to end strikes by engaging in constructive dialogue with the unions. This always sounded like a pretty hollow promise. How could simply talking to the unions – something the Conservatives have been doing for years – solve the problem? What would they actually do about the lack of public funds and exaggerated pay demands?
Then, miraculously, things changed. At the end of July, the junior doctors appeared willing to accept a new offer of a 22 per cent pay rise – a hefty increase, albeit still short of their original 35 per cent demand. Then the government made a new offer to train drivers, including a 15 per cent increase over three years, and accepted recommendations for above-inflation pay rises of 5.5 per cent for other public sector workers. This came with a staggering £11.6bn price tag.
So, with a bit more cash now on the table, have we entered a new era of industrial harmony? It would appear not.
A leaked message from a junior doctors’ union leader warned that despite the generous offer, the plan would be to undertake further strikes “when Labour’s honeymoon period ends”. Then less than 48 hours after the government’s pay deal offer, the train drivers’ union Aslef announced three more months of strikes. Last month, reports indicated that the union movement will push for backdated, above-inflation pay increases for its members across the public sector.
The new government has found itself in a bind of its own creation. Labour is founded on and receives significant donations from the union movement. Much of their core electoral coalition, particularly from the white collar public sector, are union members. Notably, while just 12 per cent of private sector workers are part of a union, half of those in the public sector are card-carrying members.
The damage of strike action
In the public sector, the unions only have to negotiate with a single employer. They can cause significant damage through strike action. The government’s decision to abolish rules regarding minimum service levels during strikes will only weaken their negotiating hand. This all makes it difficult for Labour to fight the union demands.
The goal of a union, rationally, is to get the highest wages for the minimum possible work. Inevitably, however, this comes at the expense of someone else. Unions have been known to reject modern work practices, lowering the productivity in their sector, pushing up prices for consumers and depressing everyone else’s wages.
Just take one example. Much of the tube, particularly the new Elizabeth line, could operate without drivers. Sydney has just opened the first parts of a new driverless metro system. It appears like a modern miracle, until you remember we have had the same with the DLR in London for decades. But there is no way Britain’s train unions would ever agree to new driverless trains. That adds significant cost, for no apparent reason, to a train system that’s already extremely expensive. Labour’s botched attempt to get to a deal with the train drivers’ union went even further by giving up on earlier demands to improve work practices.
Labour came into power expecting a much easier ride than the Tories when it came to negotiating with the unions. They are rapidly finding out that things are never so simple. Unions have their own interests and receive lots of legal protections for their actions. Public services are costing more than ever before and yet outcomes across the system are often mediocre. Simply sitting down in a friendly atmosphere and talking to the unions may not be enough to get taxpayers what we deserve.
Matthew Lesh is a Public Policy Fellow at the Institute of Economic Affairs