Back to union bashing: the UK government is now openly aggressive |  Larry Elliott Business Editor

Back to union bashing: the UK government is now openly aggressive | Larry Elliott Business Editor

A little over two years ago, Rishi Sunak stood outside 11 Downing Street, flanked by TUC Chairwoman Frances O’Grady and Carolyn Fairbairn, head of Britain’s leading employers’ federation, the CBI. The photocall was intended to demonstrate a new spirit of tripartite solidarity that would help guide Britain through the pandemic.

The TUC had played a big part in the holiday wage subsidy plans and the Chancellor was eager to show his gratitude. Announcing the government’s economic emergency package to Parliament, Sunak thanked the TUC for its “constructive talks” with the Treasury.

That spirit of consensus is gone. Talk of a new era of “beer and sandwiches” – short for the days when ministers, unions and employers met to reach agreement on pressing issues – was replaced by union bashing. Sunak now accuses the rail unions of being irresponsible for taking industrial action against wages, jobs and working conditions.

The government’s openly aggressive approach to unions is relatively new and was certainly not seen at last year’s Conservative Party conference, where Boris Johnson said he was “delighted” to see wages rising faster than before the pandemic began. There is no going back to the “same old broken model” of low wages, low skills and low productivity, the prime minister added. The message was clear: Conservatives sided with workers.

Tony Wilson, director of the Institute for Employment Studies think tank, says he is not surprised that relations between government and unions have deteriorated. “It was always a false dawn that the furlough scheme would usher in a new era of partnership. It was a marriage of convenience.”

Three things changed the atmosphere. First, the government is much 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 expected. Despite fears that an economic shutdown would lead to mass employment, the unemployment rate is back to pre-crisis levels and there are labor shortages in many sectors. Although union membership is half the 13.2 million it was in the late 1970s, employers have been forced to pay more to attract and retain employees.

But the most important factor was the cost of living crisis caused by the strength and persistence of inflation. In their desperate search for a scapegoat for the stagflation plaguing the economy, ministers have focused on unions looking to protect their members’ living standards. Ministers have attempted to capitalize on the labor unrest by speaking of “workers’ strikes”.

Paul Nowak, TUC deputy general secretary who attended the furlough talks, says: “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 have decided to take up a fight with the unions to distract people from their mistakes and the cost of living. Instead of fomenting tension and pitting worker against worker, the government should bring the people together to find a fair solution to this rail dispute.”

Nowak says the government’s plans to hire agency workers to replace striking workers are “impossible” and will simply poison industrial relations.

Some Conservatives believe the government is taking a risky approach. Former Cabinet Secretary David Willetts wrote on the ConservativeHome website: “Overall, wages are rising less than inflation. This is not an inflationary spiral. It appears that part of the adjustment to our poverty is through wage rates. The disappointment of expectations that inflation brings is particularly felt among workers. They are miserable, but they are not given an explanation of what is going on around them that speaks honestly about the economic pain and recognizes who is bearing it.”

Torsten Bell, director of the Resolution Foundation think tank, says the UK is not used to high inflation, which puts “a huge strain” on labor relations.

The debate in the private sector, Bell adds, is whether workers should suffer from falling real wages or whether employers should shoulder the burden by raising prices or cutting profits.

“It’s a bit more acute in the public sector because of the trade-off between pay and taxes.

“The government has announced large tax increases and has a red line against announcing further increases. She wants to lower taxes and therefore does not build in any spending pressure. It’s about taxes as well as a possible wage-price spiral.

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“But the government needs a narrative to make the unions and the Labor Party a problem.”

History suggests that ministers will struggle to regain political initiative even if workers heed warnings of wage-price spirals and accept sub-inflation deals. Governments that govern times when real wages and living standards are rising are popular; those who don’t are often removed at the next general election.

“A lot of it is about politics,” says Wilson. “It’s the only way the government can think of blaming Labor for the cost of living in the crisis. But it’s hard to blame 10% inflation on the RMT.”

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