Everywhere we look, the fabric of Britain is tearing at the seams. Railroad strikes, chaotic airports, severe staff shortages, rising petrol and food prices, the biggest drop in living standards since the 1950s.
With the biggest industrial conflict on the rail network in three decades starting this week, battle lines are being drawn. Alongside the succession of clashes caused by the Covid pandemic and the Russian war in Ukraine, the government of Boris Johnson will add another culprit to our palpable sense of national decline: the workers.
The tone could hardly be more different than last October, when the Prime Minister told the Conservative Party conference that Britain was on its way to becoming a high-wage economy under its leadership. Business leaders were warned to stop complaining about Brexit and staff shortages and were told to continue with the pay rise.
Now the government warns that conditions are set for a dangerous “wage-price spiral” that would force the Bank of England to further raise interest rates to stifle inflation out of the system, raising the spectrum of years seventy, when the powerful unions raised wages and with it inflation.
In this marked change, Treasury Secretary Simon Clarke warned public sector workers in particular that they should not have “unrealistic expectations” about their pay because the increases would only “prolong and intensify” the crisis. cost of living.
It was a revealing speech, expressing the vision of senior cabinet members. While the public sector accounts for only 15% of the workforce, the Treasury’s view is that keeping wages low in the sector can send a powerful message to the economy as a whole, helping to keep wage expectations low.
Over the next few weeks, the government will unveil its annual salary award plans for NHS staff, prison staff, teachers and staff. With all this talk of moderation, the signs are that he is waiting for a stingy deal. Bad luck to the applauded heroes in the coronavirus pandemic, now the bad guys in the piece; they issue as facilitators of our emergency for the cost of living.
Despite wage warnings fueling the inflationary fire, there are few signs of a wage-price spiral.
None of this fits well with the promise of a high-wage economy. Neither with the better reconstruction, nor the level increase. “We will not go back to the same old broken model,” Johnson told a Conservative party conference last October. Has the Prime Minister changed his mind? If the time is not right to abandon the low-wage economy that your party has presided over for 12 years, as workers suffer the worst impact on the standard of living in history, when will it be?
Despite wage warnings fueling the inflationary fire, there are few signs of a wage-price spiral.
The Bank of England estimates that average wage growth across the economy, excluding bonuses, is between 4% and 6%. While well above pre-Covid rates, this hardly turns off the lights. With a record of job vacancies and unemployment, the lowest in five decades, as well as the highest inflation in the last 40 years, which is already at 9% and is heading to 11%, according to the Bank, it may be more surprising that wages have not increased significantly. higher already.
There are some sectors where wage increases are strongest. Official figures show that average wage growth, including bonuses, has skyrocketed to 8% in the private sector due to overpayments for city bankers and IT professionals. However, wage increases in the public sector are dampening by only 1.5%.
Last October, Boris Johnson told the Conservative Party conference that Britain was on track to become a high-wage economy under his leadership. Photo: Tayfun Salcı / Zuma Press Wire / Rex / Shutterstock
All this comes after the worst decade for wage growth in real terms since the Napoleonic Wars. Under the terms of austerity that the government now seems willing to recreate, public sector workers have come to a particularly crude agreement.
Unions are preparing for a 3% pay rise for the NHS in England this year. Although it was in line with the wage agreement reached in 2021, it would mean a significant reduction in wages in real terms when adjusted for inflation and would be well below the growth of the benefits of the economy as a whole.
If ministers push for a 3% deal for NHS workers, the TUC estimates that nurses and paramedics would suffer a £ 2,000 cut in inflation-adjusted value of their pay. For maternity care assistants it would mean a reduction of £ 1,200 in real terms and for hospital carers a reduction of £ 1,000.
Given the weak wage growth and rising cost of living since 2010 after years of austerity, nurses have £ 5,200 a year worse. No wonder the British public sector is being eroded. As wages rise at a significantly faster rate in the private sector, the only spiral that should worry Johnson is widening the queue of health care workers leaving for better-paid jobs elsewhere.
Labor shortages are the biggest challenge facing the UK health and social care system. The Health Foundation’s non-partisan think tank estimates that only English NHS trusts face a staffing gap of 110,000. With Covid delays in coping and an aging population, this will only increase. With new records of hospital waiting times revealed last week, the King’s Fund charity warned: “Until the government takes over these staffing challenges, the NHS will not have the capacity it needs to provide the care that patients need and deserve. “
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So far, however, the government seems more interested in politics than in viable solutions. After Partygate, the Prime Minister is afraid to give in to the unions and set a precedent, preferring instead to blame the strikes on Labor rather than their own shortcomings.
However, an action plan is needed soon. To avoid a bleak future for jobs, the government needs to set a roadmap for wages to grow sustainably by increasing the productivity of the British economy. These conditions can allow wages to rise without fueling inflation. But where is the plan?
If the prime minister wants to build a high-wage economy, a good start would be to abandon the tactics of dividing and governing and return to the table with unions and employers. This coordination is common in European countries, but it seems anathema to a government more focused on ideological disputes.
Without a long-term plan and permanently locked into campaign mode, Johnson has chosen a fight with workers. It will only serve to fan the flames of a summer of discontent.