Why private sector strikes are not all about the money

If only it was just about the money.

The UK private sector should have it easy compared with the parlous state of the public finances. Pay growth might not be keeping up with inflation, but it was still about three times as generous in the private sector than the public one in the latest quarter. Yet still there are strikes.

BT shows what can be achieved when pay is the only issue. The former monopoly faced eight days of strikes earlier this year after the union deemed April’s flat-rate £1,500 pay rise not up to scratch. But it seems all that was needed to end the first strikes in more than 30 years was another £1,500 for those earning £50,000 or less a year — and part of that was paid for by savings from the government’s energy scheme.

Now £1,500 is clearly not nothing — it represents an average 9 per cent raise for eligible employees. But there will be no extra pay increase in April, the normal time for a review. The next round of pay negotiations will take place in September.

The problem elsewhere in the private sector is that it is not just pay at stake. And that makes the strikes a whole lot harder to solve.

Take Royal Mail, where the Communication Workers Union has rejected management’s “best and final offer”. Pay is one of the sticking points: much of a promised 9 per cent increase isn’t being backdated under the proposals, some of it is one-off rather than a salary uplift, and only 2 per cent came with no strings attached. But the acrimony really sets in with the accusations that management is trying to turn the group into a “gig economy-style parcel courier, reliant on casual labour”.

It’s not hard to see why the union doesn’t like the package on offer. Mass redundancies are coming down the road: voluntary for now, but the guarantee there won’t be compulsory job cuts extends only to March. The problem for the CWU is that Royal Mail, the UK bit of what’s now called International Distributions Services, is losing money — and, for the moment, lots of it. That’s at least in part because of more rigid workforce structures and employee protections that make it harder to cater to profitable parcels customers as flexibly as competitor couriers can.

The outlook for the business might not be as bleak as management makes it seem. It is hardly in its interests to talk it up during an industrial relations dispute. But at least part of the business — letters — is in structural decline, and the outlook for parcels isn’t peachy either. IDS is threatening to split off the profitable international arm. A return to partial government ownership is far from the likely eventual outcome. But it’s not inconceivable.

Any prospect of government anywhere near the business should worry the posties. The lesson from the rail operators’ dispute — which has striking similarities to the Royal Mail quandary — is that having the government as the guiding hand behind industrial relations does not make things easier.

Once again a pay offer from employers (the train operators; there is a parallel dispute involving Network Rail) has been dismissed as inadequate in the inflationary context. There are concerns about job security and changing conditions that employers say are needed to overhaul outdated practices. So far, so familiar.

In the pre-Covid era, the train operators were able to negotiate with the unions on an individual basis rather than collectively, making accommodations easier to come by. That changed when the pandemic ended the franchising model and the train companies became fee-driven operators bearing none of the revenue risk, with the taxpayer taking it on instead. And with the government standing behind the budget, it inevitably ends up setting the terms of the pay package. That leaves employers — bunched together as the Rail Delivery Group — stuck trying to agree tricky nationwide reforms such as driver-only operated trains that, while acceptable on some parts of the network, are a red rag to the RMT union on others.

Both Royal Mail and the railways face years of potentially unpleasant workforce reforms. Bigger pay bumps make them only slightly easier to swallow.

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