Labour shortages and inflation: why UK labour relations are hotting up

Like many young university lecturers, Carl lives in a state of constant uncertainty. A teaching assistant in the politics department of a London university, he does not find out whether he will have work until a month before the start of each term, when he is given a schedule of a few hours of paid teaching each week.

To make ends meet, the 32-year-old often pieces together teaching jobs on multiple courses. The time in each contract is rarely enough to adequately prepare for lectures, mark students’ work or give feedback, so much of the work is unpaid.

“The reality is if the university ran with the hours we’re contracted for it wouldn’t work and everybody knows it,” he said. “There’s a lot of insecurity — we don’t know if we’re going to get work next year.”

Carl, who asked to be identified by a pseudonym, is one of thousands of staff at dozens of universities across the UK taking part in three weeks of strikes over pay, cuts to pensions and workplace conditions. It is one of the most high-profile and disruptive industrial actions now in the UK.

But university workers are not alone. At a recent strike by academic staff at City, University of London, the lecturers and teachers were joined on the picket lines by security staff, represented by another union entirely. What united them was not just pent-up demand for higher pay and a safer working environment, but also a sense of injustice that is fuelling the country’s most confrontational pay bargaining season in years.

For the past two years industrial action has largely paused while unions focused their energies on saving jobs threatened by coronavirus lockdowns. But in 2022, with employers battling staff shortages and inflation already at a 30-year-high, workers in a range of sectors from transport to custodial work to education, on the front lines and in white collar offices, are downing tools.

On Tuesday, a strike over pension reforms was set to shut down the entire London Underground. About 3,000 employees at Airbus factories in Wales and Gloucestershire have voted to take strike action over pay from March, as have workers at a nearby subsidiary of GE Aviation Systems. Bin lorry and bus drivers in many parts of the country have been demanding — and winning — big pay rises after watching wages shoot up for truckers with similar skills.

Outsourced cleaners whose workloads intensified during the pandemic, with little reward, have downed tools to strike at hospitals, railway stations and at Facebook’s London offices. More widespread disruption looks likely in the rail sector, where unions are making plans for national strike action if talks with train operators and Network Rail over a major restructuring of the industry break down.

White-collar workers are also up in arms: 1,500 teachers at the Girls’ Day School Trust — a group of 23 private schools and 2 academies across England and Wales — are striking in a dispute over pensions, and industrial action is threatened at the Financial Conduct Authority, where staff have been angered by a transformation plan that will effectively cut pay for many of them.

“People work way beyond what they are expected to do in their job descriptions,” Daniel Shannon-Hughes, a branch representative for Unison, which represents security and support staff as well as workers in the public sector. “Even before inflation started increasing at a rapid rate our members had seen real-terms pay cuts for over a decade. It gets to the point where you have to say enough is enough — it can’t go on like this. And we’ve reached that point.”

Some see the resurgence of industrial action as a sign that workers are wielding new bargaining power, especially in sectors facing acute labour shortages and desperate to hold on to staff.

Data gathered by Indeed, the online job search site, shows that advertised wage rates for driving, manufacturing and construction jobs have risen about 8 per cent over the past year, while even in the perennially underpaid care sector advertised wages are up 6.6 per cent. For certain skilled roles, advertised wage growth was in double digits — from chefs to welders and painters, warehouse packers and mental health nurses.

“Workers in some occupations are in a position to bargain for higher wages to cushion themselves from the cost of living squeeze,” said Jack Kennedy, economist at Indeed.

But for most people, inflation is rising at a much faster rate than wages. The latest official data showed regular pay, excluding bonuses, was just 3.7 per cent higher than a year earlier in the three months to December, similar to pre-pandemic rates. In real terms, average earnings fell — and the squeeze is set to worsen in the months ahead as energy prices push inflation to fresh 30-year highs.

This squeeze on living standards is one factor fuelling anger among key workers, who faced extraordinary demands in the early stages of the pandemic — with most employers now unwilling to offer pay deals that would match inflation, because they are facing cost pressures on all fronts.

It adds up to a combustible moment in labour relations, and a test for Britain’s unions in the most intense period of worker unrest since the 2016 Trade Union Act placed new, onerous limits on their activities.

“For a few decades now there’s been relatively low levels of industrial dispute. What we’re starting to see in recent years is an uptick [and] a counter attack from the employers to try and shut off that emergence of labour struggles,” says James Eastwood, the branch head of the University and College Union (UCU) at Queen Mary University of London.

The pension dispute

At UK universities, the core of the industrial action is a dispute over pension benefits provided by the Universities Superannuation Scheme, the main pension scheme provided by UK universities and colleges.

Many of the 200,000 active members regard these benefits as deferred wages that make up for academia offering less in terms of pay and security that would be offered elsewhere.

Members are now facing a potential cut of 35 per cent to their guaranteed pensions, according to union calculations, after a valuation carried out in March 2020 identified a deficit of between £14bn and £18bn in the scheme’s finances.

The UCU argued the valuation gives a pessimistic view of the scheme’s finances, and that universities should be able to foot the bill for worker benefits. Despite its assets recovering to pre-pandemic levels since that assessment, USS said the cuts were necessary because the cost of funding pensions had increased, and because of new pension promises. Universities UK, which represents the sector, said without change pensions would have become “unaffordable” for members and employers.

Jo Grady, the union’s general secretary, said strike action was driven by members’ “complete disgust and desire to protect what is rightfully theirs”, arguing that university bosses were “needlessly attacking” pensions and “inviting industrial action as an annual event”.

But the dispute goes beyond pensions to the overall working environment in the sector. In a series of separately-balloted strikes the union is also demanding pay increases, action on gender and race pay gaps, and an end to precarious, short-term and zero-hours contracts which have become endemic in the sector.

UCU estimates that its workers have experienced an average 25.5 per cent real terms pay cut over the past 13 years, while almost 90,000 academic and academic related staff are employed on insecure contracts.

In response, the Universities and Colleges Employers Association says over half of academic staff had received a pay increase of between 1.5 per cent and 4.5 per cent this year, and that the sector was reducing its reliance on fixed term contracts.

When the pandemic hit in March 2020, union members scaled back industrial action. But during a strenuous two years in which staff on part-time contracts worked overtime to move teaching online and support students, while struggling to do the research demanded for career progression in the unforgiving world of academia, the grievances which led them to down tools became even more acute.

“The experience of the pandemic has alienated staff even further,” Eastwood said. “People were working really hard to keep the show on the road and not getting any consideration back. There was a real sense of disrespect, that our goodwill was not being reciprocated.”

Universities, Eastwood added, require this “goodwill”, in the form of additional hours spent marking work, supporting students or organising events, for their day-to-day running. “It’s stuff that’s not accounted for in workload models, but it’s critical to the functioning of the university,” he said. Now, academics say their goodwill and willingness to provide free labour has run out. Further action could include a marking boycott.

“We’re not ruling anything out,” Grady said. “There is far more that staff could do . . . any notion of goodwill to keep the sector going has been completely eradicated by [university] vice-chancellors who are pursuing this.”

The decision to escalate action is in part in response to the approval, last week, of the pension cuts that prompted this wave of strikes. But it is also prompted by outrage at some universities threatening to withold pay from striking staff for months beyond the action, in what the UCU said amounts to a “lockout”.

As well as withholding pay for strike days, several universities including QMUL and City this month said they could deduct 100 per cent of pay from striking staff who did not reschedule lectures that were cancelled during the strike. The full pay withdrawal could be imposed for a period of “working to contract,” or action short of a strike, scheduled until at least May. Several other universities threatened to deduct pay in part.

UCEA, which advised universities to make the threat, said they were not only “legally entitled” but “compelled” to do so due to a “duty to students.”

The union, however, regards rescheduling activities from strike days as undermining strike action and have refused. “Rescheduling makes the whole strike powerless,” Grietje Baars, a UCU member and legal scholar at City, said. “We see this as a strikebreaking tactic that we think might have national repercussions, not just within the higher education sector but more broadly.”

City said it would “reserve the right” to deduct 100 per cent of pay. “We respect the right of members of our recognised trade unions to take industrial action, but we will continue to do all that we can within the law to mitigate the impact that action has on our students’ education,” it said. QMUL said it would “reasonably request” that staff carry out contractual duties.

The challenges to unions’ power

The threat of a stand-off, with potentially months of further disruption and universities withholding pay from hundreds of staff indefinitely, ups the stakes as more workplaces contemplate industrial action.

Union members fear it could set a precedent for more punishing responses from employers as economic pressures led to more strikes. “They’re underhand tactics, designed to stop a return to a time when staff could take industrial action to defend their conditions,” Eastwood said.

Unpredictable employer responses present a challenge for the UK’s biggest unions. New leaders have pledged to prioritise members’ interests in workplaces rather than becoming embroiled in party politics, but the hurdles to industrial action have become higher since 2016, when the Conservative government passed controversial legislation that tightened the rules on balloting, with a view to reducing disruption to public services.

Unions’ power is also limited by the long-term decline in their membership and their weak presence in many parts of the service sector where low-paid workers are concentrated.

Sharon Graham, the general secretary of the union Unite, ran for office with a promise of practical action to fight job cuts and defend pay. She also set out a detailed manifesto on how she planned to achieve this, including by authorising industrial action ballots whenever cuts to pay or conditions were imposed, scrutinising every below-inflation settlement at top level, and targeting major employers whose standards would set the norm for their sector.

Melanie Simms, professor of work and employment at the University of Glasgow, said this new focus on “bread and butter, practical improvements” was a a distinct change of tone from the party political focus and backroom deals of the past, but would take time to filter through — while cautioning that unions’ influence was weak in many parts of the UK economy.

“If you happen to be a binman in Brighton, you’re doing all right,” she said, referring to a pay rise won by the city’s refuse workers after strikes in October. But workers in other low-paid sectors, such as retail and hospitality, could be in a very different position, she said, because “the sectors that have labour shortages are not the ones with union representation”.

OECD data show just 26 per cent of UK employees were covered by collective bargaining agreements in 2017 — ahead of the US, where collective bargaining coverage was just 11.6 per cent, but well behind the levels seen in major EU economies and the OECD average of about 32 per cent.

Kevin Rowan, head of organizing at the Trades Union Congress, gave a similar warning about the limits of unions’ power. “Across the economy, we are seeing relatively small pockets of quite significant industrial action,” he said.

Because balloting thresholds made it difficult to organise national strikes in the public sector, this would not necessarily lead to a “big wave of industrial action”, he said. But he added that: “the government should not assume public service workers are happy with their pay or workload issues.”

Yet for many workers, industrial action is the only recourse they have left. Jackie, a rail sector cleaner, joined strike action in Westminster last week to demand higher hourly wages and better sick pay from the outsourcing company Churchill. “I have to work 84 hours a week to bring enough money in,” she said.

Despite 14 years of service, she said, she had received only 80 per cent of her usual pay when she was forced to take three months off work after catching Covid — she believes, from a passenger who sneezed in her face while she was cleaning a train.

Now, she said, she found herself scouring supermarkets late at night for short-dated, discounted food in order to make ends meet. “A lot of cleaners are single people, with children,” she says. “You shouldn’t have to do that.”