The Government’s response to the cost-of-living crisis is nothing short of class war.

In a two part article, John Hendy QC examines the steady erosion of employment rights & collective bargaining

Commentary icon24 Aug 2022|Comment

Lord John Hendy KC

Chair of the Institute of Employment Rights

Part One: A transfer of wealth from labour to capital unparalleled since the 1930s

This week the Office for National Statistics (ONS) reports that the rate of inflation measured by the consumer prices index rose by 10.1 per cent in the 12 months to July 2022, up from 9.4 per cent in June.

The Bank of England expects inflation to rise to “just over 13 per cent” in the last quarter of 2022.

The ONS confirms what we all know: the principal contribution to inflation in July came from the cost of electricity, gas and other fuels, and food prices.

The price of oil dramatically increased in early 2022. This was not because of war or increases in the cost of exploration, extraction, refining or transport: it was because the global cartel of energy producers calculated that consumers would pay.

In consequence, the first six months of 2022 doubled the profits of Shell, BP, Chevron, and Exxon Mobil to $58.2 billion.

As for gas, in July, Centrica (which owns British Gas) declared profits for the year of £857m, six times as much as its previous year’s profit of £140m.

This week, world gas prices surged to €251 a megawatt hour, equivalent to more than $400 a barrel of oil, 10 times the price a year ago.

Gas producers could thank Russia’s war restriction of gas exports for this as traders outbid each other for the limited supply.

But that too is capitalism: the price of these commodities does not reflect the actual cost of supply (which has not increased), it reflects that cost plus the maximum amount of profit which the producers can extract.

And the consumers must pay. This is a working-class catastrophe, considering that 10 per cent of UK employees earn less than £695 per month and 90 per cent earn less than £4,963 per month. Those on benefits and pensioners are even worse off.

Inflation means that those incomes are now worth less. This week the ONS reports that median wage increases are, on average, currently running at around 6.54 per cent a year. With inflation at 10.1 per cent that is a significant cut in purchasing power.

Yet the “median wage increase” disguises the fact that for the lowest-earning tenth of the workforce (three million workers), wages are increasing at a mere 1.3 per cent a year.

And the median varies by industry. It might be thought that sectors, like hospitality, with shortages of workers might pay higher increases. Not so.

ONS reports that the median annual wage increase in accommodation and food services is only 2.46 per cent a year (just above arts, entertainment and recreation at 1.85 per cent and below education at 3.15 per cent).

In contrast, finance and insurance achieved 8.32 per cent a year. These figures exclude bonuses — benefits largely enjoyed by those in the top earning group.

As the value of wages falls workers become cheaper to hire and employers’ profits rise. This sudden transfer of wealth from labour to capital is unparalleled since the 1930s.

That’s why the current fight by railway workers, mail and call centre workers, dockworkers, nurses and junior doctors, bin workers, Co-op coffin-makers and the rest is so important. Their fight is a fight for the entire working class.

The upsurge in industrial action has been compared to the 1970s. But circumstances are very different.

The 1970s was the most equal decade in British history. Wages took a greater share of GDP than ever before or ever since.

That achievement was because 85 per cent of workers had their terms and conditions set by collective bargaining between unions and employers. Successive governments have demolished collective bargaining in all but a few sectors.

They did this by urging the end of sector-wide bargaining and fostering derecognition by individual employers, abolishing the wages councils, repealing legislation extending collective bargaining, ending the requirement that public contractors abide by collective agreements, allowing corporations to move whole industries overseas, and by encouraging privatisations in the public sector and outsourcing in the private sector.

Above all, the destruction of collective bargaining was achieved by legal restraints on industrial action, most particularly the outlawing of sympathetic industrial action.

The result is that less than 25 per cent of workers have the benefit of collective bargaining today. In fact, bargaining over wages is much less than that because so many workers in the public sector have their wages set either by a pay review body or by governmental wage freeze.

The fact is that the vast majority of British workers are not in a position to negotiate better wages; for them it’s “take or it leave it.”

And for most, they can’t afford to leave it. They don’t need the governor of the Bank of England to tell them to exercise wage restraint — they have no option.


Part Two: Has the time come to organise a general strike?

In part one of this series in yesterday’s Morning Star, I argued that the fight of those on strike this summer and autumn, workers and unions who still have the right to bargain collectively, fight for the whole working class.

That right covered 85 per cent of workers in the 1970s. Now it’s less than 25 per cent.

From the history of the 1970s, we should take something else. In the summer of 1972, 50 years ago, five dockers were imprisoned in Pentonville for picketing in defiance of a court order.

They were released after workers across the country spontaneously walked off their jobs and the TUC called a general strike.

The situation now is correspondingly grave with the working class facing a tsunami of inflation, which will put hundreds of thousands of families into destitution.

Has the time come again to organise a general stoppage of work? This time to demand an end to the inflated prices imposed by profiteering capitalism on a working class that will otherwise be reduced to penury?

Because the response of the government to the unfolding catastrophe is nothing short of class war. The Tories dole out a few hundred quid of taxpayers’ money to the poor — not enough even to meet people’s energy bills — so the poor can pay it over to the rich energy companies.

The Bank of England increases the cost of borrowing, so millions of citizens in debt must pay more to their lenders.

Rishi Sunak offers to cut taxes — an offer which benefits most those who pay most taxes, does not help the millions earning below the tax threshold, and punishes those who rely on the public services those taxes would have paid for.

For the profiteers, the Tories impose a limited “windfall tax” full of loopholes instead of a “profiteering tax” to extract every penny of extra profit.

They refuse to cap the increase in the price of energy which suppliers can demand. And both Tories and Labour refuse the obvious option of taking the energy companies into public ownership to control energy prices and profits.

That’s what the French government has done with EDF. As a result, inflation in France is no more than 6.5 per cent.

While the government refuses to control the key prices which have driven up inflation they are determined not to allow workers to fight to increase wages to match that inflation.

So, while the unions fight for the workers, further legal shackles are proposed to stop them.

As Transport Secretary Grant Shapps said this week in introducing further anti-union measures: “Margaret Thatcher knew Luddite trade unions were a barrier to that reform. She delivered prosperity by taking them on — and so will we.”

Unions are already heavily regulated and constrained. In 1997 Tony Blair rightly described the laws Thatcher brought in as “the most restrictive on trade unions in the Western world.”

But the Labour governments did not repeal them. The Tories returned to power and since then we have had the Trade Union Act 2016 with more restrictions on trade unions and picketing.

This year, already there has been legislation against noisy pickets, a fourfold increase in damages payable by unions (up to £1 million for big unions), and the legitimising of agency labour to break strikes.

Shapps has been talking about introducing legislation requiring minimum staffing levels during strikes in certain sectors. This week he announced additional measures to suppress workers’ capacity to fight for higher wages or fairer conditions.

So far as can be ascertained these measures include:

  • Changing the law to allow a minister to use emergency powers to outlaw any industrial action deemed to pose a “national emergency.” This will apply in both the public and private sectors and is obviously aimed particularly at the “key workers” in transport, education, health, food, energy, and so on who the government clapped every Thursday during lockdown. With this discretion vested in ministers the right to strike goes out of the window.
  • In “important public services,” as well as the requirement of majority vote in favour, a minimum of 50 per cent of the whole eligible electorate will have to vote in favour of action, up from the current 40 per cent. “Important public services” are not defined but again we may assume that they include the ”key workers” celebrated during lockdown.
  • Unions will be required to give four weeks’ notice of industrial action instead of two.
  • Where a ballot does mandate industrial action it will be confined to one occurrence of strike action within the six months currently mandated by the ballot. If further industrial action is needed there will have to be a re-ballot. So a union wishing to stage one-day strikes will have to re-ballot for each one. The result will be, of course, that unions will favour longer periods of continuous industrial action.
  • There will be an absolute limit on the number of persons permitted to attend pickets. How the union can be expected to control members of the public (or MPs) attending to support pickets is not clear.
  • Pickets in the vicinity of “critical national infrastructure” sites will be restricted. Again, this is likely to include all the workplaces of our key workers. So nurses will not be able to picket their hospitals, teachers their schools, railway workers their stations, and so on.
  • Inflammatory and intimidatory language on picket lines is to be prohibited. This is curious since it already is — and has been for decades.
  • Online intimidation is to be prohibited. Why current protections against online intimidation is inadequate in relation to industrial disputes but not needed in any other situation is unknown.
  • Employers will be permitted to bypass ongoing collective bargaining by making an offer directly to the workers. The current prohibition on making such direct offers dates from the Wilson and Palmer judgement of the European Court of Human Rights upholding the right to bargain collectively in 2002.
  • Ballot papers will be required not only to identify the issues in dispute (as now), but also to set out the employer’s response.

In addition, Liz Truss has proposed that for “critical national infrastructure” there will be “tailored minimum” service levels and tailored minimum voting thresholds for industrial action. It is not clear whether Shapps endorses this. “Critical national infrastructure” is presumably the same as Shapps’s “important public services.”

For all other sectors, Truss proposes that the current minimum voting turnout of 40 per cent of voters in the balloting constituency is to be increased to 50 per cent.

And there’s more. Like Shapps, Truss has also proposed that strike notice will be increase to four weeks. But she did not go as far as Shapps has in her proposal that industrial action will be permitted a specified number of times (with, it seems, cooling off periods between) within the current six-month limit. It remains to be seen which proposal will be adopted.

The icing on the cake is surely Truss’s proposal that unions be barred from using their funds (contributed by their members) on providing strike pay to their members. Shapps does not seem to have commented on this.

All these measures violate international laws ratified by and binding on Britain. But unions and workers are not going to wait for the lawyers to challenge these measures; they are going to vote with their feet. Solidarity to them. Enough is enough.

This comment piece is made up of two articles, orginally published in the Morning Star on the 19th August and 21st August

Lord John Hendy KC

Lord Hendy KC is Chair of the Institute of Employment Rights. He is a barrister specialising in industrial relations law, based in Old Square Chambers, London. He is President of the International Centre for Trade Union Rights (ICTUR) and a Vice President of the Campaign for Trade Union Freedom.