As the cost of living increases and people worry about making ends meet, I consider some of the impact of these rises on employers and employees, looking at the response of the Trades Unions in these difficult times.
Prices are rising
Globally people are worried about rising prices. They wonder if the money they have coming in each month will be enough to cover the increasing cost of gas, electricity and the food they buy to put on the table. Will they be able to feed themselves and their families at the same time as heating their homes and keeping a roof over their heads or will it come down to a decision – one thing over another?
In the UK on 1st October (today) our energy prices increased again, this time the increase is capped at 27% and the average household will see their fuel prices increase to about £2,500 anually. However the reality is that this is for an average home and some people will find their fuel bills higher than this. Even with this cap in place, these increrases (which are double the increase at this time last year of 12%) are still going to be challenging for many households. According to the BBC, the Government have said that they will keep this cap in place for two years
Increasing Food Prices
Its also not just energy prices which are increasing – food prices are rocketing too. Many of our staples – dairy for example – are rising more than other foods. On 8th July it cost £1.05 for 2 pints of milk; I’ve just checked online and for the same bottle this evening its now £1.25. (I’m not great with numbers but I think that’s a 21% increase in the cost of milk in just under 3 months). According to the BBC it is expected that these prices will continue to increase for the foreseeable future. Therefore, even with the cap on increasing energy prices, our income will continue to be worth less (a net pay cut) as the cost of the groceries in my basket increases. According to the Bank of England, cited in the BBC article shared above, inflation could top 13% by the end of this year.
Trades Unions representing their members
Its against this backdrop that we are seeing increasing industrial unrest. Where employees have a collective voice, we are seeing union activity in the form of industrial action, including strike action. Concerned about the increase in the cost of living and concerns that wages are not keeping up with inflation and may not permit employees to survive (eat and pay bills), they are seeking pay increases which will be close to the projected inflation rate of 13%.
I can sympathise with the unions and their striking members who are just trying to survive in these very unusal and scary times.
However, I can also understand the employer’s perspective. Its been a challenging couple of years – disruption caused by Covid19, Brexit in the UK, the war in Ukraine, failed harvests etc are all impacting on everyone. Employers understand their employees’ predicament but these are times of financial challenge for organisations too and if they concede to union demands they will need to find resources to pay for the increased wages bill. They would have to consider increasing prices to customers which in turn pushes up inflation and in a year’s time the Unions may be back to seek further wage increases. Alternatively, to cover the cost of increased wages the organisations need to find savings elsewhere, which could include job losses and even site/organisational closures.
Both employees and their employers are trying to survive in these difficult times.
According to a survey carried out by PWC, big employers are taking steps to support their employees during these times of financial hardship, both financially and non-financially. In addition to pay rises, they are offering additional pay reviews and one off bonuses to support their employees. Non financial benefits include “increased staff shopping discounts, support with home insulation, financial wellbeing programmes and employee hardship funds.” (PCW 2022). Some of these measures could be considered by smaller organisations too.
While the employers are looking to support their employees by providing additional support, they also recognise that they are experiencing retention difficulties and therefore need to ensure they acknowledge the worries and concerns of their employees and are a supportive employer otherwise the employees may change jobs if they find a better offer elsewhere.
Achieving an Impact
Although now settled in Scotland, we had industrial action taken by our Council workers, including binmen where we had refuse building up in the streets for a week or more, depending on the particular council area. While I sympathised with the striking Council workers and supported their campaign, dealing with the piles of rubbish and litter on all the streets was very unpleasant.
I hear people commenting that they should time their strike action so it doesn’t cause disruption – but that’s the whole point of taking such action. It is a protest to try to achieve an outcome. If industrial action doesn’t cause disruption, it is ineffective.
The Council workers may have reached agreement on their dispute, but there is still other ongoing industrial activity elsewhere – today both our postal and train services are being disrupted by strike action. More action is to come, and the postal workers will be striking on Black Friday and Cyber Monday.
Prior to Covid19, union activity and membership was slowly increasing but had reversed in 2021 with Covid and the resulting lockdowns, but with increasing poverty and rising prices, union membership is rising. With our current economic climate, employees are seeking the collective voice and protections provided by the unions.
This article is based on the position in the UK and I am aware that industrial relations and the regulatory framework concerning Trades Unions may be different in other parts of the world.
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- BBC; 2022; What is the energy price cap and how high could bills go?; 29th September, 2022; https://www.bbc.co.uk/news/business-58090533; accessed 1/10/22
- ITV News, 2022; Unions see surge in membership interest as workers ‘fight back against real-term pay cuts’; 24th June, 2022; https://www.itv.com/news/2022-06-24/unions-see-surge-in-membership-interest-as-workers-fight-back-against-pay-cuts; accessed 1/10/22
- Nanji, Noor; 2022; UK Inflation: Milk, cheese and eggs push food price rises to 14 year high; BBC News, 14th September, 2022; https://www.bbc.co.uk/news/uk-62891168; accessed 1/10/22
- PwC, 2022; Large employers respond to the cost of living crisis – PwC Survey; https://www.pwc.co.uk/press-room/press-releases/large-employers-respond-to-the-cost-of-living-crisis.html; accessed 1/10/22
- Stewart, Iona and Bolton, Paul; 2022; Research Briefing: Domestic Energy Prices; House of Commons Library, UK Parliament, 28th September, 2022; https://commonslibrary.parliament.uk/research-briefings/cbp-9491/; accessed 1/10/22