The government will face more worrying news this week, with official figures on Monday expected to show that the economy came to a standstill in April as families struggled with record energy bill increases. On Tuesday, the new data is likely to confirm that wages again failed to keep pace with the cost of living, while the Bank of England is expected to raise interest rates to tighten the screw on household and corporate lending. To rectify a bruised political reputation and stave off a recession, the prime minister is said to be delivering a major economic recovery speech soon. However, Johnson is facing an additional headache from the strike that could spread into a summer of resentment. In a context of high inflation, declining living standards and severe shortages of workers in some sectors, wage disputes are inevitable. Railway workers are planning three days of nationwide strikes this month, the largest since 1989, as unions are demanding a fair deal on wages and guarantees against job cuts. So far, Johnson has sought controversy, warning that larger wage agreements could threaten a 1970s-style wage-price spiral that would force Threadneedle Street to raise interest rates further. In the midst of the cost of living crisis, it also wants to cut more than 90,000 public sector jobs. But beyond the railways, more industrial action could follow. NHS workers in England are preparing for a hypersensitivity pay deal that would allow nurses to suffer a real. 1,600 blow to their incomes this year. The government is expected to announce a series of wage agreements across the public sector for the current financial year, starting in April. Ministers argued that “economic restraint” was necessary, but that there was a risk of widespread unrest. Last week’s viral video of a nurse telling patients at a busy A&E that they could cope with a 13-hour wait has resonated with many NHS staff. Public sector employees have good reason to be angry. Those on the national payroll – including the millions who served at the forefront of the pandemic – are experiencing much slower wage growth rates than the country as a whole. Official figures show that annual private sector pay rises by 8.2%, compared to just 1.6% in the public sector. This means that doctors, police, teachers and civil servants are facing a much bigger blow to their standard of living than the spike in inflation. City employees, on the other hand, enjoyed large payments, following an explosion in bankers’ bonuses and a rapid increase in wages for IT and professional services workers. Britain is facing a new rise in inequality, which was already high after decades of sluggish average wage growth. However, strike action may still be limited to specific pockets of the economy. Union members are at a record low after decades of decline, from a ceiling of more than 13 million in the 1970s to 6.4 million last year, less than a quarter of the workforce. The drop in numbers has led to a reduction in strikes, with the number of days lost due to industrial activity at one of the lowest rates since records began in the 1890s. This trend is likely to be reversed this year, but will not approaching the records set in the 1970s and during the general strike of 1926. As the Governor of the Bank of England, Andrew Bailey, has warned, workers with less bargaining power to demand higher wages will bear the brunt of inflation. Those who work for low pay and precarious work with zero-hour contracts will face the biggest blow. If the national railway strike continues, it will come at a cost. Although more people can work from home after the pandemic caused by the rise in teleworking, about half the workforce can not. The Center for Economic and Business Research estimates that a three-day strike would cost 91 91 million in production losses. With the effects of the strikes adding to a bleak economic outlook, the prime minister’s reinstatement plan could soon be derailed.
