As the UK grapples with arrays of strikes spanning several professional sectors, the nation finds itself at a critical junction. Civil servants, rail workers, teachers, among others, are mobilising over real pay issues, reflecting labour market unrest. This sense of turbulence is, in no small part, spurred by significant wage growth. Over the three months to May, the annual increase in average pay was 7.2 per cent – a statistic that has become central to heated discussions about the UK’s economic trajectory and the necessity of shrewd policy interventions.
This rise in wages does not exist in isolation. It is entangled with the spectre of escalating inflation. The wage-inflation dynamic is a complex dance that requires careful navigation. On one hand, while wage increases may signify a more robust economy, they can also feed inflation if they outpace productivity gains. On the other hand, inflation can erode the purchasing power of wages, inciting demands for higher pay and adding to the inflationary spiral.
Today’s unrest shares similarities with the industrial conflicts that marked the 1980s. During that period, rising import prices triggered high inflation, sparking intense strike actions that resonated through the labour market. This was the stage on which Thatcherism entered, introducing socio-economic transformations that would leave a lasting impact on the UK’s industrial relations.
Thatcherism, a political doctrine that championed neoliberal economic policies, swept across the UK like a sudden tide. Unions were dismantled, and employers were catapulted into positions of greater power within the labour market. The result was a significant shift in industrial relations: from a pluralistic model that acknowledged the inherent conflict between employers and unions, to a unitarist one that assumed a shared interest between employers and employees.
This unitarist perspective has coloured the UK labour market for a substantial period since the Thatcher era. However, it is, to a certain extent, a facade. The rise of a low-wage, low-skill economy, a consequence of policies promoting migration and flexible working, helped to maintain this illusion. With all of this being underpinned by an era of low inflation, industrial action was kept in check, and the inherent tensions within the employment relationship were pushed beneath the surface.
Moreover, the implementation of Human Resource Management (HRM) strategies and other employer-centric policies largely curtailed union activities, as workplace disputes became predominantly individualised. This evolution marked a shift in British industrial relations from a model of extensive collectivisation to one dominated by singular negotiations between employers and employees.
Yet now, with the rapid wage growth and looming inflation, money illusion is unravelling. Workers, and their collective voices, are stepping back into the spotlight. The ongoing cost of living crisis, marked by a high but decreasing rate of inflation, has incited unrest across various professions. This turbulence has led to widespread mobilisation over real pay, exposing the conflicts embedded within employment relationships.
The legacy of Thatcherism, the implications of migration policies, and the current trends of wage growth and inflation are all converging at this critical junction in the UK’s economic narrative. The unfolding situation could potentially redefine the nation’s labour market, forcing a departure from the dominant unitarist perspective. If the balance tips towards a revival of industrial action and collective bargaining, it could signal the beginning of a new chapter in UK industrial relations – one that echoes the pluralistic disputes of the past.