A scene that took place in the UK in the 1970s is now being repeated. At that time, Britain was governed by the Labour Party, and strikes were frequent. Today, the railway workers are on strike, and tomorrow’s coal workers are on strike. The British economy has fallen into a vortex of severe recession.
Now Britain strikes again every day. Container terminal workers take over after the British rail workers’ strike ends. Nearly 2,000 workers, accounting for 75% of the entire terminal, were on strike. They were dissatisfied with the port’s lucrative profits, but the pay rise did not keep pace with inflation. The terminal operator has offered a 7 per cent pay rise and a one-off payment of £500 (HK$4,634), but the union representing the dock workers believes the increase is significantly lower than inflation and is demanding a 10 per cent pay rise. The two sides could not reach an agreement, and the dock workers insisted on striking for 8 consecutive days from August 21.
Separately, the UK’s Criminal Bar Association announced that criminal barristers in England and Wales will go on strike indefinitely from September 5, the day Prime Minister Johnson’s successor is announced.
The British Criminal Bar Association said the real income of criminal lawyers, after accounting for inflation, had fallen by 28% since 2006. Junior criminal barristers earn an average of just £12,200 (approximately HK$113,000) a year in the first three years, causing many of them to quit lawyering. The UK’s Criminal Bar has asked for a 25 per cent increase in the government’s legal aid grant, but the UK government has only agreed to a 15 per cent increase. The British Criminal Bar Association has announced an indefinite strike. The barristers’ industrial action is likely to create a massive backlog of cases that cannot be cleared. British subway, airline, and postal workers have already launched strikes earlier to fight for a pay rise.
The current wave of general strikes in the UK was triggered by soaring inflation. The UK Office for National Statistics announced earlier that the consumer price index (CPI) for July rose 10.1% year-on-year, the highest since 1982, up 0.7 percentage points from June. Among them, food products increased the most, up by 12.7% year-on-year, especially cheese, milk, bread, eggs and other major food items with the most price increases. Data from the Office for National Statistics showed that local workers’ wages, after deducting inflation, fell by 4.1% in the second quarter, the ninth consecutive month of decline and the biggest drop in 20 years.
In short, the UK has experienced hyperinflation, which has caused workers’ wages to fall, net of inflation. They demand a raise from their employer. When the inflation rate exceeds 10% and the wage increase rate is less than 10%, it will be difficult for workers to accept, especially if the employer still has money or is related to the government, the negotiating attitude of the trade union representing the workers will be tougher and more difficult to accept. It is difficult to accept wage increases that are lower than inflation. Negotiations broke down and the union went on strike.
The Russian-Ukrainian war has caused energy and food prices to soar, and the United Kingdom has taken the lead in sanctioning Russian energy, further pushing up energy prices. The UK government implemented an energy price cap in 2019 to limit the maximum charges that gas and electricity suppliers can charge to ordinary households. It is estimated that the UK will soon announce a new cap on household energy prices, which will be slightly less than £2,000 per household at present. It has risen to £4,200, compared with a cap of £1,400 in October last year. In other words, within a year, UK households could be capped on energy charges by 200%. Faced with rising energy prices, the British government has proposed a comprehensive subsidy of 400 pounds to provide some assistance to poor families, but the subsidy is only a drop in the bucket. The head of the NHS said bluntly: “The UK is facing a humanitarian catastrophe.”
The UK government’s financial capacity to support citizens in fighting inflation is very limited. Britain’s deficit hit £151.8bn in the financial year to March, the third-largest annual deficit since records began in 1947. This deficit figure is also equal to 18% of the UK government’s annual revenue of 830 billion pounds, a huge gap.
A vicious circle in the UK has emerged. Inflation soared, workers demanded a pay rise, and when their demands were not met, a general strike broke out. In addition to affecting people’s daily life, the strike also affects the supply chain of goods, which will further increase prices. Of course, the government is also concerned that, if wages rise significantly, it will also stimulate further inflation. This vicious circle is likely to bring about a recession.
Although global inflation is a factor that is difficult for a country to control, the United Kingdom closely follows the United States and is at the forefront of sanctions against Russia.
Politicians make wrong decisions, leading the country to disaster, and it is the people who suffer in the end.
Lu Yongxiong