Summer of glory? Yesterday, criminal barristers in England and Wales began a strike over legal aid fees, following three days of industrial action by the RMT union last week. Other public sector groups such as NHS staff, teachers and care workers could also go on strike, leading some to predict a ‘summer of unrest’. Progressive Economy Forum’s James Meadway puts a positive spin on the planned industrial action, dubbing this the ‘labour movement’s summer of glory’

  • A break with a failing past. Meadway refutes comparisons of today’s situation with the 1970s, arguing that there is no wage-price spiral and that trade union membership is "far below" what it was during the winter of discontent. However, he also says that "one way in which the 1970s comparison can work’ is that public sector industrial action could lead to a change in the economic paradigm. In the same way that the disputes of the 1970s led to the ‘consolidation of neoliberalism’, today’s disputes could usher in a different economic settlement and a ‘break with a failing past". 

Further restrictions on union freedoms. Transport Secretary Grant Shapps has said that agency workers could be brought in to break what he calls ‘Marxist’ strikes and says that the measure will be introduced during the current RMT dispute if it is not resolved. Plans to ‘bus in’ agency workers to cross picket lines is "just the latest attempt to curb the right to strike", says the TUC’s Tim Sharp. Sharp argues that the use of agency staff to replace striking workers could put the public ‘at risk’ due to lack of training and would "most likely breach international law". The UK has already been criticised in this area, with the ILO Committee of Experts already concluding that British law does not do enough to protect strikers from being replaced by agency workers. Even the Spectator’s Brendan O’Neill has criticised the government’s proposal, saying that "the right to withdraw labour (is one)of the most important freedoms people enjoy."

  • Rights for agency workers. Agency workers have very little power to avoid breaking strikes if the government’s plans go through as they will often not be told before turning up to a shift that they will be breaking a strike. Furthermore, they are not protected from ‘suffering a detriment’ if they refuse shifts on the basis that they are replacing striking workers. 
  • History of anti-trade union legislation. Barrister and author David Renton gives a backdrop to the current situation and provides a history of the UK’s anti-trade union laws and explains why Britain has "the most restrictive anti-union laws in Europe". Renton outlines how the promotion of tribunals as an alternative to strikes - by both Conservative and Labour governments - has played a key part in weakening trade union power and how the RMT’s recent action has bucked this trend. 
  • The Trade Union Act 2016. Many barriers to industrial action today were introduced as part of the Trade Union Act 2016 (TUA). The TUA brought in new restrictions on how trade unions and their members could take industrial action, fund political parties, and conduct their duties. The bill brought in a higher threshold for ballot turnouts and doubled the amount of notice trade unions must give to employers before going on strike. The Institute of Employment Rights (IER) has published a handy guide to the Act. 
  • Electronic strike ballots scrapped. As the government escalates its ‘war with unions’, the Business Secretary, Kwasi Kwarteng, is rowing back on plans to allow unions to introduce electronic strike ballots. The move, which was first introduced by David Cameron in 2016, would have made it easier for unions to organise strikes. TUC General Secretary Frances O’Grady called Kwarteng’s decision an "absurd", "hypocritical" and "a feeble attempt to look tough by a government that wants to stoke a culture war against unions". 

Trade union membership today. The general trend of trade union membership over the past few decades has been one of steady decline. While over half of workers were unionised at the peak of trade union membership in the 1970s, the figure today stands at just over 23 percent. What’s more, only 13.7 percent of private sector workers now have their pay set by bargaining between unions and employers, claims Sarah O’Connor in the Financial Times. However, membership has started to rise very slightly in recent years. In 2020, 23.7% of workers were unionised compared to the low of 23.3% in 2017.

  • Different demographics. According to government statistics, this rise has been largely due to the rise in female trade union membership. From a low of 25.6% in 2017, the percentage of female workers now unionised stands at 27.2%. 
  • ‘Good news and bad news’. The TUC unpacks the data behind the steady increase in trade union membership over the past four years, claiming that while membership has increased in the public sector, union membership in the private sector has fallen by more than 100,000. 

The case for collective bargaining. The government’s new offensive against trade unions is against the tide internationally, where unions and collective bargaining are coming back into vogue among governments and policy-makers.The OECD has said that collective bargaining is the best way to deliver better work. Though it has previously promoted breaking up sectoral bargaining institutions, it now argues that collective bargaining can tackle inequality, boost productivity, manage industrial change, keeps people in jobs and is good for employment. The TUC’s Kate Bell outlines the OECD evidence that trade unions can benefit from. 

  • Collective bargaining key to post-pandemic recovery. The International Labour Organisation (ILO) has said that collective bargaining is crucial to global recovery post-pandemic. ‘The higher the percentage of employees covered by collective agreements, the lower the wage inequality’, argued the ILO’s Director-General Guy Ryder. 
  • Collective bargaining across the world. At the end of last year, Spain passed legislation restoring sectoral collective bargaining in law. Similarly, the New Zealand government has announced its intention to move forward with sectoral ‘Fair Play Agreements’
  • Collective bargaining prevents inequality in Europe. In a comparative analysis of trade unionism in Europe, a study by UNI Europa finds that weakening collective bargaining is a "key driver behind increasing income inequality in Europe". Declining collective bargaining has been associated with a rise in income of the top 10% in both Germany and the UK while countries which maintained high levels of collective bargaining (such as Austria and Belgium) have ‘kept inequality at bay’. 
  • Collective bargaining and industrial strategy. Unite the Union has proposed a "new industrial strategy for post-Brexit trade" based on collective bargaining. The union calls for a new approach to support coordination between reps across industries to take account of the fact that industries are now organised so that all workplaces exist within supply chains rather than in isolation.

Labour’s position on collective bargaining. The Labour Party has been criticised by unions for not backing recent and proposed strike action. However, at its conference last year, the party launched its Green Paper on Employment Rights which included a commitment to Fair Pay Agreements. It said it would "empower workers to act collectively through Fair Pay Agreements’ which would be negotiated ‘through sectoral collective bargaining – starting in the adult social care sector". The agreements would see government bring together worker and employer representatives from sectors to negotiate pay and conditions.

Weekly Updates

Competition policy and inflation

Corporate profiteering and the cost of living crisis. Unite’s Profiteering Commission have published their first report aiming “to uncover who has really profited from the Covid 19 pandemic and the inflationary pressures that have followed.” Their research accuses many FTSE 350 companies of price gouging and argues that profiteering is pushing a ‘second round’ of inflation.

  • Key findings. “Profit margins for the UK’s biggest listed companies (FTSE 350) were 73% higher than pre-pandemic levels in 2019. UK-wide company profits jumped 11.74% in the six months from October 2021 to March 2022, according to the most recent ONS data…The UK appears to be following the pattern of inflation profiteering noted in the US, albeit some months behind the curve. This isn’t just about oil companies or a few “bad apples”. Even excluding energy firms, FTSE 350 company profits increased by 42% between 2019 and 2021.”

Fiscal discipline and public sector pay restraint. Simon Clarke, Chief Secretary to the Treasury, said public sector workers should expect ~3% pay rises funded in last year’s spending review and urged unions not to “whip up a storm of resentment and anger about something which is frankly a matter of fairly fundamental economic good sense”. 

Inflation and Brexit. Bloomberg reports that the UK will be affected by higher than normal inflation because of immigration controls and supply chain disruptions exacerbated by Brexit, according to strategists at Wall Street’s top banks. Citigroup’s Vasileios Gkionakis said: “The economy is extremely fragile and in desperate need of more fiscal support, which is unlikely.” 

  • Food price inflation. A report from LSE’s Centre for Economic Performance has found that trade barriers from leaving the single market and customs union has already driven a 6% increase in UK food prices.

Regulation and finance

Bankers’ bonus caps scrapped? A leaked letter from PM’s Chief of Staff Steve Barclay called on Chancellor Rishi Sunak to scrap the cap on bankers bonuses as part of a package of “deregulatory measures to reduce the overall burden on business” after Brexit. The government has since denied the rumours.

‘Growth’ over ‘competitiveness’. The Treasury Select Committee has recently published a report warning against the pursuit of international competitiveness for the UK’s financial regulators and called for a new secondary objective that promotes long-term economic growth. A cross-party group of MPs has set up a subcommittee to scrutinise further moves to deregulate the financial sector after Brexit. (For more on the Government's financial regulation agenda, read our previous digest.)

Fiscal policy

Political pressure for fiscal expansion. Both major parties are reportedly being pressured for more active use of fiscal policy to stimulate economic growth as fears of long-term stagflation mount.

  • Conservatives want tax cuts. After the Conservatives lost 2 by-elections last week, pressure is mounting in the Cabinet for more tax cuts to stimulate growth. Ian Duncan Smith highlighted Rishi Sunak’s fiscally conservatism stance as a barrier: “The Chancellor, as a politician, must understand the damage that going into a recession will do for our prospects. No. 10 is outgunned by the Treasury and the PM should have an independent economics guru: Thatcher had hers, Alan Walters, who told her to get the economy moving again rather than tighten it. Boris needs someone like this too so he can stand up to the Treasury orthodoxy.”
  • Labour wants public investment. Across the aisle, Shadow Cabinet members reportedly “fear Starmer’s commitment to fiscal discipline will block adoption of potentially popular big-ticket policies”. The FT’s Jim Pickard noted how Rachel Reeves’ pledge to invest £224bn (over 8 years) in climate measures is barely mentioned by shadow ministers in the media, and that “Senior party figures suggest Starmer needs to loosen the purse strings at the annual conference in Liverpool in September.”

Taxing wealth without reducing economic growth. Economists Linus Mattauch, David Klenert, Joseph Stiglitz and Ottmar Edenhofer have published a paper showing how governments can tax wealth to fund public investment and reduce wealth inequality, without compromising economic growth

Treasury vs BEIS. The Institute for Government’s Tom Sasse took a deep dive into the relationship between the Department for Business, Energy and Industrial Strategy and the Treasury for Politics Home. Sasse posits Rishi Sunak’s ‘Treasury Brain’ - “a rigid short-termism that acts as a dead hand on the aspirations of anyone in government who thinks they can make things better” - against Kwasi Kwarten’s ‘newfound pragmatism’. He argues that the cost of living crisis, and particularly the rise in energy bills, has “tested the Treasury’s approach to breaking point”. 

Energy and climate change

A global energy price cap? Leaders of the world's largest economies discussed the ‘feasibility’ of introducing temporary price caps on energy imports at the G7 this week, in an attempt to reduce Russian hydrocarbon revenues and minimise the effects of energy price inflation.

Winter fuel crisis. The International Energy Agency’s Fatih Birol has warned that Europe should immediately prepare for a complete severance of Russian gas exports this winter and urged governments to cut energy demand and “mobilise major funds to create a clean energy transition” to avoid volatile energy prices. Germany’s economic ministry is considering rationing gas to smooth over supply shortages. (OpenDemocracy’s Laura Basu explains how the UK already rations energy through prices and makes the case for an alternative way of rationing energy “carried out in the context of radical equality”.)

UK Infrastructure Bank, clean energy and energy efficiency. The UK Infrastructure Bank published its Strategic Plan which included £22bn investment in clean energy. The plan stated objectives to “look to finance both local authority and private investment in urban heat networks” and “explore how we can finance local authority and private projects, including pilots, that will accelerate the deployment of energy efficiency measures.”

Green industrial strategy in the US. Earlier this month the Whitehouse invoked the Defence Production Act (DPA) to give President Biden emergency economic planning powers to drive the domestic production of critical clean energy supply and energy demand reduction. The announcement includes new Federal procurement actions to stimulate demand for US-made solar panel parts, building insulation, heat pumps and more. 

  • Analysis. E3G’s Melanie Brusseler explains the political significance of the move: “On the one hand, it signifies the growing political legitimacy of state intervention into private production for public benefit broadly, and in support of decarbonization and energy resilience more specifically. But, on the other hand, its use signifies the current limits of such legitimacy (at least for green undertakings) and practical state capabilities, especially with a climate-hostile fiscal state.” (For more on the DPA and its funding issues, read this piece by The American Prospect’s Lee Harris.)

Empty promises make the case for stronger climate action. New York Times writer David Wallace-Wells provides an update of greenwashing from corporations and state governments as C02 emissions continue to rise. Key points from his ‘thread on climate hypocrisy’: A global review of net-zero pledges by corporations found that half of them have not developed a plan to deliver emissions reductions. Similarly, no single country is on track for emissions reduction in line with a 1.5 degree target enshrined in the Paris Agreement. 


Economic implications of Roe v Wade. After the Supreme Court overturned the Roe v. Wade case which may lead to a ban abortion in many US states, the New Yorker’s Sheelah Kolhatkar explained the ‘devastating economic impacts’ of an abortion ban. Economist Caitlin Myers convened 154 fellow economists to file a brief outlining decades of research on how unwanted pregnancies affect women’s education, employment, earnings and the labour market more broadly

Local economies

Regional devolution and Whitehall’s fiscal micromanagement. A new paper from Onward, endorsed by a cross-party coalition of regional mayors, sets out the problems with England’s over-centralised system and makes 25 recommendations for reforming the funding settlement for regional government, including calling on the Treasury to hand mayors control of 1p in every £1 raised from income tax in their areas. 

Worker-owned business in Wales. CLES have published a policy report outlining a plan to support worker buy-outs and expand employee ownership in Wales. The report argues that “The benefits generated by employee ownership directly address the most pressing challenges in the Welsh economy...democratising ownership for all should be an objective that underpins the Welsh government’s foundational economy approach.”