Sunday, April 18, 2004
No return to the bad old days of strikes
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

For those with long memories, the words “strike” and “Britain” are guaranteed to bring on an attack of the heebie-jeebies. There were many reasons why, only a generation ago, Britain became an economic basket case. Among them were flawed economic policies, the legacy of empire, chronic under-investment and a mistaken belief in the economic efficiency of the state sector.

The most powerful symptom of Britain’s “sick man of Europe” period, however, was strikes. And now, it seems, there is a worrying echo of those days.

Last week 100,000 civil servants went on strike for up to 48 hours over pay. They included, for the first time, statisticians, not normally known for their militancy. The precise numbers involved are a matter of dispute between the unions and the government, the former warning that these are only a taste of things to come. Strikes are threatened, not just over pay, but over matters as diverse as health-and-safety and raising the public-sector retirement age from 60 to 65.

The RMT union is also in militant mood, gearing up for the first national strike of rail workers for a decade. Pay is at the heart of its dispute with Network Rail, although pensions and free travel for rail staff are also high on the agenda.

Britain’s teachers, at least those represented by delegates to the NUT’s recent annual conference in Harrogate, are girding themselves for industrial action on issues ranging from the use of classroom assistants to the proposed six-term school year. And in this case there does not seem to be much room for dialogue.

Doug McAvoy, the NUT’s outgoing general secretary, described Charles Clarke, education secretary, as “McCarthyite”. Clarke said he had better things to do, including eating fish and chips in Lowestoft, than attending the NUT conference.

So is all this building up for a return to the bad old days? Let us start with the good news. Britain’s strike-prone reputation developed during the economic “golden age” of the 1950s. I’m All Right Jack, a 1959 Boulting brothers film starring Peter Sellers, satirised militant trade unionism and came after 8.4m working days had been lost to industrial disputes in 1957.

During the 1950s working days lost due to strikes averaged 3.3m a year, rising to 3.6m in the 1960s. But the defining decade was the 1970s, with a three-day week at one end and the winter of discontent at the other. During that period 12.9m days were lost, on average, each year to industrial action and the country often seemed to be on the brink of anarchy (although union leaders also struggled to contain unofficial action by their members).

It may not have been the worst period for industrial action in Britain. That grim accolade has to go to the 1920s, which included 162m days lost during the 1926 general strike, as well as 86m in 1921. By comparison, the worst individual year in modern times was 1979, the winter of discontent combining with an engineering strike, when 29.5m days were lost, followed by 1984 and the miners’ strike, 27.1m.

The miners’ strike bumped up the figures for the 1980s, although, with an annual average of 7.2m days lost, the trend was improving. But the real breakthrough came in the 1990s, when fewer than 0.7m days were lost on average. To put that in perspective, before 1990 there had not been a single year — including the war years 1914-18 and 1939-45 (when there were quite a lot of strikes) — when the figure had been below 0.9m. In the past four years this average of 0.7m has been maintained, despite the council workers’ strike of 2002.

Britain is not only far less strike-prone than in the past, its record compared with other economies is excellent. This country’s strike rate (days lost per 1,000 employees) has been under half the EU and OECD averages over the past decade.

Why the change? The union reforms introduced by Margaret Thatcher outlawed lightning strikes and secondary action. They and the changing structure of the economy brought a sharp decline in union membership. Low inflation has reduced the incidence of pay-related disputes. The bad old days are not going to return.

So is everything in the garden rosy? Not quite. Union membership has declined in Britain but it has declined unevenly. It is now rare for private-sector workers to belong to a union; fewer than 20% do so. In the public sector, however, where union membership is 60%, it is still the norm. The link between union membership and strike action is pretty clear — most disputes are now in the public sector (I may be old- fashioned, but to me Network Rail is part of the public sector).

The scope for strikes by public-sector workers to disrupt is less than it was, but it still exists. Also, the current mini-outbreak of industrial unrest in the public sector comes before Gordon Brown’s planned efficiency squeeze, under which up to 80,000 civil-service posts will be cut and 20,000 shifted out of London.

A government that has yet to convince voters that it has improved public-service delivery could face damaging clashes with the unions. That does not mean we are going to see a tidal wave of industrial action: even public-sector workers have lost the appetite for long disputes. It does mean that the prospect for transforming Britain’s public services will slip further into the future even as the billions continue to pour in. But then we rather expected that.

PS: Worrying news. The skip index, one of my most reliable economic indicators, has slumped. The index, for those unfamiliar with it, is based on the number of builders’ skips in my street. Four is a boom, two normal and zero tells us the economy has ground to a halt. The reading is now zero. Combine that with the news that Marks & Spencer, the traditional bellwether of British retailing, is in trouble, and it all begins to look quite troubling.

Before jumping to that conclusion, a couple of caveats are in order. The skip index may simply be reflecting the Easter holiday. Builders have been doing so well that few will have missed the opportunity to spend some time in their second homes in Spain (although previous experience would suggest they usually do that in the middle of a job). As for M&S, every retailing analyst will tell you that its problem now is that it is no longer a bellwether.

Even so, M&S may be telling us something about the general picture. It is a common belief that consumer spending is racing away. It is not. The value of retail sales, the money that people actually paid out, rose only 2.4% last year, after climbing by 4.9% in 2002 and 5.9% in 2001. Volumes were a little stronger last year, but only because retailers cut prices.

The British Chambers of Commerce’s latest quarterly survey, out last week, was upbeat but also struck a note of caution. It pointed out that public-sector spending and recruitment were playing a disproportionate role in the recovery. David Kern, its economic adviser, said consumer-spending growth (a wider measure than retail sales) had slowed to a sustainable 2.5% rate.

Neither the skip index nor M&S is likely to prevent the Bank of England’s monetary policy committee (MPC) from raising interest rates from 4% to 4.25% on May 6. But some of the wilder stories about an economy roaring away on a sea of debt can be dismissed. Having sensibly held off from a rise in April, the MPC will continue on its gradualist path. And rates should not need to rise above 5%.

From The Sunday Times, April 18 2004