In May 2022, inflation in the UK reached a 40 year high as the consumer price index rose to 9.1% from 9%. This is the highest it has been since February 1982. This is also the highest rate in the G7 group of wealthy nations. Soaring utility bills, fuel prices, and food and grocery costs, is putting increasing pressure on household budgets. As consumers grapple with rising bills, there has been greater wage pressure within the labor market. As a result, many unions have begun to take action, with many strikes being threatened, while others have been executed.
On June 21, 23 and 25, around 80% of Britain’s railways closed amid the biggest rail strike in over 30 years. These strikes were carried out by members of The National Union of Rail, Maritime and Transport Workers (RMT), and revolved around issues concerning redundancies and salaries. Strike action has also been seen elsewhere, with criminal barristers walking out of court on June 26. This came after they rejected a proposed 15% increase in fees for legal aid cases. Meanwhile, post office workers are set to become the latest to strike. This will be the third strike this year and comes after a rejected proposal for a 3% pay increase.
With inflation hurtling towards double figures, unions are increasingly calling for pay increases for employees. As this situation exacerbates, strike action will spread throughout both the public and private sector. The issue here is not if more strikes will happen, but rather how extensive these strikes will be, when they will occur, and what impact they will have. For many public sector workers, pay disputes had been ongoing prior to the cost-of-living crisis, with unions now calling not only for recent inflationary increases, but also rises to regain what has been lost over recent years in terms of real wages.
The government sets the Bank of England an inflation target of 2%. However, with the upward trend we are seeing at present, this target could be some way off. The central bank has stated that it does not expect to reach the 2% target for at least another two years. The UK is set to continue to face extremely difficult economic pressures as the cost-of-living crisis worsens. Effectively, workers are seeing a pay cut as the cost-of-living soars at extraordinary levels. However, should the government and employers raise pay at a rate that mirrors inflation, there is the potential for this to aggravate the issue further. Such steep increases in wages would put pressure on businesses and would likely result in the cost increase being passed on to consumers. Should this happen, inflation will continue to soar as the cost of goods and services rises further. One thing that is for certain is that both employers and employees across all industries will be forced to ride out a highly challenging 2022.