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Employment

Low union membership has 'knocked £400 a month off the average Brit's paypacket'

Recent rail strikes and warnings of a national strike give the impression that workers have the upper hand, but declining union membership is handing the cards to bosses when it comes to pay.

Trade unionists travelled from across the UK to join a demonstration against low pay and the rising cost of living in London last month

Trade unionists travelled from across the UK to join a demonstration against low pay and the rising cost of living in London last month. Image: Eliza Pitkin

Years of falling trade union membership is likely to be holding wages down by as much as £100 a week for the average worker, new research has found. 

The study by the Resolution Foundation challenges the idea that unions are holding employers to ransom over pay, finding that employees at four-in-five workplaces had their pay set by management rather than negotiated by a union. 

The current imbalance of power between workers and employers is likely to have marked down wages by between 15 and 25 per cent, says the think tank.

In response to the recent three days of strike action on the railways by members of RMT union, transport secretary Grant Shapps has suggested the government could repeal a legal ban on agency staff filling in for striking workers.

“The country must not continue to be held to ransom,” he told The Telegraph. 

Treasury officials have also warned that increasing pay in pursuit of rising prices could worsen inflation, with the boss of the Bank of England telling workers to “think and reflect” before they ask for a higher wage.

Hannah Slaughter, senior economist at the Resolution Foundation, disagrees. She said: “Recent rail strikes and warnings of wage spirals and industrial action give the impression that workers have the upper hand as Britain battles with double-digit inflation.”  But in reality she said “worker power has been in decline for decades”.

“These shifts in power between workers and firms have a huge impact on living standards, with lower worker power likely to have reduced average wage levels by as much as £100 a week,” she said.

Tony Wilson, director of the Institute for Employment Studies, added: “There is little sign so far of a wage/price spiral, but some indications that private-sector services are raising pay in response to a tighter labour market.”

In the three months to April, public sector workers saw their wages rise by just 1.6 per cent compared with the same period last year, while those in the private sector saw an average pay rise of 8.2 per cent, almost keeping up with inflation.

With the average Brit earning £562 per week in April 2022, Resolution Foundation researchers calculated that average weekly earnings would be £99 a week higher “in the absence of employer power over workers.”

Unions across the UK have been balloting for industrial action, with criminal barristers, BT call centre workers, Arriva and Stagecoach bus drivers and Post Office workers joining the ever growing list of workers demanding a pay rise in the face of soaring inflation.

But with union membership half of what it was – around one in two people were part of a union in 1980, compared with less than one in four in 2021 – the bargaining power they hold has decreased.

RMT members recently stagest the biggest railway strike in 30 years, demanding a pay rise as inflation sees that value of paypackets plummet. But despite three days of strike action taken by up to 40,000 railway workers, a pay deal is yet to be agreed with railway bosses. 

Transport commentator Christian Wolmar explained that, unlike in other industries, the railway sector still sees strong union membership, which means those in the industry can use their labour as bargaining power. 

But with fewer people a member of unions themselves, this translates into decreasing knowledge, and sympathy, for those resorting to industrial action. 

For the government, the strikes are “another type of culture war,” says Wolmar. “It’s saying that railway workers are a well off bunch who have had an easy time of it and are really well paid, and when they go on strike they’re portrayed as militant, and the government is happy with that”.

“Having striking railway workers kind of, in a way, suits them. They can say, ‘these people are disrupting your livelihoods at a bad time’.”

The UK is also bracing for what could be the first national train strike in more than 25 years, as workers from the Aslef trade union ballot for strike action. 

Union Unite has recently won a series of pay rises for workers, including a 17.5 per cent pay rise for factory workers at Cadburys’ Birmingham site, and 15.8 per cent for Stagecoach bus drivers in Worthing where the deal was reached without having to resort to industrial action.

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