Saturday, 21 June 2008

There is power in a union

After a highly effective four-day strike, Shell tanker drivers pulled of a spectacular pay agreement. The drivers accepted a two year 14 percent increase. Moreover, it is front-end loaded; 9 percent this year and 5 percent next year. The Shell increase is significantly higher than the rate of inflation. So much for pay restraint.

The deal stands in stark contrast to UK average earnings growth. The most recent earnings data shows that most workers, both in the public and private sectors, are now suffering real wage reductions. We all feel it; wages are simply not keeping up with inflation.

How did the Shell workers pull off this extraordinary 14 percent increase, while the everyone else is making do with 3.5 percent? The Shell workers are organised; and they are in a trade union. They threatened a strike, they voted for one, and then they followed through. Once the strikers threatened UK oil supplies, a 14 percent increase seemed very reasonable.

Strike action? Double digit pay increases? Didn't Thatcher kill off the trade unions back in the 1980s?

Certainly, a casual examination of the facts seem to bear this claim out. After 1979, her government passed a series of laws that restricted trade union activity. One by one, the unions attacked, and government faced them down. The last major confrontation; the miner's strike of 1985 was the last of the battles. After that, the trade union movement was finished.

However, the story isn't quite as simple as that. Between the end of the war and 1970, trade union membership was remarkably stable. Around 9 million workers were members, mostly in traditional manufacturing industries. National strikes were comparatively rare, although small "wild-cat" strikes were quite common.

After 1970, things changed. Within 9 years, union membership increased to 13 million, and by the time Thatcher crossed the threshold of 10, about 50 percent of the workforce were members.

Why did membership surge? One word - inflation; when prices are rising, workers have only way of maintaining the value of wages - collective action. During the 1970s, workers belonging to aggressive trade unions were most able to protect their standard of living. Non-unionized workers suffered the most.

Today's Shell agreement provides a powerful example of the importance of unions in times of inflation. Pay restraint, the government are deluding themselves. If inflation continues to accelerate; the unions will be back.


CWS said...

14 percent versus 3.5 percent? 5 percent inflation? I am joining up. Where is the membership form?

seema said...

I am beginning to believe in time travel - we are back in the 1970s.

electro-kevin said...

My workforce (train drivers at a certain TOC recently merged in a new franchise) have just turned down a 30% pay rise (over three years) expecting something better.

OK - it's a little more complex than that but basically correct without giving away too much detail.

Yes. I can see trouble ahead.

And privatisation was supposed to stop militancy ???

Anonymous said...

Let's hope they get crushed again.


VADO said...

Shell - 14 percent! Wow, double digit inflation will soon be upon us.

Anonymous said...

Why are we against salary increases? we form part of the working class. The ruling class increases the prices(by speculation), and we complain about salary increases!!!

Does that sound strange???

For uncensored news please bookmark:

Anonymous said...

I'm not working class, I'm middle class. So in class-struggle terms I'm your enemy. But I think the class struggle is silly.

I don't suppose you want to specify just HOW the ruling class increases prices? Here's me thinking prices are set at a level approximate to marginal cost plus normal profits and that any company setting them higher would be outsold by its rivals.

I suppose you are aware that the major "index investors" bidding up oil and commodities are mutual funds and pension funds. Hmmmm, whose money are they investing. Right, normal people saving for retirement, plus company and local government pension schemes.

So in a roundabout kind of way it's the older working class thats screwing itself and the younger working class too.


Anonymous said...

Shell was today accused of making "obscene" profits at a time when pensioners, motorists and industry are struggling with higher energy prices when it unveiled annual earnings of $27.6bn (£13.9bn).

The oil major has made British corporate history with the record figures, which are equivalent to more than £1.5m an hour and come at the end of a three month period when crude prices have averaged over $90 a barrel.





“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”

polpot was right said...

Turn the middle class into useful

Anonymous said...

Pay increases are not a long term solution, a more sensible approach would be boost wages and encourage productivity via shifting taxation onto the rental value inherent in land rather than taxing work.

Believe it or not there are still manufacturing companies that operate in the UK which could easily dismantle their operations and shift overseas if unions started to spring up again. Uk employees need these companies much more than they need us.

Furthermore, I wonder how the Chancellor would propose to fund these increases demanded by the public sector? The money has to come from somewhere and laying public workers off would be politically disasterous.

I don't see across the board wage increases as viable this time round. We need instead to cut tax.


Anonymous said...

Dear Chefdave,

Please read the following article and tell me after that if you think the same way.

Have fun!!!

Anonymous said...

The most scary part of this all is when you understand that you are paying(with your taxes)the security forces(police,MI5)that have been created to suppress you.

“If voting changed anything, they'd abolish it”

Ken Livingstone quote

For uncensored news please bookmark:

powerman said...

I'm surprised that they got their deal so quickly. I don't begrudge them the money, but I do wonder how this will affect other trades and professions.

These guys are now being paid more than a lot of much more highly skilled people. They're being paid more than a lot of skilled medical staff, software developers, people who had to study and/or tran for years before they could do their job.

Anonymous said...

Dear Powerman,

Don't blame train drivers for your low salary, blame the system.

Please read the following article and tell me after that if you think the same way.

powerman said...

Well, when you're discussing the effect of government policy on the economy, it's hard for it not to get political, but I don't think Alice wants her blog to get turned into a general political rumpus with people arguing from free-market, socialist, libertian positions etc..

I'd rather just try and focus on where the economy is likely to head with special attention to what's going on in the property market.

One thing that I think a few of us agree on is that several western governments have an incentive to allow a bit of wage inflation for a while because it would :-

A) help rebalance the ratio of house prices to household incomes without having to put the population (and the financial services industry) through the pain of defaults and negative equity.

B) It would in real terms help them reduce their _massive_ commitments to final salary pensions to the 'baby boom' generation of public servants who are now starting to retire.

C) Currency devaluation will to some degree help our export/import balance.

Of course, there will be enormous problems resulting from this strategy, if it really is what they unofficially intend, but I can see why they might not be all that serious when calling for 'wage restraint' within certain parameters.

Alice Cook said...

Powerman, discuss whatever you want so long as it is not rude or racist.


Anonymous said...

Anonymous. Sign a name to your posts or stop the leftie spam


electro-kevin said...

It's not about skill or education so much as restricted supply of labour combined with the immediacy of the effects of withdrawing that labour (unionist control as Alice says) - also the critical nature of the work helps to give the worker leverage.

Petrol tanker drivers could cut the country's throat in days - they got their money. We will pay in the knock-on effect as others seek to follow their successful example.

Train drivers with degrees or professional qualifications (notably teachers, engineers & chemists) are now so common as to have featured in a regular section in the Aslef Journal (until I complained about it.) They have been bitten once already by the con that education always brings rewards and are often more keen about protectionism than the rest of us.

Why do we have people of this calibre driving trains ?

Virgin, Freightliner, GNER drivers earn in the region of £50-80k pa. Not bad for 18 months training and no qualifications.

(I don't earn anywhere near btw)

electro-kevin said...

A convoluted way of saying that workers in essential jobs are now often brighter and better educated than their management.

powerman said...

I don't actually believe that having a certain academic qualification 'entitles' one to a certain income.

But I do worry about the long term effect of telling the population that except for a small number in the City, striving for a high degree of academic attainment is effectively a waste of their time.

Anonymous said...


The sooner people recognise that Universities are a fraud selling impossible dreams, the better we'll be. Admissions need to fall so we get less debt, lower costs, less Cultural Studies, and less below-average IQ students.

Then perhaps Universities will go back to there traditional role: a prep school for the middle class.

I seriously doubt there's anything of value to learn in a university that couldn't be had in a polytechnic (for technical skills) or a night class (for that philosophy crap).

For the moment its a giant Ponzi scheme to provide middle class workers of dull intellect with a welfare payment (that they call a "lectureship")


Anonymous said...

Actually, massed union action is going to come back a lot sooner than you might expect, mostly due to some financial idiocy on the part of the Labour Party (not the Government per se).

The Labour Party is structured like a small club, and the officials of this club all are liable for the club's finances, and this liability is unlimited. So, if the Labour Party as an entity incurs large debts, the officials of the party are liable for the debt, and could get wiped out if the debt is a big one.

At present, the Labour Party owes some 24 million pounds, and with donations now heavily restricted and at an all-time low (nobody bets on an obviously lame horse in a race) it doesn't look able to shrug off the debts; indeed people are already turning down official positions in the party due to fears of bankruptcy.

So, if the debts cannot be paid off, the Party's finances will collapse, and as they go will grab all money possible from the officials of the Party, who will all be forced into bankruptcy too; they are none of them rich enough to survive the disaster.

A bankrupt cannot be a member of Parliament, so if the Labour Party went bust, all its officials who are MPs would lose their posts, effective immediately, no wriggle room permitted.

The only force that can avert this catastrophe is the Unions, in particular only the unions Gordon Brown has thus far managed not to alienate, which is the public sector unions.

So now Gordon doesn't really rule the country any more but has to check with his Union paymasters at every turn. He now dare not make public sector cuts, and he dare not cut fuel duty or taxes; he's spent up, maxed out the country's loanbook and now the silly sod's stuck.