The ongoing wave of industrial action that has been sweeping the UK has eased since the end of last year, but with little progress being made in negotiations between unions and government it looks set to drag on. In the nine months to February, more than 3 million working days were lost to strikes, and we estimate a further 520,000 to have been lost since March. This is the largest recorded number of days lost to strikes over any nine-month period since 1989-90.[1]
Even so, our estimates suggest that the direct costs of these lost working days will amount to just £1.2 billion in the twelve months to June 2023, representing just 0.05% of annual GDP. This peaked in December, with walkouts by rail workers, ambulance staff, nurses, and postal workers, amongst others. As shown in Figure 1, the composition of these direct costs has changed over the year. The transport, storage and IT sector accounted for 80% of the total direct costs of strikes in Q4 of last year (£597m), driven by major rail strikes, but in Q1 of this year the education sector accounted for just over half (53%) of the total (£243m).
Figure 1: Direct costs of industrial action by sector, £ millions. Figures left of the dotted line based on ONS data available for working days lost to disputes; right of the dotted line on Cebr estimates of these
Source: Cebr analysis
The recent news of RMT members voting overwhelmingly in favour of extending their strike mandate suggests that the decline in overall strike activity isn’t set to last. Strikes in the transport, storage and IT sector resulted in over 1.34 million working days lost in Q4 last year; this is 1.5 times the total recorded number of days lost by the sector between 2008 and 2019 (901,000). With further RMT and Aslef strikes planned this month, we predict the total direct cost of strikes in this sector to amount to £757 million in the 12 months to May.
By their nature, rail strikes disrupt economic inactivity more widely, by forcing people to change or cancel travel plans. Trains ran as normal around the coronation of King Charles III – it is instructive to consider how celebrations in London and other big cities would have been affected had this not been the case. A smaller, but still significant event is the UK’s hosting (on behalf of Ukraine) of this year’s Eurovision final. Aslef and RMT strikes today and tomorrow respectively may cause problems for those hoping to travel to Liverpool. Ticket-holders who were planning to travel by train and are unable to do so may have to go by car instead – at a conservative estimate we think this will generate over 9,000 additional car journeys, with an associated 200 tonnes of CO2e emissions and congestion costs of around £100,000.[2] These impacts are small in the scheme of things, but are replicated in commuting, business, and leisure journeys diverted to car for every rail strike – not to mention the economic activity foregone due to journeys that don’t take place at all.
Pay negotiations in the education sector are also showing little sign of progress: the government’s latest pay offer was rejected by all four unions involved. February saw the highest number of working days lost in the education sector since November 2011, at a direct cost to the economy of £67 million that month alone. However, data collected by the Department for Education suggests that schools have become more able to remain either fully or partially open over recent years, likely as a result of being forced to adapt to remote teaching during Covid lockdowns. It was previously reported [4] that around 60% of schools in England were closed during the one-day walkout in November 2011, whilst just 9% closed during the national teacher strike in February.[5] This will reduce the economic knock-on impact of parents being forced to cancel work and other plans. Longer-term impacts through disruption to children’s education – on top of that already caused by school closures during Covid – must also exist but are more difficult to quantify.
Adapting to staff walkouts is, unfortunately, less possible for the health and social care sector. An estimated GVA loss of £48 million (in the twelve months to June 2023) hides the wider indirect impacts on long-term health outcomes due to reduced services. NHS trusts have had to reschedule more than 500,000 outpatient appointments and operations since strikes began last December.[6] Whilst progress can be seen in the recently agreed pay deal with the NHS Staff Council, there remains the possibility of further strikes from Unite and the Royal College of Nursing, both of which rejected the offer. Indirect costs, economic and otherwise, of delayed treatments and diagnoses could persist for years and add to pressures on the health system further down the line.
Therefore, the small direct impact of strikes must be considered in the context of wider economic, social, and environmental costs that disruption to services like rail, education, and health causes. As inflation begins to abate and the gap between public and private sector pay growth starts to close, pressure to settle the disputes will grow and the impetus for further strikes may abate. Public sector workers will rightfully point to the real wages losses suffered since inflation started to rise aggressively in 2021. But a longer-term view of how public sector pay can be sustainably raised will also need to consider how the sector’s record on productivity can be improved.[8]
[1] 12 months from July 1989 to March 1990. ONS.
[2] Diversion to car from Rand Corporation; Emissions figure from Gov.uk; Congestion costs from Gov.uk.
[3] The Week.
[4] BBC.
[5] DfE.
[6] NHS Confederation.
[7] ONS.
[8] ONS.
For more information contact:
Robert Beauchamp, Managing Economist -Email: rbeauchamp@cebr.com – Phone: 020 7324 2872
Elle Crossley, Economist – Email: ecrossley@cebr.com – Phone: 020 7324 2840
Cebr is an independent London-based economic consultancy specialising in economic impact assessment, macroeconomic forecasting and thought leadership. For more information on this report, or if you are interested in commissioning research with Cebr, please contact us using our enquiries page.