The pool of available workers remains vanishingly small. That puts unions in a position of strength.
As the previous economic crisis snowballed in 2008, one of the first things companies did was tighten their belts. Mass redundancies and administrations became commonplace, and many people, from Lehman Brothers bankers to Woolworths shop-workers, found themselves out of a job. By the end of 2011, 2.7 million people in the UK were out of work, causing the quarterly unemployment rate to climb to 8.4 per cent, its highest since 1995.
Almost a year after Vladimir Putin’s invasion of Ukraine pushed the problems still simmering after the pandemic into a full-scale, inflation-fuelled, global economic crisis, a very different picture of Britain’s labour market is emerging. Figures published today (17 January) by the Office for National Statistics (ONS) show that, in spite of soaring inflation, sluggish GDP growth and an interest rate that just keeps climbing, unemployment is still surprisingly low: in the three months of September to November, unemployment edged up just 0.2 percentage points to 3.7 per cent, while the number of payrolled employees climbed by 28,000. Meanwhile, economic inactivity – one of the measures worrying economists because, in the wake of the pandemic, it has remained unusually high – fell 0.1 percentage points.
In the context of increasingly heated industrial disputes, does what economists refer to as “tightness” in the labour market provide strikers with a decent bargaining chip? The ONS said 467,000 working days were lost to strikes during November, the most since 2011. Karl Thompson, an economist at the Centre for Economics and Business Research (CEBR) told me that the total cost of days lost to strikes between June and January will be about £1.4bn – and that’s without the knock-on effect of the rail strikes, which will add another £500m to the total.