The summer of discontent

Sustained strike action highlights the damage industrial disputes can cause and erodes public confidence in the corporate world.

It is fair to say that 2022, at least to this point, has not been short of news.

Just as a semblance of post-pandemic normality appeared to be kicking in, the Russian invasion of Ukraine sent energy prices surging along an even steeper upward trajectory. Inflation is at its highest point since the 1970s, the UK’s Prime Minister has resigned and travel chaos continues to blight the summer season which is serving up one prolonged heatwave after another.

In and among all of this has been a series of industrial strike action which has also made the headlines.

The most notable – not least because of the impact they have on the general public – have been walkouts by workers in the transport sector.

Towards the end of June, the RMT – which represents the interests of employees in the transport industry – led three days of strikes which brought the entire rail network to a near standstill, with a fallout over job security, pay and conditions at its heart. This occurred alongside a separate strike by London Underground workers on one of the days over a similar dispute, the summer of discontent peaking, ironically, on the day of the summer solstice, 21 June.

Rail strikes could return later this year, while the threat of a British Airways strike has just been suspended after the airline agreed to a new pay deal.

And it is not just transport workers resorting to industrial action. The UK has seen strike activity across a range of sectors this year. Barristers walked out for four days in June over a dispute about government proposals around legal aid. Meanwhile, the prospect of strikes from teachers and GPs is looming.

While the exact reasons for each strike ballot are different, it is clear that workers across many key sectors of the UK economy are experiencing hardship. The cost-of-living crisis has only served to intensify the financial challenges being faced by millions of workers around the country, and employers are under pressure to do more to help their colleagues to get through this difficult period.

So, given the high volume of strike action occurring across the economy, what can we learn from what has happened so far?

Strikes work – they will continue to cause damage to businesses

Strikes have proven to be highly effective because the impact they cause is both widespread and deep.

‘Fundamentally a strike is a reputational disaster for any organisation,’ comments Deborah Saw, an adviser to boards on reputation management, corporate branding and stakeholder engagement.

‘They can cause long-term damage that may take years to repair. A strike can even be an “extinction event” for some companies, allowing predators to raise issues about management competence, causing investors to lose confidence and sell to a rival.’

Of course, we already knew that industrial action was a proven means of forwarding negotiations, exposing employers to public scrutiny and highlighting the challenging situations their workers face.

However, what this summer has shown – especially in the case of the sustained rail strikes – is just how much disruption can be caused, and how much disruption unions and their members are willing to cause.

The hospitality sector, for example, is predicted to have lost around £540 million across the week of rail disruption in June.

‘For a devastated hospitality industry beginning its tentative post-pandemic recovery, the strike action couldn’t come at a worse time, and might deliver a fatal financial blow to those businesses already struggling to survive,’ Kate Nicholls, Chief Executive of UKHospitality said in the build up to the walkouts.

‘We should all be pulling in the same direction if we’re to get the UK economy back on track and want to see urgent and productive talks to avoid widespread disruption.’

The threat of strikes is a means of making those urgent and productive talks happen. Although the rail strikes ultimately went ahead, the fallout between the RMT, Network Rail bosses and the UK government has highlighted the critical importance of trust, transparency and empathy between employer and employee.

Tempered and fragile relationships are key strike ingredients. ‘Today, unlike in the 70s and 80s, strikes are rarely spontaneous,’ comments Saw. ‘They are the result of months of failed negotiations and, in many cases, signal a breakdown of trust between management and employee representatives.’

‘Even if only a section of the workforce goes on strike, it affects the whole organisation. Share prices fall, customers don’t have the confidence to book, profits are squeezed, employees leave and recruitment becomes even more difficult.’

Public sympathy with the corporate world is eroding

There is also a bigger picture message being built up around strike action that threatens to undermine faith in the broader economic model.

A poll by Savanta ComRes found that the majority of the public (58%) believed the June rail strikes were justified, with two thirds (66%) saying the government have not done enough to prevent the strikes from happening. On a more general level, six in 10 said they supported the principle of strike action.

‘Today, in such challenging economic times, the public’s sympathy is with the workers, not “fat-cat” bosses who ask for sacrifices but seemingly don’t make any themselves,’ Saw adds.

That perception could also be about to strengthen. According to the High Pay Centre, the gap between the pay of company executives and other workers is set to widen this year after shrinking slightly during the height of the COVID-19 pandemic. Indeed, for 2022, the organisation’s research suggests that the median FTSE 100 CEO’s earnings surpassed the median annual wage for a full-time worker in the UK by around 09:00 on Friday 7 January.

The same study also found that the majority of the public (71%) believe that government policy benefits high earners more than those on low and middle incomes.

Employers must do more to avoid strike action

These findings, which are reflected in the industrial activity seen across the UK this year, should serve as a prompt for both public and private sector employers to step up their efforts not only to avoid industrial disputes, but also to shift the dial of public opinion.

Indeed, for those working on organisations’ boards and in governance professions, there is a need to find ways to empathise with employees’ challenging circumstances and take tangible action that will make a difference.

There are many ways this can be achieved. Offering fair, value-based remuneration packages is one option, but many companies will also be struggling with heightened inflationary pressures that will hamper their ability to increase salaries.

However, there are low-cost alternatives that can also be impactful. For many employees, offering early or more regular access to wages will make a huge difference in their ability to keep on top of bills. Indeed, according to research by Wagestream, 53% of pay-on-demand employees feel their financial situations are better, while 42% feel less distracted at work as a result of being able to access their pay earlier.

The same research also found that half of employees were seeking some form of access to financial education to help them better manage their finances. This is a simple, low-cost intervention that organisations can make and could take various forms, from offering one-to-one financial coaching to simply circulating a list of available services and tools.

Finally, and perhaps most importantly, company bosses must demonstrate that they care. This means providing an open door to facilitate dialogue and allow employees to raise concerns without reservations – crucially, that dialogue needs to be productive and a means of supporting action.

Tom Wadlow, a Partner at WD Editorial

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