In the News

Is the UK economy facing a summer of discontent on pay?

Graham Watson

17th July 2022

Are we facing a summer of discontent on the back of the cost of living crisis?

Certainly, the boss of the Unite union, Sharon Graham, thinks so. And they are, currently, the UK's largest trade union.

Her argument is a straightforward one about the distribution of income - why are we prepared to tolerate the returns to capital being so much higher than the returns to labour?

In essence, many firms continue to make high profits but little of that profit finds its way into workers' pay packets. With consumer prices rising much faster than wages, real incomes are falling, leading to pressure for pay to rise to help protect real living standards.

Economists have a phrase for this - a wage-price-spiral.

With unemployment low, record numbers of unfilled job vacancies and numerous reports of skilled labour shortages, has the balance of negotiating power this summer tilted towards workers, especially those with relatively strong trade unions who might be prepared to use their collective bargaining power?

This will be one the most important economics stories to follow for the remainder of the year at least.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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