All the signs are that the Grangemouth oil refinery workers in the UK, whose two-day pensions strike closed the Forties North Sea oil and gas pipeline earlier this week, have scored a significant victory. A joint statement issued by Ineos, the refinery’s owner, and the oil workers’ union, Unite, was soothingly bland and face-saving after talks in London on Tuesday. But insiders say the outcome is unequivocal. Faced with such a decisive demonstration of industrial strength, Jim Ratcliffe, the secretive billionaire chairman of Ineos, has bowed to the inevitable. In exchange for a commitment to future negotiation, he has agreed to withdraw his decision to close the final-salary pension scheme for new employees and to reduce existing benefits from the beginning of August.
Assuming the deal holds, it will be an overdue shot in the arm for a trade union movement that has struggled to rebuild its strength under New Labour, especially in the private sector. As one leading unionist said yesterday: “This will be a real morale booster. It shows that when people are prepared to put up a fight, they can win. We have more muscle than we give ourselves credit for, and loss of confidence can become a self-fulfilling weakness.” Of course, not every group of workers is in a position to shut down a third of the North Sea’s oil and gas supply — and oil refineries present special problems for employers who want to up sticks and take their business overseas.
But as has been shown in other sectors such as rail, civil aviation and the utilities, where unions are prepared to use the leverage they have, they are able to deliver impressive results.
Certainly the watertight case and dignity of the Scottish workers won public sympathy. This was a walkout, after all, in support of the pension rights of a new generation of workers, as well as the strikers’ own. There was also never any doubt that the highly profitable petrochemicals giant and its lawnmower-collecting chairman could afford to maintain the Grangemouth pension scheme, which is fully funded and in surplus. The problem was simply that a heavily leveraged private equity business was determined to slash costs, transfer risk to its employees and drive up the rate of profit still further.
You wouldn’t guess that, though, from much of the political and media reaction. The country was being “held to ransom”, the Sunday Express declared; the Independent sniffed: “These workers are hardly alone in seeing their final-salary scheme dismantled.” But that is exactly the point. Pension benefits have been slashed, insecurity at work has grown and wages at the bottom have stagnated (while profits and boardroom pay have ballooned), not least because of the reduction in union strength.
Where groups of workers are able to protect their interests, they are surely right to do so. It’s not as if by caving in to the worse terms and conditions that have spread across other parts of the workforce they would be helping to reverse that process. On the contrary, by resisting the race to the bottom, they are also strengthening the hand of other employees. There is no credibility whatever in complaining about growing inequality and shrinking benefits at work while opposing the means to defend them. But that’s pretty well what Tory leaders have been doing this week. On Monday the shadow chancellor, George Osborne, floated the idea of yet more anti-union legislation to confront workers’ supposed willingness to strike “at the drop of a hat”, while the London mayoral candidate Boris Johnson has speculated about training nonunion drivers to “smash strikes” on the tube.
Osborne’s comments were mainly aimed at last week’s national pay strikes by teachers, lecturers and low-paid civil servants, even more ferociously denounced than the oil workers by politicians and the bulk of the media. The Tory frontbencher claimed public service unions “have grown too powerful”, and promised more privatization to cut them down to size. But if unions in the public sector are such an overweening force, how come they have to accept below-inflation pay deals year after year? Contrary to the mythology that there has been some kind of public pay bonanza under New Labour, public sector settlements in fact outstripped the private sector in only four out of the past 11 years.
This year, with the latest retail price index — widely thought to underestimate fuel, housing and food costs — running at 3.8 percent, teachers and local government workers have been told they’re getting 2.45 percent, and health workers 2.75 percent. Meanwhile, 40 percent of staff in the Department of Work and Pensions, some on as little as £14,000 a year, are not being offered any consolidated increase. In real terms, those are pay cuts — and the government can’t wish away the reality of lower purchasing power by insisting on using another index, the CPI, which helpfully excludes housing costs and stands at 2.5 percent.
Contrary to the impression given by ministers — and as the Bank of England has in effect conceded — the squeeze on public-sector pay has nothing to do with inflation. But it has everything to do with the government’s own self-imposed tax-and-spending decisions, including the abolition of the 10 percent band to fund a cut in the basic rate of income tax.
Whether this will lead to the much-predicted “summer of discontent” or simply escalating industrial guerrilla warfare remains to be seen. What is certain is that Gordon Brown can no longer afford the simmering disaffection the pay ceiling has created among such a crucial part of Labour’s electoral base. “There’s scope if they need to compromise,” Mark Serwotka, the leader of the main civil service union, told me yesterday. “But the situation’s turned quite dramatically. They underestimate the anger among core voters, as the 10p tax crisis has shown, and there are going to be big consequences.”
Those are likely to be industrial and political. When even Richard Lambert, the director general of the CBI, and Mervyn King, the governor of the Bank of England, feel able to rail publicly at the disastrous impact of the City’s pay and bonus extravaganza, Brown can hardly expect public service workers to meekly carry the can for the government’s failure to bring the corporate feasting to heel. And as the prospect of recession looms, the question of who will shoulder the burden of retrenchment is bound to grow sharper.
