The government has warned against providing wage raises to striking rail employees, claiming that doing so might spark a wave of new strikes and create ‘1970s-style inflation.’
From Tuesday, 40,000 workers are set to strike, causing massive disruption to the country’s transportation networks.
Mick Lynch, general secretary of the National Union of Rail, Maritime and Transport Workers (RMT), has stated that he will not change his mind unless workers are granted a large enough pay raise to keep up with the rising cost of living.
Workers, on the other hand, have been instructed not to expect large pay raises because they will drive up prices even more, according to a senior minister.
Salary increases to balance rising costs of living, according to Simon Clarke, Chief Secretary to the Treasury, risk a ‘inflationary spiral’ akin to the 1970s.
Inflation, which is at a 40-year high of 9%, is expected to exceed 11% in October, according to the Bank of England.
The pay review panels for the public sector, which suggest salaries for about 5.7 million personnel such as teachers, nurses, and cops, are expected to report in the coming weeks.
Mr Clarke, who is Chancellor Rishi Sunak’s deputy, said last night that workers will not be paid at a rate that is close to inflation, saying: ‘There isn’t any automaticity, if you want, between inflation and pay setting.’
Mr Clarke stated that the pay review bodies “ought to be conscious if we wind up in a world where all settlements strive to match or even exceed inflation.”
‘Then we are actually creating the conditions where those expectations become baked in and self-fulfilling, and that is the risk,’ he continued.
‘We must be extremely cautious to prevent, as I previously stated, fueling an inflationary spiral to the disadvantage of everyone.’ It will allow it to flee from us, which is something that governments in the 1970s failed to solve and which we must avoid in the 2020s.’
Last night, unions contended that ‘energy prices, not wages, are driving up inflation.’
Mr Clarke’s accusations, according to Paul Nowak, deputy general secretary of the Trades Union Congress (TUC), are “false.” ‘The Government has cynically abandoned its promise to a high-wage economy,’ he told the BBC.
‘The only way to provide long-term financial security to families is for pay to rise across the economy.’ The longest wage crunch in more than 200 years is affecting British employees.’
With inflation and interest rates expected to rise for the rest of the year, ministers have been preparing the public for more economic suffering.
Michael Gove, the Secretary of State for Levelling Up, warned this week that while households are facing “difficult times,” the government cannot aid everyone.
He appeared to support the Bank of England’s decision to keep rising interest rates, which were raised to 1.25 percent on Thursday.
Experts predict that by the end of 2023, they would have reached 3.5 percent.
Mr. Gove agreed with Mr. Sunak that tax cuts should be postponed until inflation falls. ‘The Chancellor has the right policies…’ he told TalkTV when asked if that would have to wait until 2024.
He can’t spend all of the public funds that many would like to, and that we would like to in a perfect world.’
Last month, Bank of England boss Andrew Bailey, who earns £575,000 a year, was chastised for remarking that workers should ‘think and consider’ before asking for ‘large wage increases.’