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April 2016

EESC: The crisis and the evolution of labour relations in the UK

The evolution of labour relations in the UK since the crisis is the focus of a new report by the Labour Research Department for the European Economic and Social Committee (a consultative body of the European Union). It summarises the socio-economic situation and, in particular, labour relations before and after the ‘credit crunch’ and the ‘Great Recession’ of 2008-09, recounting the main steps taken by a new and untried Coalition government that chose deficit reduction and welfare-to-work as its main priorities.

While the UK’s numerically weakened trade union movement was confronted in its public sector heartlands over pensions, pay and jobs, employers’ representatives applauded the government’s deregulatory, flexible-labour-market stance. Peak unemployment fell short of the employers’ worst fears but, despite impressive and continuing numerical growth in private sector employment, much of it was into self-employed, temporary, part-time and zero-hours jobs. Economic recovery remained painfully uncertain, productivity stagnated and there was an unprecedented fall in average real earnings (although the feared "double dip" recession was avoided).

Collective bargaining (covering 15-20% of the private sector) coupled with ongoing public sector pay curbs resulted in pay increases that remained below their pre-recession trend (although pay outcomes were helped eventually by a sharp fall in consumer price inflation). Pressure for higher wages found its voice in the spread of the Living Wage as well as through bargaining and industrial action, which continued (although at a reduced level). The report follows these trends through to the election in 2015 of a Conservative government committed to further restricting the trade unions, while promising higher statutory minimum wages.

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