TUC takes on Brown over pay

The TUC set itself on "collision course" with Gordon Brown over public sector pay this week by unanimously backing strike action by millions of public sector workers, say David Hencke and Patrick Wintour in The Guardian. At the TUC conference in Brighton, civil servants, teachers, transport workers, prison officers and postal workers unanimously raised their hands in support of coordinated strike action against the Government's 2% pay limit and privatisation of services. Brown's insistence that pay discipline was essential "to prevent inflation, to maintain growth and create more jobs so that we never return to the old boom and bust of the past" was met with anger from union leaders, who argued that public service staff were not the cause of inflation, but its victims. Promises of 500,000 new job guarantees, tougher enforcement of the minimum wage and "British jobs for British workers" did little to sweeten the pill.

The union leaders have a point, says Polly Toynbee in The Guardian. Inflation has to be "throttled at birth", but the pain must be shared. It is not enough to "twist the arms of the only workforce under his immediate control the public sector". Brown can't stay silent on the topic of inflation in boardrooms while forcing real-terms wage cuts on the "street cleaners and ambulance workers who service the tax avoider at the top". Unfortunately, the unions have lost much influence in the past 20 years, depriving ordinary PAYE citizens of a powerful voice. Had they been stronger we would not have slid back to the same level of wealth inequality as 1937, with the top 3% owning three times the wealth of the bottom 50%. Today, the money barons hold sway: the mere hint that the City's golden geese may take flight is enough to stop Labour doing what "by instinct it longs to do make them pay their fair share".

The unions could certainly do with more support, says Andrew Taylor in the FT. Union membership has halved since 1979, becoming concentrated more and more in the public sector. Employers and politicians fear them less. This is not to suggest that they have no clout: they still represent about seven million people. They forced the Government into a climbdown over public sector pension reform after threatening to stage a series of one-day strikes in the run-up to the last general election and have been instrumental in improving maternity and paternity benefits and persuading Labour to introduce the minimum wage. Brown needs to keep the unions on side, particularly with the recent cash-for-honours scandal: they are a "vitally important financial tap". Between the start of 2005 and the end of 2006, unions provided about 60% of all Labour party donations.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

Funding aside, there is genuine common ground between Labour and the unions, says Steve Richards in The Independent. Brown may not talk much about inequality in public for fear of being led into a "vote-losing debate on taxation", but in private he is "gripped by the question". Union leaders don't help their cause by threatening that council staff will strike unless they are paid more they just alienate everyone else. The key to winning the union arguments in a country with a "strong right-wing media and an economy built precariously around a self-interested City of London" is to build a wider coalition of support. To do this they need to make the wider connections: to show that a lack of investment in transport means that even the wealthiest will be stuck in traffic jams; that if poverty is not addressed, the subsequent crime and discord will make life "hellish for the more affluent". Brown, for his part, should bring the debate on inequality into the public domain.