Pay freezes and industrial disputes beckon

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OM GORDON and EWAN FERGUS

Fears are growing that the UK is heading for an autumn of discontent as council workers face a pay freeze until 2014, government spending reduces and crippling industrial disputes rumble on.

Disputes in Royal Mail and the fire service are set to escalate in the coming weeks, while councils are also being hit by industrial action.

A series of local disputes over job cuts in the fire service will see almost 8000 firefighters in England - almost one in five - taking some form of industrial action by Wednesday.

Meanwhile, the Communication Workers Union is set to ballot 130,000 postal staff for a national strike over pay, jobs and service next month, with the result due to be released a few days before Labour's national conference in Brighton. Unions blamed managers in Royal Mail and the fire service for trying to force through cuts and other changes without agreement.
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Action short of a strike, including an overtime ban, is already taking place in South Yorkshire, Humberside and London, with Essex set to follow on Wednesday.

On top of this, tens of thousands of Scottish council workers are facing pay freezes until 2014, as government spending is slashed in the wake of the recession.

Local authority bosses fear the "unprecedented" financial climate may lead to job losses and redundancies across Scottish local government, where wages account for 50% of the annual £10bn budget.

The grim outlook raises the prospect of councils axing frontline services and strikes by angry staff. The pay freezes would mean millions of pounds less flowing into the Scottish economy. Scotland's 32 councils employ around 283,000 people - 11% of the workforce.

Although the recession has hit private-sector workers with cutbacks and redundancies, the grim reality of one of the worst economic crises in living history has so far left the public sector, a part of the workforce often criticised for being over-protected, relatively unscathed. However, council leaders will now discuss the prospect of long-_term pay freezes at a closed session on Friday of the Convention of Scottish Local Authorities (Cosla).

A confidential paper going before the meeting warns of "unprecedented consequences for local government and its services", adding: "Over the next 10 years the pressure on funding will be significant.

"If early predictions prove accurate, there is a possible loss of resources in the order of 15% over the three years of the next spending review. In short, income is reducing at a time when costs are increasing and the result is that the gap between the two is getting wider."

Written by Tom Young, the team leader on Cosla's employers group, the report says if current pay policies are maintained, then "the prospect of unmeetable demand will arise. This means a fundamental review of our policies and services and the way that we provide these will be required."

The report recommends pursuing a four-year strategy to deliver a "lowest-cost workforce at a price that maintains Trade Union relations and employee motivation", with "maximum flexibility" in pay negotiations. As a first step, "pay negotiations for 2010/11 would be based on a zero increase", compared to this year's cap of around 2.5%.

For 2011 to 2014 "the overall objective would be to achieve pay restraint across all employee groups... this may include a period of pay freeze for the majority or possibly the entire workforce ... job losses and redundancies could not be ruled out". Controversially, it also suggests that previously agreed pay deals for 2010/11 could be reopened.

This applies in particular to the third year of a three-year pay deal for Scotland's 53,000 teachers, who are expected to receive a 2.4% increase in 2010-11.

As the original talks involved the Scottish Government, reopening the deal would drag ministers into a potentially bitter dispute.