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The economic benefits of strike law reform

    Joseph Baum has put forward an argument for reforming strike laws on the CPS blog within the context of the proposed Trade Union Bill. The bill aims to reduce the number of strikes by introducing a minimum participation threshold of 50% and in some important public services an additional minimum approval threshold of 40%. As the Government’s Impact Assessment shows, this will not only have a direct impact on output and productivity, but will reduce the adverse effect of strikes on the general economy.

    Whilst the law may come at a £0.5 million one-off cost to total trade union budgets, this is fairly negligible compared to the annual savings of £13.7 million it will bring due to direct output increases in key sectors (transport and storage, education, health and social work and the border force.) It has been estimated  in the last five years that on average over half a million working days are lost in the whole of the public sector due to strikes, with 245,380 lost working days being from the education sector reflecting the exceptionally high loss of output during strikes. Furthermore, it has been calculated that the number of lost working days could be reduced by 65% by introducing the new minimum threshold which highlights the clear economic benefit this law may have. Within the health and social work sector, 278,502 working hours would be saved on an annual basis by the strike laws therefore reducing disruption to vital health care services.

    Public sector strike action is often a cause for complaint by many; from the busy commuter to the working parent who has to take time off work to look after their child when school gates are closed. Transport and education are noted to have the largest negative indirect effects on the economy as a result of disruption and accrued costs of wasted productive hours. A 2007 Acas report estimated that a two-day transport strike would cost other businesses £52 million and a Workplace Employment Relations Survey in 2011 found that within a 12-month period, 22,500 businesses were disrupted by strikes of another workplace. Whilst it is near impossible to calculate exactly the total indirect benefit of reduced strike action, costs to businesses are high and it is absolutely clear that fewer strikes will have large benefits to both communities and businesses resulting in a positive economic effect on productivity and output.

    A consultation is expected to take place to consider the new law and determine which occupations will be subject to these new thresholds. Whilst the new minimum threshold may encourage trade unions to be more aggressive in advocating a potential strike to members, this effect is likely to be countered as members who fail to vote will effectively be balloted as opposing the vote. This law is a driver for increased economic efficiency within key public sector areas. Perhaps as importantly, it is a key milestone in ensuring that strike action is only taken as a last resort when other trade negotiations have failed.

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    Comments

    Anonymous - About 899 days ago

    So the lawis justified in pure economic terms.
    Workers rights are cast aside. Workers will be exploited by bosses without a care for their wellbeing. They are just a resource to be managed more effectively for the shareholders and board.
    Its disgusting that we have come to this after our elders fought for our freedom from slavery.

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    Anonymous - About 884 days ago

    This is a terribly argued piece looking only at supposed economic effects and not even discussing rights.

    There is a case for removing the rights of employees to strike without being prosecuted for breach of their employment contracts or restricting the circumstances under which they may do so.

    The problem, however, arises specifically in the public sector (or in government-protected monopolies). Here the service provided is often/usually a tax-funded monopoly, so striking unions can hold the public to ransom - hence the argument for restricting to removing the right to strike. However, from the employee's point-of-view, their employer is operating an effective monopsony - they may have little other employment option in their field of work and so no ability to look for a better employer if their public sector employer is treating them badly or underpaying them.

    The only solution to this is to reduce the number of public sector monopolies/monopsonies to a minimum. I am thinking here of areas such as the NHS, education, etc. which should not be directly provided by government. They should be broken up and either run by non-government organisations or, where this is not possibly, locally controlled (so that Ts & Cs for employees are set locally).

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