High inflation puts pressure on pay
Three strikes in June by members of the RMT union saw widespread disruption for passengers across England, Wales and Scotland.
THERE was nationwide disruption in the second half of June as members of the RMT union – including Network
Rail signallers and depot and station staff – voted to strike on June 21, 23 and 25, with further disruption on days either side as trains and crew were out of position.
An estimated 20% of services ran on strike days, with many routes having no service at all. These included all lines north of Edinburgh and Glasgow, nearly all in Wales, and everything west of Plymouth.
The dispute centres around pay and conditions against a backdrop of high inflation. Until now, there has been a long period of relative calm in rail industry industrial relations as a result of higher traffic volume and low inflation, which has allowed pay to increase in real terms.
The growth in passenger numbers also meant improved asset utilisation and greater margins over day-to-day costs, which enabled franchise bidders to offer higher premium payments for contracts and therefore lower overall revenue support payments by the Government.
In the freight sector, productivity also increased as a result of being able to operate longer trains with higher payloads, allowing increased pay for traincrew.
The level of staff rewards at Network Rail is related to the budget negotiated in a periodic review with the Office for Rail and Road every five years, with settlements covering a five-year control period (CP). In the current CP6 for 2019-2024, there was a requirement to increase productivity mainly by capital investment in digital signalling and track maintenance equipment.
This past equilibrium was upset by the Covid pandemic, which resulted in heavy restrictions on using passenger services – although the freight sector was less affected and traffic volumes are now above the level of two years ago. There has also been an unexpected surge in inflation, in part because of the war in Ukraine.
Costly decision
The decision to support the continued operation of the passenger railway through the pandemic, without staff being furloughed, has been a hugely expensive exercise for the Government, and the lower level of passenger demand meant the operating costs were far above fare income.
The ability to work from home established during the pandemic has led to a longterm change in the level of season ticket purchases, with less regular travel now taking place, often at off-peak times.
As a result, there is a financial shortfall in the annual railway budget of at least £2 billion, and the Government is seeking to eliminate this through a series of initiatives to reduce costs, including pay restraint.
The timing could hardly be worse, however, with inflation around 10% and rising. This means that pay offers in the region of 2% and the threat of compulsory redundancy are a recipe for unrest.
There are various disputes taking place besides the RMT one, and negotiations with ASLEF representing ScotRail drivers have already resulted in a 5% pay offer, which is being part funded by Transport Scotland. There is also the offer of a bonus related to revenue, which will allow backdated payments from April as ScotRail income is above the set threshold.
It seems unlikely that the
RMT dispute with Network
Rail and 13 of the franchised train operators (all except Thameslink, Southern and
Great Northern), will be resolved unless a pay offer matches the one in Scotland.