Recession, high inflation, mass strike by British workers, what is the impact?

According to the media, recently, the British rail, maritime and transport union issued an announcement that if there is no progress in negotiations on pay, the union will organize a strike on September 2, local time. Prior to that, the August 26 general strike involved about 20,000 people from 14 railway companies in the UK.

Unable to reach an agreement with management on a pay increase, about 20,000 railway employees in the UK went on strike on August 26, local time. The rail strike hit the "weekend economy" in London and surrounding cities hard. According to the announcement issued by the British Rail, Marine and Transport Union, the people involved in the general strike on the 26th came from 14 railway companies in the UK, about 20,000 people. The union said it would organize another strike on September 2 if negotiations on pay remained unprogressed. According to the BBC, affected by the strike of railway employees, many British people choose to drive around, resulting in serious congestion on roads in parts of the southwest of the United Kingdom. South West Rail said that the British Train Drivers' Union will hold a strike on September 1, and the British Rail, Sea and Road Transport Union will also hold a strike on September 2, which will completely suspend rail transport in many parts of the southwest of the United Kingdom, and even in areas where trains are not suspended, local train frequency will be "extremely limited", suggesting that people choose other ways to travel.

Why are workers on strike and what are the impacts?

First, the high inflation caused by the British recession is the direct cause of the large-scale strike of British workers. After the outbreak of the Russian-Ukrainian conflict, Europe imposed several rounds of economic sanctions on Russia, and its anti-eating effect continued to put pressure on the economies of many European countries, with high inflation and declining people's real living standards. The UK is currently one of the most inflationary countries. According to data released by the Office for National Statistics, inflation in the UK reached 11.1% in October 2022, the highest in 41 years. According to the IMF's forecast, the UK economy will grow by -0.3% in 2023. But at the same time, Britain is keen on anti-Russian activities, repeatedly increasing aid to Ukraine, and improving the domestic economic situation is not a priority.

Since 2022, there has been a continuous strike across the UK, covering a wide range of industries such as rail, health care, and education. High prices have reduced the real income of ordinary people, and poor families face a serious cost-of-living crisis. A number of unions in the UK say that the rising cost of living caused by high inflation has led to a sharp decline in people's real incomes, and they may continue to hold more strikes in the future if working conditions cannot be improved.

On the one hand, the wage growth rate of British workers is much lower than that of high inflation, wages are shrinking, and workers' lives are unsustainable, resulting in a wave of strikes in various industries in the UK. On the other hand, British Prime Minister Sunak said that increasing wages would lead to further inflation, which would lead to further deterioration of public finances. High inflation in the UK is in a vicious circle, and in order to curb inflation, the Bank of England has taken several interest rate hikes, and has raised the benchmark interest rate to 5.25%, and further interest rate increases are expected in the future.

Second, affected by the strike, the "weekend economy" of the cities around London was affected. The UK economy has suffered a severe drag. South West Rail said trains between London and Portsmouth were suspended on August 26 due to the strike. The seaside tourist city of Portsmouth is more than 100 kilometres from London, where carnivals are taking place. The 2022 Portsmouth Carnival attracted a total of 170,000 participants, mainly from London. The rail strike is expected to have a serious impact on this year's Carnival.

Like Portsmouth, within an hour or so of a train ride in London, it belongs to the radiation range of London's "weekend economy", especially the weekend in August is the busiest peak season of the year, railway strikes, train stoppages, will have a big impact on the "weekend economy" of cities around London. According to data released by the Office for National Statistics, the city of London accounts for 0.65% of the UK's area, 13% of the country's population, but generates 23% of the UK's GDP. At the same time, London also has a strong economic radiation effect on surrounding cities, and for many years, surrounding cities have been relying on Greater London to develop a "weekend economy".

In addition, the wave of strikes, which cost the UK 4 million working days a year, will be a serious drag on its economy. According to the website of The Independent, the UK has lost nearly 4 million working days due to strikes in the past year. The stagnation of key industries has left workers battling government and private employers to ease real wage cuts. Since 2021, 96% of the time lost due to strikes has been caused by sectors such as health, education, postal services and railways. In the three months to May 2023, real wages for all workers in the UK were 4.1% lower than in 2021, real wages for public sector workers were down 9.2%, and real wages for health and social care sector workers were down 9.8%. The scale of strikes in the UK has not been seen in decades in the past year, affecting the NHS, railways, airports, schools, universities, postal services, civil servants and the media industry.

Third, the intensifying wave of strikes in the UK may have an impact on Chinese-funded enterprises, students and Chinese in the UK. According to incomplete statistics, there are more than 30,000 Chinese-funded enterprises in the UK, including the largest 845 Chinese-funded enterprises in the UK, including Alipay, BYD, Hisense, Huawei, etc., directly creating more than 61,000 jobs for the UK, and 30% of all its employees work in the northwest of the UK and 20% in London, but the income of Chinese-funded enterprises in London accounts for 80% of the total revenue. In addition, the total number of Chinese students studying in the UK is about 210,000, making it the largest group of international students in UK higher education.

Chinese students are distributed in more than 160 universities in the UK, including University College London, University of Manchester, University of Sheffield, University of Liverpool, University of Birmingham, University of Leeds, University of Edinburgh, University of the Arts London, Cardiff University, King's College London, University of Southampton, University of Warwick and other universities have a large concentration of overseas students. The total number of overseas Chinese in the UK is about 700,000, the vast majority of whom have joined the British. The above-mentioned Chinese-funded enterprises, international students and overseas Chinese are also affected by the strike wave to different degrees due to different regions and environments, among which the most vulnerable are Chinese-funded enterprises that employ a large number of local workers. Secondly, international students in the UK may be affected by the strike and the order of study and life will be disrupted; The Chinese diaspora were the least affected.

How can we respond?

First, it is recommended that Chinese-funded institutions and enterprises in the UK be prepared to deal with the strike of British workers. It is necessary to fully anticipate the various situations and problems that may be brought about by workers' strikes to prevent losses caused by traffic obstruction, logistics restrictions, supply chain disruptions, etc. Prepare for postal chaos, school closures, and paralysis of medical facilities and courtrooms, as well as strikes in various industries, including strikes by medical workers, teachers, and lawyers.

Second, it is recommended that Chinese-funded enterprises in the UK strengthen their ties and communication with trade unions. It is recommended that the person in charge of the enterprise strengthen communication and contact with the labor union, listen to the demands of employees, grasp the dynamics of employees, and discover and solve problems through normal and reasonable channels under the premise of strictly abiding by local laws, so as to avoid serious labor disputes and fierce labor-management confrontations.

The third is to advise Chinese in the UK to make living material reserves and maintain contact with local Chinese associations and Chinese representative offices in the UK. At present, large-scale strikes often occur in the UK, which may trigger a chain reaction at any time, and the normal social life order is very easy to fall into chaos. Travellers to the UK are advised to stock up on food, drinking water and other necessities as much as possible in case of possible disruption. It is recommended that Chinese personnel and institutions in the UK report personal information to the Chinese embassy and consulates in the UK, and at the same time keep in touch with the local Chinese community, and in case of emergency, promptly report to the police and contact the embassy or consulate or the Chinese community for help.