Britain: The Unions Are Making Blair's Life Miserable

For the first five years of Tony Blair's government, British unions were so thrilled about the Labour Party's return to power after 18 years in opposition that they kept their demands in check. But two years into Blair's second term, the honeymoon is over. From Nov. 13 to 15, firefighters staged a 48-hour nationwide strike--the first since 1977. A new generation of more militant union leaders seems bent on making life miserable for Blair and the British public.

This new restiveness could prove Blair's biggest challenge yet. While he is known to the outside world for foreign policy splashes, such as backing the U.S. on Iraq, Blair risks losing credibility at home. He won a big election victory in 2001 by vowing to improve Britain's public services, and he has earmarked $6.3 billion for everything from public transportation to education next year. The country's ailing health service is to get $63 billion in new funding over the next five years. But the unions are now out to suck up much of the loot in pay increases.

Blair is in no danger of losing his job. He enjoys a huge majority in Parliament, and his Conservative opponents have been consumed with infighting for years. But a series of debilitating strikes could hamstring Blair and ruin his chances of reconstructing state services. Worse, the unions' demands could undermine Britain's hard-won economic stability.

Much depends on how the Prime Minister handles the new wave of strikes. The government is trying to persuade the firefighters to accept a 16% increase phased in over three years and linked to improved efficiencies. That would be a big improvement over the Fire Brigades Union's initial demand of a wage increase of 40%--nearly 20 times the current level of inflation--to $48,000 a year. While the firefighters might agree to a 16% pay deal, they are resisting the government's call to link any increase to modernizing practices. "Why fix what isn't broken?" declares Paul Scotting, a retired London firefighter.

But even if this standoff is resolved before the firefighters walk out again in an eight-day action threatened to begin on Nov. 22, more trouble seems sure to come. Postal workers and airport employees, as well as ambulance, train, and tube drivers, are gearing up for battle. In some cases, union members are threatening to strike before Christmas. "There are a lot of demoralized teachers, doctors, nurses, and social workers out there," says Mike Terry, a professor of industrial relations at Warwick Business School. Their demands have been fueled by an August pay deal worth up to 10.9% over two years for 1.3 million local government workers--nearly double the current average income growth for British public sector workers.

Meanwhile, the government is wary of the precedent that such inflationary deals could set. Every percentage-point increase in the pay of the country's 5 million public sector workers costs the government a hefty $1.6 billion. Chancellor of the Exchequer Gordon Brown recently told Parliament that giving in to excessive pay demands would come at the cost of jobs and badly needed investment in public services.

But such finger-wagging doesn't impress hardliners such as Bob Crow, the vocal leader of Britain's Rail, Maritime, & Transport Union. His members have spent the past few years struggling to keep up with inflation while reading about seven-digit bonuses for investment bankers. That's why Blair now faces a dangerous game.

By Kerry Capell in London

Edited by Rose Brady

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