BOE Pay Dispute Escalates to Strike as Staff Appeal to Carney

Updated on
  • Unite members in maintenance, security, Parlours back action
  • Wage row follows weaker-than-inflation pay rises, union says

Wages and staff morale have long been issues at the BOE.

Photographer: Simon Dawson/Bloomberg

Bank of England facilities staff voted to go on strike over pay in the first action of its kind at the central bank in 50 years, according to a labor union.

Ninety-five percent of Unite’s members in maintenance, security and the private offices of senior officials at the BOE -- known as the Parlours -- backed industrial action between July 31 and Aug. 3, Britain’s biggest labor union said in an emailed statement. It called on Governor Mark Carney to personally intervene and said it may escalate the plan if management fails to resolve the disagreement.

Wages and staff morale have long been issues at the BOE. The latest row has been caused by management granting weaker-than-inflation pay increases for the past two years, with the overall annual wage bill projected to rise by only 1 percent from March 2017, according to Unite. Consumer prices rose 2.9 percent in May from a year earlier.

The strike threatens to upset operations at the three-century-old bank, nicknamed the “Old Lady of Threadneedle Street.” Doormen greet visitors wearing pink tailcoats and top hats, while guards with machine guns protect the world’s second-largest store of gold. The Parlours, a series of grand stately rooms served by butlers, house the offices of Carney and his deputies.

Fair Pay

“The governor can no longer turn a blind eye to what is happening on his own patch,” said Mercedes Sanchez, a Unite regional officer. “The result of the bank’s unwillingness to negotiate fair pay will be that the bank’s sites, including the iconic Threadneedle Street in the City of London, will effectively be inoperable.”

As salaries for employees will be decided individually by line managers, some will receive less than 1 percent and up to a third will get no pay increase at all in 2017, according to Unite. Still, the plans may also allow for individual wage gains greater than 1 percent depending on headcount changes.

The BOE said staff that participated in the Unite ballot made up about 2 percent of its workforce, and should the industrial action go ahead, it has plans “so that all sites can continue to operate effectively.” Management will continue to hold discussions with the union, it said in an emailed statement.

The BOE relies on security services to protect its gold reserves. After the Federal Reserve, it’s the second largest custodian of the precious metal in the world, storing about 400,000 bars worth more than 100 billion pounds ($130 billion) on behalf of the U.K. Treasury, other central banks and some commercial firms.

Inflation Report

The industrial action also risks overshadowing the release of the BOE’s latest quarterly economic forecasts in its Inflation Report on Aug. 3, when Carney will hold a press conference in London.

The latest pay dilemma reflects the wider challenges in BOE policy. In the U.K. as a whole, wage gains are failing to keep pace with accelerating inflation, spurred by the decline in the pound since the Brexit vote last year. Average earnings rose 1.7 percent in the three months through April, leaving Britons with their biggest loss of purchasing power in almost three years.

Even with the labor market tightening, BOE officials have cited weak wage growth as one of the factors in keeping interest rates at a record low. The fall in living standards is sapping consumer confidence, weighing on an economy that relies on household spending and piling pressure on Prime Minister Theresa May to ease austerity policies and abandon the 1 percent ceiling on public-sector pay increases.

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