Strikes in the UK – Just the beginning?

The strike in two McDonald outlets in the UK is interesting. The main reason is the lack of security associated with zero hour contracts and the low level of compensation.
It’s not a huge movement yet and McDonald headquarter said it is just 0.01% of their workforce in the UK who are on strike.
My guess is that this movement could rapidly grow in a near future.

Two reasons for that:
During the UK’s recovery the main support for growth was employment not productivity. In the UK the productivity profile is almost the worst, with Italy, in the G7 countries (see here in the second part of the post I wrote at the beginning of last July). The flexibility of the UK labor market has allowed zero hour contracts and the rapid development of self-employed. These have fed the employment recovery.
This framework can work if everyone expects a stronger situation in the future. These types of employments were perceived by a majority as a temporary situation. It could last until the convergence to a more “normal” situation. In other words, these precarious contracts were accepted if and only if they were temporary.

The referendum on Brexit has dramatically changed the picture for two reasons:
more than one year after the referendum, the British people expectations are weak at it is shown in the graph below. People are pessimistic on what will happened in the coming year (in the post mentioned above I show that they aren’t completely wrong). They don’t know what will happened for them and for the British economy.
They are not wrong on that. The Brexit is a permanent negative shock on the British economy and the adjustment on the downside will go on the domestic demand.
uk-2017-august-hhconfidence
The second point is that inflation is now higher and real wages are decreasing.
uk-2017-june-earning-inflation
We can see this also with the real disposable income as shown below
UK-2017-T1-disposable Income real

In other words, with negative expectations on the economic activity, negative purchasing power growth and the perception that the current government doesn’t know exactly where it wants to go with the Brexit negotiations, what can be the behavior of someone with a precarious labor contract? He perceives that probably nothing good will happen to him. The risk of social unrest is high. The situation has dramatically changed in the UK.

One thought on “Strikes in the UK – Just the beginning?

  1. Pingback: Grève chez McDonald au Royaume Uni: ce n’est que le début | Le Blog de Philippe Waechter

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