Labour Market

Rail unions need to accept that their industry has changed

Prof. Len Shackleton writes in CapX

IEA Editorial and Research Fellow Professor Len Shackleton has written in CapX arguing that the RMT’s Christmas strike action may end up being an unforced error.

Len wrote:

“According to Rail Minister Huw Merriman, these disputes have already cost the economy £500m pounds. It’s reasonable to suppose that, with the likely effect on the hospitality and entertainment business at their busiest time of the year, the round of pre-Christmas strikes will cost at the very least an extra £50m.”

“The unions seem slow to recognise that the 20-year boom following privatisation, which boosted pay considerably for many rail workers, is now over. The collapse of the franchise system due to the pandemic means that private train operating companies (TOCs) are now tied to a narrow service contract with a very low profit margin. They cannot offer more money to buy off the strikers. They have no control over fares or service levels, so cannot generate higher revenue, which in any case now goes direct to the Treasury, while the Department for Transport gets a budget from which it pays the TOCs and Network Rail.”

Len’s full article can be read here.