It is now more than 30 years since the ‘Winter of Discontent’, during which there were widespread strikes by local authority trade unions demanding larger pay raises for their members, which virtually guaranteed the demise of James Callaghan’s government in May 1979.

Now, hot on the heels of the postal workers’ action, comes news that BA’s cabin staff are about to be balloted with a view to taking strike action. All the pundits are saying that Gordon Brown is just about to face his own Winter of Discontent, especially with dustbin workers in Yorkshire already on strike over the equalisation of pay that will see women earn more and, they claim, men less. Not to mention rumours of more bus and rail strikes.

What is the dispute about this time?
In this case, the dispute relates to cost-cutting measures that management have announced in an attempt to make the business more competitive in the current economic climate (one in which we are not, after all, coming out of recession, if the Office for National Statistics data are correct).

Management says that it is cutting up to 3,700 jobs over the next year, but that 75% of employees would receive a rise of between 2% and 7% this year and next, according to the BBC. It is, however, seeking productivity improvements to save costs overall. It is also seeking to pay new recruits less (which could lead unions to fear that they will simply get rid of more experienced staff and recruit cheaper new ones).

At the end of the day, BA knows that it is in a highly competitive market with higher than average costs and falling passenger numbers as the recession hits more travellers who will look for cheaper alternatives like Easyjet and Virgin Atlantic.

What is needed is flexibility
It would be very easy to blame the unions for being obstructive and failing to see what is going on in the real world with increasing unemployment and ongoing recession. But while it is also easy to say that they would be better protecting the long-term interests of their employees by adopting a flexible approach to working practices and remuneration, it is by no means clear that most large organisations really understand what flexibility means from their point of view.

Of course safety can never be compromised – especially in the air industry, where lives are literally in the hands of the crew – but equally, perhaps management and unions can hide behind this issue, rather than sitting down together to discuss what really matters.

And if employees are being asked to make financial sacrifices in the short term, they need to know that they will benefit in the longer term. So if salaries have to be squeezed, why not make up the shortfall in shares, redeemable at some time in the future as a reward for loyalty and helping the business through the crisis? Perhaps there is a lesson there for all businesses.

As ever, when it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.