David Prosser: Cable's call for trade union restraint could backfire on us all
Outlook: Here's the thing about strikes,,, there aren't so many of them these days – they have been falling in both the public and the private sector
Tuesday 07 June 2011
There are two ways to interpret Vince Cable's ultimatum to trade unionists yesterday. You might take the Business Secretary's warning he could be forced to introduce tougher trade union laws, as demanded by lobbyists including the CBI, if there is an escalation in strike action as a straightforward threat. Or you might see this as a plea to the unions from a Liberal Democrat minister who is desperate not to give Conservative colleagues any ammunition in their battle for new legislation, particularly with Boris Johnson, the Mayor of London, pushing for exactly that.
Either way, Mr Cable is taking a risk. The antagonism towards him from members of the GMB was palpable during his speech yesterday. The danger is that the Business Secretary hardens attitudes against the Coalition to such an extent that more, rather than less, strike action is the result. That might play into the hands of right-wingers just waiting for an opportunity to emulate the anti-union policies of Margaret Thatcher, but it would be to no one else's benefit.
Did Mr Cable have no choice but to confront this issue? Well, here's the thing about strikes: there aren't so many of them these days. The official government statistics show that in the private sector, the number of days lost to strike action has, over the past five years, been running at roughly half the levels of the previous five-year period – and again fell sharply last year. In the public sector, the story is in some ways even better, with the number of days lost to strikes having fallen in each of the past three years. Nor is there any sign of any marked increase in industrial action during 2011.
The statistics may surprise people, given some of the high-profile disputes of the past year or so – at British Airways, for example, or London Underground. But one reason why these disputes have been so eye-catching is that full-scale strikes have become relatively rare events.
It is true that the figures are significantly higher in the public than the private sector, chiefly because workers in the former are nowadays much more likely to be members of a trade union. But all the more reason not to have an unnecessary confrontation at this time – it is the public sector where potentially confrontational wage restraint and job cuts will be most keenly felt over the next few years.
As for the private sector, the fact that Britain is getting through a recession and its painful aftermath without a flare-up in industrial disputes is a tribute to employers and employees alike. Both sides have been remarkably open to flexible working practices and lower pay settlements (though there are growing concerns among unions about the way executive remuneration now seems to be racing ahead so much more quickly than workers' pay). Mr Cable must take great care not to jeopardise those better relations.
High fashion commands a high price
All this talk of a new dot.com bubble is eclipsing another phenomenon investors might just want to start questioning: the boom in the luxury-goods sector. The pricing yesterday of Prada's flotation in Hong Kong at such a significant premium to its rivals' in the luxury-goods sector is just the latest example of this phenomenon.
Prada is a smart operator. In its way, choosing to list in Hong Kong, rather than Milan or even London, is as cutting-edge as some of its designs. What better way to reference the growing power of Asia, particularly at the top end of the market, than to spurn the West in favour of one of its bourses?
Moreover, the current phase of the global economic cycle has put Prada and others in a sweet spot. The growing wealth in China and beyond gives the luxury sector a whole new source of growth, but many companies are performing well in their traditional markets too. The economies of the West may be underperforming, but the headline figures hide growing income inequality, with finances improving for those at the top end – one reason why Britain's Burberry, for example, is doing so well here as well as abroad.
It is on this basis that Prada has felt able to charge its investors the sort of prices customers are used to paying. Nor is it alone. Two of its peers, Salvatore Ferragamo and Moncler, are also in the middle of different types of sale process. There is growing speculation about a wave of consolidation in the sector following LVMH's takeover of Bulgari at a hefty price.
Still, while the direction of travel is clear in the developing economies on which Prada and the rest are becoming increasingly dependent, the journey is bound to be bumpy. A small slowing in Chinese growth this year has already had a disproportionate effect on everything from sales of Swiss watches to international air travel.
Moreover, the higher the valuation, the more vulnerable the share price to even small setbacks, particularly when expectations are so high. There are thrills to come with Prada, but probably some spills too.
No end in sight to stand-off over oil
The message from the airline industry at the annual Iata meeting in Singapore yesterday could not have been clearer: the oil price is at a level that threatens to tip the global economy back towards a downturn. That does not mean, however, that Opec, due to meet tomorrow, is any more likely to sanction an increase in oil production – at least officially.
For now, Opec is split. Its members have political differences, over the conflict in Libya, as well as economic disagreements. Saudi Arabia wants a production hike. Venezuela said yesterday that no increase was necessary.
In the absence of any consensus, the best hope is that individual members take their own action independently – at least finally to begin replacing some of the lost output from Libya.
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