Tanker drivers' victory emboldens unions to threaten militancy on pay

Pleas by ministers for pay restraint have been met with contempt by the unions, emboldened by the Shell tanker drivers' 14 per cent rise over two years, way above the latest rate of inflation of 3.3 per cent and a remarkable result for the Unite union.

Dave Prentis, general secretary of Unison, the largest public service union, warned that the recent health service settlement could be scrapped: "If the Government continues to shower insults on 6 million public service workers, it will pay the price at the next election.

"Public sector workers have had below inflation pay deals year on year. We are balloting 800,000 local government members for strike action over a 2.45 per cent pay offer and, if inflation continues to spiral, we will trigger the re-opener clause in the NHS deal and go back for more money."

Mr Prentis has pledged to "campaign with all other public service unions to break this pay policy". The general secretary of the TUC, Brendan Barber, added: "Our economic difficulties are caused by reckless lending by bankers and inflation comes from higher oil, food and commodity prices ... Inflation and the pressure on wages will drop as the economy slows. That does not suggest we are heading for a runaway wage-price spiral."

While the Chancellor, Alistair Darling, and the Business Secretary, John Hutton, argued that the Shell settlement was a one-off, union leaders made it clear that they were determined to defend their members' interests – especially in the public sector.

Dai Hudd, assistant general secretary of Prospect, a union that represents civil servants in science and technology, said: "If the fuel tanker drivers' settlement represents pay restraint in the private sector, can the public sector have a little of that restraint as well?"

Mark Serwotka, leader of the larger civil service union, PCS, said: "For people earning just above the minimum wage, to be told to accept real pay cuts is just insulting."

Pay settlements have been relatively subdued in recent months, hovering around the 3 to 4 per cent mark. Deals in manufacturing firms were revealed yesterday to have fallen for the third month in a row, to their lowest level in more than 18 months, averaging 3 per cent.

The number of companies reporting pay freezes rose sharply to just over 7 per cent of all settlements, according to the Engineering Employers' Federation. However, as food and fuel costs soar and expectations of higher inflation become embedded, it is likely to lead to more militancy.

The RMT's general secretary, Bob Crow, said: "It is funny how it is always working people who are asked to exercise restraint. Bosses have been raking in huge profits and dividends and the gap between rich and poor continues to grow, yet it is the unions who are being told to keep their members' wages down. We shall not be paying any attention to wage restraint."