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Felixstowe port workers to strike again; record grocery inflation; NHS pressures push up long-term sickness – business live | Business


Fresh eight-day strike announced at Felixstowe

A new eight-day strike has been announced at the UK’s largest container port, Felixstowe, as a pay dispute deepens.

The Unite union have announced that the strike will begin at 7am on Tuesday 27th September, and run until 06:59 on Wednesday 5th October.

Unite says workers have “overwhelmingly rejected” management’s attempt to impose a pay deal worth 7%, which is a real terms pay cut.

Felixstowe handles almost half the container freight which enters the UK, with around 17 different shipping lines operating to and from 700 ports.

The strike could cause fresh disruption to UK supply chains, as retailers try to stock up on goods ahead of Christmas.

NEW: Unite announces fresh strikes in the Felixstowe port dispute. Eight days of walkouts called from 07:00 Tuesday 27 September and ending on 06:59 on Wednesday 5 October. The last eight days brought the port to a standstill

— Josiah Mortimer (@josiahmortimer) September 13, 2022

Unite general secretary Sharon Graham said:

“Felixstowe and CK Hutchison [the port’s owner] are both eye-wateringly wealthy but rather than offer a fair pay offer, they have instead attempted to impose a real terms pay cut on their workers.

“Since the beginning of this dispute Unite has given its total support to its members at Felixstowe and that will continue until this dispute is resolved.”

Workers at the port rejected the imposed 7% pay offer by 82%, on a 78% turnout, Unite says.

Unite’s members have already held one eight-day walkout, at the end of August, involving around 1,900 crane drivers, machine operators and stevedores.

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Felixstowe Port: No prospect of agreement with union

The port of Felixstowe has confirmed it has received notice from Unite that further strike action will take place from September 27 to October 5.

A notice on its website states the port is implementing a 7% pay rise and a £500 payment.

Hutchison Ports says:

We are very disappointed that Unite has announced this further strike action at this time. The collective bargaining process has been exhausted and there is no prospect of agreement being reached with the union.

The port is in the process of implementing the 2022 pay award of 7% plus £500 which is backdated to 1 January 2022.

A second strike at Felixstowe will cause delays and disruption, says Unite national officer for docks Bobby Morton:

“The latest strike action is entirely of Felixstowe’s own making. Rather than seeking to negotiate a deal to resolve the dispute, the company instead tried to impose a pay deal.

“Further strike action will inevitably lead to delays and disruption to the UK’s supply chain but this is entirely of the company’s own making.”

Fresh eight-day strike announced at Felixstowe

A new eight-day strike has been announced at the UK’s largest container port, Felixstowe, as a pay dispute deepens.

The Unite union have announced that the strike will begin at 7am on Tuesday 27th September, and run until 06:59 on Wednesday 5th October.

Unite says workers have “overwhelmingly rejected” management’s attempt to impose a pay deal worth 7%, which is a real terms pay cut.

Felixstowe handles almost half the container freight which enters the UK, with around 17 different shipping lines operating to and from 700 ports.

The strike could cause fresh disruption to UK supply chains, as retailers try to stock up on goods ahead of Christmas.

NEW: Unite announces fresh strikes in the Felixstowe port dispute. Eight days of walkouts called from 07:00 Tuesday 27 September and ending on 06:59 on Wednesday 5 October. The last eight days brought the port to a standstill

— Josiah Mortimer (@josiahmortimer) September 13, 2022

Unite general secretary Sharon Graham said:

“Felixstowe and CK Hutchison [the port’s owner] are both eye-wateringly wealthy but rather than offer a fair pay offer, they have instead attempted to impose a real terms pay cut on their workers.

“Since the beginning of this dispute Unite has given its total support to its members at Felixstowe and that will continue until this dispute is resolved.”

Workers at the port rejected the imposed 7% pay offer by 82%, on a 78% turnout, Unite says.

Unite’s members have already held one eight-day walkout, at the end of August, involving around 1,900 crane drivers, machine operators and stevedores.

ING: Pressures on the NHS leading to more long-term sickness

The relentless pressures on the National Health Services are contributing to the rise in people unable to work due to long-term sickness, analysts say.

Today’s jobs report shows that there are 352,011 more people out of work due to long-term illness than in December 2019-February 2020.

James Smith, ING’s developed markets economist, says the ‘dramatic rise’ in people leaving the labour market, due to illness (see earlier post), is ‘linked to pressure in the NHS’:

At a headline level, the latest UK jobs numbers don’t look too bad. Unemployment fell by two-tenths of a per cent to 3.6%, the lowest level since 1974. But this is driven not by an increase in the number of people in employment, but primarily by another dramatic rise in those classified as inactive – that is neither in work nor actively seeking it.

Alarmingly, the number of people classifying as not working due to long-term sickness is up by almost 400,000 since late 2019, and almost 150,000 in the last two months’ worth of data alone. It’s hard to escape the conclusion that this is linked to the pressures in the NHS.

UK labour market report
UK labour market report Photograph: ING

Full story: UK pay growth lags behind inflation as cost of living crisis bites

Phillip Inman

Phillip Inman

Pay growth failed to keep pace with rising prices in July despite a jump in average wages, according to official data that showed the cost of living crisis continued to affect millions of households throughout the summer.

Average pay including bonuses rose by 5.5% in the three months to July while regular pay (excluding bonuses) increased by 5.2%, up from 4.7% in June.

Workers continued to be hardest hit in the public sector, where regular pay grew by 2%, compared with 6% in the private sector. Annual inflation was 10.1% in July, the highest level in 40 years.

The growth in wages came against a backdrop of falling unemployment, which declined to its lowest level since 1974, but the trend for wages to trail inflation was maintained

Britain’s two German-owned discount supermarket chains have broken the Big Four’s grip of the grocery sector, with Aldi officially overtaking Morrisons for market share.

Kantar’s Fraser McKevitt explains:

Back at the start of the 2010s, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three quarters of the sector but that traditional big four is no more.

The discounters have seen dramatic sales increases in recent months, bringing more and more customers through their doors.

Aldi has done well to expand its shopper base, supported by consistent store openings, and with 14.2 million consumers visiting the grocer in the past three months. Meanwhile, for the fourth month in a row Lidl was the fastest growing grocer and recorded its strongest sales performance since October 2014.

UK grocery market inflation hits record 12.4%

Supermarket inflation has soared to 12.4%, as households continue to be battered by rising costs.

Grocery price inflation hit a fresh record in the last month, adding over £570 to the average annual bill, according to market researcher Kantar.

This has encouraged more customers turn to discount retailers, as they try to manage their stretched budgets (as wages aren’t keeping up with prices).

Fraser McKevitt, head of Retail and Consumer Insight at Kantar’s Worldpanel Division, warns that “it seems there’s no end in sight to grocery inflation”.

McKevitt says:

Now standing at 12.4% for August, the latest figure means that the average annual grocery bill will go from £4,610 to £5,181 if consumers don’t make changes to what they buy and how they shop to cut costs.

That’s an extra £572 a year. Categories like milk, butter and dog food are jumping up especially quickly at 31%, 25% and 29% respectively.

Kantar also reports that German-owned discounter Aldi has overtaken Morrisons to become Britain’s fourth-biggest supermarket group.

Aldi’s sales rose by 18.7% over the 12 weeks to 4 September 2022, reaching a 9.3% market share and making it Britain’s fourth largest supermarket for the first time.

Meanwhile Lidl grew sales by 20.9% and its market share has increased to 7.1%.

Ocado shares slide as customer cut back

Julia Kollewe

Julia Kollewe

In the City, shares in online grocer Ocado have tumbled almost 10% after it warned customers are cutting back.

My colleague Julia Kollewe explains:

Ocado has warned that annual sales will drop because customers are trading down to value products and buying less overall amid a worsening cost-of-living crisis.

The online grocer, which is owned partly by Marks & Spencer, said sales rose 2.7% from a year ago in the 13 weeks to 28 August, an improvement from the drop in the previous quarter.

However, faced with soaring energy bills and higher food prices, shoppers are putting less in their baskets and looking for cheaper products. The value of the average basket fell 6%, from £123 to £116.

Here’s the full story:

We’re now starting to see signs of a labour market losing its momentum, warns Jack Kennedy, UK economist at the global job site Indeed, with the employment rate and vacancy numbers both dipping.

He adds:

“At the same time, there remains extreme tightness with vacancies nonetheless remaining near record levels and economic inactivity reversing its recent falls to rise to its highest level since 2016. This was caused by people at opposite ends of the career ladder; largely driven by those aged 16 to 24 years and those aged 50 to 64 years. This participation gap in the labour market means hiring became even more challenging for employers.

“While many people’s thoughts may be elsewhere at the moment, the cost-of-living crisis continues to be reflected in a squeeze on real terms pay. Despite historically strong nominal regular pay growth, real wages were down -2.8% on the year – one of the largest falls on record.

“The squeeze on public sector workers is particularly acute as their regular wages increased by just 2% year-on-year in nominal terms compared with 6% for private sector workers, the largest gap on record outside of the pandemic period.”

Latest @ONS labour market stats show further tightening in 3m to July. Inactivity rate jumped 0.4ppts to 21.7%, its highest since late-2016.

Hiring challenges for employers certainly not easing as unemployment rate dropped to just 3.6%, even though employment fell in period. https://t.co/fwrYFYXRi0 pic.twitter.com/apfaC64B9e

— Jack Kennedy (@JackKennedy82) September 13, 2022

Real wages fell by around 4% when compared to the CPI inflation measure, warns TUC General Secretary Frances O’Grady:

She says ministers must take action to boost pay:

“Every worker deserves a decent standard of living.

“But as the cost-of-living crisis intensifies, millions of families don’t know how they will make ends meet this winter.

“The new prime minister must get pay rising. Boosting the minimum wage and giving public sector workers a decent pay rise would be a good start.

“And unions should be allowed to go into every workplace to negotiate proper pay rises for all working people.”

Rise in long-term sickness should ring alarm bells

Long NHS waiting lists, poor mental health, a lack of specialist employment support and long Covid are all driving up the rise in long-term sickness (see last post).

That’s according to Tony Wilson, Director at the Institute for Employment Studies, who said:

“Today’s figures should be sounding alarm bells in government, with the number of people out of work due to long-term ill health now rising faster than at any point in at least three decades.

This is happening despite there being well over a million vacancies in the economy and unemployment at its lowest in most of our lifetimes. Yet there are still more than half a million more people out of work than there were before the pandemic began and firms simply can’t find the workers to fill their jobs. This is holding back growth but also pushing up inflation, with pay growth in the private sector now running above 6% and contributing to even higher prices. Of course inflation is even higher still, which combined with anaemic public sector pay means that earnings in real terms have fallen for the ninth month in a row.

“This weak jobs recovery is being driven by more people out of work due to long-term ill health, up by 350 thousand since the pandemic and by 130 thousand in the last three months alone. NHS waiting lists, poor mental health, a lack of specialist employment support and long covid will all be playing a part in this, but whatever the reasons we need to do far more to help those with ill health to prepare for, find and keep work.

For a government that wants to cut taxes to boost growth, today’s figures also spell trouble. If we don’t do more to help more people into work, then any tax cuts will just lead to even higher inflation and higher interest rates for longer.”

IoD: disturbing rise in inactivity as long-term sickness rises

The drop in the unemployment rate, to just 3.6%, shows some firms are facing labour shortages (even as vacancies fall).

Kitty Ussher, Chief Economist at the Institute of Directors, says long-term illness is preventing some people working:

“Just when we thought unemployment couldn’t get any lower, it has fallen further to an extraordinary 3.6% in the 3 months to July, the lowest rate since 1974.

“This is good news for households trying to budget in the face of rising costs. Although the effect of inflation has caused real pay to fall – by 2.8% on the year, causing difficulties for many – the jolt to family budgets from high unemployment would be significantly worse.

“More disturbing is the continuing rise in economic inactivity. Some of this is due to having more students, but also to increasing numbers of over-50s being denied the ability to work due to long-term illness.

Uk economic inactivity
Photograph: ONS

There are now 642,00 more people classed as economically inactive, compared with February 2020 (just before the first Covid-19 lockdowns).

Changes in economic inactivity
Photograph: ONS

Real pay packets could be squeezed harder in the months ahead as the economy weakens.

Yael Selfin, chief economist at KPMG UK, says:

“Pay packets continue to be squeezed as nominal pay growth hasn’t kept up with soaring inflation. As long as demand for staff remains high, this could encourage workers to look for better opportunities and secure a higher pay elsewhere.

However, the window of opportunity could soon narrow if employers review their payrolls in light of a deteriorating outlook.”

Glassdoor: labour market feeling an autumn chill

Glassdoor’s UK economist Lauren Thomas says:

“The ONS’s latest labour market report tells us that summer’s red-hot labour market is starting to feel an autumn chill, with vacancies down for the second month in a row after nearly two years of nonstop growth.

One notable bright spot for employees: the healthcare sector, where openings are still high. Employers struggling to hire should focus on the over 65s, whose employment rates are tied for the second-highest on record.

Students are another possibility to focus on; they’ve driven a large share of the rise in economic inactivity during the pandemic, but many will be returning to the labour market after their programmes end.

UK vacancies
Photograph: ONS

The drop in people working, or available to work, in May-July was largely driven by those aged 16 to 24 years and those aged 50 to 64 years.

The ONS says:

Looking at economic inactivity by reason, the increase during the latest three-month period was driven by those inactive because they are students or long-term sick.

Public sector pay packets hit hardest by inflation

Public sector workers are suffering the brunt of the real wage squeeze.

Today’s labour market report shows that average regular pay in the public sector rose by just 2.0% per year in May-July.

Private sector workers saw their pay rise three times as fast – with average regular pay growth of 6.0% (still lagging inflation).

That’s the largest difference between public and private sector pay on record (apart from in the pandemic, when private sector pay tumbled in the first lockdown).

UK public sector and private sector pay
UK public sector and private sector pay Photograph: ONS

Workers in the wholesaling, retailing, hotels and restaurants sector saw the largest regular growth rate at 7.0%, as bosses continued to offer higher wages to attract staff.

That was followed by the finance and business services sector at 5.9%, and construction sector at 5.4%.

Here’s Alex Collinson, analysis and research officer at the TUC:

New labour market stats:

Pay is failing to keep pace with inflation, but hitting the public sector particularly hard.

Real pay growth at a record low in the sector, and real monthly wages are now a massive £196 less than they were in the same period last year. pic.twitter.com/HWMMnks2H8

— Alex Collinson (@Alex__Collinson) September 13, 2022

Introduction: Real wages still falling, but jobless rate lowest since 1974

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

UK wages are continuing to lag behind inflation, as the cost of living squeeze hit British workers over the summer.

The latest UK labour market report, just released, shows that real pay is still falling, even as the jobless rate hits a new near-50 year low.

Average pay including bonuses rose by 5.5% per year in May-July, while basic pay, excluding bonuses, rose 5.2%, the Office for National Statistics reports.

Although that’s quite high in nominal terms, the ONS says it’s one of the worst drops in real pay this century:

Based on its CPIH inflation measure, the ONS says:

Growth in total and regular pay fell in real terms (adjusted for inflation) on the year in May to July 2022, at 2.6% for total pay and 2.8% for regular pay; this is slightly smaller than the record fall we saw last month (3.0%), but still remains among the largest falls in growth since comparable records began in 2001.

UK real pay
UK real pay Photograph: ONS

The headline CPI inflation is higher that CPIH. It hit 10.1% in July, and could remain high for months – despite the government’s energy price cap announced last week.

New labour market stats:

Real wages continue plummeting, falling by 4.0% in latest data.

Average weekly wage is £25 per week (or £109p/m) less now than it was in same period last year. pic.twitter.com/nNx6Q0Jlxc

— Alex Collinson (@Alex__Collinson) September 13, 2022

The jobs report also shows that firms are also cutting back on hiring, as the energy crisis pushes the UK economy closer to recession.

The number of job vacancies in June to August fell by 34,000 to 1,266,000, the largest quarterly fall since June to August 2020.

But in better news, the total number of workforce jobs in the UK has risen by 290,000 to a record 35.8 million. This means it has exceeded the pre-coronavirus level of December 2019 for the first time.

The UK unemployment rate is now the lowest since May to July 1974 – the ONS reports it dropped to 3.6% in the three months to July, down from 3.8% in the previous quarter.

‘The unemployment rate for May to July 2022 decreased by 0.2 percentage points on the quarter to 3.6%, the lowest rate since May to July 1974.’ – ONS.

— Andy Verity (@andyverity) September 13, 2022

But the economic inactivity rate has risen by 0.4 percentage points to 21.7%, as more people dropped out of the labour market in May-July.

That’s 1.5 percentage points higher than before the coronavirus pandemic, showing the long-term impact of Covid-19 on the labour force.

More details and reaction to follow….

Also coming up today

UK business are preparing for the Queen’s state funeral. A string of retailers, including Aldi, John Lewis, Waitrose, Primark and Homebase have decided to shut stores next Monday…

… while London hotel rates have soared, in line with surging demand from foreign dignitaries, and members of the public keen to pay their respects.

In economics….investors are hoping to learn today that the pace of US inflation may have slowed last month.

US CPI is expected to have slowed in August, for the second month running, to an annual pace of around 8.1%, down from 8.5% in July.

Prices may have dropped by 0.1% on a monthly basis during August, thanks to a drop in energy costs (gasoline has been falling steadily for weeks), having been flat in July.

But core inflation, which strips out volatile measures such as energy, is expected to have risen 0.3% during the month.

A slowdown in inflation could take some pressure off America’s central bankers, who are expected to raise interest rates by another 75 basis points (three-quarters of a point) at the their next meeting.

European stock markets are set to open lower, after strong gains yesterday after Ukraine’s sweeping advances against Russia eased some investor fears of a prolonged energy crisis in Europe.

The agenda

  • 7am BST: UK labour market report

  • 8am BST: Kantar’s grocery inflation report

  • 10am BST: ZEW index of German economic sentiment

  • 1.30pm BST: US inflation report for August

  • 3pm BST: TIPP survey of US economic optimism for September





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