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UK car industry booms but do workers benefit?

Hardly a week goes by without another story concerning increasing production, sales and profits in the UK car industry. With such demand and money rolling in, it might be assumed that workers in those car plants are enjoying a similar boom in their pay and conditions but this does not seem to be the case. These workers bit the bullet when the financial crisis threatened plants with closure.

Hardly a week goes by without another story concerning increasing production, sales and profits in the UK car industry. With such demand and money rolling in, it might be assumed that workers in those car plants are enjoying a similar boom in their pay and conditions but this does not seem to be the case. These workers bit the bullet when the financial crisis threatened plants with closure. They accepted wage freezes or even cuts and short hours to help keep plants open. Five years on, however, many such workers are still on shorter hours and many more have seen their wages fall sharply in real terms.

Workers at Vauxhall’s plant at Ellesmere Port, for example, have been on short hour contracts for more than a year and have had just a single pay rise in the last five years. Unions cut this deal as part of an agreement to persuade General Motors to build the new Astra at the factory from 2015. The new model will see hundreds of new workers taken on at the plant but they will be hired at 70% of the standard salary and have a less generous pension.

Companies such as MINI and Nissan have seen profits soar as production records are broken but many workers are not seeing the benefits of the sales surge. Car companies have been using lower paid temporary workers to cope with the extra work, while permanent shop floor staff have seen wages fall by 7.5% since 2009. In the same period, production has increased by almost 50% and directors have seen their pay rise by around a third in real terms. The total annual wage bill for the UK car industry peaked at £4.6 billion in 2004 but is now £1 billion lower, despite the increase in production.

Jaguar Land Rover (JLR) seems to be an admirable exception to the gloomy picture on falling or frozen wages. Workers at the Indian owned carmaker have seen their pay packets bulge with a 14% wage increase over the three years from 2010 to 2013. As the Chancellor and many others talk up the UK economy and insist that the financial crisis is behind us, it may become less tenable for the car companies to maintain their positions on frozen or decreased wages. Memories of destructive industrial action in the 1970s and 1980s are still fresh for many and it will be hoped that conditions for workers can be improved without resort to such actions.

 

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