Why WFH culture has made the impact of strikes even greater

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8th January 2023

One Lombard Street is the City of London’s canteen: an old-fashioned brasserie where deals are sealed over early-morning plates of smoked salmon and scrambled eggs. It usually has up to 150 covers at breakfast time. But last Tuesday, Soren Ulrik Jessen, the owner, surveyed an unfamiliar scene: “For the first time in 25 years, we had zero customers.”

The restaurant lost £150,000 in sales — about 25 per cent of the month’s total — in December as strikes by the RMT union brought the railways to a standstill and emptied city centres. Jessen estimates it will lose a further £35,000 this month.

For hospitality businesses still recovering from Covid, the effects of industrial action are “devastating”. “I was here a lot during lockdown and it was like a ghost town — and it’s the same again,” Jessen, 59, said. “It’s so depressing. We were just coming out of it, and everyone was excited about the fact that people were coming back, and now we’re being hit by this storm.”

The cumulative economic impact of strikes by rail workers, posties and even nurses is laid bare in analysis carried out for The Sunday Times by Panmure Gordon. The stockbroker calculates that disruption since last June has cost Britain about £3.2 billion, or 0.25 per cent of GDP over that period. The damage was concentrated in the Christmas and new year peak, with a hit of £1.6 billion for December and January.

Simon French, Panmure’s chief economist, said the vast majority of that £1.6 billion — £1.2 billion — came from travel woes and the resulting pain felt by bar and restaurant owners such as Jessen. Panmure attributed about £200 million to NHS backlogs exacerbated by the nurses’ action, and £150 million to slowdowns caused by striking government services staff such as border officials and highway workers.

The full £3.2 billion represents “a significant economic headwind”, French said. “We’re not in general strike territory, but the question is how long this goes on and how much it broadens further, because we’re in a situation where industrial action is becoming more intense and covering more of the economy. The longer this goes on, the harder it is to build cultures and intangible relationships — the types of things we know sit behind highly productive businesses.”

Business leaders are frustrated at having emerged from Covid lockdowns only to be plunged, in effect, into a new one imposed by unions warring with the government over pay and working conditions. Lord Rose of Monewden, the chairman of Asda, said: “It’s debilitating. It is wearing in terms of morale, it will definitely have an effect on our productivity and it will continue to slow down the whole economy . . . I’m an optimist, but in the short term you get into a rut. ‘The trains aren’t working, therefore I’ll stay at home.’ People aren’t getting off their arses.”

Rail strikes have dealt a fresh blow to city centres already reeling from the pandemic. Mobile phone data analysed by the research firm PlaceMake.io last week suggested that Tuesday to Thursday had become the typical working week in offices, with most people working from home on Mondays and Fridays. London office occupancy, which reached 52 per cent on Tuesdays in November, crashed to 22 per cent and 21 per cent last Tuesday and Wednesday respectively, according to the workplace data firm Freespace.

Julia Hobsbawm, author of The Nowhere Office, said that office workers were snapping back into full-time WFH patterns established during Covid. “The reality is that the muscle memory of the white-collar worker has changed completely,” she said. The mental health implications of more working from home are widely debated. A report from Microsoft last year found that although it could improve job satisfaction, it could also leave employees feeling “socially isolated and trying to overcompensate”.

While the ubiquity of Zoom calls has lessened the impact of strikes on companies whose staff can function without coming into the office, leisure businesses have been hammered. Crussh, a chain of juice bars with most of its branches in central London, filed notice of its intention to appoint administrators on Friday. Rik Campbell, whose Indian restaurant chain Kricket has sites in London’s Soho, White City and Brixton, suggested that the RMT was staging certain midweek strikes to inflict maximum damage on the ancillary white-collar economy. “It’s already a three-day working week now, so when they strike on a Tuesday and Wednesday we’re pretty much down to the weekend,” he said. “It does make me angry, and you wonder how long it’s going to go on.”

Meanwhile, many blue-collar workers have been forced to take circuitous and sometimes more expensive routes to work. “Kitchen porters and waiters who are not half as well paid as rail workers are having to spend three hours changing buses four times getting to work in the cold and getting home at night after a late shift,” Jessen said. Hobsbawm added: “If you have no choice but to go to work, you’re screwed. If you have some choice, you use it.”

Data from the research firm Springboard showed that strikes and the cold snap also put a dent in the number of shoppers in the run-up to Christmas. Footfall was 0.9 per cent lower week-on-week and 20 per cent down on pre-Covid levels in the key week to December 17.

The British Retail Consortium (BRC) said that footfall for the month as a whole was down 7.3 per cent compared with 2019. While this was the least bad December since the pandemic, Helen Dickinson, the BRC’s chief executive, said it would have been better without the backdrop of industrial strife. She pointed out that some retailers suffered a double whammy due to strikes staged by about 100,000 Royal Mail posties before Christmas. “If you’ve got lower footfall and your online business is then being impacted by postal strikes, that’s not good news,” Dickinson said.

Susan Bonner, founder of The British Craft House, an online marketplace for independent retailers, said the Royal Mail action had been a “huge issue” for her sellers. “It was a really frustrating end to a frustrating year for a lot of them,” she said. “One has 70 parcels that were last spotted in the Heathrow mail distribution centre. They’re having to refund customers and then claim from Royal Mail.”

If the city-centre gloom is reminiscent of the Covid era, so are booms in other areas. Supermarkets appear to be among the biggest winners in the strikes. Grocery sales rose by 9.4 per cent compared with last year to a record £12.8 billion in December, according to the research firm Kantar — although growth was fuelled by price inflation rather than families buying more. Clive Black, an analyst at the stockbroker Shore Capital, said the postal strikes had probably given supermarkets a boost in sales of general merchandise items. “A lot of people just thought, ‘I can’t buy it online so I’m going to go to the supermarket and pick it up,’” he said.

And while urban centres are bearing the brunt of lower footfall, affluent towns and suburbs are the beneficiaries as home workers shop and eat out locally. Luke Johnson, a minority shareholder in the upmarket bakery chain Gail’s, said: “Central London facilities get bashed, whereas there’s no doubt Gail’s benefits. In Blackheath and Henley-on-Thames and Maida Vale and all the rest of it, the stores are busier, because people aren’t commuting to Canary Wharf.”

Original article here: https://www.thetimes.co.uk/article/why-wfh-culture-has-made-the-impact-of-strikes-even-greater-sxshx3jhf

Author: Oliver Shah, Associate Editor, The Times

Simon French

Managing Director, Head of Research

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