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Why the Unilever strikes matter

19 January 2012

Given the fragile state of the economy, it's easy to gloss over the strikes at Unilever, the first in its 82-year history. But the industrial action is important because it encapsulates so many issues facing the country as a whole. Here is a snapshot of why the strike matters.

Public sector pensions have been in the spotlight owing to the government's determination to end the vast discrepancy between public sector and private sector pensions. But there has also been plenty of disquiet over many private companies ending final salary pension schemes. To be fair to Unilever, it is one of the few companies that has left it this long to close such a scheme. The was closed to new staff in 2008 and will now be shut down completely, affecting around 5,000 workers.

Management salaries
Unilever's argument for cutting the system is that it can no longer keep pace with the rising cost of pensions, and that it has to tackle a deficit of £680m. While this argument is difficult to deny, unions say that if the company was so worried about its bottom line, CEO Paul Polman wouldn't have received a 50% jump in his salary. They say his salary is now 285 times that of Unilever's average employee. This issue echoes other complaints about bosses around the country who earn far more than their underlings, but who embark on painful cost-cutting efforts to save money.

The economy
Unilever apparently told its employees in 2008 that their pensions would be safe, although new entrants would not be able to participate in the scheme, and existing workers would have to pay in more than they were already. The announcement that the scheme will be closed down has therefore annoyed the workers because they feel management has lied to them. There are lessons for both parties here: management should be wary of making promises it cannot keep, and workers should accept that, given the state of the economy, nothing can ever be taken for granted - except death and taxes.

Food inflation
Inflation may be falling, according to the latest figures, but don't fool yourself, food prices are destined to go up, up and up in the coming months and years. By striking, Unilever workers will put added pressure on food production, particularly as the company is responsible for such household names as Marmite, Flora and Pot Noodle. However, management can rest assured the damage to their product - if there is any - won't be long-lasting. The strikers must know they're fighting a losing battle. The economic tide is against them, and final salary pension schemes are almost certainly breathing their last breath.

Manufacturing excellence
During the brief post-recession recovery last year, manufacturing in the UK led the way. Its resurgence at a time when the economy desperately needed a financial boost was much lauded, and led to a renewed appreciation of this sector. When one considers the food and beverage sector was leading the way within manufacturing, it becomes clear this sector is extremely important. Any denting of the food industry's image - and, more importantly, its production output - can only be detrimental to the economy. That doesn't mean workers shouldn't strike, or that companies shouldn't re-evaluate their pension schemes, but it does draw attention to the fact that for the UK economy to work, manufacturing has to excel - and food and beverage above all else.

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