Labour’s method of settling wage disputes

Sir, Daniel Finkelstein is right to argue that giving in to unions’ wage demands will mean they press for more pay, more power and more benefits (“ ‘Grown-up’ pay bargaining will prove disastrous”, Aug 21). The UK is only too familiar with a wage-price spiral. Should these wage settlements, and those coming in their wake, prove inflationary, a resultant increase in interest rates will cost the economy and the public far more than the estimated cost of industrial action. It should also be remembered that the biggest problem for our economy is poor productivity. The government has now agreed three major above-inflation pay claims with no sign of any improvement in productivity. This is a huge missed opportunity and bodes ill for ministers’ avowed

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