The Bank of England fears worker power, but most are taking a real-terms pay cut | Phillip Inman

Goldman Sachs has bowed to demands for a less stressful workplace by offering a “flexible vacation” scheme that allows senior bankers to take a holiday whenever they feel like a break.

Generosity further down the investment bank’s global chain of command is more limited: it has told traders and admin staff – who are notorious for taking breaks lasting just a day – that they should disappear for at least one solid week out of the minimum of 15 days.

The stark inequality aside, Goldman’s warm hug for 43,000 global employees, 6,000 of them in the UK, is supposed to be a sign that the pandemic has forced employers into a major rethink of how to attract and retain staff – with better pay and benefits and a willingness to take on board their concerns.

At rival banks, and at large consultancies, accountancy firms and legal businesses, there is a similar story of more flexible working becoming the norm for most, if not all, staff. Most are aping what is on offer in the tech sector.

But policymakers, be they in the Treasury, the Bank of England or No 10, appear to be listening in horror to these stories, which they interpret as a sign of growing worker power.

For instance, the Bank of England is expected to jack up interest rates, mostly to head off a threatened wage/price spiral that relies on its feeling that workers, like poker players who have spent decades at the tables without success, are finally hitting the jackpot. It’s a short leap from flexible benefits to double-digit pay awards, according to some inside Threadneedle Street.

But while some employers are considering more flexible working, surveys show that this is being applied only to working from home – a change that may prove popular in many boardrooms as a permanent cost-cutting measure.

A recent survey for the TUC found that while regular home working tripled during the pandemic – rising from 6.8% of the working population in 2019 to 22.4% in 2021 – other forms of flexible working are being implemented as inflexibly as they ever were.

There was some good news when figures showed that over the past two and a half years, the number of people on flexi-time has increased, from 12.6% to 13.5%. However, part-time work declined – from 24.9% to 23.5% – as did the proportion of people benefiting from annualised hours, term-time working and job shares, which declined from 0.5% to 0.4% of the working population.

More indicative of the overall attitude to working practices is Royal Mail, which has thrown the gears into reverse, telling staff that they need to give up some flexibility in return for a slightly larger pay rise.

Not that Royal Mail is poor. It recently announced profits north of £700m. Yet it says the business cannot afford a pay rise of more than 2% now forecasts show that profits are due to halve this year. If postal workers want a further 1.5% and an “above and beyond” bonus of 2%, they must submit to a new working regime and extended week designed by the management.

The Communications Workers Union said last week that it would ballot for industrial action to secure a “no-strings” pay rise. The union must not only fight off a switch to new, unsociable working practices, it must also gain acceptance from the management of a “no-strings” pay award matching the current 9% inflation rate.

It would be nice to think that Royal Mail is an outlier. Yet to believe that the world is heading towards a rebalancing of capital and labour in favour of workers is surely to be deluded.

Negotiated pay rises seen by consultants XpertHR have risen from 3% in January to just 4% in April. These figures cover a cast of thousands of workers, from the automotive and chemicals sectors to large service industry employers.

None of these deals comes close to matching the inflation rate. A 4% rise was about the average before the pandemic, giving workers a small improvement in living standards while inflation was at a subdued 2%. Now it represents a significant cut and lies at the root of the cost-of-living crisis.

Yes, bonuses, signing-on fees and other non-consolidated elements of salaries gave a boost to pay growth in official figures for March to 7%. However, the Office for National Statistics made it clear that these payments were offered in banks, insurance companies and professional services. Everyone else missed out, seeing an average 4.2% rise when bonuses were excluded.

Workers at Goldman, Deloitte and Google can expect more flexibility – to go with their already high pay – but for everyone else, all the indicators show that the direction of travel is backwards.