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British Gas staff to reject new contracts in workers strike


Hundreds of British Gas workers have announced that they will reject a new contract proposed by the company.


Under the new contracts, full-time engineers would be required to work 40 hours a week, 3 hours extra than their previous contracts.


The new contract also stated that they would not be paid more when working on the weekend or public holidays.


The announcement by the firm has had its workers retaliate, the BBC reports that 500 workers are expected to leave, approximately 2% of the workforce.


The strike has been going on 43 days as staff suffer decreased morale due to the appalling treatment by the firm according to Andy Prendergast.


Justin Bowden, GMB’s National Secretary for Commerical services stated that there will be “more strikes.”


But will a strike consisting of approximately 2% of the 20,000 workers actually have a significant impact on British Gas?


2% of the workforce may not seem like a lot at face value, however, once the opportunity cost is accounted for, the strike is much more impactful.


First of all, the majority of British Gas’ workforce is likely engineers, thus making it highly skilled.


Because of this, the wage rate is quite high due to the limited supply of labour meaning any days which the workforce is not producing anything is very costly for the firm.


Additionally, the training costs associated with employing new employees once older ones leave will further worsen the negative opportunity cost associated with workers striking and leaving the company.


There is also the impact on British Gas’ social image as an employer which make it harder for them to employ future engineers.


Also, the negative opportunity cost is amplified once we account for the fact that the firm has not been performing very well financially in the past years.


In the past decade, British Gas has seen a various number of shortcomings, for example, the firm has lost more than 3 million customers.


Also, 15,000 jobs have been lost, and, as a result of the decreased demand and capacity, the company has seen a reduction in profits of 50%.


For this reason, the workers strike may be much more impactful on the firm as it may find it essential to keep its workforce in an effort to not drastically increase its costs as workers leave and strike for longer periods.


Increased labour costs will further reduce the firm’s profits and will negatively impact its financial performance, thus showing why British Gas may decide that keeping 2% of its workforce is essential.


Once we account for all these factors, we may see British Gas rolling back on their decision to change their employment contracts in the near future.

 

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Research compiled by Billy Ryan.


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