How do strikes affect businesses?

A man taking part in an industrial action, holding a megaphone and notepad.

Being a small business in today’s economic climate doesn’t come without its challenges, and as an increase in industrial action poses a fresh obstacle, many SMEs are starting to feel the effects.

But how does strike action impact a business, and what can you do to make sure that you’re prepared to deal with the consequences? Keep reading to find out more.

What is industrial action?

Industrial action occurs when trade union members have a disagreement with their employers that isn’t resolved with negotiations. More often than not, workers will go on strike, but in some cases they may choose to undertake other action, such as picketing, ‘go-slows’ (the deliberate delay of work progress), or refusing to work overtime (also referred to as ‘action short of a strike’). Sometimes, a ‘lock-out’ can occur. This is when an employer may stop their employees from attending work during a dispute.

In the UK, the right to strike is controlled by restrictive and complex industrial action laws. A trade union is only able to call for industrial action if the majority of the members involved support it via an organised and valid secret postal vote, also known as a ‘ballot’. By organising a ballot, a union can establish which members that are impacted by the dispute want to take industrial action. The union then calls industrial action by telling members and the employer how and when the action will be carried out. This should be done by a trade union official.

Since May 2022, the UK has experienced a series of strikes and industrial disputes across various industries, with workers walking out due to disputes over working conditions and pay. These strikes coincided with inflation, with workers demanding pay increases to keep up with inflation.

For example, in June 2022, the National Union of Rail, Maritime and Transport Workers (RMT) voted to strike for increased pay and improved working conditions, with a string of strikes bringing train travel to a halt throughout the country while trains operated at just 20% of the normal capacity.

As industrial action on the railways continues, trade union members across other industries have also decided to take action, including NHS doctors, nurses and ambulance workers, teachers, postal workers and refuse workers.

How do strikes impact small businesses?

Strikes have impacted industries right across the board, and this action has also had a ripple effect on small businesses throughout the UK. According to a study conducted by small business lender Iwoca, small to medium sized businesses have lost an estimated 680,000 days of trading every month due to the wave of strikes that have hit the country in the last six months.

The study also showed that almost a third (31%) of businesses reported the strikes have had a negative impact on their organisation, with nearly a fifth (18%) saying they had to change their work plans as a result of industrial action. A combination of lost trading days due to strikes in addition to spiralling energy costs and inflation, means it is an extremely tough and troubling time for small businesses.

Strike action can take its toll on the day-to-day operations of a business. For example, strikes within the transport sector can make it difficult for employees to get to work. This can spell bad news for businesses that rely on their staff turning up at their place of work, such as to carry out shift work.

Meanwhile, postal union strikes can mean that customer orders are significantly delayed. As a result, businesses could expect to receive more communications from customers asking for updates on their orders, as well as negative backlash from those unhappy at having not received their orders in a timely manner.

How to deal with strikes

Knowing how to deal with external strikes can help you prepare and cope with the impact this action may have on your business. Check out the following tips to learn how to keep this disruption to a minimum for you and your business.

- Allow employees to work from home

Where possible, allowing employees to work from home can reduce the disruption caused by travel industry strikes to rail and bus networks. This takes away unnecessary stress for staff who may rely on public transport to get to and from work and means they don’t have to find alternative travel arrangements. What’s more, for you as a business, it means you’ll be able to continue to run at full capacity.

For the times when you’re working from home due to industrial action disruption, you might want to consider taking out homeworkers insurance. This type of policy can include cover such as business equipment insurance, which provides financial protection for the loss, theft or damage of equipment that is necessary to work from home, including laptops, smartphones and tablets. Having this business insurance in place will mean that you’re prepared to switch to a work from home pattern, especially when a strike is announced unexpectedly.

- Arrange deals with third party couriers

The Communication Workers Union, which includes 10,000 Royal Mail workers, recently took strike action in June 2022. Since then, it has initiated further strike actions, some of which took place over the Christmas period, causing severe delays to the delivery of mail and parcels across the country during this extremely busy time. To avoid business disruption caused by postal strikes, you may want to consider switching to using a third party courier unaffected by industrial action. This will help to keep disruption to a minimum and ensure that customers receive their orders as expected.

- Improve communication with your customers

Improving communication between you and your customers is essential in maintaining a good relationship, especially if disruptions caused by industry strikes are impacting the way your business operates. It’s important to be readily available to answer customer queries, including via phone, email, live chat and social media. Keeping your customers updated and informed will help reduce frustration and disappointment, especially in situations where the impact of industrial action on your business is out of your control.

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