Moral maze

Wages rising in lockstep with inflation is a relic of the 1970s, when organised labour yielded real institutional power. By the 1990s, with trade unions neutered, it became common business practice to offer annual settlements that lagged inflation, if only by one or two percentage points. A sly fillip to profits. 

Workers generally acquiesced, if reluctantly. Inflation was lowish anyway. And the marginal impact on living standards was minimised by easy access to cheap credit.

You didn’t have to be an economist to realise this trend had a limited shelf life. If the real-terms value of your wages withers over several years (or even decades, in some trades), eventually you’re really going to notice. Then there will come a reckoning. ‘Enough is Enough’ – and the resurgence of union militancy – suggest that reckoning has arrived.

Legal business is not immune from the crisis. Let me call in evidence an email I received this week from West Midlands practice Higgs LLP. Law firms have a ‘moral responsibility’ to help their employees negotiate the cost-of-living crisis, says Higgs. And the firm has put its money where its mouth is, handing staff £500 each and launching a hardship fund.

Good for Higgs – and the firm is far from alone in handing out one-off bonuses. Yet it is no coincidence that most of those garnering media plaudits for their largesse are in the cash-rich top rank. Linklaters, Clifford Chance, Bird & Bird, Irwin Mitchell. To be blunt, they can afford it, when partners routinely draw high six- or seven-figure sums. A million or two off the top to give the ‘poor bloody infantry’ a pick-me-up is a mere bagatelle.

Among their less rarefied peers, the fiscal outlook may not be so (perennially) sunny. And that makes me uneasy about Higgs’s ‘moral responsibility’. Law firms can only pay what they can afford.

Even so, committed and competent employees are hardly being unreasonable in expecting their wages to keep pace with surging inflation. All this means is they will be paid the same next year as they were this year. In legal business, staff often do better than this – but across the wider business world, what was once routine long since became a bonus in its own right.