FEATURE Profiteering report


Ground-breaking Unite investigation shows how corporate profiteering is driving inflation — as Unite demands profit restraint


When both the Bank of England governor Andrew Bailey and prime minister Boris Johnson said in June that workers shouldn’t ask for pay rises because it may set off an inflationary spiral, they got one thing right.


Inflation is indeed spiralling, but it is not workers who are driving it. Rather, the spiral is being fuelled by companies that are using the cost of living crisis as a smokescreen to raise prices and further increase already massive profits.


This was the conclusion drawn by a ground-breaking new report by Unite into corporate profiteering, which is now running rampant. The report, Unite Investigates: Corporate Profiteering and the Cost of Living Crisis, reveals the inextricable link between people’s plummeting living standards and companies’ ballooning profits.


Among the report’s key findings is an analysis of the UK’s biggest listed companies in the FTSE 350, whose profit margins are an astonishing 73 per cent higher than pre-pandemic levels in 2019. Even after removing energy companies – whose staggering profits have been widely reported – from the analysis, profit margins of the remaining companies are still up by 52 per cent.


“The weight of evidence shows that the UK is in the grip of a profiteering crisis,” explained Unite general secretary Sharon Graham. “Workers’


wages and what they can buy, are being squeezed by corporate wreckers pursuing runaway profits, quite literally at our expense.”


Indeed, while it is widely accepted that high inflation was initially sparked by supply chain shocks driven by the pandemic, increasing energy demand and the war in Ukraine, Unite has uncovered evidence of a ‘second wave’ of inflation.


This, the report found, is being driven by companies relentlessly raising prices over and above what’s needed to cover rising costs, also known as ‘price gouging’.


In a wider examination of the overall economy, Unite’s report found that, looking at data from the Office for National Statistics (ONS) across all companies, profits were up by more than 8 per cent in the six months from October 2021 to March 2022 after accounting for inflation. Over the same time period, real terms labour costs fell by 0.8 per cent.


Unite’s research found that this jump in UK-wide company profits is responsible for nearly 60 per cent of inflation in the last half year – as opposed to just over 8 per cent from labour costs.


Even companies themselves have publicly noted that price gouging is becoming standard practice. In April, supermarket giant Sainsbury’s reported a record £730m in profits.


10 uniteLANDWORKER Summer 2022


Although chief executive Simon Roberts denied his own supermarket chain was price gouging, he said that the company’s competitors were guilty of it when he noted, “We are inflating behind the market, our direct competitors are inflating ahead of the market.”


The Bank of England, too, has highlighted the impact of price gouging on the cost of living crisis, albeit quietly and euphemistically. In a recent speech to Chartered Accountants, the Bank of England’s chief economist Huw Pill spoke of companies pushing up prices to ‘pass on costs’, adding that a ‘further strengthening of [profit] margins is likely’.


In its report, Unite emphasised that profiteering isn’t just about oil companies or a ‘few bad apples’. Because of the way that supply chains are so tightly interwoven, when companies price gouge, businesses within the supply chain follow suit. This is what can spark successive waves of inflation as profiteering becomes entrenched.


“The Governor of the Bank of England and Boris Johnson want workers to think it’s irresponsible to demand better wages to pay for crippling food and energy prices,”


Unite’s leader Sharon Graham noted. “But Unite’s report exposes the truth. It’s not hard pressed workers who are driving inflation, but whole swathes of corporate Britain.”


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