GMLC employment campaign volunteer lead Avaia Nightingale Williams summarises the recent report by Unite the Union on profiteering.
What is profiteering?
Profiteering occurs when companies take advantage of crises or market conditions to increase their profits significantly, often at the expense of consumers and workers. Instead of investing in future growth or improving wages, these companies prioritise short-term gains for shareholders, leading to higher prices for goods and services without corresponding benefits for the general public.
The impact of profiteering
A new report by Unite provides a comprehensive look at how profiteering has affected the UK economy. Unite analysed nearly 17,000 companies and found that corporate profit margins have jumped by an average of 30% since the pandemic. This increase is substantial, indicating that profiteering is a widespread and systemic issue.
Who are the profiteers?
The report highlights several key industries where profiteering is most pronounced:
- Oil and gas companies – Major players like Shell and BP have seen their profits soar. For instance, Shell’s pre-tax profits rose from £23 billion before the pandemic to £52 billion in 2022. These companies benefited enormously from the rising prices of natural gas, especially following the Ukraine war, but continue to benefit and profit despite the wholesale price of these products continuing to fall.
- Electricity generation – These companies tripled their profit margins, taking advantage of higher natural gas prices to hike their own rates. This has had a direct impact on household energy bills and these companies continue to use the global political economy as an excuse to squeeze consumers at the household level.
- Shipping – Container shipping companies saw their profit margins increase 650-fold during the COVID-19 supply chain crisis.
- Banks and supermarkets – Big banks used higher interest rates to gain an additional £45 billion, while supermarkets also oversaw significant profit increases, almost exclusively without corresponding wage increases for their workers, and while customers struggled to afford the new prices.
The cost to workers and the economy
The report highlights that, while shareholder payouts for major companies have jumped by 20%,workers have faced real-terms wage cuts and higher living costs.
While corporate profits soar, a lack of investment in industries and infrastructure has meant that public services are under strain, and the economic future for millions of workers and their families is insecure. Whilst inflation in the UK has finally fallen back down to target, even the Bank of England note that:
“While prices overall are very likely to go up more slowly than they have done in recent years, lower inflation doesn’t mean prices will fall. Most things will still cost more than they did before.”
This is notable in the Unite report, which shows that profiteering is not actually something only the largest of companies engage in. In fact, the research and report found that of the 17,000 companies studied, it was the second least valuable set of companies that saw the largest soar in profits – with an average increase of 49%!
Why this matters
Profiteering isn’t just about companies making more money; it’s about how that money is distributed. In recent years, the shift in wealth from workers to corporate profits has exacerbated inequality and made it harder for people to make ends meet.
Unite argues that the only real check on corporate power is the organised power of the working class via trade unions. Unite General Secretary, Sharon Graham, said:
“There is only one real check on their power. Our power, the power of the organised working class. This is why at Unite we have one clear aim, to rebuild the trade union movement. To rebuild the power to claim our share.”
This means strengthening trade unions, restoring collective bargaining, and pushing for legislative reforms that support workers’ rights. Over the past three years, Unite members have taken industrial action to address the cost-of-living crisis, winning over £430 million in better pay.
To truly tackle profiteering, there needs to be a renewed focus on rebuilding the power of organised labour. This involves not only fighting for better wages and conditions but also advocating for policies that enable workers to organise for themselves, and put them on a more equal footing with employers. This includes a fair social safety net when people cannot work or are looking for work, so that employers must attract job seekers with better terms, and more rights to hold exploitative employers to account for unlawful practices.
Conclusion
The findings from Unite’s investigation make it clear that profiteering is a deep-rooted issue affecting the UK economy. It has led to significant wealth redistribution, favouring corporate profits at the expense of workers’ wages and investment. To address these challenges, there is an urgent need to rebuild collective bargaining power and push for systemic reforms that prioritise redistributing wealth and power in society.
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Avaia is an unregistered barrister and was formerly a Trade Union Representative at Citizens Advice Manchester as well as a national delegate for Unite the Union. If you are interested in working with GMLC on protecting and strengthening employment rights, either as a campaigner, practitioner or on an organisational level, you can email us at development@gmlaw.org.uk.
Image credit: William Murphy, Flickr, 2015. “Transport House: Unite the Union”.
