It all gets worse

Ross McKibbin

  • The New Industrial Relations? by Neil Millward
    Policy Studies Institute, 170 pp, £15.00, February 1994, ISBN 0 85374 590 0

For much of the last few years Britain has not had industrial relations, at least not that the public would be aware of. ‘Industrial relations’ to most of us connotes strike unreasonable trade unions – all that is understood by the ‘Seventies’. We have repeatedly told pollsters that unions had too much power and were ‘damaging’ the economy; even trade unionists agreed with this, though they usually exempted themselves and their own unions from blame. The Government has very successfully exploited this folk-memory, and the stated aim of its industrial policies – the restoration of managerial authority – has been pursued with undisguised determination and no political ill-effects. For the Government, the question is one of power. Ministers have not been interested in alternatives to trade unions because most alternatives presuppose a kind of consultative procedure and thus some limitation on management’s ‘right to manage’. Whether its trade union legislation was responsible, or the economic policies which destroyed much of the country’s manufacturing capacity (so rendering workless a good part of the population), the Government’s success is unquestionable. Since its peak in the late Seventies there has been a huge fall in the number of trade unionists and a significant decline in the number of establishments which recognise trade unions. Half of all workplaces in industry and commerce have no union members and only 40 per cent of them recognise unions for the purpose of pay bargaining. In 1990, collective bargaining – the historic British form of wage bargaining – covered only 43 per cent of employees in industry and commerce. Aside from the miners’ strike, which affected hardly anyone except the miners, but them disastrously, and the occasional public sector strike, we have lived since 1979 in an environment without industrial relations – that is, without strikes.

Events of the last few weeks, however, suggest that industrial relations have crept once more into our lives. The signalmen’s strike has reminded us that the present government, notwithstanding its assertions, has a formal incomes policy, by which the public sector is expected to bear the strain of private-sector pay settlements which have plundered the economy at all levels of private employment – particularly at the top. And shortly before the cabinet reshuffle the then employment secretary, David Hunt, actually spoke to the unions for the first time since anyone could remember. What that portended, of course, we will never know, since Mr Hunt has been replaced by the narrowest ideologue in the government; but it is unlikely that Mr Portillo will leave industrial relations alone.

This is, therefore, a good moment for the Workplace Industrial Relations Survey to publish another of its excellent analyses of British industrial relations. The Survey constitutes a series of detailed snapshots derived from an elaborate questionnaire sent to a large sample of British workplaces in 1990. The snapshots are mostly four years old; but not much has changed since then, except perhaps to confirm the Survey’s findings. This, then third publication, does two things: it gives us a clear idea of how strong (in practice, how weak) trade unions now are, and why; and it examines how far the two most commonly advocated alternatives to traditional bargaining – ‘single union agreements’ and ‘human resource management’ – have been adopted by British industry.

The Survey establishes beyond doubt that traditional forms of union-based pay bargaining decayed at accelerating rates throughout the Eighties. There was, it argues, no single reason for this, but one reason was that newly-created firms were much less likely to recognise unions than older ones – which, irrespective of the changed legal and ideological climate, is what we might expect. The new firms of the Eighties tended to be small, and they were concentrated in the service or financial sector, where unions have always been weak. Even so, and in marked contrast to the Seventies, manufacturing firms in the Eighties were no more likely to recognise unions than those in the service sector. Here, changes in the law and in attitudes have probably been important. The 1980 legislation removed from employers a statutory obligation to recognise unions; at the same time, both management and state were losing belief in the efficacy of collective bargaining.

Throughout the Eighties there was much talk of finding alternatives to traditional collective bargaining that did not obliterate the unions. The most attractive and well-publicised of these were the ‘sole union agreements’ thought to be favoured by Japanese companies, and more euphoric observers foretold the ‘japanisation’ of British industrial relations. The classic sole union agreements had four provisions: the unfettered right of management to organise the pattern of work; the creation of single-status workforces with all employees, manual and white-collar, workers and management, to be treated the same way; the institution of formal consultative procedures, with both sides, in the event of a dispute, bound to accept the decision of the arbitrator – the ‘no strike’ clause; and ‘pendulum’ arbitration – the arbitrator to find wholly in favour of one side or the other. The first of these agreements was signed with Toshiba in 1981 and several more were signed with large Japanese firms later in the decade. Two unions, the engineers (AEU) and the electricians (EETPU), became famous for their willingness to sign sole union agreements – a disposition not thought fraternal by some other unions. The sole union agreements, their proponents hoped, raised another possibility: ‘japanisation’ of industrial relations might be the beginning of the ‘japanisation’ of the economy. In the light of what the Survey discloses it is obvious that these hopes were fanciful. But they were perfectly reasonable: we could do much worse than ‘japanise.’ the economy. (And we have.)

The Survey’s findings contradict nearly all the accepted wisdom about the ‘new industrial relations’. It found not one case of classic, fourfold sole union agreements in its sample; and since the sample was large, that suggests the number of firms negotiating such agreements must be tiny. Even ‘pendulum’ clauses are very rare. Furthermore, the majority of firms that have some sort of sole union agreement are British and not foreign-owned; and these agreements long predate the Eighties. The majority of the negotiating firms are not in manufacturing but in the service and financial sectors and they tend to employ a predominantly female workforce. Many of the agreements are with staff associations; the implication here being that the agreements are designed to exclude trade unions. The consequence of this is that the unions usually associated with sole union agreements – the AEU and EETPU – are comparatively unimportant. Over one-fifth of all agreements are with the largest of the service sector unions, USDAW. Nor have sole union agreements encouraged trade union membership: all they have done is to encourage ‘free riders’ – as one would expect in the absence of the closed shop. (Indeed, almost the only way the fourfold sole union agreements could work equitably is by the addition of a fifth clause – the compulsory closed shop. But that is no longer possible.) Finally, the proportion of firms possessing some kind of consultative committee has in fact fallen: from 24 per cent to 18 per cent. As Neil Millward, the author of the Survey, points out, single-union workforces are almost everywhere associated with union weakness. They are common in firms with low union density and highly segmented workforces – where the unions only represent, for example, manual workers. In practice, single unions without agreements might as well not exist.

The second alternative to collective bargaining is ‘human resource management’. This has a long, largely American, history and was once called ‘scientific management’. Its aim is both to increase worker productivity and, as the Survey notes, to kill trade unions by kindness. There are several ways ‘human resources’ can be managed: by profit-related bonuses, share options and other financial incentives; by single-status management; and by formal methods of consultation. The Survey suggests that there is now a good deal of the first but little (or not much) of the second and third.

Profit-related payments have grown ‘dramatically’ since 1984 and by 1990, 84 per cent of the Survey’s sample were using one or another form of financial arrangement to tie the workforce to the firm’s profitability. There was some movement towards single-status workforces although it is questionable how far we can go. The Japanese model – same dress, same canteen, same callisthenics – is probably too far from European experience to be widely adopted. But the majority of employees are now paid by direct transfer and, increasingly, monthly, which eliminates one of the most historically conspicuous differences between manual and clerical workers. What is not clear, however, is whether this is calculated resource management or simply administrative convenience. Direct transfer seems to have been inevitable once bank accounts became almost universal. Certainly, the method of recording the work-day has changed little: the majority of manual workers are still obliged to clock on and off, while many non-manual employees are required neither to show when they started nor when they stopped.

Otherwise, much is the same. The number of firms with formal consultative procedures has declined, though the number which practise informal ‘briefing’ sessions, especially between junior management and workgroups, has significantly increased – though the increase has been much more striking in the public sector than in the private. Overall, to judge by the two important criteria – the prevalence of the single-status workforce and formal methods of consultation – British industry, as the Survey points out, has a long way to go. In fact, most remarkable is the tendency for human resource management to be a result of, rather than an alternative to, strong unions. Nearly everywhere in this Survey we find that single-status and formal consultation are most common in firms with several recognised unions.

The Survey, understandably given its provenance, is cautious in its conclusions. Having demonstrated that the British workforce is now more powerless in the workplace than that of any comparable country, it merely notes that you either think that a powerless workforce is the only way to have economic growth or that it is the condition which led to trade unionism in the first place. But neither of these outcomes is likely. The disempowerment of the British workforce will certainly not lead – has not led – to higher economic growth, and it is very improbable that it will lead to a rebirth of British trade unionism. On the contrary, the reader is impressed both by the unimaginativeness and inertia of British management and by the passivity with which the workforce as a whole has accepted its disenfranchisement.

Mr Millward in effect leaves it up to the reader to make what he or she can of his fascinating data. It seems to me we might ask three questions of the Survey’s findings. The first is political: how far might the steady weakening of the trade unions threaten Britain’s political stability? I do not know the answer but I think the question legitimate. People have always wondered whether the unions impeded economic growth; the issue has been debated, rather inconsequentially, for more than a century. But few denied the unions were a civilising element in the British polity. It was their strength, their capacity to represent the workforce peaceably, their willingness to negotiate and compromise with employers, and their readiness to accept the legitimacy of a fundamentally capitalist state, which underpinned what the Germans admiringly called ‘the social peace in England’. Before we throw all this away we should at least know what we are doing: creating an atomised, apolitical workforce with only an instrumental commitment to the British state.

The second question: what will be the consequences for management? This is more important for management than it thinks. Managers have done extraordinarily well out of the widespread dislike of the unions. ‘Blame’ for the country’s economic ‘decline’ has largely been heaped on the unions. The belief that all would be well ‘if only managers were allowed to manage’ is almost universal in the Conservative Party and has inspired all its recent industrial relations legislation. But what when the unions are so feeble that they can no longer be blamed? How long can British management escape the consequences of its own actions – or inactions? Already, the Survey reports that three-quarters of managers feel they are under no constraints from the unions and as many report non-union constraints as union ones. Since it is clear that management is significantly more responsible for economic decisions than unions have ever been, much hangs on this – not least the grotesquely inflated salaries that many senior executives have voted themselves in the last few years, and for which the country has, as yet, received little in return.

Another of today’s received wisdoms is also disproved by the Survey. It has been widely argued that somehow union membership makes otherwise reasonable working men and women behave unreasonably; or else that unions misrepresent the views of their members. But the Survey finds that where unions exercise constraint on management they do so with the approval of their members. This tallies with what we know to have been one of the unions’ historical functions: to check or at lease mediate the hostility of the workforce towards management. Which is one of the reasons so many employers were, and still are, prepared to bargain collectively.

The third question: what are the implications for the present government? The deliberate destruction of collective bargaining has a number of unintended but serious results. It means that wage determination will be even more uncontrollable than it is now. Without any form of centralised bargaining, well-placed workforces in individual enterprises will be able to procure wage settlements almost certainly higher, even much higher, than the norms thought desirable by the Government. Since the Government has already largely disarmed itself, it has few weapons to combat this. It can either use public sector wage settlements – in effect impose a discriminatory tax on public employees to control overall income levels, or it can adopt deflationary policies and use the consequent high unemployment to depress wage claims. Or it can do both; which is what it is now doing.

Unfortunately, recent experience suggests that, besides being wasteful and unfair, these policies do not work. Furthermore, public sector employees eventually decide enough is enough: which is what happened in the late Seventies and is now happening with the signalmen. And whatever slight chance these policies had of working is even slighter because so many of those who were once public employees (and whose wages could be manipulated by the Treasury) are now, as a result of privatisation, in the private sector. This explains the Government’s determination to hold down the signalmen’s settlement. Although Railtrack is supposedly autonomous (‘let management manage’) the Government is driven to treat the signalmen as old-fashioned public sector employees.

This, however, is not all. The intended effect of all industrial relations legislation since 1979 has been to disenfranchise employees in the workplace. And to the extent that there is a consistent discernible aim in the mish-mash of Conservative policies over the last 15 years, it has been to depoliticise all social relations. In return, the Government has attempted to enfranchise people in the private sphere – as home-owners, for instance; to replace public political rights with private consumption rights. In order both to offer consumption rights and to conceal their spuriousness as equivalents of political rights, the Government has been compelled to take immense risks, which have made the economy even more unstable. The price that people have paid for their disenfranchisement at work (and for their partial disenfranchisement as citizens) has been an inflationary housing market, unsustainable consumption booms, mountains of accumulated debt and the severest economic recession since the Second World War. And, despite what the Government says, this will always have to be the price, so long as disenfranchisement of the public sphere remains the Conservative Party’s first ambition. Many, alas, clearly think the price worth paying. As for those who do not or who go under – who cares about them?