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The publication of Mr B. C. Roberts’s book on wages policy has revived academic interest in this subject, though there has never been any real possibility of a wages policy on the lines of those adopted in some other European countries, notably Sweden and the Netherlands, being accepted here. In these countries, the main responsibility for fixing wage rates has been given to a central body in the hope that this procedure would help to stabilize both wages and prices, thereby bringing the inflationary spiral to an end. As a secondary aim, it was hoped that centralized wage fixing would bring about a more equitable and rational wages structure than would free collective bargaining. In this country, though we have been faced with the same kind of economic problem, the trade unions have preferred to retain their traditional independence and freedom in collective bargaining.
The argument that a centralized wages policy will check inflation rests upon two assumptions: first, that rising money wages are a cause of inflation, and secondly, that centralized wage fixing will in fact lead to a stabilizing of wage rates and labour costs. The Cohen Report showed that personal incomes in this country, in which wages and salaries are the biggest item, have risen more rapidly than output since the war. Between 1946 and 1956, production rose on average by three per cent a year and the wage and salary bill by eight per cent a year. This, however, is not proof that wage increases have been the principal cause of rising prices, or that the wage increases have been the result of irresponsible demands by trade unions.
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- Copyright © 1958 Provincial Council of the English Province of the Order of Preachers
References
1 National Wages Policy in War and Peace (George Allen and Unwin. London, 1958).
2 Although the trade union movement has supported the idea of a planned economy in general, it has failed to accept the logical consequence of this, namely that wages too should be determined centrally. It is difficult to say whether this is really a deep-rooted objection to pushing economic planning to its logical conclusion, or whether it arises from a fear that a Conservative Government, whilst abandoning economic planning in general, would welcome the opportunity to retain controls over wages and use its powers to the disadvantage of the trade union movement and workers as a whole.
3 Council on Prices, Productivity and Incomes, First Report (H.M.S.O. London, 1958), P. 50.
4 This is assuming that there is no simultaneous increase in productivity, so that an increase in wages means there is an increase in labour costs. In practice, no substantial increase in wages is possible in industry generally at the expense of profits.
5 Earnings were increased by overtime payments, and by employers trying to attract labour by offering more than the rates negotiated with trade unions.
6 Wages and salaries now take such a large share of the national income that this is possible only to a very limited extent, and may be far from desirable.
7 The Government must take a more direct part in wage fixing so far as the public service and nationalized industries are concerned. There is a limit to the extension of these sectors if the trade unions are to retain their traditional rô1e.
8 loc. cit., p. 165.
9 ibid., p. 166.
10 This would only anticipate the expected rise in average productivity, of come, not the increase in productivity in that industry if it were one where rapid technical changes were taking place.
11 If all wages tended to rise in proportion to the average increase in productivity, some firms, where productivity rose less than this, would be unable to maintain their profits without raising prices. Where productivity rose more than the average, there would be the same wage increase and prices would fall. Thus the average price level would not change, although some prices rose and others fell. Although some firms would have to raise prices, firms could not lightly assume that they could do so without losing sales, and would therefore make every effort to raise productivity in order to keep up their profits.
12 It has been assumed that expanding industries need more labour and vice versa. Where technical changes mean that a greater output can be achieved with a reduced labour force, expanding indushies may in fact require less labour.
13 Some manufacturers have been making use of these provisions. In the case of groceries, however, there have been signs of dissatisfaction among important elements in the retail trade of the fact that little action has been taken by manufacturers in spite of extensive price cutting. There was even a suggestion that retailers might boycott manufacturers who did not take action to enforce resale prices fixed by them. This suggestion apparently overlooked the fact that such a boycott would be illegal, in precisely the same way as it is now illegal for a group of manufacturers collectively to boycott a trader who cuts prices on goods made by any one of them.
14 loc. cit., p. 48.
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