CERTAIN phrases are redolent of a time that has passed, although when exactly it passed always seems rather vague.
No one ‘runs in’ a new car anymore, nor would estate agents bother to mention that a property boasted ‘hot and cold running water’, still less ‘all modern conveniences’ (H&C and all mod cons, for short).
Then there is ‘pay restraint’, something that was being urged on the rest of us by Ministers, economists and officials for what seemed forever but about which you hear very little these days.
Which is odd, as I point out in my column in today’s edition of The Mail on Sunday, because without any urging at all, pay restraint seems to be what we are practising. That is how the numbers in work are climbing at a time of stagnation: real wages have fallen.
People have priced themselves back into jobs.
Given productivity has fallen as well, you could say the labour market is adjusting automatically to the lower economic value of each employee. It just goes to show that all those tortuous ‘tripartite’ negotiations in the Seventies were entirely un-necessary: all you needed was a flexible workforce and no pesky unions.
Mm. That idea does get some support from the data. One place unions remain strong is the public sector and that is the one area of the economy where jobs are being lost while pay rises are running significantly ahead of those in the private sector.
And the joys of labour-market flexibility are far more palatable an explanation for self-imposed pay restraint than the alternative, which is fear of unemployment at a time when we have a still-high structural level of joblessness and high levels of immigration.
Doesn’t sound quite so good, does it?
1) Shrinking pay: your patriotic duty?
OLD-fashioned, officially sanctioned (or even mandated) pay restraint seems to have been based on a notion that appears bizarre in our own time, that the economy could survive only if people’s pay went up by less than the rate of inflation. In other words, if they did the same work for less money, in real terms.
It seems less bizarre when put in historical context. From the end of the war to the second half of the Seventies, all governments were committed to doing whatever was necessary in terms of stimulating the economy to maintain full employment. But by the late Sixties, two problems had become obvious, impolite though it was to talk about them overmuch.
One was that by removing the fear of unemployment (see above), policymakers had removed perhaps the main governing wheel on trade-union wage bargaining. The other was that the pursuit of full employment appeared to be injecting ever-higher levels of inflation into the system.
In fact, these two factors were linked. Robust pay claims, which big employers had no real incentive to refuse, as they too benefited from the official guarantee of a full-employment economy run at a high level of activity, were fuelled by the ever-upward pressure on prices that resulted from Ministers’ attempts to accommodate the resulting wage increases.
By the end of the Sixties, both main parties were searching for a framework to contain wage bargaining, in effect replacements for the spectre of the dole queue - ill-fated legal frameworks (In Place of Strife, The Industrial Relations Act) and incomes policies.
I count seven of the latter between 1970 and 1979, not including Edward Heath’s N minus One regime, which applied only to the public sector and pre-dated his general pay controls. Stage One was a total freeze, Stage Two allowed for rises of £1 a week plus four per cent, Stage Three (can’t find the numbers and am away from most of my books) was the one that foundered on the energy crisis and the Three Day Week.
Labour’s limits were, respectively, £6 a week, six per cent, ten per cent and then the ill-fated five per cent, which came to grief in the winter of discontent.
I think I have these about right.
2) Be careful what you wish for…
ONE of the oddities – or even downright illogicalities - of the late Seventies was that Margaret Thatcher and a good half of the trade-union movement were wholly in agreement on the need to scrap pay controls altogether and return to ‘free collective bargaining’ (another of those phrases that were common in the long ago).
Very few in the unions or in Labour’s constituency parties seemed to find anything odd about this, and those that did – such as Sidney Weighell, head of the National Union of Railwaymen, whose ‘snouts in the trough’ remarks read well today – were treated as stooges of the ‘right- wing’ Callaghan administration.
It’s true. The incoming Tory Prime Minister, routinely described as the party’s most right-wing post-war leader, and the militants who saw pay controls as a capitalist plot, were as one on this issue. Both wanted an end to pay controls and a wages free-for-all.
On the face of it, the union militants were right to side with the Iron Lady. In the ten years 1970-1979, real earnings fell in three years, two of them – 1976 and 1977 – when Labour was in office from January through to December and the third, 1974, when Labour was in power for ten months out of 12. By contrast, Mrs Thatcher’s 11 years at the top saw just one year, 1981, in which real pay declined.
Of course, it was not just incomes policy that the new 1979 Government ditched but prices and incomes policy, the 'prices' bit being something it was committed to getting rid of and which one may have thought the union militants may have spotted in advance, given their members’ interest in the cost of living.
Much more seriously, the new Government was able to drop incomes policies because, unlike the 1974-1979 Labour administration, it was not even notionally committed to full employment. Earnings are available only to those in work, something which, again, one may have thought the union left may have noticed.
Thus they got what they wanted, a lifting of pay controls, and…er, more than three million on the dole.
To be fair, they probably calculated that, after 18 months’ tough talking at the most, the Thatcher people would imitate Heath ten years earlier and forget all this nonsense about a free-market economy. Bring on the U-turn!
Good call, I don’t think.
3) Modern London: the smooth and the rough
A shame we don’t have bus reviews the way we have reviews of new models of cars. The Route 52, which wends its way from London’s Victoria Station to Willesden, has been dropping me en route at Kensington for well over ten years.
So the realisation the other morning that my bus had changed in some vague way prompted further close observation.
Still a red double-decker (of course), this is a Volvo, rather than a Scania, more rounded, less box-shaped, quieter (it reminded me of the trolley buses that I can just about remember as a small child) and with a pleasingly dome-shaped window at the front of the top deck which makes it seems traditional and up-to-date, both at the same time.
I was rather less pleased to learn that one of the fire stations on a closure hit-list is Clerkenwell, of which I was a neighbour (in work terms) for more than ten years, and a fine-looking fire station it is too.
Given there seem more and more ways in which people can end up in ghastly situations, I have never really grasped the current insistence that the fire brigade be ‘rationalised’.
4) It’s that man again!
I am rather enjoying Radio Four’s celebration of ‘the real George Orwell’, more, indeed, than I enjoyed all the guff about Nineteen Eighty-four in 1984, when I had reached the grand old age of 23. Paul Johnson warned us back then that the two most tedium-inducing syllables of the 12 months ahead would be ‘Or-well’, and he may have been right.
At the start of that year I remember hanging round in London with my then girlfriend and an old schoolmate. One on occasion, he looked up at us from his pint of beer or cup of tea of whatever and, apropos nothing, asked in the portentous tones then in use in all Orwell-related pontifications ‘Could this year see Orwell’s nightmare vision turn into reality?’
A pause, then in a normal voice: ‘No.’ Back to his drink.
About right, as it turned out. A shame he was alone in his brevity and accuracy.
5) Doing your bit (maybe)
A last word on my main topic of the day, pay restraint. The idea that one was doing society an enormous favour by settling for less money than you would otherwise have been able to get died hard.
My first full-time PAYE job, in between leaving school and starting my journalism training, was of the unskilled, manual, production-line variety. During a break, over a cigarette, a young fellow worker called Tony responded to some disobliging remark or other by declaring in the stoutest terms that he would take a pay cut, if asked, ‘to help the country’.
It all seems rather touching, looking back from this side of all the years of greed that fetched us up in our current mess.
We would have been smoking either outside or upstairs, away from the production line at any rate.
The bad news was that smoking when you were actually working was forbidden, because our employer’s products were for human consumption.
The good news is that those products were alcoholic drinks.
Thanks again for reading and enjoy the rest of the weekend.
Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson, is published by Palgrave Macmillan