Political commentary
Great expectations
Ferdinand Mount
It's odd how little we know about ourselves, or perhaps how little we wish to know. Any day you can read an article in the Guardian about labour conditions in South Africa; ditto for the Soviet Union. But beyond the headline events of strikes and redundancies, the actual structure of the British labour market has remained a rather neglected subject. As long as the unemployment figures were low,' nobody seemed to bother much about who was employed, or how or why.
Now that unemployment has passed 21/2 million, all at once a stream of new and Often surprising facts is whooshing out of the Department of Employment. This information may be brought out for a variety of reasons. The news that even now Britain has a higher proportion of her Population at work than almost any other country is defensive Tory propaganda. When we are told that the retiring age in Japan is usually 55, it is to justify Mr Prior's measures to allow British men to draw their pension before they reach the age of 65. Mrs Thatcher never loses a Chance to tell us that in Germany teenagers are paid only a small fraction of adult wages, whereas in Britain they are soon on the full adult rate; this is to Prepare us for the new scheme to subsidise employers to take on teenagers at sub-union rates.
But whatever form the political exigencies take, we are clearly going through What they call these days a consciousnessraising process. We are learning that our labour market is not simply the natural order of things. It is the product of our history. And it is not like other labour markets. It is peculiar.
The trouble is not that our wage levels are especially high by Western standards. On the contrary. What is freakish is rather that the same wages are paid to all and sundry. By comparison with other advanced nations, our wage structure seems ridiculously rigid and uniform.
The results have now become duelly apparent. Firms won't take on teenagers Who might be employable at a lower wage. Successive Chancellors of the Exchequer have puffed harder and harder to inflate the economy, with diminishing returns, in order to maintain in full-time Work such a high proportion of the Population. High-cost parts of the country have tended to become regions of incurably high unemployment; their factories, being forced to pay nationally determined wages rates, are always the least economic and so the first to be Closed in hard times. Now these rigidities and uniformities seem to have diverse causes. The most notorious is trade union pressure on employers to pay uniform rates to all workers. 'Parity with the Midlands' was the great battle-cry of car workers in the Sixties. The long-term result of obtaining parity was often not only disaster for Scotland and Merseyside when plants such as Linwood and Speke were closed but near-disaster for the Midlands, as the costs of supporting the uneconomic plants began to spill over into the more favoured regions.
Yet less often noticed is the unemployment created by trade union pressure on government. Employers do complain that the Employment Protection Act actually destroys jobs by deterring employers from taking on extra hands. Yet employers have until recently appeared less aware of older and far more destructive Acts of Parliament, most notably the Acts, passed as expressions of social concern in the periods surrounding the two world wars, which establish minimum wages in low-wage industries: catering, shops, hairdressing, shoemaking, agriculture.
The minimum wage has been one of the most passionate concerns of the enlightened Conservative, fearful of being denounced as a sweater of labour. It is a theme reiterated in Harold Macmillan's The Middle Way. Even today, Tory spokesmen have never liked to oppose the various 'strategies for the lowpaid' which were a regular feature of Labour governments' incomes policies. The impact of these wages councils is far from piddling. Throughout periods of government-imposed wage restraint, many wages councils were regularly enforcing (for their rulings have the force of law) awards of 20 per cent or more. Yet the activities covered by wages councils are just as sensitive to cost and just as competitive as high-wage industries. British hotel rooms and British restaurants empty as the customer's bill rises and the Continent becomes relatively more attractive.
Besides, bumping up low wages by official fiat narrows differentials only for a time. Soon the high-wage industries have to push up their rates again to attract labour. By steadily raising the floor, the government is ensuring the failure of its efforts to hold down the .ceiling. Every Prime Minister since the war has lamented the fact that our wage costs are higher than those of our competitors. Hitherto, no Prime Minister has cared to examine too closely why they are higher. The reason is that the Prime Minister has himself been part of the unemployment machine. It has been part of the understanding that, in return for TUC participation in the tripartite consensus, the government of the day would 'do something about low pay' or 'strengthen job protection' or 'improve industrial safety'. Such measures have always appeared not only benevolent — which they are — but cost-free — which they are not. Governments in other countries which have had a somewhat rougher time in the 20th century seem to be rather more careful about imposing costs which might destroy the jobs of the very people they are supposed to protect.
The present administration is certainly unique in being ready to reconsider the conventional wisdom. But is it ready to act? One of the Prime Minister's closest advisers said the other day that 'if our wage costs were ten per cent lower, we could knock spots off the rest of the world', but seemed rather vaguer when asked to suggest how the Government might help to reduce those costs. Here, as so often, what is in question is not Mrs Thatcher's ability to address herself to the right question as her ability to organise the execution of the right answer.
I don't underestimate the effort involved. For the unemployment machine has a long history; it almost ranks as part of our industrial archaeology. Benevolent legislation to regulate wages springs out of the horror of the well-to-do at conditions in the early factories; Britain's preeminence in such legislation is another legacy of our being the first nation to industrialise.
The businessman remains as profoundly suspect in British myth as ever. Capitalism still has no romance for us. It may well be that if half these regulations and rigidities were swept away, everybody's wages would be higher, unemployment would be lower, and employers would be queueing up to take on likely lads in Toxteth and Brixton.
All the same, any government is going to have the dickens (and I mean Dickens) of a struggle to sweep them away. Wage rates, like other aspects of social relations, once moralized and regulated, are damnably hard to free. For the moralizing sing and regulating create expectations which come to be regarded as rights by those involved. And the disentrenching off such rights or pseudo-rights is a lot to expect of a government which has accepted the awards of the Clegg Commission, has recently re-confirmed the wages councils and has accepted that Civil Service pay should go to arbitration in 1982. To judge by her actions so far, Mrs Thatcher is no nearer escaping from the unemployment machine than her predecessors were. Liberation will, I fancy, be a little late this year.
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