Goodbye to the 'British disease'

Wednesday's monthly UK labour market release showed further weakening, with employment down and the number of unemployed and economically inactive both up. So far, so bad. But most newspapers chose to ignore some strikingly good news in the release. As the ONS summary (PDF) put it:

There were 15,000 working days lost during December 2005. In the twelve months to December 2005, there were 156,000 working days lost, the lowest calendar year total since comparable records began in 1891.

Yes, 1891. Moreover, the number of stoppages in 2005 (just 112) was also the lowest since records began in 1930 according to the online data series. Only Graham Searjeant, Financial Editor of The Times, appears to have noticed these remarkable numbers, in his Friday piece Britain has bloomed by striking out its winters of industrial discontent. He reminds us just how bad things used to be in Britain:

...Whatever else may be wrong with the economy, that is a cause for celebration. Every strike or lockout represents a failure. And the ordinary families who lose their pay usually suffer most.

The 156,000 days lost last year compare with about 30 million in 1979, when public sector unions killed off the Callaghan Government with their winter of discontent over pay. The last year of widespread industrial chaos came in 1984, when 27 million days were lost — coalminers were manoeuvred into a prolonged, bitter strike against closures of uneconomic pits, which precipitated the industry’s virtual demise.

During the 1970s disputes typically cost between six million and ten million working days a year. Those disputes were, however, only the culmination of industrial warfare that made the UK the sick economy of Europe.

...Days lost make up only a small part of the economic damage that industrial disputes caused. Labour relations took a high proportion of management time and mental effort that needed to be spent making businesses competitive, investing for the future, developing new products and exploring new markets.

Change was likely to be resisted by powerful unions, adding to the cost of investment and cutting returns. Bloated stocks of materials, parts and finished goods had to be kept to allow for supply disruptions; that in turn absorbed capital that could otherwise have been invested. Most managers preferred the quiet life or were simply not up to it.

He lists four reasons why industrial disputes have declined so much since then: Thatcher's atacks on union power, the decline of manufacturing, greater competition and the taming of inflation.

The relentless series of reforms introduced while Lady Thatcher was in charge cut trade union power, curbed contagious disputes and reduced wildcat stoppages. Ending closed shops effectively ended the power of unions to sack their members. But the change to a nearly strike-free 2005 was the product of many deeper economic and social factors.

Manufacturing has declined more than almost anyone imagined. On the way, dirty industries that were highly unionised have given way to services where unions are weaker. In these new employments, individual or family self-interest usually counts for more than solidarity with fellow workers. In a richer consumer society, mortgage payments and credit card bills curb people’s freedom to risk their cashflow.

More competition has probably played an even greater role. The destruction of British Leyland was a terrible lesson to everyone who thought it had a right to exist regardless of what was happening in its markets. Free trade forces managers and employees to fight against products and services from almost anywhere in the world, instead of fighting against each other. Privatisation has brought competition to swaths of industry that had not experienced it for generations. Price caps are even imposed on infrastructure utilities to mimic the disciplines of competition.

More recently inflation has been tamed — that removes the constantly changing relative price levels that obliged different groups of workers to leapfrog each other to maintain financial status and living standards. The growth of single union plants does away with the internal competition between groups of workers. And few now imagine that higher wage costs can simply be passed on in higher prices.

I agree with those factors, but would add the fading popularity of hierarchical 'command and control'  management in favour of the new Human Resource Management as another factor.

Searjeant ends his piece by reminding us that though a very good thing, this collapse of worker militancy does have some downside:

...No gains come free. Bad employers are now freer to exploit workers than they have been for generations, though markets usually find them out eventually. And trade union barons have been replaced by smoother but less virtuous barons in the boardrooms and counting houses of investment banks. Curbing them will be tomorrow’s battle.

The difference, I suspect, is that no government - Labour or Tory - has any appetite these days to take on 'rogue' employers, robber barons and the like (unless they are just small fry who lack friends in powerful places).

Comments

[Blissex]

Some conservative think tank once discovered that propertied people (homes, funds, cars) did not strike and voted conservative, and Mrs. Thatcher believed them and gave away council houses and shares and pushed car ownership against public transport.

Those think tanks were right. As a result the UK have had ever since decades of uninterrupted conservative policies.

For example, right now 70% of voters in the UK own real estate, and the government knows that rising real estate prices are key to electoral success.

So, many successive governments have ensured the leverage and terms of trade of propertied people, business owners or real estate owners (or the ''owners'' of a sinecure-for-life in the NHS or local councils or the civil service, many of them well connected with the party ruling in their area), have become stronger, while those of the unpropertied minority have become weaker.

In part because they are a minority, but also because this minority is largely immigrant, and thus they *cannot vote*.

For example it has been declared government policy to drive down the costs of the NHS with the immigration of health workers, or ancillary workers, and reducing the leverage of workers in general; because most voters are older and asset rich, and most of the heavily exploited immigrants don't have voting rights.

So for example current employee rights are mostly summarised as ''if you don't like it here, find another job, we have a queue outside''. Fairly intimidatory, and "markets usually find them out eventually" is just bullshit -- employers can be ferociously mean and stingy without being outright abusive, and the market is being rigged to give as much leverage as possible to employers.

In part because in a very real sense the government is a major exploiter on behalf of the majority of voters who want the cheapest health care, cheapest waiters, cheapest cleaners, cheapest builders... It is hard to get good staff nowadays :-), and the government wants to help.

Nothing new from the 19th century, with the czech and polish in lieu of the irish or the yorkshiremen.