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Post UK Trades Unions Excesses of the 1960s and '70s
Created by John Eipper on 01/23/13 3:38 PM

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UK Trades Unions Excesses of the 1960s and '70s (Istvan Simon, USA, 01/23/13 3:38 pm)

I can add a few observations to this interesting dissection of the UK economy of the late 1970s. The first observation I would like to make in response to the wistful post of John Heelan (22 January), who, it seems to me, uses the expression "post-industrial service economy" in a nostalgic way, is that there is nothing wrong with a post-industrial service economy. All modern economies become service economies. Manufacturing continues to be important, and it is actually coming back to the United States, but it is eclipsed by the services.

As I mentioned before, I spent 1983 in the UK in Cambridge. And so I was witness to the denouement of the situation that John Heelan describes, in which Margaret Thatcher broke the power of the Unions. It had to be done.

Still I would like to add my perspective to this, because what was going on in the UK is not just stubborn and stupid unions that greatly contributed to their own demise, and the demise of UK manufacturing, but also I think there is responsibility in the UK class system, and the peculiar relationship between management and labor that developed there as a result of this class system. Though there are instances in the United Sates where something similar also occurred, for example what happened to the railway industry, unions and management had a much more cordial relationship in general here, with more realistic unions that adapted to the demands of competition and modern economies. This I think explains at least in part why manufacturing is still a robust section of the United Sates economy, whereas it is practically extinct in the UK.

In 1983 wages in the UK were low when compared to what existed at the same time in the United States. But wages are tied to productivity, and that is where the rigid and stupid attitudes of not just the unions but also the Labor governments that preceded Margaret Thatcher, which gave in to the Unions, sealed the fate of manufacturing in the UK.

The attitude of labor in the UK was of rigid non-adaptability. A watchmaker, when losing his job, rather went on the dole than retrain to do something else. The attitude in the UK was very much "give me back my old job, where nothing would have to change," as if industries owed their workers their jobs, no matter whether they were profitable or not, no matter whether the quality of the products produced was bad or good, no matter whether the market changed to prefer the products of Japanese competitors--see Henry Levin's description of the competition between Honda and the old Triumph motorcycles.

Margaret Thatcher started a revolution in the UK, in which this would no longer be accepted. It was the right thing to do and the right thing for the UK. It forced a more realistic behavior from labor. It came too late to save manufacturing, but it created a modern service economy.

All the major industries in the UK were losing money in 1983. British Leyland was in the hands of the government, thanks to stupid socialist policies of previous Labor governments. And British Leyland was like all other industries, losing money big time. So in 1983, I was witness to one of the most amazing moments of stupidity that I have ever seen, which illustrates the attitudes of labor and its relations to management that I alluded to earlier.

It was called the 5-minute washup case. At the time, British Leyland was paying workers 5 minutes free time at the end of their shift, so the workers could wash up before going home. Management had declared that henceforth they would no longer pay for these 5 minutes, and workers would have to wash up on their own time. Not totally unreasonable, I would say, given that British Leyland was losing money. But labor did not think so. So they went on strike. I heard on TV all sorts of stupid comments at the time about this. Things like, "We get dirty on company time. It is only 'fair' we wash up on company time."

The union lost the strike. Margaret Thatcher, the Iron Lady, had stared down the unions, and she broke their obstructionist ways. But once again, the unions did not learn from their defeat. They continued the same ridiculous attitudes all the way to the complete death of their industries.

Unions in the United States did not do that. Under similar threats and circumstances, they cooperated much more than in the UK with management, and recognized that an industry that is losing money cannot survive in a capitalist economy. That is why we still have with us the auto manufacturing industry, which is thriving once again, which learned to make products that could compete with the excellent cars coming to our shores from Japan and Korea, Germany, and so on.

JE comments: This in an interesting thesis, that the US has tended towards more harmonious labor relations because it never had the class demarcations of the UK.  The UK was also at a competitive disadvantage in manufacturing because it was saddled with old plant and infrastructure--in a sense, it is a bonus to be a latecomer to the manufacturing game.

Cameron Sawyer has also written on this topic. Stay tuned.

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