Publications Index | Encyclopedia of Trotskyism | Marxists’s Internet Archive

Socialist Review Index (1993–1996) | Socialist Review 177 Contents


Socialist Review, July/August 1994

Notes of the Month

Pay

On the up escalator

 

From Socialist Review, No. 177, July/August 1994.
Copyright © Socialist Review.
Copied with thanks from the Socialist Review Archive.
Marked up by Einde O’Callaghan for ETOL.

 

It is a time honoured custom for an incoming leader of the Confederation of British Industry to start with a warning on ‘excessive pay rises’ – the bosses can easily agree on that – and this year’s president, Sir Bryan Nicholson, is no exception. ‘It is crucial’, he told an audience of West Midlands businessmen on 9 June, ‘that we hold the line on labour costs. This is our clear responsibility as employers. If things go wrong we shall only have ourselves to blame.’

How far do the bosses’ worries about pay reflect reality? Most pay increases in the earlier part of the year were 3 percent or less, at best barely above inflation. On top of that workers have faced cuts in their take home pay because of increased tax and National Insurance. By contrast, directors’ pay has shot up by 25 percent and shareholders have been receiving record dividends.

But at the same time the bosses face some uncomfortable truths. Right through the worst recession since the war average earnings have risen faster than inflation, despite their efforts to freeze and cut pay. In manufacturing, average pay is now 25 percent higher than in 1990. And compared to this time last year, when British bosses were boasting they were doing better than the Germans, labour costs in manufacturing have risen by 2 percent compared to a fall of 2 percent in Germany (and 3 percent in the US). The advantage British capitalism secured in 1992 by devaluing the pound has disappeared.

The bosses’ current statements reflect anxiety that they have not been able to hold down pay sufficiently in a period that was exceptionally favourable for them. And now that inflation is slowly increasing again, they fear a rising tide of pay demands. This is why the rail dispute is of real significance. The government wants to freeze the public sector pay bill for three years; if the limits do not survive even the first year intact, the pressures will mount uncontrollably.

Why have average earnings risen? The government has two explanations: overtime and bonuses (above all in the finance sector). This is not the whole story, but it is partly true. Bonuses are a normal part of the pay package for many workers.

But more significantly the bosses have not been able to stop pay drift: the processes by which workers increase their pay outside the annual pay review. Employers in manufacturing are continuously demanding that workers increase the range of tasks they perform and raise productivity. In return they have had to introduce special payments, consolidate bonuses, introduce new productivity schemes and let wages drift up gradually.

They have also largely avoided the threat of action by making concessions. Although these concessions may be small – 0.5 percent here, an extra bonus there – they add up. And while there have been very few strikes in private industry, there have been many more votes for action. Workers have been slow to accept measly pay increases, and the pay freezes which were widespread at the beginning of 1993 have largely gone.

Firms such as Massey Ferguson have conceded more cash up front because of the tax increases. Companies such as McVities have had to guarantee increases linked to inflation rather than productivity or cost savings. Other employers, such as Burton and Asda, have had to increase pay by 5 percent or more to be able to recruit workers.

It is a patchy picture. But in general there is more confidence, shown by the successful check-off campaigns to defend union membership.

In its recent annual report the conciliation service ACAS drew attention to the massive pent up anger that exists.

‘There are signs’, said ACAS, ‘that the growing pressures on businesses of all kinds are increasing tensions in the workplace. If not channelled to creative ends, these tensions could increase the level of conflict.’

The balance of forces has slowly been shifting. Behind the genteel language of official reports the fear of an explosion is growing.


Socialist Review Index   |   ETOL Main Page

Last updated: 9 May 2017