[A-List] UK labour militancy: a media whore speaks

["Michael Keaney" <michael.keaney@xxxxxx>]

This winter of discontent may lead to radical changes in the public sector
We are in the middle of a great experiment: will spending more on services
visibly improve them or will it be largely wasted?
Hamish McRae
The Independent, 13 November 2002

Is this going to be another winter of discontent, when public-sector strikes
challenge the Government, or will it be just a glitch, a roughness in labour
relations that will be sorted and forgotten in a few months?

The firefighters' strike and the deployment of the Army's veteran Green
Goddess fire engines gives a curious historical patina to the clutch of
industrial disputes now in train - like a sepia photograph of a world long
past suddenly bursting into full-colour reality. For people who remember the
grinding awfulness of the 1970s, this and the other public-sector disputes
are a troubling reminder of a period that most would prefer to forget. For
people who don't remember - and that is approaching half the workforce - it
is, perhaps, more of a puzzle: why should this discontent erupt now?

The first thing to be said is that this is very different from the 1970s.
There are at least three clear distinctions between then and now. One is
that unrest is principally a public-sector phenomenon, whereas during the
1970s unrest was universal. A second is that it is happening after a period
of economic success rather than economic failure. And third, it is taking
place at a time of global price stability, rather than rampant inflation.

During the 1970s whole industries were racked with labour disputes, and
some, such as the motor industry and shipbuilding, wrecked by them. Britain
was towards the top of the global strike league table. Companies such as
British Leyland were destroyed by the combination of labour unrest and the
management demoralisation that such unrest generated. Good people did not
want to work as managers if they had to spend more than half their time
dealing with labour disputes.

I recall a German joking about the three-day week imposed by Edward Heath's
government during that earlier winter of discontent in 1973/4. "Ah," he
said, "that means you British can only strike three days a week now."

Now, while there are the occasional private-sector strikes, usually when an
employer mishandles its labour relations, it is the public sector, or
quasi-public sector, where the real unrest lies. So the present line-up
includes the Post Office, the teachers, the universities, the local
government officials, the air traffic controllers, the ambulance drivers,
and so on.

Why should the public sector be the problem? It is partly because it is
generally a monopoly provider, but also because it has more rigid pay
scales. Several of the disputes are about London weighting, and there is no
question that many public-sector workers in London and the South-east are
underpaid when compared with their private-sector equivalents.

Further, the practical impact of striking in the private sector is a
downsizing of the workforce, something that might eventually happen in the
public sector, but where the links are less obvious.

This leads to the second distinction, the fact that this unrest follows a
period of prosperity. Real living standards have risen by around 40 per cent
in the past decade; during the second half of the 1970s real living
standards for many people were actually falling. This better performance is
true both in absolute and relative terms.

It is probably still too early to be sure of the reasons why Britain has
managed to outperform most of continental Europe, but it must have something
to do with our more flexible labour market. Because we can get a higher
proportion of our people into jobs, and have much lower unemployment, it has
been possible to increase wages much faster.

As a result of this burst of prosperity, some people have felt left behind,
particularly in London and the South-east. The average income (yes, average)
in the City of London last year was just under £60,000. Of course,
mathematically some people have to earn less than the average, but those who
do would be less than human if they did not feel a tiny twinge of jealousy.
Many of those are in the public sector.

Finally, this is a time of stable prices. Goods are either falling in price
or staying much the same. Services, including public-sector services, are
the only part of the economy where prices are rising at all, and then not by
very much. That is completely different to the 1970s, when inflation touched
16 per cent. So much of the unrest then was people trying, often
unsuccessfully, just to maintain their income in real terms. People whose
real income was cut year after year had a genuine grievance in that
employers (private or state) were not carrying out their side of the labour
contract. In that sense, strikes had a moral justification then that they
lack today.

So that is why this winter of discontent is qualitatively different from
those of the 1970s. The danger is not that disruption will reach the levels
of the past, nor indeed that it will spread to the private sector, except in
areas where there is a natural monopoly, as in the case of the BAA airports.
Most people, if they are seriously unhappy with their work contract, will
continue to do as they have done for the past couple of decades: find
another job with better terms.

The danger is that taxpayers will lose faith with the public sector. Huge
increases of their money are currently going into public services - I know
of situations where public-sector organisations have so much money that they
cannot spend it, and have to try to find ways of parking the cash until they
can. We are in the middle of a great experiment: will spending more on
services visibly improve the quality of output, or will it be largely
wasted?

The Government knows that it has to have something to show for the higher
taxation it is imposing, and quickly too. That is why more money is being
tied to performance targets. The danger is not that the targets will be
met - the managers in the Soviet Union were very good at meeting targets,
even it meant producing dreadful quality to hit the numbers. So if waiting
lists in the NHS are to be cut, sure, they will be cut, even if it means
putting fewer people on to the list in the first place. No, the danger is
that targets will be met, but needs will not. It will look OK on paper, but
we will all feel we are being ripped off.

And there lies the real significance of these strikes. The Government is
putting in the money, but wants changes in working practices to deliver
improvements in quality. But change is always tough, and in the early stages
of what will be a series of skirmishes, the workers' representatives - quite
rationally - want to ensure that the interest of the producers is
safeguarded.

But the more successful they are, the less likely it will be that the
consumers will be satisfied. In the 1970s the disruption led to radical
changes in the size and scope of the public sector, the changes that
Margaret Thatcher was hired by the voters to bring about. The danger now for
the Government is not that it will be heaved out; rather it is that it will
have to accept that its own vision of better public services cannot be
delivered under the present structure. This may eventually turn out to be a
very good thing. Just don't expect things to feel too great this winter.