Pay and productivity: a 1969 desk-slogan for the RHA
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ALTHOUGH the recent Prices and Incomes Board report "Productivity Agreements in the Road Haulage Industry" dealt specifically with only 19 firms who had negotiated productivity deals with the Transport and General Workers' Union or the Scottish Commercial Motormen's Union it is of much wider significance. The Board was asked to examine the batch of agreements concluded between March and June 1968 and to report "as to what considerations should apply in the negotiation of pay and productivity agreements in the road haulage industry generally...".
Early reaction of the industry to the report (No. 94) has been critical; at best, lukewarm. The Road Haulage Association, not fol: the first time, qualifies at least by implication for the Board's disapproval.
For example, all but one of the agreements examined "were the result of initiative by the unions and they represent but a small selection of the present tally of agreements achieved". What is the use of a trade association if—in the context of repeated national calls for increased productivity and some highly specific ones directed to road haulage itself—virtually all the running is made by the trade unions? Does this not imply that employers are defeatist about productivity calls in road haulage? Can it be right to assume that the employees alone will benefit from a properly planned productivity deal?
In Birmingham the TGWU selected a number of firms with whom they wished to conclude productivity agreements. The RHA--at the union's suggestion—arranged for representatives of the firms concerned to meet the union's regional officers at the Tipton offices of the RHA.
We are often told that the diversity of operating conditions in different sectors of the road haulage industry makes it virtually impossible for any national initiative on productivity to be fostered by the RHA —that, presumably, is the principal reason why the National Negotiating Committee was allowed to founder.
What then are we to make of the following gem from the report (para. 27): "Because of their widely different types of operation the firms made no attempt to conclude a collective agreement with the
union but chose instead to wait for the union to approach them one by one. This the union did, although there was in fact, little variation in the content of the agreement sought in each case."
If words mean anything at all I conclude from this that the only thing preventing the RHA members at Birmingham—or at least a sizeable group of firms—from getting together and making a viable collective deal with the union was inertia. (One could use a less charitable word.)
The Board point out that the main features of the separate agreements were a basic pay scale of £17 lOs compared with £14 5s 10d paid previously (the corresponding minimum on the ludicrous Wages Council scale is £10 18s 6d); and the scheduling of journeys to allow for a maximum speed of 40 mph instead of 30 mph). At Liverpool the TGWU sought a basic rate of £16, the difference reflecting the notorious Millichamp arbitration award in 1966.
In view of the Board's findings, after an analysis of four of the Birmingham agreements—"that the only element in them which specifically aimed at offsetting the increase in rates paid is the provision for increasing maximum running speed from 30 to 40 mph" and that "In every case . . the controls needed to ensure that this improvement in speed is realized are lacking"—the case for collective agreement, with copperbottomed provisions ensuring effective managerial controls, is reinforced. For if the managements of individual firms lack the expertise to do more than pay the union's Danegeld and look pleasant about it, ignoring the control aspect as being too difficult or bothersome, what is to prevent a group of employers paying a consultant to devise simple control checks? Or seeking the expert help of the Road Transport Industry Training Board who know the problem and could offer positive assistance to employers in the form of group training facilities?
It gives me no pleasure to record apropos Aston's Transport (Hall Green) Ltd. ". . the agreement appears to have been ineffective because the company lacked the minimum controls over its operations necessary to obtain the benefit from a nominal increase in scheduling speeds". Or that E. and J. Davis Transport Ltd. were able to reduce average weekly hours and increase average earnings "but there is no indication that the company was able to secure an increased intensity of work within the reduced hours and thus hold its costs".
F. Lewis and Sons, by contrast, earn a modest compliment from the Board's investigators. The firm, it is recorded, -have benefited mainly from better co-operation from their drivers as a result of their agreement and at present the company is maintaining its volume of business with significantly reduced average hours of operation".
In the light of current discussions as to the growing importance of locally negotiated productivity agreements it is interesting to learn that at Liverpool, after a three-week strike "caused by the dissatisfaction of drivel's with their pay relative to that of the dockers after the settlement of the dock strike of November last year, the dockers belonging to the same union as the drivers", the RHA refused to entertain a collective claim before the strike. Great damage must have been done to member firms of the RHA, and great inconvenience caused to many customers and to the country's export drive. Yet we find "The area organization of the RHA refused to entertain the collective claim on the grounds that it was unrealistic and contained no suggestion for improved performance. .. ". Did the RHA make counter proposals with built-in controls justifying the higher pay sought by the union before the strike action?
After the damaging and pointless strike the drivers were persuaded to return to work on the understanding that negotiations with individual firms would begin. They were conducted by shop stewards, though the eventual agreements were signed by union officials.
What is so wrong with labour relations in the industry that such a well-known firm as Lep Transport Ltd. should "run into such difficulty at the attempted interpretation of its agreement that fbr this and other reasons it was compelled to abandon its longdistance haulage altogether". Surely no agreement should be accepted by either side if its provisions are so loose or ambiguous that interpretation causes difficulty? If ever a case was made for both sides of the industry to be sent back to school to learn about productivity bargaining this report surely provides abundant evidence.
Improved relations The agreement made by Kirkdale Lewis Haulage Ltd. interested the PIB's team because it attempted to introduce a bonus related to the company's gross operating profits. Perhaps not surprisingly—for the definition of gross operating profits could be argued about—the idea failed. The bonus was less than had been hoped for and the agreement was withdrawn. "A new understanding conceding the higher rates of pay without conditions was then reached with the men as a result of which industrial relations seem to have improved and absenteeism has been reduced."
This reference to absenteeism is interesting. The Prices and Incomes Board could usefully undertake a survey of absenteeism across the whole field of goods and passenger transport. From what I hear it is a very serious problem to management, and its incidence is much greater than it should be perhaps because of welfare state provisions, employee benevolent funds, etc. It is a great burden to operating levels of management whose normally arduous job is made vastly more difficult when improvised arrangements are necessary because of absenteeism or—as some would say—malingering.
Nothing is said in the report as to the financial effect on Kirkdale Lewis Haulage Ltd. of the higher pay concession, with no strings. The firm is a subsidiary of Consolidated Tin Smelters Ltd. operating 51 vehicles on a spot-hire basis, much of the work being for one customer. The original agreement provided for a 20 per cent increase in basic rates and overtime payments at time and one-eighth instead of time and onehalf—perhaps this is evidence of the parent company's approach to the high overtime disease of the road haulage industry? There was a guaranteed week of 50 hours and the bonus related to gross operating profits but "dedpite considerable increased effort by the drivers the bonus was yielding considerably less than had been expected on both sides and they were not satisfied with it". So the increased basic rates and the 50 hour guaranteed week were retained, and overtime was paid at the familiar rate of time-and-a-half.
Many A-licensed hauliers operate as main contractors to large manufacturing firms or are controlled by them financially. The' PIB team pertinently note that a reduction in the business obtained from Kirkdale's main customer resulted from the introduction of a productivity agreement concerning their own C-licence operations. This, I suggest, may be the biggest threat to professional road hauliers in the next year or two. The large manufacturers with professional personnel and industrial relations departments will stop at nothing to get their transport and distribution operations on an efficient basis. If professional Alicensed hauliers cannot match this efficiency they are doomed. The industry cannot say it has not been warned.
The other reasons mentioned by the report to explain Kirkdale's post-strike problems were the difficulty of recovering business and "the impracticability of increasing the number of daily journeys to and from Liverpool docks due to the congestion there". Of this last point, the report says this was the main reason why the bonus did not reach the expected levels. "A proper appraisal of the possibilities for quicker turnrounds would undoubtedly have produced less optimistic forecasts. In the midst of a strike that had already lasted several weeks, the company were hardly in a position to undertake a study of this kind, and it is to be regretted that the final understanding does not seem to have included provision for a continuing joint consideration of this and other problems of improving productivity within the firm".
The only firm operating under C licences, Liverpool Central Oil Co. Ltd, have 16 vehicles, 12 of them tankers. They make extensive use of professional hauliers. Their agreement increased basic pay rates but also modified a number of working practices to make fuller use of the working day. It increased the average scheduling speed from 22 to 25 mph and allowed a specified time for unloading. "Both the speed and unloading times were agreed after the management had timed the principal journeys and deliveries. The agreement has resulted in reduced journey times, greater flexibility of working and increased use of vehicles and the company calculated that over the first four months of its operation the increase in revenue exceeded the increase in wage costs. A comprehensive costing taking in overheads and capital costs as well as labour costs has not yet been attempted. Average earnings increased by 20 per cent. .. whilst average hours fell by 2 per cent."
A key factor in the approach of Liverpool Central Oil Co. was the establishment through work measurement of agreed norms—especially for unloading—by which earnings are assessed. Lest the company suffer from a swelled head the PIB describe these norms as "albeit elementary". Comprehensive costing would be necessary for a proper assessment of the agreement but this, says the report, is on the right ,lines. "The firm has good labour relations and there is likely to be scope for further progress, based on more refined work measurement, towards a further reduction in hours without a reduction in earnings." I commend as a fitting New Year desk slogan for all RHA area secretaries, even for the headquarters staff, the following dispassionate assessment by Mr. Aubrey Jones' men: "Most C-licence operators use professional hauliers in addition to their own transport and the decisions they have to make, of course, concern not simply the increased productivity of their own undertaking but also whether it would pay them to make more or less use of professional hauliers."
It is pleasant to record the PIB's bouquet for A. S. Jones and Company Ltd, the Coast Lines subsidiary, at Liverpool. This company, says the Board, alone of all the firms reviewed, were engaging in a dialogue with the local union committee well before the Merseyside unofficial dispute began. The agreement finalized two weeks after the strike ended was the most detailed of those considered. It replaced "purely informal understandings" and represents "a significant improvement in management control of the operation". Journeys above 25 miles from base are at an average of 23 mph instead of 21 mph. Minimum loading and unloading times are specified and paid for irrespective of actual times taken but no payments are made for the first half hour of delays, nor do delays qualify for bonuses. Payments for starting and finishing times are abolished; there are penalties for late starting and for falsification of log sheets.
(Further points in this important PIB report will be dealt with in Management matters next week.)