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Janus comments
Page 79
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A game of dominoes
THE CULT of productivity has been overdone. When higher wages are demanded it is too easy -or the Government or the Prices and Incomes Board to assume that the employers must be inefficient and can easily find the extra money by economies in opera tion so that prices need not go up.
Whatever opportunities there are for this are rapidly diminishing. In some industries they may have been widespread. Even in road transport the large trader with a fleet of vehicles of his own and control over the whole chain of distribution has often found it possible to introduce a new scheme with substantial savings.
Smaller operators and particularly hauliers have had greater difficulty. Their vehicles are held up mainly by congestion and delays at terminals and these delays may be aggravated if the customer's new scheme for rationalization gives preference to his own lorries. Without the co-operation of trade and industry there is not much the haulier can do.
Pessimistic background
It is against this pessimistic background that operators will judge the report by the Prices and Incomes Board next week on a number of pay agreements reached between the unions and a number of firms in the West Midlands and Scotland. Almost certainly the Board will criticize the agreements because they do not make sufficient provision for increased productivity to match the higher wages.
The magic word is no longer enough if it ever was. For the sake of its own reputation the Board ought to put forward recommendations for coping with a situation which is rapidly making a farce of the prices and incomes policy. The Minister for Employment and Productivity should also make her opinion known as the chairman of the Road Haulage Association has suggested. Mrs. Barbara Castle; when Minister of Transport, was quick to condemn the RHA for issuing general recommendations on rates. The present situation is more serious and her disapproval should be correspondingly heavier.
Not long ago accusations against trade union officials of blackmail would have led to indignant denials and threats of legal action. In the present permissive situation the abuse is cheerfully accepted almost as a compliment. Local officials appear to be disregarding alike the instructions of their own union and the tattered remnants of Government policy and by-passing the negotiating barriers which have been set up like outposts of civilization in a vain attempt to stem the barbarian flood.
Mr. Alan Law and others like him have put the domino theory triumphantly into practice. They have concentrated on a few operators or even on a single operator and used the agreement thus reached as a lever for further action.
The Board is aware of the danger. Whether it can cope with it is another matter. At least it has been consistent in its general approach. Broadly speaking it has been inclined to accept as reasonable wage increases of up to 31 per cent per annum at least for the lower paid workers. Any ad vance on the norm must be matched by a corresponding increase in productivity.
It must not be assumed that any increase at all can automatically be passed on to the customer. The Board made this plain in its report published in November 1967 on the proposed reduction from 41 to 40 hours in the basic working week in the road haulage industry.
On the Board's calculation this involved an average increase in earnings of 3.3 per cent. The report continued: "In view of the scope—which we have repeatedly emphasized—for reducing the amount of overtime worked by lorry drivers there is no reason why, in practice, earnings should be allowed to increase by this amount; in other words managements should ensure that the proposed reduction in the standard working week, as accepted by the Wages Council, is fully reflected in a reduction in the actual working week."
If this did not happen, the ,Board continued, hauliers would not in its view be justified in trying to recoup the addition to their wages bill from their customers. "When there is so much scope for reducing overtime the last thing customers should be asked to do is to finance more of it."
The reduction in the basic week took effect in February last when there was also an addition of 3s to the subsistence allowance. In a subsequent Wages Order dated August the pay of the lowest-paid workers increased by up to El a week. Normally the time would now have arrived for another application from the trade unions for a further increase in the statutory rates of pay.
Inflated wage bill
Whether this happens or not may seem to make little difference in practice. Many hauliers and their drivers may find the discussions on the statutory rates more and more removed from reality. Operators who have already been victims of guerilla activities by the onions have good reason to be apprehensive of another Wages. Order. Whatever' increase it laid down they would be expected to add to their own already inflated wage bill.
To such operators it might seem an
attractive suggestion that the Wages Council should be brought forward out of the shadows and asked to consider an entirely new structure which would take account or the wages actually being paid. Under the latest Order the lowest-paid worker must receive in practically every case at least £15. If this could be accepted as a new basic minimum it would take much of the steam out of the present controversy.
Almost certainlysuch a scheme would not work. Outside a few large towns probably more than half the drivers are being paid at the statutory rates. The operators could not absorb an increase of the extent suggested and it is unlikely that they would be able to Match even a part of it with improved productivity.
There would be no greater success even in that sector of industry for which the scheme is designed. The Government arbit rator in the Millichamp Haulage Ltd. dispute noted the trade union assurance that it would not attempt to enforce the award automatically on other companies, but this seemed to have no effect. Those union officials who have established a differential would not long delay in seeking to apply it to whatever, new agreement was reached by the Wages Council.
Successive Governments have run away from the problem which can hardly be solved without official help. It has largely arisen from the two increases in speed limits, one from 20 to 30 mph for drivers of heavy goods vehicles (which took effect in May 1957) and the other for all goods vehicles from 30 to 40 mph. It may be surprising to recall that this came into force as long ago as February 1963.
Extra productivity
On both occasions there was a good deal of talk before and after about the need for the two sides of the industry to agree on satisfactory terms for operating at the higher limits in order to get the maximum extra productivity. In each case when it came to the point the Government withdrew and left the industry to settle the matter itself.
One may suspect that history will repeat itself with the reduction in drivers' hours to be imposed under the Transport Act. In her White Paper on the transport of freight Mrs. Castle said that increased productivity would be a key factor. "Evidence of real progress towards this objective by both sides of the industry," she added, "will be essential before the enabling powers are used to bring the new law into effect."
As matters stand there is unlikely to be evidence of much progress before at any rate the first step is taken to reduce the maximum from 11 to 10 hours a day. There are also hints that the present Minister, Mr. Richard Marsh, may withdraw from the original firm line on tachographs.
Fears on these grounds do not make the best atmosphere in which to receive the report of the Prices and Incomes Board. There may still be hope that it will not content itself with scoldings and admonitions but will also have strong recommendations for Government action to help put the wage structure at last on a sensible foundation.