The Reform of the Wage Bargaining System

Abstract

After the fall of the Conservative Government in February 1974, at the end of that period of incomes policy, the rise in average earnings in the UK went up to a figure of 30 per cent in the year to mid-1975. In the first stage of the incomes policy which followed, that figure was brought down to 14 per cent and in the second stage to 8 per cent. There can be no reasonable doubt that this deceleration was the consequence of the incomes policies adopted. None of the equations which have been put forward to represent the ‘normal’ movement of wage rates or earnings would have produced a deceleration of this kind. The third stage of incomes policy, now coming to an end, differed significantly from the first two. In the first two stages, the numerical limit set for earnings increases had the explicit backing of the General Council of the TUC. The third stage did not have this backing (although the General Council did support the twelve-month rule); it was left to the Government to try to hold the figure of a 10 per cent rise in average earnings, with a variety of ad hoc sanctions on employers who exceeded the figure, and with a number of exceptions for productivity agreements of varying degrees of genuineness. The resulting rise in average money earnings is likely to be of the order of 15 per cent.