Trade Union Crisis
OCTOBER 01, 1956 by COLIN BROGAN
Mr. Brogan is a British journalist, author, and advocate of competitive private enterprise. Years of easy credit, malinvestment, union domination, and other aspects of political intervention lead to a day of reckoning for Britain’s auto industry. Ever since the end of the War it has been the proudest boast of British politicians that full employment has been maintained in spite of all difficulties. Conservatives and socialists have disputed as to which party can claim the major part of the credit, but both parties, at least in public, take it for granted that full employment is an unmixed boon. That has never been the view of serious economists. Full employment in Britain has meant roughly ten jobs for every nine men, and the results have been highly damaging to industry in a variety of ways. Laborers have been tempted to shift from job to job in the most casual way, which does not help industrial efficiency. There has also been a large amount of concealed unemployment: In slack times firms have kept workers, especially skilled workers, on the payroll with nothing to do lest those workers be lost to the firm forever if dismissed for even a week or so. Firms also saw little or no advantage in dismissing the lazy or inefficient worker. One builder said to me bitterly, “I have a couple of loafers working for me. I give them the sack and the Labor Exchange then sends me two other loafers another employer has just sacked.” But the most damaging effect has been a serious distortion of the pattern of employment. Some British industries a r e over-manned, while other essential industries are badly undermanned. The mining industry and transport badly need more workers, but the miners have so lavishly advertised the hardships of their life that possible recruits go to more agreeable jobs instead. It is a curious fact that although the miners are now the highest-paid manual workers in Britain, they still feel acutely that they are regarded as socially inferior. As more and more industrial jobs can be done with clean hands, the men in the necessarily dirty mines increasingly resent the dirt. One man suing for divorce named among his grievances the fact that his wife had made him give up a well-paid job in the mines “because of the social stigma.” The unpopularity of transport work has another explanation. Pay in this occupation is relatively low and cannot be substantially increased for there is a great public outcry every time the fares go up. The effects of overfull employment have been seen most clearly in the motor industry. For ten years this industry has been on velvet. At home a huge new market has been opened by the great rise in incomes of wage earners. The higher-paid workers are now willing to buy cars, not only for their usefulness, but also to gratify their self-esteem. At the same time, the foreign markets were easy for years. The foreign demand for cars was great, but the foreign supply of dollars was small, and this shortage constituted a barrier against American cars in the soft currency markets. In those places where dollars were plentiful American cars swept the board. As a result of these comfortable conditions, the British industry took things altogether too easy. There were too many men employed and too many of these men did altogether too little, as some of the more earnest workers have bitterly said. It cannot be said that all the blame lay with the men. Complaints came from all over the world of shoddy workmanship, late deliveries, and the refusal of British manufacturers to modify their product to suit road and climatic conditions far different from the conditions prevailing in Britain. Management can hardly pretend that it has no responsibility for a state of affairs that has enabled the German Volkswagen almost to annihilate the market for British cars in Scandinavia. The contrast between the complacency of the car industry and the strenuous efficiency of the steel industry was remarkable. The steel bosses were, of course, under the spur of competition all the time. Although the British output of steel has greatly expanded, imports are still necessary, and these imports provide a standard for measuring the efficiency of production. It has long been clear enough to the most casual observer that the motor industry would be the first to feel the pinch when times became more critical. The pinch has come, not only from outside influences but also from deliberate government policy. Continental rivals were eating into British markets in a big way, and other countries, facing much the same difficulties as Britain herself, cut down their imports. At the same time, the home market was deliberately restricted by Chancellor MacMillan through pressure on banks to restrict personal loans and through a steep increase in the down payments for installment purchases. The Chancellor’s particular purpose in the motor industry was to shrink the home market so that manufacturers would fight harder and more effectively for foreign orders than they had done in the recent past. But his general purpose was to squeeze labor out of this and other industries and: get the men into jobs where they were badly needed. The reactions of both management and men to this slight unemployment were deeply interesting. The first trial came at the Standard works in Coventry. This firm, though not one of the largest, has recently had a notable record of efficiency and enterprise under a highly capable manager, Mr. Alick Dick. Alick Dick announced that plans for automation would necessitate laying off thousands of men, and he made it clear that there was no probability of re-employment for all in the foreseeable future. Since the purpose of automation is to reduce labor costs fewer men for the same quantity of product—his statement seemed perfectly reasonable. But it created headline news all over Britain and provoked a violent and even virulent storm of protest, with strikes, walk-outs, and angry demonstrations. It was idle to point out that every one of the displaced men could easily find another job. The other jobs available were not so well paid and the conditions of work in some cases were not arduous. The other reason for the outburst goes far beyond the motor industry. For a long generation British workmen have labored under the philosophy that it is the duty of the State to see that every man has a job. Many workers have come to believe that it is the duty of the State to find a man the kind of work he wants to do in the place where he wants to do it. In the darkest days of the prewar depression, government officials pled with young unmarried miners to leave their bleak villages of limited employment opportunity and go to the Midlands where there was work in the car factories. Time and again they were told that the unemployed miners had a right to a job in their own village; and as a result, Coventry, Dagenham, and Birmingham filled up with immigrant Irish laborers drawing high wages while the miners remained idle on the dole. This claim of a right to a job was officially sanctified by Sir Stafford Cripps in the first postwar socialist government when he said it was his job and his duty to “bring the work to the worker.” This has tended to immobilize the British workmen. Many of the jobs that the dispossessed Standard men could have had were fifteen or twenty miles from their homes, and they dug their heels in. They felt they had a right to a job around the corner. The row at Standard eventually died down. The men first demanded that all should remain in employment whether there was work for them to do or not. To this Alick Dick briskly replied that he did not mean to “employ men for fun.” As the men knew in their hearts that this was simple and refreshing common sense, they made a second demand that all should be put on short time to avoid any sackings. Alick Dick once again said “No.” To have adopted this device would have been uneconomic for the firm, and it would have nullified the government’s effort to shift the men into other work. In fact, the government then would have been subsidizing the defeat of its own policy, for it is possible in Britain for a man working part time to draw unemployment benefit for his idle days. In the end the men went quietly enough to other employment. Within a matter of weeks, Alick Dick who had been denounced as an industrial Fascist was being admired as a model of tact, consideration, human kindness, and understanding. The reason for this ironical reversal was the truly ugly trouble that broke out in the great British Motor Corporation. This firm—a merger of Nuffield’s and Austin’s—dismissed six thousand men with an abruptness that took everybody’s breath away. Instead of a week’s notice, the men were given a week’s wages and promptly dismissed. The unions and the Labor party shouted in rage. Iain MacLeod, the Tory Minister of Labor, was publicly furious, and the Prime Minister nodded vigorous agreement. But there was method in the shock tactics of Sir Leonard Lord, the head of B.M.C. He had observed the Standard trouble and had drawn his own conclusions. The weeks between the announcement of the intended dismissals and the act had been weeks of bitterness and disrupted production in the Standard firm. Sir Leonard had noticed also that the fighting spirit of the Standard workers faded notably as soon as the men knew which were to go and which to stay in their jobs. When the threat of dismissal was lifted from the great majority of the workers, they were much more inclined to accept the logic of the management’s position. Accordingly, Sir Leonard issued the dismissal notices without argument or parley and got the men off the premises at once. The move was brusque, but the management had judged the mood of the men shrewdly enough. The men knew that in a falling market a swollen staff could not be maintained. Left to themselves, they would have grumbled, and a minority would have demanded strike action; but by far the greater part would have been silently thankful for their own good luck and stayed at the bench. But the management had reckoned without the trade union hierarchy. Fifteen different unions had members employed by B.M.C. and they instantly demanded that the dismissals be canceled. Almost as an afterthought, they added a claim for compensation. Both demands were refused, and a strike was called under conditions that were little short of suicidal. It is an elementary principle of trade unionism not to call a strike when trade is bad. The unions ignored this principle. They made no attempt to poll their members, and they called the strike for the week before the annual holiday shutdown, when the workers were anxious to collect as much money as they could. The result was disastrous. More than half the workers refused to obey the call, and of those who did obey it was clear that many thousands had no wish to strike but were merely showing their union loyalty. The first day’s picketing was amicable enough, but by the second day feeling had suddenly turned bitter. There was real venom in the catcalls and the police were kept busy breaking up quite nasty fights. Further, the pickets resorted to illegal methods to stop the men who were working, and the unions sent flying squads of militants in cars to stiffen resistance at the weakest spots. In addition, the auto unions called for secondary support. Building workers were asked to refuse to work on B.M.C. contracts; rail men and dockers were asked to refuse to handle B.M.C. goods. These men, if they chose, could “black list” all B.M.C. work with little loss to themselves, for they could do other work instead. Thus, union leaders were asking men outside B.M.C. to tighten the strike grip when more than half of the B.M.C. men refused to strike at all. As a crowning irony, by the time the strike began, most of the dismissed men had already found employment elsewhere. One question was asked everywhere. Why did responsible, respectable, and moderate leaders of important unions take this suicidal course? The answer was sadly simple.: They could not help themselves. The lightning dismissal of the six thousand men was possibly the best way of handling the situation, but it bypassed the unions so completely that they might as well not have existed. Up to the last moment, the union leaders hoped desperately that the employers would make some conciliatory move enabling them to save their faces. Then the lamentable result of the first day of strike made their position intolerable. For years the authority of the union leaders had been slighted by wildcat unofficial strikes that could be counted literally by the thousand. Now their authority was threatened with extinction by the refusal of the same men to come out on an official strike. By the second day the leaders were no longer fighting for compensation or restoration, but they were fighting for their own professional lives. It is possible to sympathize with them in their dire emergency, and at the same time to concede that they brought their troubles on themselves. The first setback in overfull employment was bound to create trouble among workers who had been used for ten years to give the boss the sack by walking out but were no longer used to getting the sack themselves. But the unions had done absolutely nothing to prepare for the day. They had pressed steadily for higher wages and shorter hours and for nothing else. Outside of their orthodox routines they had done no serious thinking at all. That is the tragedy of the strike, but the picture is not all black. One may hope that the first hint of hardship had induced some of the workers to shake off their damaging complacency and take a realistic view of Britain’s economic difficulties. If realism is coming, it is coming none too soon, and it must come in all British industry. The huge contract for the Kariba Dam in Rhodesia was lost to the Italians because the British bid was a million and a half pounds higher. The disappointed head of one British firm plaintively said that they were outbid because they treated their workers so well, pro-riding them with such amenities as swimming pools. The Rhodesians coldly retorted that they were a poor people, and firmly declined to pay for the British worker’s swimming pool. All over Africa the same dismal tale is told. The new industrial firms which have done worst are the British firms, and of these the firms which employ British labor on the spot have done even worse than the others; they have been flattened by the French and the Italians. In the first week of the strike, the government issued a publication which disposes of fond self-comforting British delusions that the Germans are beating us in trade because of some unfair advantages. German industry enjoys no advantages fair or unfair. In fact, it is rather more heavily handicapped than British industry. The bare figures for the last five years carry their own bleak indictment. In the metal-using industries, wages have risen almost equally in Germany and in Britain. But German labor costs have remained stationary whereas British labor costs have risen by one quarter. The difference is explained by a sharp rise in German productivity. This is what is meant by “pricing ourselves out of the market.” This is the result of incessant socialist propaganda to convince the British workingman that his standard of living and his social security are inalienable rights which he is entitled to demand regardless of productivity or the state of world markets. This propaganda has had a most damaging effect, but there are indications that workmen are beginning to see that there is no “right to work” when there is no work to do, and that a person’s standard of living’ is not laid down from on high, but is what he makes it. 
A Free Market For Labor Most people want commodities to be sold in free markets, but many doubt if such markets are suitable for the determination of wage rates. They insist that workers should be permitted, or even encouraged, to organize and bargain collectively with their employers. They believe that just wages can be had only if workers are permitted to collectively decide the minimum price at which they will sell their services, and, if agreement cannot be reached with their employers, to enforce their demands by the use of strikes and boycotts. In short, the price-fixing practices which are forbidden to the sellers of commodities are accepted as proper for those who sell their services . . . . By definition, a free market for labor is one in which no monopoly power is exercised by either employers or workers. In such markets, how much will a prospective worker receive? The amount of the offer cannot be predicted, but this much is evident: 1. The employer will not offer more than his estimate of the value to him of the worker’s services, 2. The worker will not accept any offer that is less attractive than he can get from some other firm. Within these limits, if he is to work for the firm in question, a wage must be agreed upon. If there is a more just method of determining wages, I have yet to hear of it.
Glenn E. Hoover, A Just Distribution of Wealth