ENGINEERING WAGES AND THE SOCIAL CONTRACT, 1975–1977*
| Published date | 01 February 1979 |
| DOI | http://doi.org/10.1111/j.1468-0084.1979.mp41001004.x |
| Date | 01 February 1979 |
ENGINEERING WAGES AND THE SOCIAL CONTRACT,
1975_1977*
By WILLIAM BROWN
Incomes policies, although now a central feature of the economic policy of
successive British governments, have proved difficult to monitor and evaluate.
In part this is because the timing of successive stages of policy is out of phase
with the collection dates of official statistics.1 In part it is because official statistics
are collected at levels of aggregation inappropriate for monitoring the plant and
company bargains that dominate private sector pay.2
In an earlier study2 an attempt was made to overcome these problems through
the use of regular wage surveys carried out in the West Midlands engineering
industry. It examined the impact on wages of the three successive stages of the
counter-inflation legislation of Mr. Heath's government from the autumn of 1972
until 1974 and also the period of relatively free collective bargaining under Mr.
Wilson's government that preceded 1975. The present note extends the earlier
work to cover the next two stages of policy until the late summer of 1977.
The policy, introduced under the title 'The Attack on Inflation' in July 1975,
was not statutory, although undisclosed powers were kept in reserve, and was
modelled closely on proposals by the TUC. No employee was to have an increase
of more than 6 per week during the year up to August 1976 and no pay increases
at all should go to those earning more than £8500 a year.5 This came to be known
as Phase One. Its successor, Phase Two, emerged from a novel negotiation whereby
the Chancellor offered income tax concessions for a new package of rules from the
TUC. These limited pay increases to £2.50 for those earning up to £50 a week,
to 5 per cent of gross earnings for those between £50 and £80, and to a maximum
of £4 at all higher levels of earnings. As with Phase One, increases were not to be
consolidated into basic rates and no group should have major pay increases at
closer than a 12 month interval.6
This study draws on surveys of 40 factories employing some 80,000 people in
the West Midlands. The factory pay negotiations are effectively independent of
any industry-wide agreements and are carried out at the workplace or, in a few
cases, at company level. The data relate to standard earnings and thus exclude
* The author is grateful to Margaret Morgan for her clerical assistance and to Dick Blandy,
Keith Hancock, R. G. Searle-Barnes, Keith Sisson and Philip Way for their comments.
1The New Earnings Survey is conducted in April and the survey of earnings in the engineer-
ing, chemicals and shipbuilding industries in J une, whereas recent incomes policies have started
in August or later in the autumn.
2For an analysis of recent changes in British bargaining structure and the consequences
for the interpretation of official statistics see W. A. Brown and M. A. Terry, 'The Changing
Nature of National Wage Agreements', Scoitish Journal of Political Economy, XXV, 1978.
' W. A. Brown, 'Incomes Policies and Pay Differentials', BULLETIN, Vol. 58, No. 1, February
1976.It is hoped that a later study will examine the relaxation of policy after 1977.
The Attack on Inflation, Cmnd 6151, HMSO, 1975.
The Attack on Inflation. The Second Year, Cmnd 6507, HMSO, 1976.
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