THE IMPORTANCE OF NATIONAL WAGE AGREEMENTS*
| DOI | http://doi.org/10.1111/j.1467-8543.1976.tb00036.x |
| Date | 01 March 1976 |
| Published date | 01 March 1976 |
British Journal
of
Industrial Relations
Vol.
XIV
No.
1
THE IMPORTANCE
OF
NATIONAL WAGE AGREEMENTS*
R.
F.
ELuont and R. STEELE~
It
is
a commonplace of the literature
on
labour economics and industrial relations
that
the post-war period has seen the emergence
of
a substantial gap between minimum or
standard wage rates agreed
in
official industry-wide negotiations and actual earnings
in
the workplace throughout many leading sectors
of
the economy.§
INTRODUCTION
WE would not dispute the fact that in
some
leading sectors of the economy such a
gap has emerged. The evidence gathered
so
enthusiastically during the
1960s
is
difficult to refute. We would, however, take issue with the widely held view that
such a gap exists in the majority, if not all, industries within the British economy.
Such an impression has been given by a marked tendency among labour
economists and industrial relations experts to generalise from developments within
specific sectors
of
industry, most notably engineering.
It is our intention in this article to redress the balance and to call attention
once again to the primary role played by national agreements within the wage
determination process. The very large proportion of earnings accounted for by
rates negotiated at
a
national level is not generally appreciated nor
is
the extent to
which the coverage of national agreements has grown in the post-war period. We
shall reveal the magnitudes involved and show the steady growth
in
the
importance of national agreements over recent years. By
so
doing we hope that we
can focus attention once again on recent developments at the national level.
In the following section we employ new Earnings Survey data to analyse the
change
in
the wage gap over the period
1968-73,
while in the final section we
detail the growth in the coverage of national agreements since the war.
THE IMPCRTANCE
OF
NATIONALLY NEGOTIATED WAGE
RATES
Throughout the
1960s
attention was increasingly directed towards the
emergence of significant wage drift within the British economy. It appeared that
since the war there had been
a
persistent tendency for the gap between earnings
and rates to increase through time. The National Board for Prices and Incomes’
estimated that over the three years
1963
to
1966
wage drift was of the order of
2
per cent per annum. Gillon* showed that over the sixteen years from
1949
to
1965
average earnings had increased by
163
per cent against an increase
of
129
per
cent in wage rates, while Dicks-Mireaux and Shepherd3 revealed that as a propor-
tion of earnings supplementary payments
in
the manufacturing sector had risen
from about
19
per cent in
1948
to about
26
per cent in
1959.
This increase in,
what in the two latter studies is more appropriately termed earnings drift,
also
attracted the concern of the Donovan Commission? They believed that
workplace bargaining was giving rise to drift and that this resulted in ‘competitive
*This paper forms part of our research into ‘wage rounds’ which has been financed by the
Department of Employment. We gratefully acknowledge the assistance of the Department of
Employment and the helpful comments and suggestions of Professor Donald MacKay. Thanks are
also due to Mrs. Bain who typed this paper and earlier drafts. We alone are responsible for our con-
clusions or any errors that may remain.
Research Fellow in Political Economy at the University of Aberdeen.
$
Assistant Research Officer
with
the Training Services Agency.
8
D.
L. Purdy and
G. Zis,
’Trade Unions
and
Wage Inflation
in
the UK: a re-appraisal’,
in
D.
Laidler and
D.
L.
Purdy (eds.),
Iflation
and
Luboour
Markets,
Manchester University Press,
1974.
43
To continue reading
Request your trial