WAGES: JUST REWARD OR EFFICIENT ALLOCATOR?
| Author | J. M. Jackson |
| Date | 01 November 1967 |
| DOI | http://doi.org/10.1111/j.1467-8543.1967.tb00521.x |
| Published date | 01 November 1967 |
WAGES
:
JUST
REWARD
OR
EFFICIENT ALLOCATOR?
J.
M. JACKSON*
THE
White Paper,
Prices and Incomes
Policy
after
30th
June
1967,‘
showed
that it was the Government’s intention to operate an incomes policy with
certain reserve powers at least until the middle of
1968.
After June
1968
there would, it was hoped be much greater reliance upon the implemen-
tation of a voluntary policy. Discussion will, of course, continue, both as to
the desirability of an incomes policy (either
as
a crisis measure, or as a
permanent instrument of economic policy) and as to the kind of incomes
policy that is appropriate. Even the fall of the Labour Government would
not end this discussion, for any government now must consider whether to
try
to operate some kind of incomes policy or to rely upon other methods
to curb cost inflation. Even the complete failure of the particular kind of
incomes policy pursued by one government would not be evidence that
a
more appropriate policy could not be made to work and to form
a
use-
ful part of the armoury of weapons available for the better control
of
the
economy.
The purpose of this article is to consider one of the fundamental objec-
tions to the concept of an incomes policy. Some see the role of wages in the
economy to be an allocator of labour between the many different
jobs
that
need to be done. They believe that industries which are expanding and
so
needing more labour should be free to offer higher wages. They fear that
if
such industries are tied to the norm of an incomes policy they will not be
able to recruit the additional labour they need.
It
must be admitted that an
incomes policy may introduce
a
measure of rigidity into the wage and
salary structure. The policy may recognize the necessity ‘in the national
interest to secure a change in the distribution
of
manpower (or to prevent
a
change which would otherwise
take
place)
’
as
a justification for
a
wage
increase if this will be ‘both necessary and effective for this purpose’2.
Where, however, the incomes policy has other criteria, these may limit
severely the extent to which an industry in need of more manpower can be
allowed to offer higher pay.
THE
THEORETICAL
MODEL
The assumption that a widening
of
wage differentials between indus-
tries will lead to
a
significant and speedy redistribution of labour is based
*Senior
Lecturer in Economics, University
of
Dundee
a
ibid.,
para.
22. In the earlier White
Paper,
this
was
a
criterion
for
an
above
norm increase.
Cmnd
3235,
1967
375
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