Keynote speech of John Monks, General Secretary of the Trade Union Confederation (ETUC)
The future of employment
I have been asked to bring a historical perspective to today’s meeting. As my wife pointed out – that’s because you have been around a long time.
Indeed, she’s right. I joined the Trade Union Congress (TUC) organisation department in 1969, a few months after the publication of the Labour Government’s White Paper – ‘In place of strife’ – and I have worked on all the different twists and turns of industrial relations policy since then.
It has been a roller coaster ride wonderfully interesting, with the campaign against Edward Heath’s Industrial Relations Bill, the three day week, miners strikes that succeeded, the swing to the Social Contract of the Wilson/Callaghan Governments with pro-worker and pro-trade union laws, and how distant it now seems, a debate about workers directors on boards of larger public limited companies. Abrupt changes followed in the Thatcher years with major battles fought and, from the trade union side, lost against new, restrictive laws and a series of unsuccessful strikes. And then to the present New Labour era with some modest pro-worker legal moves but few pro-union ones.
The cast list of these dramas which have never been far from the epicentre of British politics includes great and not so great figures. Defining which is which is a lecture that I will save for another day.
It is not my intention to dwell on the history or to guide you in detail through the twists and turns of the period since the Donovan Commission reported in 1968. It’s not because it’s not fascinating. It has been a huge part of my life, after all, and the lives of many of you in the audience. In the pub, we can all reminisce about what Jack said to Harold or Hughie said to Ted or Clive Jenkins said off the record to a hundred journalists.
But I will not indulge myself in that exercise. The present and the future are too challenging, too frankly exciting, to afford me the opportunity of lingering too long down memory lane.
On the other hand, I must recognise, of course, that not every one present is as ancient as I am, nor is aware of the history. So let me pick out a personal list of key points.
In 1968, the UK was obsessed with its relatively low growth rate and poor productivity performance. It had fallen well behind comparable countries such as Germany and France. There were not so many days lost through strikes but there were many strikes in certain sectors, characteristically short, unofficial strikes (i.e. not sanctioned by the union as they were in breach of procedure agreements). There was an intense argument how to tackle these problems with two opposing schools ranged against each other.
One school, blessed by the Donovan Commission and reflecting the views of key Oxford academics like Alan Flanders, Hugh Clegg, Bill Mc Carthy and George Bain, rejected stronger laws against strikes and saw the road to reform as through formalising plant level bargaining, which was already common informally.
The other favoured stronger laws. The Wilson and Heath Governments favoured a new legal framework which included curbs on strikes but also opportunities for unions and restrictions on employers. Both were rejected, and defeated by the TUC, the miners’ strike of 1974 and the AEU’s defiance of the law (an employer paid the fine).
By 1974, union activity was regarded as beyond the reach of the law – and indeed there was a consensus which spanned the political parties that law and strikes should be kept apart. Union co-operation had to be won through voluntary collective bargaining – a view which the Labour Government promoted.
However, this was also a period of huge rises in oil prices. Inflation soared. Governments of the 1970s sought to restrain inflation including by voluntary agreements with the TUC and in the Conservative case by statutory means. The so-called Social Contract between Labour and the TUC was a relatively successful incomes policy from 1976-78 reducing by agreement the real wages of averagely paid workers by 5% and so cutting the inflation rate drastically. But in 1978 it proved, for many still controversial reasons, impossible to negotiate a new round of incomes policy. There was an outbreak of industrial action in road transport and the rail and public services, resulting in widespread strikes and disruption – the so-called winter of discontent.
This had the paradoxical effect of making unions intensely unpopular but attractive to join. TUC membership reached 12 million in 1980.
But the post-winter of discontent election was won by Mrs Thatcher. Her Government resolved, step by step, to change trade union law. The key changes were to make trade unions as corporate entities liable for actions in tort – in other words, the institutions could be sued for unlawful acts, not just named officials – and also to narrow the scope for lawful industrial action, with another key change a requirement to hold secret ballots before industrial action.
Unions resisted fiercely but the General Secretaries of the TUC of the day – Lionel Murray and Norman Willis – were determined not to act unlawfully. Unions that did – the National Union of Mineworkers led by the charismatic, stubborn, quasi-revolutionary Arthur Scargill, and the print workers suffered heavy fines and sequestration of assets.
That era was seminal. Arthur Scargill was right about one thing in particular. If the miners lost, the whole trade union world would suffer.
We did. The Government was no longer afraid of unions. Other employers – Rupert Murdoch and the dock employers, prominent among them, sought to break union power and to de-recognise unions. New incoming companies refused to recognise unions or, if they did, they set the terms, which could include no-strike agreements. This issue divided the TUC between traditional unions and the so-called ‘new realists’. Other employers decided to undermine collective bargaining by offering individuals personal contracts which could include staff status, performance related pay, shares in the business, and cash incentives to drop union representation.
There were a few brighter signals in the 1980s for unions. Promoted by the Involvement and Participation Association and encouraged by ACAS, and Hugh Stirk, Bryan Stevens and John Edmonds were prominent in this, partnership working was promoted by some unions and employers. It focused on joint union-employer action to boost performance and productivity in exchange for job security and commitments to improved training.
And the social agenda of the European Union began to click in with pro-worker legislation, so beginning a series of impressive interventions in British employment law.
The case for this ‘Social Europe’ was set out by the then President of the European Commission Jacques Delors in a speech to the TUC in 1988. His speech had profound political consequences. Mrs Thatcher watched it on TV and apparently said ‘this guy is trying to reintroduce socialism into this country, just after I have defeated it.’
Three weeks later, she gave a trenchant anti-European speech in Bruges, a speech that triggered the revolt by Geoffrey Howe and Michael Heseltine which led to her downfall. So the TUC got her in the end.
The laws deriving from Europe – 60 in all – over health and safety, gender equality and pay, transfer of undertakings, information and consultation, European Works Councils, equality for part-timers, fixed term workers, and now agency workers, and working time – make a strong list.
The 90s were dominated by Neil Kinnock and particularly Tony Blair. As the employment spokesman of the Labour Party, Blair had refused to restore the closed shop with, I might add, a wide degree of support in the TUC who recognised its incompatibility with the European Social Charter which gave individuals a right to choose whether to be in unions or not. That decision first marked out Blair as a man of the future.
When he came to power in 1997, he was committed to three things – a new union recognition law, a national minimum wage, and adoption of the Social Chapter of the Maastricht Treaty – the last following an opt out from the Maastricht Treaty negotiated by John Major on social policy. There were stings in this programme for the unions – the recognition law would not be recognition for ‘collective bargaining purposes’, indeed there was to be no public policy encouragement of collective bargaining. And on the Social Chapter, the CBI were given an assurance that no new measures would be allowed to pass through the procedure unless agreed with CBI. The Government let the CBI down once – on information and consultation – but we are still feeling the effects of this dirty deal on issues like the opt out on working time, although Gordon Brown recently negotiated a deal with the TUC and CBI about temporary agency workers which is allowing the adoption of that Directive.
During the New Labour period, there are some key facts which shape us today:
• Union membership stabilised but did not keep its proportionate share of the growth of the labour force, especially in the private and service sectors. Union organising efforts became a top priority issue for unions and the TUC.
• Real wages increased each year and employment levels soared.
• But there were many working poor who needed support from in-work State benefits and credits.
• The minimum wage has been a success so far causing negligible job loss while having a major impact on rural areas in particular but it is not a living wage for many who need the support of tax credits.
• At the same time inequality rose massively with the gaps between rich and poor, top executives and the rest, widening dramatically.
• Large numbers of migrant workers arrived, especially from new Member States of the EU and were generally successfully integrated but there was some exploitation, and also campaigns by unions to ensure equality of treatment.
• Union mergers proceeded, especially with the creation of UNITE, a predominantly private sector union with two million or so members. Whether the efforts needed and costs incurred outweigh the advantages is a matter which is still open.
• The partnership agenda lost popularity with some key unions who saw it as too collaborative in an era when shareholder value maximisation became ever the more explicit and the most significant objective of companies. Nonetheless the learning agenda, often shared with employers, grew in importance and significance.
And that last remark brings me to the present and the future. The arrival of a recession which is rapidly gaining strength may well change everything and be just as much a turning point as 1979.
It is worth saying what did not cause this recession. It was not the trade unions. It was not pay or strikes. It was not pressure in the labour market. It was not the Government. It was the speculation in financial markets and the reckless lending of banks, often off balance sheet using risky hedge funds. It was the high debt levels of companies, asset stripped for short-term shareholder value or private equity gain. It was Wall Street, the City and other financial centres who have brought Western economies close to their knees.
It is to Governments, not markets that people are looking for help. There is huge irony in seeing General Motors and Ford leading the queues of lobbyists for special help from the White House, including offering part-nationalisation. Nationalisation, and not just of banks, is back on the agenda with a vengeance.
What kind of society will emerge from this deep recession? Will it be a return to business as usual when ‘happy days are here again’? Or can we build from the ashes of today a fairer, more responsible, more sustainable future?
While new State activism received general public support initially, it is evident that over the past two weeks, a reaction is developing against which the unions must prepare to fight. Conservative cries now are about ‘how can we afford to pay for all this intervention?’. Their consequent warnings about levels of public debt mark a new challenge to the consensus for State action.
At the same time, incredibly, even some New Labour disciples are nervous about the proposed new top tax rate of 45 per cent proposed by Alistair Darling; they are talking about no return to the ‘politics of envy’, rather than, as Gordon Brown does, about the need for all parts of society to bear fair shares of the burden in the fight to combat recession and restore growth.
The stark fact is that the traditional New Labour approach of seeking a smaller State and the application of market principles to as wide a range of the nation’s economic and social life as possible simply does not work in the present crisis, as its more intelligent advocates are recognizing, even as others spout the old time religion. New Labour risks being the new Old Labour.
There are many comparisons being drawn with 1931 and the Depression then. At that time, Government spending cuts made the collapse far worse. This time, at least, Governments are rightly acting to boost spending and to create new demand for goods and services. No-one knows whether and to what extent it will work but there are no alternatives.
But while the immediate action must be directed at fighting the frightening recession, there is also a fight about what this means for State action in the future. This is where the Right are looking to return to business as usual with a smaller State, much lower public spending and freeing up the private sector.
This is where I draw parallels with another year – 1945 and post war reconstruction. In that era, people looked to the State for help and rescue as they sought to rebuild shattered and impoverished societies. Of course, it’s not that grave now but expectations of the State are building up. The queue headed by car companies and building enterprises will include large numbers of unemployed and people whose houses are repossessed, as well as other industries desperate for survival.
I believe that Governments will have to be as pragmatic in dealing with these challenges as they are with trying to deal with the banks. In the European Union, there will need to be flexibility in the interpretation of the single market as well as the Stability and Growth Pact which controls spending levels. Exceptional circumstances could well be with us for several years to come.
Over this period, the unions must make our case for a new kind of economy, one in which there is a better balance between industry and the financial sector which has become an overblown, overmighty and irresponsible burden on nations especially in the English speaking world. We need to fight for a society where efforts to build up productive businesses are supported and rewarded but where short-term speculation and all the spivery that we have seen in financial markets is relegated to the margins. Think for a moment. Companies which had developed reserves in the form of cash deposits, and owning their own property so that they could ride out economic storms and fund their own investments, became ripe targets for takeovers so that their assets could be stripped out and sold on, and their debt levels heavily increased. Even solid, market leading companies like Microsoft and Toyota were pressed to do this. And now the cold winds are blowing hard, many companies are vulnerable and fragile. That’s no way to run society.
In future, we want a society in which long-term perspectives flourish, and where the fruits of growth are much more evenly shared than has been the case over the past 20 years when levels of inequality reached Victorian levels.
We know the Right are planning to slash public expenditure in the future to tackle the ‘bloated State’ and ‘feather bedded’ public services.
The trade union approach must be to argue the positive case for a new society based on sustainability, responsibility and greater equality, with no return to the ‘business as usual’ of the past 20 years. ‘Business as usual’ has brought the banks – and many of the rest of us – to our knees. British trade unions had a disastrous year in 1979 with the so-called ‘winter of discontent’ and we have never been allowed to forget it. 2008 has been the banks’ 1979 and they must never be allowed to repeat the damage they have inflicted.
For us, a huge battle has just begun.