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Incomes policy: a dangerous strategy

This article is over 16 years, 1 months old
Previous policies of pay restraint have sparked protests and strikes
Issue 2084
 (Pic:» Leon Kuhn )
(Pic: » Leon Kuhn)

“Pay restrictions tend to succeed in their first year. Holding them thereafter has all sorts of downsides. The longer you keep on, the more the dangers become.”

That was what former Tory chancellor Kenneth Clarke told the Financial Times in June 1993. Three months later he failed to follow his own advice and brought in a 1.5 percent pay limit.

Just as predicted, at first there was little in the way of resistance from workers. But eventually the anger built up, exploding in a strike by railway signal workers that won the next year, bringing down the incomes policy.

In fact this pattern occurs each time the government tries to limit wage rises below inflation. This is why Gordon Brown is so keen to avoid potential future flashpoints by tying public sector workers into pay deals now that will stand for the next three years.

In the early 1970s the Tory government of Edward Heath managed to score some victories, in particular seeing off a national strike by postal workers.

Emboldened by this, Heath tried to introduce a wage freeze and various anti-union laws in 1971. But these plans were swept aside over the next two years, as a strike wave built up from below.

It was led by miners, who struck nationally in 1972. This was their first strike in decades – and was followed by strikes of hospital workers, civil service workers and others. Eventually miners struck again in 1974, forcing elections that brought down Heath.

Before long Harold Wilson’s incoming Labour government was also bent on bringing in pay controls – this time with the help of the trade union leaders. In 1975 it introduced the “social contract” to limit pay awards.

This was justified by saying that strong groups of workers must show wage restraint so poorer groups would be able to catch up.

The backing of union leaders ensured that the initial response to the social contract was muted. The general secretary of the TUC threatened to “cripple” the seafarer’s union for threatening strike action over pay in 1976.

The first national firefighters’ strike was defeated in 1977 after the union was isolated by the TUC. But by the end of 1978 the anger could not be contained.

A wave of strikes over pay by tanker drivers, council workers, water workers and others formed the “Winter of Discontent” of 1978-79 that finally killed off the social contract.

These battles over pay are never just economic – they always have a political dimension too. The strike wave that peaked in 1974 did not just end a pay freeze and block anti-union laws – it also brought down a hated Tory government.

But the lack of a left wing political alternative to Labour in the late 1970s meant that many formerly militant trade unionists ended up dancing to the government’s tune.

The resulting bitterness and demoralisation of the workers’ movement meant that the 1979 general election was won by Margaret Thatcher – with disastrous results for the working class.

The industrial struggle against Brown’s pay limits has to go hand in hand with a political challenge to New Labour and the neoliberal dogma shared by all the mainstream political parties.

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