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Low Pay, Wage Relativities, and Labour’s First Attempt to Introduce a Statutory National Minimum Wage in the United Kingdom

Published online by Cambridge University Press:  15 December 2015

Dennie Oude Nijhuis
Dennie Oude Nijhuis*
Affiliation:
Leiden University
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Journal of Policy History , Volume 28 , Issue 1 , January 2016 , pp. 81 - 104
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Copyright © Donald Critchlow and Cambridge University Press 2015 

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References

NOTES

1. For an excellent overview of statutory national minimum wages and their functional equivalents in Western European countries at the time, see Funk, Lothar and Lesch, Hagen, “Minimum Wage Legislation Regulations in Selected European Countries,” Intereconomics 41, no. 2 (2006): 78–92.CrossRefGoogle Scholar

2. MRC, MSS.292B/116/1: LPWP 6/2, Collective bargaining, 27 January 1970.

3. See, for instance, Chris Pond and Steve Winyard, The Case for a National Minimum Wage (London, 1984), 1–10; Howard Gospel and Gill Palmer, British Industrial Relations (London, 1994), 208; Lewis Minkin, The Contentious Alliance: Trade Unions and the Labour Party (Edinburgh, 1991), 428; Metcalf, David, “The British National Minimum Wage,” British Journal of Industrial Relations 37, no. 2 (1999): 172;CrossRefGoogle Scholar Bain, George Sayers, “The Minimum Wage: Further Reflections,” Employee Relations 21, no. 1 (1999): 15–28;CrossRefGoogle Scholar Michael Terry, Redefining Public Sector Unionism: UNISON and the Future of Trade Unions (London, 2000), 157; Peter Brosnan, “The Political Economy of the Minimum Wage,” in Brendan Burchell, Systems of Production: Markets, Organisations and Performance (London, 2002), 205. Jill Rubery and Paul Edwards, “Low Pay and the National Minimum Wage,” in Paul Edwards, Industrial Relations: Theory and Practice (Oxford, 2003), 460; Richard Hyman, “The Historical Evolution of British Industrial Relations,” in Edwards, Industrial Relations, 46–47. Chris Howell, Trade Unions and the State: The Construction of Industrial Relations in Britain, 1890–2000 (Princeton, 2005), 181; Jerold L. Waltman, Minimum Wage Policy in Great Britain and the United States (New York, 2008), 71–77.

4. Blackburn, Sheila, “The Problem of Riches: From Trade Boards to a National Minimum Wage,” Industrial Relations Journal 19, no. 2 (1988): 131.CrossRefGoogle Scholar See also Keevash, Stephen, “Wages Councils: An Examination of Trade Union and Conservative Misconceptions About the Effect of Statutory Wage Fixing,” Industrial Law Journal 14, no. 1 (1985): 217–32;CrossRefGoogle Scholar Sheila Blackburn, A Fair Day’s Wage for a Fair Day’s Work? Sweated Labor and the Origins of Minimum Wage Legislation in Britain (Aldershot, 2007), 189.

5. Most references to the TUC’s opposition to the introduction of a statutory national minimum wage do not even mention union concerns over the possible consequences of statutory intervention for existing wage differentials. See, for instance, Bain, “The Minimum Wage,” 15–28; Brosnan, “The Political Economy,” 192–212; Rubery and Edwards, “Low Pay,” 453–65; Hyman, “The Historical Evolution,” 46–47; Waltman, Minimum Wage Policy, 71–77. Others, such as Lewis Minkin and Chris Howell, have noted the craft-union defense of wage differentials but, nevertheless, chose to emphasize the importance of union fears “over a possible undermining of union functions.” See Minkin, The Contentious, 429–30; Howell, Trade Unions and the State, 181. Howell, Chris, “Trade Unions and the State: A Critique of British Industrial Relations,” Politics and Society 23 (1995): 171.CrossRefGoogle Scholar

6. For some prominent examples over the years, see, for instance, David Coates, Labour in Power? A Study of the Labour Government, 1974–1979 (London, 1980), 74–85; John McIlroy, Trade Unions in Britain Today (Manchester, 1995), 61; David Metcalf, Kristine Hansen and Andy Charlwood, “Unions and the Sword of Justice: Unions and Pay Systems, Pay Inequality, Pay Discrimination and Low Pay,” National Institute Economic Review 176 (2001): 61; Richard Hyman, Understanding European Trade Unionism: Between Market, Class, and Society (London, 2001), 171; Isabela Mares, Taxation, Wage Bargaining, and Unemployment (Cambridge, 2006), 203. Much of the broader literature on wage inequality and labor market development has also proceeded from the assumption that labor unions generally supported wage compression policies—regardless of their internal organizational features. See, for instance, Gary Marks, Unions in Politics: Britain, Germany, and the United States in the Nineteenth and Early Twentieth Centuries (Princeton, 1989), i; Jonas Pontusson, Inequality and Prosperity: Social Europe vs. Liberal America (Ithaca, 2005), 63; Jelle Visser, “Inequality and the Labour Market: Unions,” in Brian Nolan, Wiemer Salverda, and Timothy M. Smeeding, eds., The Oxford Handbook of Economic Inequality (Oxford, 2011), 231; Lupu, Noam and Pontusson, Jonas, “The Structure of Inequality and the Politics of Redistribution,” American Political Science Review 105, no. 2 (2011): 323.CrossRefGoogle Scholar

7. For some prominent examples, see, for instance, Alison L. Booth, The Economics of the Trade Union (Cambridge, 1995); Disney, Richard, Machin, Stephen, and Gosling, Amanda, “What Has Happened to Union Recognition in Britain?” Economica 63 (1995): 1–18;CrossRefGoogle Scholar Metcalf et al., “Unions and the Sword of Justice”; Rubery and Edwards, “Low Pay,” 465; Blanchflower, David and Bryson, Alex, “The Wage Effects of Trade Unions in the UK Public and Private Sectors,” Economica 77, no. 305 (January 2010): 92–109.CrossRefGoogle Scholar

8. See, for instance, Peter Swenson, Fair Shares: Unions, Pay, and Politics in Sweden and Germany (Ithaca, 1989), 27; Agell, Jonas and Lommerud, Kjell Erik, “Union Egalitarianism as Income Insurance,” Economica 59, no. 235 (1992): 296;CrossRefGoogle Scholar Hans Slomp, Between Bargaining and Politics: An Introduction to European Labor (Westport, Conn., 1996) 104; Visser, “Inequality and the Labor Market,” 231.

9. Britain’s craft and occupationally organized white-collar unions together never represented more than some 30 percent of all organized workers in the postwar period. The share of the union membership held by the craft unions would decrease rapidly from the late 1960s on. See Bernhard Ebbinghaus and Jeremy Waddington, “United Kingdom/Great Britain,” in Bernhard Ebbinghaus and Jelle Visser, The Societies of Europe: Trade Unions in Western Europe since 1945 (Basingstoke, 2000), 739.

10. There was much discussion over the introduction of a statutory national minimum wage during the first decades of the twentieth century. The Fabian Society had, for instance, first called for its introduction in 1906 and continued to do so later. The Fabian Society, The Case for a Legal Minimum Wage (London, 1906). The Liberal government of the day eventually opted for the introduction of Trade Boards (the predecessors of the postwar Wages Councils) instead. For an extensive treatment, see, for instance, Blackburn, A Fair Day’s Wage for a Fair Day’s Work?

11. See Bowlby, Roger L., “Union Policy Toward Minimum Wage Legislation in Postwar Britain,” Industrial and Labor Relations Review 11 (1957): 72–84.CrossRefGoogle Scholar

12. Both the postwar Wages Councils and their prewar predecessors, the Trade Boards, were created to provide for the fixing of wages where “the rate of wages prevailing in any branch of the trade was exceptionally low, compared with that in other employments.” As such, they did not deal with sectors in which low pay was an outcome of an unequal division of earnings among different groups of workers. See, for instance, Blackburn, A Fair Day’s Wage for a Fair Day’s Work?

13. Even during the early 1960s, there was a debate in the Labour Party over the extent to which the wages of the lowest paid had kept up with or had even risen faster than the wages of higher-paid workers. See MRC, MSS.292B/110.44/1: Labour Party, “Comments on Subcommittee’s Discussion on Incomes Policy,” Michael Stewart, January 1963.

14. See MRC, MSS.292/110/1: TUC Research Department, “War Additions,” 18 November 1940, and “Wage Increases since the War,” August 1941; MRC, MSS.292/110.1/2a: TUC Research Department, “Wages and Earnings,” 2 November 1948.

15. See, in particular, Turner, H. A., “Trade Unions, Differentials, and the Levelling of Wages,” The Manchester School 20, no. 3 (1952), 227–82.CrossRefGoogle Scholar Although Turner did not provide support for his claim, recent studies still refer to it to argue that craft unions may support wage compression. See, for instance, Visser, “Inequality and the Labor Market,” 231.

16. MRC, MSS.292/100.1/22a: “Wage Policy—Statement to Affiliated Unions,” 20 June 1950.

17. See MRC, MSS.292/110.1/2a: “Proposed Increases in Basic Rates,” September 1947; and “Memorandum on the Need for a New Wages Structure in Engineering,” June 1945.

18. MRC, MSS.292/110.33/2a: Minutes, Special Committee, 26 April 1950; MRC, MSS.292/110.44/2a: “Wages Policy—Statement to Affiliated Unions,” 20 June 1950, 2; “Wages Policy,” June 1950; and Minutes, Special Committee, 9 May 1950.

19. See Pond, Chris, “Low Pay—1980s Style,” Low Pay Review 4 (1981): 2.Google Scholar

20. MRC, MSS.292B/110.44/1: “An Incomes Policy for the Labour Party,” Michael Stewart, October 1962; MRC, MSS.292B/116/1: LPWP 2/4, “Aspects of Low Pay,” 29 October 1969.

21. See Barbara Wootton, Social Foundations of Wages Policy: A Study of Contemporary British Wage and Salary Structure (London, 1955).

22. See, for instance, Phelps Brown, E. H. and Browne, M. H., “Earnings in Industries of the United Kingdom, 1948–1959,” Economic Journal 72 (1962): 517–49;Google Scholar Dicks-Mireaux, L. A. and Shepherd, J. R., “The Wages Structure and Some Implications for Incomes Policy,” National Institute Economic Review 22 (1962): 38–48.CrossRefGoogle Scholar

23. See, for instance, Townsend, Peter, “The Meaning of Poverty,” British Journal of Sociology 13, no. 3 (1961): 210–27;CrossRefGoogle Scholar Wedderburn, Dorothy, “Poverty in Britain Today: The Evidence,” Sociological Review 10 (1963): 257–82;CrossRefGoogle Scholar Peter Townsend and Brian Abel-Smith, The Poor and the Poorest (London, 1965).

24. MRC, MSS.292B/110.44/1: “An Incomes Policy for the Labour Party,” Michael Stewart, October 1962; and “Incomes, Costs, and Prices,” 11 December 1963.

25. The Working Party on a Minimum Wage was a relatively low level and mainly investigative working party. In its draft report (it never finished its work completely), it emphasized the adverse economic consequences of a statutory national minimum wage and therefore recommended against its introduction. PRO, Lab10./2149: “Working Party on a National Minimum Wage,” Draft Report, 31 December 1964.

26. See Colin Duncan, Low Pay: Its Causes and the Post-War Trade Union Response (Chichester, 1981), 79.

27. PRO, Lab 10/2149: “Working Party on a National Minimum Wage,” Draft Report, 31 December 1964.

28. PRO, Lab 10/2228: “Draft Interim Report of the Working Party on a National Minimum Wage,” 28 August 1964.

29. PRO, Lab 10/2228: “Draft Report of the Working Party on a National Minimum Wage,” 22 February 1965.

30. PRO, Lab 10/2516: “Draft cabinet paper: The Implications and Consequences of Introducing Legislation for a National Minimum Wage,” 1965.

31. MRC, MSS.292B/110.44/1: “Incomes, Costs, and Prices,” 11 December 1963.

32. For an elaborate overview of the Wilson government’s experience with incomes policies, see Peter Dorey, Wage Politics in Britain: The Rise and Fall of Incomes Policies since 1945 (Brighton, 2001), 64–104.

33. PRO, Lab 10/3180: Interdepartmental Working Party on a National Minimum Wage, “Note for Chairman,” 1968.

34. On this, see, for instance, Dorey, Wage Politics, 100–104.

35. On the problem of wage drift and its consequences, see Royal Commission on Trade Unions and Employers’ Associations 1965–68, Report (London, 1968).

36. PRO, BN 72/48: “Minimum National Wage,” note by R. S. Swift, 26 September 1967; MRC, MSS.292B/115.4/4: Radice and Edmonds, “Why Not a National Minimum?”

37. PRO, BN 72/48: Meeting to discuss the concept of a national minimum wage, 19 September 1968.

38. PRO, BN 72/28: “A National Minimum Wage,” Comments by the economic advisers on the report of the interdepartmental working party, 1968.

39. PRO, Lab 10/2178: Interdepartmental working party on a national minimum wage, minutes of a meeting, 22 April 1968.

40. Department of Employment and Productivity, A National Minimum Wage: An Inquiry (London, 1969), 36–37; Steven Fielding and Jim Tomlinson, The Labour Governments, 1964–1970: Economic Policy (Manchester, 2004) 212–13.

41. Only two major unions immediately responded favorably to the introduction of a statutory national minimum wage: the National Union of General and Municipal Workers (NUGMW) and the National Union of Public Employees (NUPE). All other major affiliates that responded to the General Council’s request for evidence either outright opposed its introduction, as was the case with the Iron and Steel Confederation (ISTC) and the National Association of Local Government Officers (NALGO), or had strong doubts as to whether this would improve matters for the lowest paid, as was the case with the National Union of Agricultural and Allied Workers (NUAAW), the National Union of Mineworkers (NUM), the National Union of Railwaymen (NUR), and the Transport and General Workers’ Union (TGWU). Not all unions responded to the General Council’s request for evidence. MRC, MSS.292B/1.4/3: “Low Pay: Further Appraisal,” 10 June 1970.

42. See, for instance, Minkin, The Contentious Alliance, 429; 215; Rubery and Edwards, Low Pay, 460; Terry, Redefining Public Section Unionism, 157.

43. Pond and Winyard, The Case, 38.

44. See, for instance, Coates, Labour in Power, 56; Minkin, The Contentious Alliance, 116–18; McIlroy, Trade Unions, 187–88; Tyler, Richard, “Victims of Our History? Barbara Castle and In Place of Strife,” Contemporary British History 20, no. 3 (2006): 461–76.CrossRefGoogle Scholar

45. Tony Cliff, The Crisis: Social Contract or Socialism? (London, 1975), 58–59.

46. See, for instance, Bridgen, Paul, “The State, Redundancy Pay, and Economic Policy-Making in the Early 1960s,” Twentieth Century British History 14, no. 3 (2000): 83–104.Google Scholar

47. According to TUC estimates, some 70 percent of women earned less than 15 pounds a week in 1970, compared to 8 percent of men. MRC, MSS.292B/116/1: LPWP 6/1, “Extent of and Reasons for Low Pay,” 27 January 1970. For some excellent studies on gender inequalities and the trade union response to this at the time, see Martin, Tara, “The Beginning of Labour’s End? Britain’s Winter of Discontent and Working-Clas Women’s Activism,” International Labor and Working-Class History 75 (2009): 49–68;CrossRefGoogle Scholar Conley, Hazel, “Trade Unions, Equal Pay, and the Law in the UK,” Economic and Industrial Democracy 35 (2014): 209–23.CrossRefGoogle Scholar

48. MRC, MSS.292D/160.11/3: Committee on Poverty, Social Security, and Taxation, June 1976.

49. Contrary to Labour’s first two superannuation proposals, the 1966 National Insurance Act created a fully actuarial program, with benefits depending strictly on the number of weekly contributions paid. Unemployed and sick workers could claim a full benefit after a contribution record of ten years. These features severely limited the scope for redistribution between more and less privileged workers. The Equal Pay Act, which merely aimed to make sure that workers in similar occupations received equal pay levels, likewise did not pose a major threat to the privileged status of skilled workers. The difference here is one between equity within and equity between occupational groups. For the TUC’s role in the introduction of the 1966 National Insurance Act, see Dennie Oude Nijhuis, Labor Divided in the Postwar European Welfare State (Cambridge, 2013), 119–25.

50. See Bridgen, “The State,” 83–104.

51. See Oude Nijhuis, Labor Divided in the Postwar European Welfare State, 85–86.

52. MRC, MSS.292B/1.4/3: “Low Pay,” further appraisal, 10 June 1970.

53. MRC, MSS.292B/115.4/3: “Low Pay,” report, 11 February 1970.

54. MRC, MSS200/C/3/EMP/8/4: “The Case for and against a National Minimum Wage,” 5 September 1967; and John Hughes, “Low Pay: What Part Can a Minimum Wage Play? 1967; MRC, MSS.292B/116/1: LPWP 6/1, “Extent of and Reasons for Low Pay,” 27 January 1970.

55. Many years later, Labour officials would repeat this point to persuade reluctant TUC affiliates. See MRC, MSS.292D/160.11/3: Joint Policy Committee on Poverty, “Social Security and Taxation,” 22 July 1985.

56. The TGWU would repeat these concerns in later years. See MRC, MSS.292D/116/6: Public Services Committee, Low “Pay in the Public Services,” 5 July 1983.

57. MRC, MSS.292B/115.4/4: “Statutory National Minimum Wage—Some Underlying Considerations,” 2 December 1969.

58. MRC, MSS.292B/115.4/4: LPWP, “Restructuring Incomes and Jobs,” 12 November 1969.

59. MRC, MSS.292B/116/1: LPWP 4/3, 2 December 1969.

60. MRC, MSS.292B/1.4/3: “Low pay,” further appraisal, 10 June 1970.

61. Ibid., Annex.

62. Ibid., MRC, MSS.292B/115.4/3: “Low Pay,” further appraisal, 8 July 1970.

63. As a result, not only the General Council and Labour government, but also the Confederation of British Industry believed that it “seemed inconceivable that it would be possible to contain pressures for maintenance of differentials.” MRC, MSS.200/C/3/EMP/8/4: Summary of CBI views on a National Minimum Wage, 1969.

64. While also encountering strong opposition to its superannuation proposal, the government had managed to pass a bill on this through Parliament, but then failed to enact it. The difference between the superannuation bill and the national minimum-wage proposal is that the latter affected fewer workers and that the government was much less committed to this proposal.

65. PRO, FG/1762: “Incomes Policy,” 21 December, 1972.

66. The Act was to be a temporary measure and focused specifically on those in work on very low pay and with children. See Howard Glennester, British Social Policy since 1945 (Oxford, 2000), 119.

67. MRC, MSS.292B/115.4/3: TUC circular, 30 July 1970.

68. MRC, MSS.292B/115.4/3: “Low Pay,” further appraisal, 10 June 1970; MRC, MSS.292D/161/1: Minutes, 11 November 1970.

69. MRC, MSS.292B/115.4/3: “Low Pay,” report, 11 February 1970.

70. MRC, MSS.292B/115.4/3: “Low Pay,” further appraisal, 10 June 1970.

71. MRC, MSS.292D/160.31/2: Social Policy Subcommittee, 7 October 1976.

72. TUC members nevertheless continued to bring forward this objection in subsequent years. See, for instance, MRC, MSS.292D/160.11/3: Joint Policy Committee on Poverty, “Social Security and Taxation,” 22 July 1985.

73. MRC, MSS.292D/160.31/2: Social Policy Subcommittee, 7 October 1976.

74. MRC, MSS.292D/116/3: Report of a special meeting of the NEDC, 14 September 1972.

75. Ibid.

76. MRC, MSS.292D/116/2: Report of a special meeting of the NEDC, 1 August 1972. See also MRC, MSS 200/C/3/EMP/8/4: Report of Interdepartmental Working Party on a National Minimum Wage, April 1969.

77. Ibid., 14 September 1972.

78. MRC, MSS.292B/110.8/13: Report of a meeting, 1 August 1967; MRC, MSS.292B/110.8/10: Incomes Policy Committee, Minutes, 16 February 1966.

79. For the CBI, see MRC, MSS.200/C/3/EMP/3/8: “Joint Wages and Conditions and Industrial Relations Committees,” 31 May 1973, appendix III, 2.

80. Robert Taylor, “The Trade Union ‘Problem’ in British Politics,” in Ben Pimlott and Christopher Cook, Trade Unions in British Politics (London, 1982), 207.

81. For some excellent accounts, see, for example, Henry Pelling, A History of British Trade Unionism (London, 1971), 203–5; Dorey, Wage Politics, 141–73l.

82. See Brown, W., “Incomes Policy and Pay Differentials,” Oxford Bulletin of Economics and Statistics 38, no. 2 (1976): 27–49.CrossRefGoogle Scholar

83. See Ashenfelter, Orley and Layard, Richard, “Incomes Policy and Wage Differentials,” Economica 50, no. 198 (1983): 130.CrossRefGoogle Scholar

84. See Ken Mayhew, “Incomes Policy and the Private Sector,” in J. L. Fallick and R. F. Elliot, Incomes Policies, Inflation, and Relative Pay (London, 1981), 80.

85. Ibid., 92; See also R. Steele, “Incomes Policies and Low Pay,” in Fallick and Elliot, Incomes Policies, 136.

86. See, respectively, Minkin, The Contentious, 429; and Metcalf, “The British National Minimum Wage,” 172.

87. See Ebbinghaus and Waddington, “United Kingdom/Great Britain,” 739.

88. MRC, MSS.292D/116/6: TUC Economic Committee, “Low Pay,” 11 May 1983; ibid., Public Services Committee, “Low Pay in the Public Services,” 5 July 1983. See also MRC, MSS.292D/116/8: “Fair Wages Strategy,” 21 May 1986; Ibid., General Council Minutes, 23 July 1986.

89. MRC, MSS.292D/116/8: Letter from the Engineers’ and Managers’ Association, 9 June 1986.

90. For a list of union supporters and opponents, see MRC, MSS.292D/116/6: Public Services Committee, “Low Pay in the Public Services,” 5 July 1983; ibid., TUC Economic Committee, “Low Pay,” 11 May 1983.

91. See, for instance, Terry, Redefining Public Sector Unionism, 158; Minkin, The Contentious, 429. See also MRC, MSS.292D/116/6: Public Services Committee, “Low Pay in the Public Services,” 5 July 1983.

92. MRC, MSS.292D/116/8: General Council Minutes, 23 July 1986.

93. See Dorey, Wage Politics, 222.

94. See W. Hamish Fraser, A History of British Trade Unionism, 1700–1998 (Basingstoke, 1999), 253; Metcalf, “The British National Minimum Wage,” 173; Dorey, Wage Politics, 221.

95. Metcalf, “The British National Minimum Wage,” 173. Italics added.