Transcript Legal and Economic Dynamics of State Intervention in

The economic context of labour
law reform and union
organisation, 1906-2006
Simon Deakin and Frank Wilkinson
IER, 10 May 2006
The economic context of laws
supporting collective bargaining
• Union growth and labour law reform over the economic
cycle
• The nature and limits of collective laissez faire
• Responses to the poor law and casualisation of labour in
the early twentieth century: enforcement of the ‘common
rule’ through collective bargaining and the right to strike,
social insurance and legal enactment; tension between
Fabian stress on public intervention, and self-organisation
under the auspices of the Trade Disputes Act 1906?
• Today’s analogues of the 1900s?: universal labour
standards, solidarity, and social rights
Collective laissez faire
• Priority given to the autonomy of the collective bargaining
system: exclusion of the courts by the 1875 and 1906
‘immunities’ legislation
• No universal model of employee representation and no
guarantee of basic social protections
• Regulatory legislation confined to a subsidiary role:
‘substitute’ for collective bargaining in underorganised
trades and occupations
• Absence of constitutional settlement for labour: ‘no Carta
del lavoro or Charte de travail’
• Consequences: vulnerability of collective bargaining to
economic shocks and shifts of political sentiment
Figure 1. Trend in Home Costs and Import Prices: (9 year moving average)
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
1995
1991
1987
1983
1979
1975
1971
1967
1963
1959
1955
Imports
1951
1947
1943
1939
1935
1931
1927
1923
1919
1915
1911
1907
1903
1899
1895
1891
1887
1883
1879
1875
GDP
Figure 3. Rates of unemployment: 1895 to 2000.
25
20
15
10
5
0
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
1964
1961
1958
1955
1952
1949
1946
1943
1940
1937
1934
1931
1928
1925
1922
1919
1916
1913
1910
1907
1904
1901
1898
1895
Unemployment rate
Figure 4. Trade union members and trade union density
140
120
100
80
60
40
20
0
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
1964
1961
1958
1955
1952
1949
1946
1943
1940
1937
1934
1931
1928
1925
1922
1919
1916
1913
1910
1907
1904
1901
1898
1895
TU density (per cent)
TU Members (100,000s)
Figure 5. All strikes and non-mining strikes, 1895 to 2000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
1964
1961
1958
1955
1952
1949
1946
1943
1940
1937
1934
1931
1928
1925
1922
1919
1916
1913
1910
1907
1904
1901
1898
1895
Non mining strikes
all strikes
The problem of disorganisation in
the 1890s
• ‘all unskilled labourers being as it were in possible
competition with each other, the most incapable in body of
feeble in character (and these include the many who have
once belonged to a skilled trade but from helplessness or
incompetence or misfortune have been unable to maintain
themselves in it) get sifted down, and crowd into certain
ill-paid occupations at the bottom of the scale, in which
their mere superfluity of numbers renders employment
irregular and precarious. Lower still below this class of
the casually employed and largely recruited from it, comes
that of the unemployable’ (Royal Commission, 1894)
The debate over legal
enforcement of c.a.s
• ‘It would do more harm than good either to invest
voluntary boards with legal powers, or to establish rivals to
them in the shape of other boards founded on a statutory
basis, and having a more or less public and official
character ... many of the evils to which our attention has
been called are such as cannot be remedied by any
legislation, but we may look with confidence to their
gradual amendment by natural forces now in operation
which tend to substitute a state of industrial peace for one
of industrial division and conflict’ (Royal Commission,
1894).
The labour code alternative
• ‘this policy of prescribing minimum conditions, below which no
employer is allowed to drive even his most necessitous operatives, has
yet been only imperfectly carried out. Factory legislation applies,
usually, only to sanitary conditions and, as regards particular classes, to
the hours of labour. Even within this limited sphere it is everywhere
unsystematic and lop-sided. When any European statesman makes up
his mind to grapple seriously with the problem of the ‘sweated trades’
he will have to expand the Factory Acts of his country into a
systematic and comprehensive Labour Code, prescribing the minimum
conditions under which the community can afford to allow industry to
be carried on; and including not merely definite precautions of
sanitation and safety, and maximum hours of toil, but also a minimum
of weekly earnings’ (Sidney and Beatrice Webb, Industrial Democracy
1897: 767).
Parasitic trades
‘It is doubtful whether there is any more important
condition of individual and general well being
than the possibility of obtaining an income
sufficient to enable those who earn it to secure, at
any rate, the necessaries of life. If a trade will not
yield such an income to average industrious
workers engaged in it, it is a parasite industry, and
it is contrary to the general well being that it
should continue’ (Select Committee, 1908)
Collective bargaining and the
method of legal enactment
• Debate over whether to legislate over working
time resolved in favour of ‘voluntary principle’:
1894 Royal Commission Report; implicitly
confirmed by TDA 1906
• Failure to develop embryonic health and safety
standard set out in s. 28 Factories Act 1896
• Trade boards set low minimum rates in order not
to threaten collective bargaining or undermine
employer autonomy
The poor law
• The workhouse test for the able-bodied, by
‘establishing a worse state of things for its inmates
than is provided by the least eligible employment
outside’, not only engenders ‘deliberate cruelty
and degradation, thereby manufacturing and
hardening the very class it seeks to exterminate’; it
also ‘protects and, so to speak, standardizes the
worst conditions of commercial employment’
(Sidney and Beatrice Webb, The Public
Organisation of the Labour Market, 1909)
The method of social insurance
• Webbs saw union-based social insurance as a
device for maintaining the ‘common rule’
• National Insurance Act 1911, s. 86: effect was ‘to
maintain union rates so far as Trade Union
members are concerned, and to empower other
workmen to demand their customary rate’
(Comyns-Carr, 1912)
• Retirement condition: by preventing combination
of retirement benefits with wages, social insurance
law sought to control the labour supply
Full employment
• ‘the labour market should always be a seller’s
market rather than a buyer’s market…’
• ‘…it means that the jobs are at fair wages, of such
a kind, and so located that the unemployed men
can reasonably be expected to take them; it means,
by consequence, that the normal lag between
losing one job and finding another will be very
short’ (Beveridge, 1945)
‘Disorganisation’ of the labour
market in the 1980s and 1990s
• Ending of ‘full employment guarantee’ in
macroeconomic policy (1970s, 80s); replacement
by goal of raising employment rate (1990s, 2000s)
• Removal of right to solidarity action in the labour
market through reforms to strike law
• Erosion of social insurance
• Return of casualisation, aka ‘labour flexibility’
The minimum wage as an alternative
to collective bargaining?
• Low Pay Commission should act ‘without risking damage
to the economy’ and the rate should be ‘manageable to a
wide range of business interests’ (LPC 1st. Report, 1998)
• ‘we found no significant impact, positive or negative, of
the National Minimum Wage on productivity…the
introduction of the National Minimum Wage had not
provided a boost to productivity, but neither had it led to a
general increase in unit labour costs’(LPC, 4th. Report,
2003)
• Role of wage subsidies in maintaining low incomes: Tax
Credits Acts 1999-2002
Pension fund activism as a new
method of social insurance?
• 2000: UK pensions law follows US by requiring
pension funds to disclose voting strategies on
social, ethical and environmental issues: another
version of comply or explain
• Myners report on institutional investment and
Operating and Financial Review would create
information in how companies discharge social
and environmental responsibilities; but so far little
real progress on this; New Labour government
decides to make the OFR voluntary in 2005
Solidarity, union revival, and the
economic framework
• What is the role of solidarity in complementing
the methods of legal enactment and social
insurance?
• The evidence of the economic cycle suggests that
union strength in the twentieth century was highly
dependent on wider economic conditions being
favourable – can a more permanent institutional
solution be found to underpin collective labour
organisation?