the incomes policy and the printing industry

THE INCOMES POLICY AND THE PRINTING INDUSTRY*

DAVID BODDY

IN May 1965 the First Secretary of State referred the proposed wage agreement in the general printing industry to the Prices and Incomes Board. This provides the first opportunity to examine the problem of applying the current incomes policy to a particular industry. The first section of this article contains a brief review of the machinery which has been established for the incomes policy. In the second section the earnings structure in the printing industry is discussed. The third section then considers the causes of this earning structure, which have important implications for the effectiveness of the incomes policy in this industry. The final section discusses the report of the Board.

I

The reasoning behind the principle of an incomes policy is familiar and need not be repeated. What is now of concern is the practical application and operation of the present Government’s policy’ on prices and incomes. The official framework of this policy has been made known in three documents published between the end of 1964 and April 1965.

In December 1964 representatives of Government, Management and Trade Unions signed a Joint Statement of Intent on Productivity, Prices and Incomes. This stated the Government’s economic objectives and in very general terms outlined some of the policies which the Government would pursue. Amongst these would be the establishment of an Incomes Policy. Management and union representatives accepted the Government’s economic objectives, in particular that of keeping increases in incomes in line with the increase in national output. They therefore undertook to co-operate with the Government in giving effective shape to the incomes policy.

The Government then published, in February 1965, a White Paper detailing the machinery of the Policy.2 While the continuing general

*The author is indebted to L. C. Hunter and G. L. Reid, who made

For an outline ;f earlier attempts at an incom:s policy, see an article Incomes Policy-State of Play , Three Banks Review,

Machinery of Prices and Incomes Policy, HMSO Cmnd. 2577.

valuable comments on an earlier draft.

by Sir Robert Hall, May 1964.

309

310 DAVID BODDY

review of prices and incomes movements would be carried out mainly by the National Economic Development Office, particular cases would be examined by a National Board for Prices and Incomes. The references to the Board would be the responsibility of the Government, with the reports appearing within 2 or 3 months of a reference being made. Throughout the Paper emphasis was laid on the hope that both sides of industry would co-operate with the Board in the provision of information and the interpretation and application of its findings. If this voluntary method failed, however, the Government would consider other measures.

The third stage was to lay down criteria against which price and income movements could be judged. These appeared in a White Paper in April 196Y which set out the ‘considerations which in the national interest should guide all concerned with prices and incomes ’.

The familiar central point is the incomes ‘ norm ’. On an assump- tion of a growth in national output per head to 1970 of about 33% annually, the maximum permissible annual rate of increase of money incomes consistent with stable prices is between 3 and 33%. In conditions of full employment, collective bargaining procedures at national and local level may cause this figure to be exceeded. If price stability is to be achieved, less consideration will have to be given to traditional bargaining factors and much more attention focussed on the incomes ‘ norm ’. In other words, unions and management are being asked not to take advanatge of conditions of labour shortage and buoyant product demand in which cost increases can easily be passed on. But if increases are to be limited to a norm of 3 or 33% per annum it is important to know exactly what is included within the meaning of this term. It does not include movements in wage rates alone. All elements of labour costs should come within the norm-paragraph 13 of Cmnd. 2639 states that account must be taken of costs resulting from hours reduction and improved fringe benefits. There is also the obvious point, important in the printing case, that the norm covers changes in earnings, not rates.

An element of the policy which has not perhaps received sufficient emphasis is that some groups of workers are expected to accept increases in earnings below the norm. However, it is recognised that certain groups will be able to justify increases in excess of the norm. apart from cases where this would be paid for by greater productivity. Paragraph 15 of the White Paper sets out the possible justifications. These include the need to alter manpower distribution, to ensure a

Prices and Incomes Policy, HMSO Cmnd. 2639.

THE INCOMES POLICY AND THE PRINTING INDUSTRY 31 1

reasonable standard of living, and to correct any undesirable inter- industry earnings comparisons. Though these ‘ gateways ’ are so wide that almost any wage claim could be supported by at least one of them, some increases, however, will quite properly be awarded under these provisions. To the extent that this happens, other groups must accept less than the average if this is to be kept to 3 or 3+%. No explicit guidance is given to the Board on this point, and it could raise critical problems of enforcement.

This last point raises that of the voluntary nature of the policy. The Government have often emphasised that they would only resort to legislation if present methods failed. Though it is too early to be certain that this stage has been reached, the recent proposals by the Government, to give legislative support to the Prices and Incomes Board, are significant.

Having established the machinery of an incomes policy, and some guiding criteria, the Government made its first references to the Board. The first one primarily concerning a proposed wage increase was made on May 18th 1965, when the First Secretary of State announced that he was ‘ referring to the National Board for Prices and Incomes-in the light of the national interest-wages, costs and prices in the printing industry ’. The previous three year wage agreement for the industry had expired at the end of March. The main point in the proposed new agreement was that basic rates for craftsmen should rise immediately by about 3%, with slightly greater percentage increases for non-craftsmen, and that a similar increase would follow in January 1966. Further, part of the accumulated Cost of Living Bonus was to be consolidated into basic rates, and the value of the Bonus would be increased. At first sight this may appear to be within the norm, but the reference also noted the effect on costs of increases under the old agreement in January 1965, and of a third week’s holiday coming into effect this year. The reference then mentions the Government’s concern that failure by the industry to absorb these extra costs by greater productivity would lead to price increases affecting a wide range of industries; and also that the proposals might influence negotiations in other industries. The Board was therefore asked to report on these issues ‘ in the light of the national interest ’.

The effectiveness of the policy will be made more likely if the pressures shaping earnings, cost, and price movements in a particular industry are accurately identified. The next section therefore considers the components of the earnings structure in the printing industry, while the third section suggests the causes of this structure.

312 DAVID BODDY

I1

Two statistical problems must first be stated. The first arises because the collective bargaining division of the industry does not correspond with the Standard Industrial Classification. This divides the industry into two parts:

MLH 486, Printing & Publishing of Newspapers and Periodicals. MLH 489, General Printing, Bookbinding. etc.

For collective bargaining purposes, however, the division is between national morning newspapers and the rest of the industry. The latter produces provincial newspapers, periodicals and all forms of general printing. It includes within it a great variety of different forms of production, ranging from the numerous small jobbing printers to the few large plants organised for the mass production of large quantities of coloured work, such as periodicals or packaging. It therefore com- prises all of MLH 489 and part of MLH 486. The problem in using the official statistics here is obvious. If we include all of MLH 486, the account of the general printing industry will be misleading because the very different conditions of work and rates of pay in national newspaper production will substantially influence the total figure. Alternatively, if we exclude MLH 486 altogether, and use only MLH 489 figures, we understate earnings in general printing, as we exclude the higher wages earned on periodical work, which statistically is in MLH 486. However, of the two, the latter course is considered preferable, but the element of understatement should be borne in mind throughout.

The second problem arises from the complexity of the industry’s wage structure, and lack of information in detail on the distribution of the industry’s labour force. Rates are determined by a person’s craft, the sort of machine he is operating or the nature of the product, and by the location of the plant.4 Without a detailed occupational distribution, wage rate indices must only be approximate. The Min- istry of Labour Index of Weekly Wage Rates covers the whole Order, i.e. Paper, Printing and Publishing, and is too wide for our purposes here. Alternatively, we can observe the rates paid to a particular representative craft, and follow this in detail. This is the course adopted, using rates paid to hand compositors and stonehands in

Highest rates are paid in London, rather lower ones in two provincial grades. For some crafts, rates are higher, for example, for work on evening newspapers than on general printing work; alternatively several different rates apply to the operation of printing machines, depending upon their size and complexity.

THE INCOMES POLICY AND THE PRINTING INDUSTRY 313

general printing in large provincial towns.5 Compositors are the largest single craft group, and their rates represent a balance between the higher rates paid to some other crafts, and the lower rates paid to non-craft workers: London rates are a fixed absolute amount in excess of provincial rates, and the crafts tend to maintain, at least over the period being considered, roughly the same differentials. This explanation should be borne in mind when wage rates are discussed.

To follow movements in minimum rates in detail, therefore, we use the rate for provincial compositors and stonehands. The minimum rates consist of two elements: a basic rate and a Cost of Living Bonus. Appendix A gives details of movements in these elements since 1959, and the following table summarises movements since 1960. On three occasions since 1962 part of the accumulated Cost of Living Bonus (CoLB) has been consolidated into Basic Rates. The importance of this CoLB element in minimum rates is shown by the fact that, of the rise of 52/3 in minimum rates over the period, 26/3 was due to increases in Basic Rates (excluding consolidation of CoLB) and 26/- to CoLB payments (see Table I).

TABLE I

MINIMUM RATES, HAND COMPOSITORS AND STONEHANDS, IN GENERAL PRINTING, GRADE I TOWNS, 1960-1965

Basic Rate, Excl. Consolidated CoLB ,, Incl.

Mihimum Rate: BasicTCoLB ”

January January Average annual 19Ml 196 incrcase yo

s. d. s. d. 214 9 241 0 2,4 214 9 262 0 4 5 228 9 281 0 4 5

Source: Ministry of Labour Gazette.

Average earnings, however, are more important than minimum rates, both over a period of time and in comparison with the rest of industry. Despite the understatement of General Printing earnings inherent in only using MLH 489 figures, it can be seen from Table I1 that over the period 1956-64, average hourly earnings in general printing are generally between 18% and 22% higher than the all industries figure.6

In its Report, the Board adopts a similar course, except that it uses the rate for a compositor working in London. The provincial rate was used here as probably being more representative of experience in the country as a whole. The difference between the rates is 16/-.

In October 1964, 9:h of the workers in MLH 489 were employed on shift-work of some sort, compared to 187; for all industries-the figure for MLH 486 was of course higher, reflecting the nature of national morning newspaper production, Ministry of Labour Gazette. April 1965.

314 DAVID BODDY

Percent age increase over

April 1056

01 / O

1 8

11 15 25 34 39 45 57

TABLE I 1

AVERAGE WEEKLY AND HOURLY EARNINGS, MALE MANUAL WORKERS, ALL INDUSTRlES AND MLH 489.'

OCTOBER EACH YEAR

Actual

d. 65.7 71.5 73.2 76.2 85.1 8 5.4 92.6 99.0

102.7 108.8

1956

1957 1958 1959 1960 1961 1962 1963 1964

S. d. Apr.235 4 Oct. 237 11

251 7

Weekly Earnings Hourly Earnings , -1 All industries I MLH 489

~~

s. d. I d. 257 9 58.1 276 0 58.9 2R0 I 62.6

All industries 1 M k F 1 Actual

256 8 271 I 290 8

553 6 ~ 646 332 5 I 67.1 333 2 1 72.7

306 10

334 1 1 362 2

317 3 351 9 1 77.7

385 0 I 8 4 4 411 6 91.1

364 10 81.0

Median as Median weekly percentage

average,weekly

Average

%%? I earnings value

Percentage increase over

April 19.56

Percentage of workers

earning below theaverage

%

8.8 11.4 16.0 29.5 30.0 4 0 9 50.7 56.3 65.6

MLH 489 as percentage of all industries

I ) / /O

121.4 116.9 118.0 1265 117.4 119.3 122.2 121.6 119.5

~ _ _

Source: Ministry of Labour Gazeffe.

TABLE 111

MEDIAN AND AVERAGE WEEKLY EARNINGS, MLH 489 AND ALL MANUFACTURING. OCTOBER 1960

I f s. d. 1 f s. d. 1 i?.8 1 111

MLH 489 I5 12 5 16 13 2 59.6

All Manufacturing I 14 17 2 I 15 3 3 I 98.0 I 55.7

Sources : Statistics on Incomes, Employment and Product.ion, No. 1, April 1962; Ministry of Labour Gazette, April and June 1961.

Since MLH 489 figures do not give a complete picture of general printing earnings, an attempt was made to construct a more realistic figure for the industry, using regional earnings and other information. Compared to the MLH 489 figure for average weekly earnings in October 1964 of 411/6, the estimated general printing figure is 443/1. As this constructed figure can only be approximate, and is only available since 1960, it is thought preferable to continue to use the MLH 489 figures, while bearing in mind the understatement of earnings in general printing which it involves.


The discussion so far has been conducted in terns of industry averages and a picture emerges of relatively high average earnings in the general printing industry. We can, however, look at the earnings structure more closely. To test the extent to which the average earnings figure reflects the earnings experience of workers in the industry we can compare the median value of earnings with average earnings. Table 111 shows a considerable divergence between the pattern in MLH 489 and in all manufacturing. Half the employees earn more than the median value, and half less. The table shows that this value is only 93.8% of the average weekly earnings in printing, compared with an all manufacturing figure of 98.0%. Also, the last column shows that 59.6:/, of the full-time employees in printing had earnings below the industry average-no other manufacturing industry exceeds this percentage. Of course workers whose earnings are below average in printing are often better off than those above the average in other industries. But the important point is that the arithmetic average earnings figure for the industry is influenced by those workers with very high average earnings (in 1960, 7% had average weekly earnings in excess of E25, as against 3% in the rest of manufacturing industry), which are well in excess of minimum rates. The earnings of many others must therefore correspond much more closely to the minima.

Further evidence of the disparity of earnings in the industry is provided if we examine average earnings by regions. Table IV shows that average earnings for the industry are exceeded in only two regions, and that some regions are substantially below the average. A particularly significant point is that in the Eastern and Southern region earnings are 15% or 20% higher than the lowest-earning regions, although they are operating on substantially the same minimum rates.*

The preceding paragraphs show the existence of a wide disparity between the highest levels of earnings and the lowest, Even if the (minimal) amounts of shift working are allowed for, the disparity far exceeds differences in minimum rates. Clearly, if forces are operating to raise earnings above the nationally agreed minimum rates, an effective incomes policy cannot ignore them. The disparity arises from overtime working at premium rates, and from local practices and payments constituting the familiar wage drift. These are discussed in turn.

Table V shows the significance of overtime working in printing. Though around 8.0 hours overtime on average are worked in both printing and the rest of manufacturing, only about 30% of operatives

Though the incidence of shift-work might have more impact on regional figures than on national ones.

316

October1960

October 1964

DAVID BODDY

s. d. s. d. s. d. s. d. s. d. 333 2 364 2 343 7 284 4 299 7

411 6 450 0 421 6 364 3 378 1 1

TABLE IV

AVERAGE WEEKLY EARNINGS BY REGION, MEN, MANUAL WORKERS, MLH 489

October1960

October 1964

1 Average 1 L. 8: S.E. 1 E. & S. 1 S.W. I Midlands

s. d. s. d. 304 0 321 10

367 9 398 4

s. d. 286 10

388 5

I Y. & Lincs. 1 N.W.

s. d. s. d. 293 6 275 2

363 8 341 9

MLH 486 MLH 489 All Manufacturing


Percentage Average Percentage Average working overtime working overtime overtime hours overtime horirs

45.6 8.3 53.3 8.5 39.9 7.9 43.6 8.0 32.3 8.0 345 8.2

North Scotland Walcs

TABLE V

OVERTlME WORKING, OPERATIVES. ONE WEEK IN OCTOBER EACH YEAR

I 1961

Percentage working overtime

MLH 486 42.6 MLH 489 1 38.6 All Manufacturing 31.1

Average overtime

holm

7.8 7.5 8 0

1962

Percentage Avrrage working overtime overtime hours

1963 1964 I I



in the latter work some overtime, while in general printing the figure is nearer 40%. This figure can be seen two ways. Either it is evidence of an acute labour shortage, or it may suggest that persistent overtime for nearly half the labour force has become ‘institutionalised’. Al- though the premium rates for overtime work are nationally agreed, the amounts worked are obviously the result of plant circumstances, and could constitute a ‘ safety valve ’ through which pressure for increased earnings, withheld at national level, could be released locally. Table V indicates that nearly 10% of the hours worked in the industry are paid at premium rates, with obvious effects on costs. I t might be argued that this is dictated by the nature of the industry, though this would be more convincing on the newspaper side than in general printing. In other industries, however, the systematic overtime which firms thought to be inevitable has been dramatically reduced by a re-appraisal of working methods and agreemenkg

Total weekly

Weekly earnings adiusted for overtime

Weekly wage rates Wage drift

earnings

TABLE VI

WAGE DRIFT 1960-64. MLH 489. MEN. MANUAL WORKERS

-~ 1960

1.8

1.9 0.9 1 .o

Percentage change from previous October

1961

5.1

5.8 7.0

- 1.2

1962 ’ 1963 1 1964 ]--.-

3.9 1 5.5 , I 7-0

3.9 5.0 7.0 4.1 I ::! I 4.6

- 0.2 2.4

Soirrces: The method is based on that used in Felner et a]., ‘The Problem of Rising Prices , OECD 1961, page 434. Earnings figures are from the Ministry of Lobour Gazette, and have been adjusted for overtime working, also using Ministry of Labour figures. Weekly wage rates are, as explained earlier, those of a hand compositor working outside London.

While overtime payments account for part of the gap between earnings and minimum rates in printing, wage drift is also in evidence. Wage drift may be defined as the difference between the annual rate of increase of wage rates, and the annual rate of increase of earnings after these have been adjusted for overtime earnings. The extent of wage drift in printing, has been calculated, and the results are shown in Table VI. The fluctuation, and even two negative values, in wage

Cf. Allan Flanders. The Fawley Productivity Agreements. Faber & Faber, 1964.

318 DAVID BODDY

drift, reflect the timing of wage settlements-this influence can be spread out by averaging the figures over the whole period as in Table VII. This shows that over the five year period to 1964, nationally agreed wage rates increased by 3.88% annually, but earnings increased by 514% annually.

Total weekly earnings Weekly earnings, adjusted

Weekly wage rates

Wage drift

for overtime

TABLE VII

WAGE DRIFT 1960-64. MLH 489. MEN. MANUAL WORKERS

126.0

125.1 119.4

6.3

Annual average

percentage change

5.20

5.14 3.88

1-26

Source : Table VI.

This suggests that however effective an incomes policy may be in influencing the rate of increase in minimum wage rates in printing, this would not necessarily check the pressures operating to raise earnings at the local level. Indeed there is the distinct possibility that these local arrangements could supersede the national ones if the latter were thought to be exercising too much restraint. If therefore there are strong pressures at the local level, it is important to know what these are and to examine their implications for the incomes policy.

To understand the implications for incomes policy of the earnings structure which emerged above, we need to understand its causes, and the mechanism which makes it possible in the printing industry. One possibility is that the disparity between indices of rates and earnings is merely a statistical illusion. The labour force in an industry may be gradually up-graded over time, so that proportionately more are employed in crafts and occupations which command higher wage rates. The wage rate index may not be sufficiently sensitive to reflect this changing occupational structure, and comparisons with earnings will be distorted, The extent of such upgrading in printing is small. Though the increased demand for colour helps to stimulate the gravure and


lithographic sections of the industry, where rates for some types of craftsmen are better than on letterpress work, the numbers involved are very small. Furthermore, movement is limited by the craft demar- cations of the industry, and growing demand in, for example, the gravure sector has often resulted in shortages, rather than an easy flow of workers to these crafts and away from others. The distorting effect of such movements on wage drift calculations in the industry does not appear to be great."'

Discounting the possibility of statistical illusion, we may consider each of the components of earnings drift. One which has received a great deal of attention is that arising from changes in conditions of production. This has been discussed mainly, though not entirely, in terms of piecework earnings. As a pieceworker raises his output, either by greater effort, or by using better methods of production, at the same piece-rate, his earnings will rise. This improvement in piece- workers' earnings, it is suggested, will stimulate pressure for similar adjustments for time-workers. The importance of this concept to earnings in the engineering industry has been debated at length in a series of articles in the Manchester School." In 1961, 11% of workers in printing were paid under some form of incentive scheme compared with 42% in all manufacturing industries.1Z There appears to have been a growth of new incentive systems recently (some of which would replace earlier schemes), mainly in larger firms, but piecework is probably still relatively unimportant for the labour force as a whole in general printing. Payments may also be made to workers as part of the sharing of the increased productivity arising from the introduction of new machinery or equipment. While for an individual worker this may only be an occasional ' once-for-all ' payment, rather than a regular ' drift ', over the industry as a whole it will be a continuing influence on earnings, though in printing productivity has been rising only slowly. What is particularly interesting, of course, is the size of the payments; these will usually be the subject of bargaining, under the influence of factors discussed below.

As well as these extra payments for the operation of more produc- tive equipment, other payments may supplement minimum wage rates. In printing these are colIectively termed ' house extras ', as distinct from the 'machine extras' related to the operation of equipment,

lo Cf. H. A. Turner, 'The Disappearing Drift ', Manchester School, May 1964, p. 158.

11 See for example S. W. Lerner and J. Marquand, 'Workshop Bargaining, Wage Drift and Productivity in the British Engineering Industry , Manchester School of Economic and Social Studies, January 1962; H. A. Turner, op. cit.; and other references in these articles.

l 2 Minisfry of Labour Gazerfc., September 1961.

320 DAVID BODDY

They may appear under a variety of names-merit money, good- timekeeping bonus, etc., but will often be simply referred to as house extras. Direct statistical information on these is not collected, but their payment is widespread, and with overtime payments, are probably the most important components of the earnings drift. Why are these payments made and by what mechanism do they operate?

The most probable explanation for most of the overtime and other supplementary payments is that they reflect an excess demand for labour, and that they are made possible by the collective bargaining system in the industry. It was shown previously that the earnings gap is most pronounced in three regions: London and South East; Eastern and Southern; and North Western. An important feature of the whole printing industry in these regions is the presence of national morning newspaper and/ or large gravure periodical plants, both of which provide opportunities for higher earnings. National newspapers train very few of their own apprentices, and the large gravure firms, like other large firms in the general printing trade, are sometimes prevented by the operation of the apprentice ratio system13 from training their full requirements of labour. Both groups of firms, therefore, draw labour from the rest of the general printing trade. With generally strong product demand, there are few firms in the general trade who want to lose labour under present production conditions. With recruitment strictly controlled, it may be necessary to offer extra payment to retain their staff, and/or to work overtime, both of which will result in earnings substantially in excess of minimum rates. While the competition for labour is less intense in other regions, it does exist, reflecting the control on recruiting and a buoyant demand for most forms of print.

While this suggests the main cause of the earnings drift in printing, it does not explain the mechanism by which it operates: an understanding of this is essential for policy. The proposed wage agreement examined by the Prices and Incomes Board was between the Joint Labour Committee of the British Federation of Master Printers and the Newspaper Society on the one hand, and the Printing and Kindred Trades Federation acting as a co-ordinator for the nine printing trade unions on the other. Though negotiations are conducted by the P.& K.T.F.. the agreements with the employers' associations are held by the individual unions, whose members must approve any agreement in a ballot, and who may also submit their own ' domestic ' claims to the employers.

The agreements at national level lay down the following:

l3 See below, p. 321.


(u) Minimum wage rates, and certain machine or process extras. (b ) The value of the Cost of Living Bonus. (c) Hours and holidays. (d) Overtime and shift bonuses. (e ) Craft recruitment ratios.

These national agreements, however, are supplemented by other agreements, which are the results of plant bargaining and which constitute a significant feature of collective bargaining in the printing industry. Members of a given union in each plant constitute a ' chapel ' which periodically elects as its representative the ' father of the chapel ' or FOC, analogous to a shop-steward. There is a strong tradition of plant bargaining in the industry covering matters of both production and remuneration. While agreements made with management by a particular chapel may be subject to ratification at branch level. this is often only a formality.

The power of the union at plant level rests on a number of factors. Effective union organisation, leaving only an insignificant non-union element in the industry is fundamental to the strength of the unions at plant level. But more important is the way in which this power has been used in collective bargaining. Very careful control is kept of the number of workers entering the industry. Except in a minority of firms, union membership is a pre-requisite of employment, and the number of people admitted to training and to the craft unions is determined by the nationally-agreed recruitment ratios. The arrangements in the ' non-craft ' union are rather different, but result in similar control over the supply of labour. Faced with generally strong product demand, employers regularly ask the trade unions to allow more labour to enter the industry. Small concessions have occasionally been made and more apprentices allowed in. One union however has com- pletely suspended the intake of apprentices to a section of its membership particularly threatened by technological change. Furthermore, apprentice intake to a firm is subject to a maximum number as well as the agreed ratio and some large firms claim this prevents them from training their full requirement of labour, That national morning newspapers train virtually no apprentices has already been mentioned. The supply of labour to a particular firm may also be controlled-members wishing to change their job, or to work for a particular firm, are generally required to get the permission of their union branch before doing so.

Collective bargaining is also used both nationally and locally to affect the demand for labour. Certain standard or commonly used machines are the subject of nationally agreed staffing requirements.

r

322 DAVID BODDY

In any particular plant, however, there will be machines and attach- ments not covered by the national agreements, as well as a wide variety of working conditions on types of output, each of which may be the subject of plant bargaining over the number of men required or the operating speed of the machine as well as the rates of pay. In such discussion, a union negotiator must inevitably be influenced in part by the prevailing local employment position of his union’s membership, and even in good times, the union’s corporate memory of the depression may linger on. Any new equipment installed is the subject of a plant agreement, though often this will merely reaffirm a widely accepted standard.

To summarise, the collective bargaining system in printing not only influences both the supply and demand for labour, but is also well established at both national and plant level. In conditions of generally strong product demand and scarcity of labour, employers have probably placed more emphasis on securing their labour force than on the costs involved. This is reflected in the estimates of an independent study of the industry that output per head at constant prices rose by less than 4% between 1958 and 1963, while earnings, adjusted for price changes, rose by twice as much. The rise in wage costs has not been offset by a fall in other costs. Though profits have fallen, they have been helped by the ability of the industry to raise prices. This is particularly easy where printing plants are operated by a publisher as a ‘ service ’ to the main business, and printing costs can be absorbed in the whole operation. The small amount of international trade in printed material also suggests that the industry is protected from overseas competition both by tariffs and by the reluctance of print-buyers to seek overseas suppliers.

A picture emerges of an industry in which strong market and institutional forces have resulted in a rise in earnings in excess of the increase in productivity. Profits have been falling, while prices have risen. The problem for the incomes policy in printing is the extent to which local bargaining has been influential in raising earnings. For while genuine efforts in the spirit of the Statement of Intent may be made at national level, it is less certain that such concern for the Government’s policy extends to local or plant level. The implication which this has for policy is that if it were limited to attempts to influence national negotiations, it would probably fail. The well established plant bargaining machinery would quite possibly act as a ‘ safety valve ’ through which pressures for increased earnings which had been dammed up at national level could be easily and effectively released. The Report of the Board is discussed in the next section.


IV

On 17th August, three months after the proposed wage increases had Its central finding

‘ provides for an increase on 17th May, 1965 of at least 3.5 per cent. on the basic rates, which is broadly the figure suggested in the White Paper on Prices and Incomes as appropriate for an annual increase in earnings. Since this will be followed in less than a year by a further increase, the rate of increase in basic rates is higher than is suggested in the White Paper. In recent years average hourly earnings in printing have increased at least as fast as hourly basic rates. If this relationship were to continue the increase in earnings by itself would be out of keeping with the White Paper.’

‘ such an increase in earnings would be justified under paragraph 15 of the White Paper only if there takes place a “major change in working practices ” making “ a direct contribution towards increasing productivity ”.’

On the central question of productivity, it reports the estimate of the independent study quoted earlier that output per head rose by about 4 per cent. (adjusted for price changes) between 1958 and 1963. It also quotes estimates given to the Board by firms in the industry that a more efficient use of manpower with existing equipment could raise productivity by between 10 and 25 per cent. Earnings. adjusted for price changes, have risen about twice as fast as productivity and profits have fallen despite higher prices. The Report is critical of the way in which the industry has been able to raise its prices in response to wage increases, particularly under wage/ price contracts. It similarly recommends the abolition of the Cost of Living Bonus at the next wage settlement.

Believing there to be scope in the industry for greater productivity, the Board does not feel that an increase in prices arising from the recent settlement would be justified. To help realise this potential productivity increase, it recommends that the industry’s Joint Manpower Committee should specifically include the more efficient use of manpower in its term of reference and should also be assisted by an independent chairman. As a further aid to improving efficiency, it proposes

National Board for Prices and Incomes, Report No. 2, Wages, Costs and Prices in the Printing Industry, HMSO Cmnd. 2750.

In the intervening period the Trade Unions had secured the agreement of their members to the proposed settlement, which therefore became effective from 17th May.

been referred to it, the Board issued its Report.’4* on the settlement is that it

and also that

SA

324 DAVID BODDY

consideration of an industrial pension scheme to help overcome fears of redundancy. There are also recommendations on profit information from private firms and on trade union amalgamations.

The Board is particularly critical of the wage/price contracts which it found to exist in the industry. Several customers have long-term contracts with their printers which provide for automatic adjustments to prices in response to wage increases. Having advised customers to be more critical of price increases, it is naturally opposed to anything which limits customers’ powers in this respect. As the practice is not limited to printing, the Board makes a general recommendation to the Government and to industry to review such wage/ price contracts.

There is a similar recommendation that the Cost of Living Bonus, which is a prominent item in printing wage rates, should be abolished. It is shown above that since 1959, CoLB payments had accounted for about half the increase in minimum rates Also, part of the accumulated CoLB has been consolidated into basic rates, on several recent occasions, thereby raising rates for shift and overtime working. Since the incomes policy will not be immediately effective. the Cost of Living Index is likely to continue to rise for some time. To the extent that wages in an industry rise automatically in response to this Index, it becomes more difficult to break the wage/ price relationship. Though the CoLB may re-appear in larger basic rates than would otherwise have been agreed, at least it will then be part of the total bargain related to conditions in the industry, instead of the automatic payment which it now is. I t is worth noting that in recent years, about 3 million workers in industry have annually received increases in basic rates due to sliding-scale arrangements based on the Official index of retail prices. The Board‘s recommendation on this point could have quite wide repercussions.

But the main emphasis of the report is on the possibilities of greater efficiency which exist in the industry, and which, if realised, would wholly or in part offset increased wage costs. Its specific recommendations on this particular point, however, leave something to be desired. They are basically that the industry’s Joint Manpower Committee should specifically deal with the efficient use of manpower, and be assisted by an independent chairman in securing major changes in working practices. It also suggests the consideration of an industrial pension scheme to remove security fears. But while management responsibility for change in the industry is clearly stated, the question of how this can be stimulated is left unanswered. Yet the central point in productivity bargaining is that management must have the initiative and deter- mination to negotiate the radical change of established practices.


The importance of the plant and its management as the unit for effective productivity bargaining has been shown elsewhere.'" I t stems from the nature of productivity bargaining, which requires that the trade union gives up some of the defences or advantages which it has secured to protect its members' interests. First, this involves an accurate assessment by the union of the concessions it is to give, and of the value or relevance of the benefits which it is to get in return. Precisely the same calculations will of course be carried out by management. This detailed consideration will usually only be possible within a single firm or plant, such is the variation in operating conditions throughout an industry. Second, the effective operation of the agreement depends on relations between management and union at the plant; these are likely to be satisfactory only if they have themselves worked out the agreement.

It may be asked whether this is not a pious hope in an industry such as printing, widely regarded as one burdened by a wasteful use of labour? The converse may, however, be true in that the institutions which, in one set of conditions produced the present agreements and practices, may, under different circumstances, operate in a way quite consistent with public policy. Productivity bargaining, particularly since the publication of Mr Flanders's book" has received considerable attention. While the concept cannot be discussed at length here, there appear to be three primary requirements for its successful outcome. First, that substantial potential savings exist to make the operation worthwhile for employer and employee-it will often involve considerable adjustments in attitudes and practices on the part of union membership, and this cautious opposition can be more easily won over if substantial gain in income, or other benefits, are possible. To the extent that labour is wastefully used in printing, then this requirement is met. Secondly, Dr. Hunter's analysis1s suggests the advantages of separating bargaining of this sort from major wage negotiations-the pressures there are too great for the detailed and delicate 'give and take' of productivity negotiations. We have seen that in printing national negotiations pro- duce adjustment to minimum rates, often in the form of two or three year agreements, so that plant bargaining could take place within this agreed framework. The third, most fundamental requirement for successful bargaining on productivity is that the two sides should have established both the machinery and the understanding at the plant level

l6 Allan Flanders, The Fawley Productivity Agreements, Faber & Faber, i964, especially pp. 238 onwards.

l 7 Op. cit. la Productivity Agreements. Scottish Journal of Political Economy, Nov-

ember 1964.

326 DAVID BODDY

which will permit detailed discussion of manning and operating practices in relation to wages. We have seen that precisely this form of organisation is well-established in the printing industry.

That this is not merely a theoretical possibility is shown by the fact that several printing firms have negotiated substantial increases in productivity with the unions. For example, in the national newspaper industry, where the problem of raising productivity is at least as great as in general printing, some firms have achieved major reductions in the numbers required to pack newspapers. For some years the union concerned resisted the mechanisation of this process, but in 1960 a national agreement was reached. This allowed their installation, provided that no regular employee lost his job as a result, although numbers could fall by natural wastage. Under a more recent agreement, management can reduce staff immediately mechanised equipment is installed: this, however, is part of a larger agreement, which in fact will ensure that jobs are available elsewhere for those displaced. Several companies are implementing this agreement and achieving staff reductions. One com- pany has negotiated a similar agreement with another union and secured a large reduction in the non-craft labour force in its press-room. In general printing, a major example of a productivity agreement is one covering the establishment of a new printing plant in London.19 As well as incorporating the most modern techniques, it will have manning scales, accepted by the unions, considerably smaller than in most other London printing plants and will also operate on two shifts. In return, the employees receive a minimum wage above the average for London, improved holidays, full pay during sickness and a pension scheme. The cost of the concession is expected to be more than paid for by the high productivity anticipated.

These and other examples of firms in the printing industry which have secured major improvements in productivity illustrate two points. First, that such improvements are possible in the industry and secondly, that they can only be achieved by detailed negotiations between management and unions at plant level. Even in the newspaper cases, where there is an outline or permissive national agreement, this must be supplemented by detailed negotiation at any particular firm to cover its own special circumstances.

The question then arises of why such improvements in productivity are so rare in the industry. The blame for inefficiency in printing is often put on the Trade Unions. Occasionally they have obstructed the installation of new equipment in national newspapers, and sometimes lay down manning scales in general printing for equipment, which.

l 8 See Financial Times, 11th February, 1965.


by raising the cost of using new machines may delay their introduction. This defence of their members' employment opportunities in printing is understandable. The skill and experience of their membership is highly specialised and would usually be irrelevant in any other industry, where the earnings would often be much less than they are in printing. They are naturally cautious of anything which may threaten their member's present position, especially his employment in the printing industry. The industrial pension scheme which has been proposed by the Board2" may help to overcome the objection to workers moving between firms and perhaps thereby losing accumulated pension rights. It would not, however, overcome the unions' concern about future employment in the industry as a whole. This will require the main- tenance of national full employment policies, and also convincing forecasts of the industry's future manpower prospects. The Joint Manpower Committee is expected to attempt forecasts of future demand for labour, but the machinery for controlling the supply of labour exists already.

While the above may contribute to an atmosphere conducive to greater efficiency, they will not by themselves raise productivity. That responsibility rests with management. The Board reports that management often seem to display a fatalistic acceptance of inefficient use of labour as part of the very character of the industry. It finds little evidence of top management being recruited from outside the industry, and also that the view is widely held that modem management techniques have no place in a craft industry. It is significant that those companies where a successful approach to productivity is evident are ones which have paid particular attention to developing their management re- sources, including recruitment from outside the industry.

In an industry such as printing where market and institutional forces have produced an earnings structure which would make central control of wages difficult if not impossible, the proper course for the Board or the Department of Economic Affairs seems to be to put their efforts into raising productivity, rather than trying to restrain earnings. Some firms in this industry have been able to make substantial increases in earnings which, being financed by greater productivity, do not violate price stability. Other firms, however, have been willing and able to pass on increased costs in higher prices. The problem for the Board or the Department of Economic Affairs is how the performance of the latter can be raised towards that of the former. Unfortunately for the incomes policy, the development of an environment in which unions accept change more readily, and in which more managements have the ability

"Though it would be necessary to ensure that such extra benefits do not conflict with the incomes policy. See para. 13 of Cmnd. 2639, op. cit.

328 DAVID BODDY

to initiate major changes in working practices, will not occur overnight. The Board hopes that an increase in productivity in the industry will offset the increase in earnings under the present settlement, but it is questionable whether its Report will significantly influence productivity in the time available.

228 9 231 9 233 9 245 0 250 0

University of GIasgow

(Hours cut to 41)

APPENDIX A

This appendix shows all movements since August 1959 in the minimum weekly wage rate of a provincial (Grade I towns) hand compositor. On three occasions (indicated by an asterisk) 7 / 0 of the accumulated Cost of Living Bonus has been consolidated into Basic Rates. The CoLB is adjusted each January. To men, 1/10 is paid for each point by which the Index of Retail Prices the previous October differs from the level for May 1962.

- 1959 1960 1961 1961 1961 1962 1962 1962 1963 1964 1965 -

August January January July September January July September January January January

Basic Rates

s. d. 214 9 214 9 214 9 214 9 226 0 226 0 226 0 233 0 2 4 6 0 259 0 242 0

Cost of Living Bonus

s. d. 12 0 14 0 17 0 19 0 19 0 24 0 29 0

*22 0 * I 3 2' * I 1 8

19 10

Minirniirn Rates

s. d. I 2% 9

zz ! I (Hourscutto40) 259 2 270 8 281 0 1

CoLB reduced by 1 1 10 after consolidation.

the incomes policy and the printing industry

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