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Compare And Contrast Strike Activities In UK Economics Essay

Introduction

Industrial relations is about discussing relationships among employers, employees and the government. It is dynamic and should be viewed in the changing context (Salamon, 1994). Generally speaking, it involves a wide range of topics and issues, such as labour movements, industrial actions, developments of trade unions, work councils and employers’ associations, collective bargaining, and government intervention and regulations (Salamon, 1994). Talking about the nature of industrial relations, it mainly focuses on employment relationships (Edwards, 1995; Ackers, 2002; Edwards, 2003). Within these relationships, there are industrial actions which consist lockouts, pickets, strikes, bans, work to rule, stop work meetings, go slow, boycotts, absenteeism, sabotage, turnover, and exclusion from decision-making in business (Fleming, 2002).

In this paper, I will mainly discuss strike activities in UK. The industrial relations structure in Britain is considered as “one of the most complicated in the world”; and this is partly because Britain’s advanced industrial revolution and development of trade unions (Clutterbuck, 1984, p. 11). Through the analysis of strike activities, we can see some change in the nature of industrial relations. The economic and political context for the period of 1975-79 and 2005-09 are quite similar, but there are some differences as well. During this essay, I will compare and contrast political and economic context and strike activities of 1975-1979 and 2005-2009; and then try to get conclusion of the change in the nature of industrial relations from the comparison and contrast. Firstly, I will talk about the global economic context and the economic context of those two periods in UK; and followed by analysis of the political context. During both those two periods, UK experienced economic recession, depression of manufacturing, increasing unemployment rate, soaring inflation, and global economic recession also associated with those two periods. There were government rotations during both periods. In the period of 1975-79, government intervention was strong and there were strong cooperation between trade union and government. Strike activities were in a degree of peak in both periods although strikes were much more severe from 1975 to 1979. I will then analyse strike activities from the aspect of working days lost, number of strikes, number of employees involved and sector differences. After this, I will talk about reasons of strike activities, and changes in the nature of industrial relations in UK based on those analysis.

Main Body

Economic Context

Global Economic Context

During the periods of 1975-79 and 2005-09, the global economy was in recession which influenced UK’s economy. For the periods of 1975-1979, world GDP per capita decreased by 0.02 per cent; however, during 2005-2009, the contraction was more severe, and it decreased by 2.5 per cent. The contraction of world GDP per capita was associated with decline on global investment, global trade and industrial production; and periods of 2005-09 declined much more compared with 1975-79 on all these terms (see table 1-4). For unemployment rate, it increased by 1.25 per cent in 1975, while it raised by 2.5 per cent in 2009 (see table 5). The global economic context was not optimistic within those two periods. The financial crisis in 2008 made UK’s economy even more severe. Both periods also experienced some degree of oil crisis. In 1973, OPEC increased oil price by 70 per cent, to $5.11 a barrel (Yergin, 1992). Since then, the oil price kept increasing until 1981; in 1975, the oil price was over $12 per barrel. The oil price increased from $ 30 in January of 2005 to $ 137 in July of 2008 (see table 6 and 7).

Table 1-5 (Source: Presentation on “Global Economic Crisis ", April 30, 2009)

Table 1

world GDP.jpg

Table 2 Table 3

global investment table.jpgglobal trade table.jpg

Table 4 Table 5

industrial production table.jpgworld unemployment rate table.jpg

Table 6

C:\Users\Ellen\Desktop\新建文件夹\oil price.jpg

Source: EIA

Table 7

C:\Users\Ellen\Desktop\799px-Price_of_oil_(2003-2008).png

Source: U.S. Energy Information Administration

UK Economic Context

Britain is the pioneer of industrial revolution, and it is one of the oldest industrialised countries. However, from 1975 to 1979, UK’s economy was considered as “de-industrialisation” (Hughes and Foot, 1981, p. 9). They also mentioned possible causes contribute to this “de-industrialisation”, such as decline of output and productivity in manufacturing industries, decline in net exports, loss of market share, and other industrialised countries’ relatively higher growth. Talking about the decline of manufacturing output, Hughes and Foot provided some data: from 1975 to 1980 (1975 as the base year), ferrous metals decreased by 35 per cent, and for the crude steel output only, output decreased by 40 per cent; leather goods declined by 36 per cent; shipbuilding was reduced by 33 per cent; and motor and vehicles’ output decreased by 27 per cent. There was decline in almost every industry of manufacturing. Because at that time, most British workers were manual workers, the decline of manufacturing industries directly resulted to the increase of unemployment rate. The unemployment increased from 1.06 million (4.2%) in 1975 to 1.60 million (4.8%) in 1979, increased about 51 per cent (Kennedy, 1982). From 2005 to 2009, manufacturing output declined by 12 per cent (National Statistics, 2009); at the same time, the unemployment rate in UK was 4.7 per cent in 2005; and in 2009, the unemployment rate arrived at almost 7.9 per cent (National Statistics, 2009).

From 1975-79, the net exports also decreased a lot. In 1970, manufacturing exports exceeded its imports about 59 per cent, while in 1979, the number became only 10 per cent; and for passenger cars only, exports fell by 18 per cent, but imports rose by 94 per cent (Hughes and Foot, 1981). However, from 2005 to 2009, UK net exports in general increased by 0.6 per cent, and its net imports increased by 4.9 per cent as well; for motor cars, net exports increased 7 per cent; but, manufacturing net exports overall decreased by 8 per cent; (National Statistics, 2009). When Britain experienced low productivity in 1970s, some industrialised countries went through a degree of growth. For example, from 1973 to 1979, the hourly labour productivity in North America and Italy increased about 20 per cent; and for Japan, France and Germany, the growth was about 30 per cent (Hughes and Foot, 1981). The lower level of productivity and output in 1970s made Britain lose market share in the global market. There was also soaring inflation and oil crisis in both periods.

Political Context

There was government-changing within both those two periods. In 1974, Labour Party won the general election, and from 1974-79, Labour Party was in charge; while in 1979, Conservative Party took over. For 1975-79, at the beginning, it just finished changing a new government; and at the end of this period, there was a changing government as well. The situation is similar for the period of 2005-09. In 2005, Labour Party won for the third time of the general election, and there were two presidents existing within this period, but both of them represent the Labour Party; and there will be an election in 2010 soon.

Government intervention and participation is crucial, especially during recession periods. Government had great impact on income policies in the period of 1975-79. There was a agreement of Social Contract between the government and TUC; and the agreement was that TUC agreed to limit wage increases to compensate costs of living and there was also a restriction on annual wage increases; in return, the government agreed to “restrain prices, increase public expenditure and take other measures to reduce unemployment” (Kessler and Bayliss, 1995, p. 27). There were also further Social Contract Phases followed. Government also introduced some laws and regulations in order to better supervise industrial relations. Through Trade Union and Labour Relations Acts in 1975, trade union immunities were reinstated; the Employment Protection Act in 1975 provided terms of collective matters and individual rights; the Advisory Conciliation and Arbitration Service, which duty was to promote industrial relations and encourage collective bargaining, was established with statutory power (Kessler and Bayliss, 1995, p.29-30). During 2005-09, there were also many regulations announced in favour of the labour force and trade unions by government. In 2005, the Employment Relations Act made improvement of trade union recognition procedure; the new Employment Equality Regulations in 2005 designed to prevent sex discrimination (Andrea, 2007).

During 1975-79, the government was still adopted Keynesian policies and intervene a lot (Fletcher, 1989). Because of the unpleasant economic context, government took many measures to diminish the negative effects. Government took actions in order to improve unemployment situation. It tried to increase labour demand by giving wage subsidies (eg. Temporary Employment Subsidy which subsidise employer £20 for every employee he kept; subsidies to firms that create more employment) and create jobs on public facilities (Cable,1982, p.265). Because of the high unemployment rate, government also took actions in 2009. According to the Director of Education and Skills Policy, government’s £500 million is allocated for recruitment subsidy fund to 50,000 new apprenticeships; government also encourages companies to offer job opportunities to young people and put great attention on providing basic skills to improve qualification of young people (Prosser, 2009).

Strike Activities

Measure of Strike Activities

From the tables below, we can see that the number of working days lost fluctuated from 1975 to 1979, but the general trend was increasing; it increased from around 6 million in 1975 to 29.5 million in 1979. However, compared with the period of 1975-79, from 2005 to 2008, number of working days lost decreased a lot compared with former period. It was 0.16 million in 2005 and reached a peak of about 1 million in 2007, but it decreased to 0.059 million in 2008. The number of strikes in 1975 was 2,282 and it declined to 2,080 in 1979; while the number increased from 116 to 144 in the period of 2005-08. For the number of workers involved, it increased 3.80 million from 1975 to 1979 while increased 0.42 million for 2005-08. Although the number of strikes from 1975 to 1979 decreased, both the number of workers involved and number of working days lost increased a lot, which indicated that there were larger scales of strikes happened. From 2005 to 2007, the breadth and duration of strikes raised more than 7 times together with relatively stable frequency. In general, breadth and duration of strikes in the period of 1975-79 were and increased much more than the period of 2005-08. It is notable that from 2005 to 2008, majority of working days lost in public sectors.

Table 8

Year

Frequency

(number of strikes)

Breadth

(number of workers involved, 000s)

Duration

(number of working days lost, 000s)

1974

2 922

1 626

14 750

1975

2 282

809

6 012

1976

2 016

668

3 284

1977

2 703

1 166

10 142

1978

2 471

1 041

9 405

1979

2 080

4 608

29 474

Average

2 310

1 658

11 663

(Source: Blyton and Turnbull 2004: 335)

Table 9

Year

Frequency

(number of strikes)

Breadth

(number of workers involved, 000s)

Duration

(number of working days lost, 000s—Priate+Public )

2005

116

93

(59+99)158

2006

158

713

(98+656)754

2007

142

745

(39+1002) 1 041

2008

144

511

(48+711)59

(Source: National Statistics; Economic & Labour Market Review 2006-08)

Analysis of Strike Activities

The economic context in 1970s was very terrible. As mentioned above, the steep decline in manufacturing industries and the global recession resulted in great increase of unemployment rate; there was also high inflation. Strikes were in a peak in 1974, but strike activities decreased a lot in 1975 and 1976 because the Social Contract agreed between government and TUC. In the Social Contract Phase 1 of 1975-76, they agreed to limit wage increase within £6 per week and no increase for people who earn more than £8500 a year; therefore, within those two years, the increase in wage was 14 per cent while the increase of the cost of living was 13 per cent (Kessler and Bayliss, 1995). Strike activities declined for those two years. However, for the Social Contract Phase 2 of 1976-77, TUC and government agreed to limit wage again up to £4 per week with some reduction of tax rate; and this resulted increase in wage of 9 per cent but increase in cost of living rose by 17.6 per cent (Kessler and Bayliss, 1995). According to Davies (1979), incomes policies successfully reduce pay disputes, but when the policy is removed, pay strikes will be more. For Social Contract Phase 3 and 4, there was no agreement between TUC and government, and government carried out the policies unilaterally; TUC was especially not satisfied with Phase 4 because the wage limit was impossibly low; because lack of power, government forced the policy in public sector by setting cash limits, and in the private sector by threatening of no export credit guarantees and withdrawal of government contracts (Kessler and Bayliss, 1995). Finally, as Davies said, after 1977, strikes began to resurgent, especially between 1978 and 1979. Incomes policies ended up with little effect and resulting in the winter of discontent and aroused widespread public sector strikes (Matthews and Minford, 1996). TUC and employees were highly unsatisfied with pay restraints, and as shown in table 10, most working days lost because of pay. From 1975 to 1979, strikes of public sector involved in railway, postal, health service, fire fighters, et al; and one of the most noticeable strikes was fire fighters’ national strike in 1977-78; those fire fighters claimed higher pay with an increase of 30 per cent; finally, it was settled with an increase of 10 per cent (Blyton and Turnbull, 2004). As you can see from table 11 and 12, for the period of 2005-08, most working days also lost on public services sector, and the main reason of strikes was also due to pay; in 2008, almost all of the strikes happened because of pay related issues. From 2005 to 2009, public sector strikes involved prison officers, railway and airline workers, postal workers, health care staff, et al. The fire fighters’ strike in 1977-78 was at national level. There were also national level strikes in 2005-09. For example, the Royal Mail strike from 2007 till now is at national level, and it is “the first national postal strike to be held since 1996” (Arrowsmith, 2007, EIROline, p.1). The Royal Mail strike is between Royal Mail and Communication Workers Union (CWU), and strikes are about fighting against company’s modernisation plans which involve jobs losses, reduced pay and pensions, increased workload and flexible workforce (BBC News, 2007; Kay, 2007). The government encourages CWU to make agreement with Royal Mail, but it takes no further actions to settle it down that according to Alarcon, it should take actions (Alarcon, 2009). Many strikes happened towards pension and pay, such as strikes of civil servants, health workers and teachers in 2005 and 2006 (Libcom, 2006). As seen from table 12, the majority of working days lost due to pay related reasons, and there was an increasing trend of this reason from 2005 to 2008. The strike took by prison officers in 2007 was due to this reason. According to Colin Moses (chairman of Prison Officers' Association), government refused to increase pay for prison officers, but there was an increase of £2.8 million of the average total pay of FTSE-100 chief executives in the private sector; It was finally settled by government’s agreement of increasing pay by 2.5 per cent (Sturcke, 2007). There are two unique features of strikes that exist only in the period of 2005-09. The first one is that there were strikes that against using foreign workers. Under the economic recession, employees in energy industries went on strike claiming over use foreign workers based on the cheap labour cost (BBC News, 3 February 2005). They claimed “British jobs for British workers” (Winnett and Jognson, 2009, telegraph.co.uk). The second feature is that, significant number of women involved in the strike on 28th March, 2006 which was “the largest ever women’s strike in British history” (March 30, 2006, Libcom.org).

Table 10 Working days lost by principal cause of strikes—UK (% of all days lost)

Period

Pay

Redundancy

TU matters

Dismissal and Discipline

Manning and Work Allocation

1975-79

84.2

1.5

6.5

3.4

5.4

(Source: Employment Gazette, various, as cited in Contemporary British Industrial Relations, p.232)

Table 11 Number of stoppages and working days lost: by private and public sector

Year

Working days lost (000s)

Stoppages

Private

Public

Private

2005

59

99

56

2006

98

656

71

2007

39

1,002

52

2008

48

711

69

Source: ONS Labour Market Statistics

C:\Users\Ellen\Desktop\working days lost-private and public.jpg

Table 12

C:\Users\Ellen\Desktop\cause of working days lost 08.jpg

Reasons of Strikes

There are many reasons that can cause strike activities. Considering reasons for strikes happened in periods of 1975-79 and 2005-09, they are passive economic context in UK and all over the world, such as high inflation rate (increase of inflation rate is higher than increase of wage rate) and high unemployment rate. High expectation of economy and employment can also result in strike activities. According to Salamon (1994, p7), because the economy situation in Britain in 1950s and 1960s experienced general “stable and full or overfull employment”, people expected this situation last. So when the economy went down beyond people’s expectation and arose their dissatisfaction, more strikes happened.

During the period of 1975 to 1979, government and TUC were in a relationship of corporation and they had agreement. It supposed to be peace and less strike activities. At first, strike activities declined a lot, but then, it increased again. Government’s unpleasant income policies were partly led to strikes. Therefore, we can see that government’s reactions to the economic situation which are not satisfied can also cause strike activities. If government took effective actions, strike can be significantly decreased, such as the decrease of strikes in 1976 and 1976; however, if actions/ policies are not effective and cannot be agreed by employees and their unions, the situation would be even worse and more strikes would happen. Government’s role is very important in industrial conflicts.

Through both periods, the majority reason of strikes is because of pay and pension related issues. So, we can conclude that pay and pension is one of the main reasons that cause strike activities. There are also other reasons which lead to strikes, such as redundancy, job loss and organisational issues. For example, the Royal Mail strikes during 2007 till now is mainly because company’s modernisation plans that involve jobs losses, reduced pay and pensions (BBC News, 2007; Kay, 2007).

The unbalanced treatment between public and private sectors also contribute to strike activities. For example, for some workers, such as teaching assistants and care workers, they usually work 15 per cent unpaid overtime and claim for fair pay (red pepper, 2010).

Nature of Industrial Relations in UK

The nature of industrial relations is about employment relations which include relations among government, employers and employers’ associations, and employees and trade unions (Edwards, 2003). Through those two periods, we can see some changes.

From 1975 to 2009, together with decline of strike frequency, breadth and duration, trade union membership also decreased. From table 13, we can see that trade union membership was increasing from 11.56 million in 1975 to 12.64 million in 1979; while it declined from 7.42 million in 2005 to 7.41 million in 2007; and in general, trade union membership declined a lot from 1975 to 2007 by 4.15 million. One explanation of the decline of strike activities and trade union membership is employment relations’ moving towards individualism (Bacon and Storey, 2000; Atkinson and Curtis, 2004). Since late 1980s and 1990s, there are more and more individual employment contracts between workers and employers (Brown, et al, 2000). Because of those individual contracts, there are fewer collective disputes than the past. Because of the decline of membership and increasing use of part-time and subcontract workers, trade union influence also decreased (Heery, 2004).

Table 13

Year

Membership (000s)

Density %

1975

11,561

52.0

1979

12,639

55.8

2005

7,418

28.3

2006

7,496

28.0

2007

7,411

27.6

(Source: Waddington 1992 for data from 1948-1987 Labour Force Survey data thereafter)

Government intervention now is much looser than that of 1975-79. Government policy shifted from Keynesian to Monetary policy (Pemberton, 2000). According to Pemberton, during the period of 1975-79, government officials tried to adopt monetary policy but actually failed to do so; the actual shift happened after 1979. There were Social Contracts from 1975 to 1979 which indicated that government still intervened a lot. However, UK now represents a liberal market economy which prefers less government regulation (Sullivan and Gershuny, 2004).

There has been a change on the balance of power. Because of the high unemployment rate and decline of trade union membership, there are fewer strikes (Hyman, 1999). When unemployment rate is high, people tend to value the job they have and are afraid of being dismissed by conducting strikes. In addition to this, Hyman said that the majority of employees also tend to solve problems with peaceful solution, such as negotiation with employers.

Because there is increase of strike activities on public sectors, Kelly and Hamann claimed that the strikes are not necessarily against employers; there is a great possibility that they are against government and government’s policies (2009).

Conclusion

For both periods of 1975-79 and 2005-09, there are global recessions; and UK also experience decline of manufacturing output, increase of unemployment rate. The former period had a decrease of net export while the latter period increased a little. Both periods experienced changing government at the beginning and the end; but government intervened more in 1975-79 than in 2005-09.

For strike activities, both periods are in peak, but from 1975 to 1979, strike frequency, working days lost and number of workers involved were much more severe than in 2005-09. In both periods, number of workers involved and working days lost increased, but number of strikes decreased in former period while increased in latter period. From 2005-09, most strikes happened in public sector and at the end of 1975-79, there were also widespread public sector’s strike; and there were both national level strikes happened. Another similarity is that the main reason of strike in both periods due to pay and pension related issues. Passive economic situation, unpleasant government policies and unfair treatment between sectors can cause strike activities.

From those two periods, we can see the decline of trade union membership and its influence, less government intervention, change on balance of power and possible strikes against government and its policies.

Although from those two periods we can see some similarities and some differences, it is not accurate to conclude continuity or change in the nature of industrial relations according to those two periods only. Because of path dependency, events happened today relate to the past history. Therefore, the more years of the analysis are involved, the more accuracy the analysis will be. 3792

Appendix

Manufacturing output from 2005-09

C:\Users\Ellen\Desktop\output 2005-09.gif

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