Bright spots in Britain
It was British coal miners who were largely responsible for bringing down the Tory government of Edward Heath in 1974. So it is particularly noteworthy that the government of Margaret Thatcher has managed to stand up to the coal miners' union, among the most militant in Britain. The recent decision of the miners to accept a 9.3 percent pay rise and to reject a nationwide strike is a major victory in Mrs. Thatcher's efforts to bring down inflation and restore economic growth.Skip to next paragraph
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What is happening in Britain in fact has its reverberations in the United States, where Detroit auto workers for the first time have agreed to renegotiate wage contracts. The reason is plain. Generous wage settlements year after year have contributed to the industry's inability to compete with Japanese imports and to its consequent decline. Labor thus seems prepared to do its part in economic recovery by moderating its demands.
Significantly, the British miners even defied the radical leadership of the National Union of Miners to accept the smaller pay increase. Perhaps they saw some handwriting on the wall. Studies done by British economists show that it would be cheaper for Britain to import coal, even American coal, than to produce it. If the miners had opted for a strike, such a course would no doubt be promoted. The workers could have eventually put themselves out of a job.
It is not only the miners who have chosen the path of restraint, however. Over the past year wage settlements have been down in Britain, in many cases below the rate of inflation. There has also been a new willingness to bargain for jobs: one union, for example, gave a Japanese firm a no-strike pledge in return for opening a factory in Britain.
Will the trend last long enough to boost labor productivity and spur the growth of exports -- the key to reviving the British economy? Due both to labor restraint and management reforms, some improvement already is visible. Output per workers has begun to rebound, especially in manufacturing. British labor productivity remains considerably behind that of other industrialized countries, but the turn upward is encouraging.
For all Prime Minister Thatcher's toughness -- some would say because of it -- the British economy remains beleaguered. Unemployment stands at 12.5 percent. Interest rates are extremely high, partly because of continuing high rates in the US and partly because of huge government borrowing. Pressures are growing even among the Conservatives for a reflation of the economy and, if this happens , the demand for higher wages will again grow. Britain is thus far from out of the woods.
But a constructive change of thinking appears to be taking place. Mrs. Thatcher's economic policies are controversial, to be sure; they may yet bring down her government. But the pain of economic austerity appears to be altering the traditional practices among both labor and management that helped destroy British competitiveness abroad. The coal miners' settlement is but the latest sign of a hopeful new attitude.