As a member of the Dutch liberal party the VVD who was studying in the UK during the last election, I was pleased that the Lib Dems formed a coalition with the Conservatives. Yet I feel that a strategy that distinguishes the party from Labour is just as important as one that distinguishes the Lib Dems from the Tories.
Instead of stressing coalition differences, the Lib Dems have the opportunity to show that they are a true alternative to Labour. The Lib Dems should stress that, unlike Labour, they protect ordinary workers by deregulating the labour market, and do not tend to just burden the unionised workforce with extra regulation. Labour unions do not represent all workers (only 26% of all salaried workers are union members (OECD)), nor do they represent the unemployed. Yet the Labour Party is likely to tend to this minority’s needs.
In total 85% of the Labour party’s donations come from the unions. 62.4% of the union members work in the public sector, where 64.5% of the wages are collectively agreed.
In the private sector, where 80% of the workforce works, just 16% of the wages are agreed collectively. These unions, despite being relatively small, have a huge amount of political power, not only because they fund Labour, but also though their election of the party’s leader, Ed Miliband. This power means that Labour is more likely to back the labour union member, rather than the majority of the workforce outside the unions.
This can have a devastating effect on the protection of workers outside the labour unions. Many of the workers outside the labour unions are paying for public sector pensions though general taxation. Additionally, many unemployed are not allowed to take the place of unionised workers who are striking.
Most devastatingly, unions are generally in favour of both immigration controls and red-tape, which hamper entrepreneurship, job-turnover, innovation and growth. Growth and innovation bring new jobs outside the unions’ control at the expense of old unionised jobs.
Collective bargaining, and other employment protections makes it expensive to get rid of workers. This not only slows the innovation process which is critical for growth, but again makes jobs more expensive as the entrepreneur takes the possible future cost of firing a worker into account. The entrepreneur will have an incentive to innovate in such a way to avoid these firing cost. This means that shops may choose self-sevice-check-out systems at supermarkets instead of employing more young workers.
To protect the liberties of the ordinary citizens, to allow ordinary workers to be innovative, entrepreneurial, and free from ridiculous regulation, the Liberal Democrats must make sure that they are the party protecting ordinary workers. The Lib Dems should emphasize the fact that the Labour Party is no more than a Labour Union creating a welfare state for union workers at the expense of ordinary workers and society at large.
* Henry Gruijters is a member of the Dutch liberal party, the People’s Party for Freedom and Democracy (VVD).
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As a proud member of the NUJ – not affiliated to Labour – I wanted to come back on some of these points.
Traditionally the unions were backers of the Liberal Party in the UK, the principles of unionism can be entirely compatible with liberalism. Put simply, they are a mechanism to allow people to have *a* (note, not *the*) say in a huge part of their lives. There are very few workers who have enough sway to actually negotiate over their working conditions in their own right – to pretend otherwise is simply fiction. Standing up for workers means giving them *more* say in their working lives, not less.
What we should be doing is working to “take back” the unions, supporting and training liberal TU officers who’re interested in standing up for their fellow workers’ working conditions, not furthering their left wing political agendas.
The reason why so few workers are unionised in the private sector is because the political agendas and posturing of the union bosses are not what people want – that is a huge opportunity.
“Instead of stressing coalition differences, the Lib Dems have the opportunity to show that they are a true alternative to Labour.”
Excellent article generally, and in particular the point quoted above, an argument i have been labouring for some time now.
The Lib-Dem’s as a whole need to be more ambitious, and not settle for being the eternal bridesmaid of left-wing politics.
What utter nonsense.
Where do the benefits achieved by the millions of ordinary people who are members of trade unions “have a devastating effect on the protection of workers outside the labour unions”? Please name them.
The reality is that in most unionised workplaces, non-union members benefit just as much if not more from the gain won by the union – be that in terms of pay and conditions, ensuring a safe working environment or providing employment rights advice when there are collective problems faced by all workers. Non-union members benefit from all of this whilst not paying any union subscription, so in many cases, they directly benefit more than those who are giving their time and/or money to improving the situation for everyone.
As an entrepreneur it isn’t ‘red tape’, or the evil unions who are holding me back, people who work with me are human beings and sometimes treating them as such can put challenges in one’s path.
The problem is the economy, which you have helped the Tories tank.
Also, the idea of replacing striking workers with ‘the unemployed’ is so massively outrageous it’s untrue. That is pure Thatcherism. Funny, I always thought the Lib Dems were hot on civil liberties and rights, striking being one that people around the world have fought for tooth and nail. This article is offensive even by your standards.
What measures to you suggest to correct the power balance between employer and employee?
After all, that’s why unions came into existence.
PS Do Lib Dems really think like this? This reads as extreme free market libertarianism.
Excellent article, agree totally. I’m not against the concept of unions, more the way they operate in this country. I actually think the Labour party are trying to distance themselves from the unions but that it is hard for them to do so. The author is correct that private sector workers have to be represented more by the unions.
The private sector workers in unions I believe are mostly from previously nationalised industries, i.e. British Gas? I would like to see stats on this but that is my belief. It seems the unions are primarily concerned with public sector workers which is divisive and short-sighted.
Predictable pro- bosses anti- union rhetoric from an extreme right wing liberal. Trade Unions, particularly those in the public sector, improve the lot of ALL workers by constantly raising the minimum pay, conditions and humanity with which workers are treated by their employers and therefore raise the bar for the tightfisted private sector. No wonder predatory capitalists hate trade unions and refuse to allow them anywhere near their businesses. If the Liberal Democrats really want to help British workers they should stop shoring up the Tories who are the puppets of predatory capitalists and the City. The sad thing is that so many Liberal Democrats would appear to agree with Gruitjers right wing views. But then, in government so many Lib Dem MPs are implementing them anyway. If the Liberal Democrats embrace the ideas adumbrated above they will be seen to be even more out of touch and their recent 8% showing in the polls will be seen as a high water mark. The above article shows just how difficult it is going to be for socialists and members of the Labour Party to work with the Liberal Democrats. If the Liberal Democrats accept Gruitjers’ ideas which are inimical to trade unionism and the employment rights of ordinary workers during these turbulent economic times I predict that at the next General Election the entire Liberal Democat Party will be able to travel to the House of Commons on a tandem.
First of all I do not know any union that favours immigration controls. I think it is very much to the credit of the unions that they do not, they may well be out of step with their members on this.
Secondly I do not see how any political party can represent the interests of workers if they favour making it easier to dismiss them. There are plenty of employers who terrify their workforce by threatening to sack them. Workers have a right not to be unfairly dismissed. We already have a light-touch regulation of workers rights in this country, yet economic growth over the past 4 quarters was just 0.5%, compared to an EU average of 1.6%. So we are not uncompetitive because of lax labour laws.
We did have lax Labour laws in the Victorian times when it was allowed to send children up chimneys. On the whole Labour laws have improved the lives of working people since then. Where there is exploitation it is because the laws are too weak rather than too strong.
Perhaps the author can inform us how much working class support VVD get in the Netherlands, given that they would presumably be grateful for them sticking up for their rights? Personally I think I would prefer to read an article by the other Liberal party in the Netherlands, D66.
“What we should be doing is working to “take back” the unions, supporting and training liberal TU officers who’re interested in standing up for their fellow workers’ working conditions, not furthering their left wing political agendas. ”
Agreed.
Whilst there are plenty of grass roots union activists who do see their role as the above, they are undermined by the headline grabbers who use their union as a tool to further their hard left aims.
@ Geoffrey Payne
“First of all I do not know any union that favours immigration controls. I think it is very much to the credit of the unions that they do not, they may well be out of step with their members on this.”
Indeed. That is because trade unions, particularly those affiliated to the Labour Party are internationalist in their perspective. They are also democratic institutions. If the members opposed immigration controls they would remove their leaders. By the way, I think that people posting on this site should know that according to Wikipedia the Dutch Liberal Party (VVD) wants to minimize the option of joint citizenship and wants social security fully open only for Dutch nationals and migrants would have to integrate to become citizens.
I found this article and support from within the LibDems very depressing. I have worked the majority of my life in the private sector with just a couple of years in the public sector and have no axe to grind either way.
It seems that this Coalition Government’s strategy is based on a cynical and dismissal attempt at setting private sector workers against the public sector. Even Clegg has fallen into this trap with his early attacks on ‘gold-plated pensions of the public sector’. But employees of the public sector have always contributed to their pensions. This by the way is not necessarily true for the private sector. I remember several years ago receiving a pension contribution ‘holiday’ yes, for the PRIVATE sector pension, as the tax man thought the scheme was too rich. Sadly, this turned out not to be the case. But that is not the fault of any worker on the public sector.
This Coalition Government has adopted a deliberately divisive strategy, in the face of our economic woes. Typical of the Thatcher Government where all that was private was ‘good’ and all that was ‘public’ was poor. We deserve better Government that this.
I am no apologist for trade unions or the Labour Party. Like any organisation they have their flaws and have made their fair share of mistakes. But to suggest that the current economic situation is the fault of low paid public sector workers and ‘over-protection’ following years of minimal industrial disruption compared to previous decades where strikes were an every-day event is simply ludicrous.
Equally to suggest that the ‘fix to our woes’ would best be achieved by a raid on employment regulations beggars belief. It’s political dogma –gone mad!
Do we really believe that following our partners in Europe re the Social Chapter was a bad thing and that it has just come to light? Did the LibDems campaign against the Social Chapter at the time? Do we really believe that the advances in worker’s conditions would have been better advanced without unions and collective bargaining?
Now we have the irony of a Coalition Government banging the drum on the need to wipe away employment protection as a solution whilst having the nerve to blame Labour for failing to introduce regulation into the City. Perhaps the author the article fails to appreciate the financial ties between the Tories and the interests of the City. By association, the LibDems will become tainted by this association IF they continue to support such a strategy and continued attack on the public sector. If it wasn’t so tragic it would be funny.
It has always been the perverse logic of the Tories that, come what may, any economic woes are either the fault of workers or can only be solved by attacking these workers. They have a pathological hatred of unions. Well that’s in part why I would never vote for them.
But for LibDems to be travelling down this same road hand-in-hand with the Tories whilst remaining silent, let alone offering vocal support as per this article, is a matter for profound concern.
Of course everyone is entitled to their views. In my opinion if the views expressed in this article are really those now shared by the LibDems as a party then I can only feel saddened as to the shift and lurch to the right, ditching their moral compass in a bid to hold on to the trappings of power seemingly at all costs. What a shame.
I find the idea that Labour is the ‘captive of the unions’ a bit strange. Labour, in its thirteen years in power, did not roll back any of the Thatcher era TU laws. Now it is in opposition, Miliband is observing a rather awkward position towards any public-sector strikes – mild condemnation. The fact is that the labour movement gets very little in return for its funding of the Labour Party, except for the hope that they will keep the Tories out. Labour is stringing them along, and a lot of the independent socialist elements within the movement seem to have realised this.
“I think that people posting on this site should know that according to Wikipedia the Dutch Liberal Party (VVD) wants to minimize the option of joint citizenship and wants social security fully open only for Dutch nationals and migrants would have to integrate to become citizens.”
I have absolutely no problem with either of those positions, but then i am not in any way an internationalist.
@Jed – presumably not also a member of the Lib Dems then.
nope, nor anyone else, just a self-confessed fan of classical liberalism of a right-wing bent.
I’ll start with a general comment after which I will respond to specific comments. Economic theory tells us that collective bargaining can be a good thing. It forces employees not to renege on implicit contracts, in return workers are less likely to shirk. In practice, however, union leaders often have completely different incentives from the workers they should represent. Currently many Unions have become a political entities, not society institutions.
@ Ben, some specifics may be workers who are not union member, but are captured by a collective agreement may prefer a more flexible contract and with a higher wage (don’t have any illusions that employers do not take the cost of collective bargaining into account).
@ Mat Of Kilburnia
Indeed workers have the civil liberty and “right” not to work (strike), yet this must also imply that the unemployed have the right to work.
Mat Of Kilburnia
Also, the idea of replacing striking workers with ‘the unemployed’ is so massively outrageous it’s untrue. That is pure Thatcherism. Funny, I always thought the Lib Dems were hot on civil liberties and rights, striking being one that people around the world have fought for tooth and nail. This article is offensive even by your standards.
Yes, it always used to be the case that many members of the British Liberal Party found it odd that we were linked in Europe with parties like the Dutch VVD. It’s a historical thing. In most of the rest of the Europe the equivalent of the British Conservative Party (a party whose prime purpose was the defence of the aristocracy) disappeared or never really formed. Instead, you had “Christian Democrat” parties, which tended to be socially conservative but economically centrist. In Britain the Conservative Party prospered through several rounds of the more right-wing elements of the Liberal Party moving over to it. The result was that what was left of the British Liberal Party by the second half of the 20th century was its economic left wing. In the rest of Europe, secularisation meant the original main purpose of the old Liberal parties, fighting the social conservatism of the Church, was over, and with the Christian Democrats absorbing many economic centrists, the Liberal Parties tended to attract economic right-wingers. It’s probably significant too that the old British Liberal Party had strong links to Christian non-conformism, and as a result was in some ways more like European Christian Democracy.
How the British Liberal Party viewed liberalism is illustrated by its slogan “none shall be enslaved by poverty, ignorance or conformity”, which was considered by most members the best summary of its aims at the time it merged with the SDP to form the Liberal Democrats. I do not know the history of that slogan, but it seems to have been written pretty deliberately to counter the “economic liberal” idea that the only bounds to freedom that matter are those caused by the existence of the state and the taxation needed to support it.
I would certainly agree that anyone who thinks the best way to protect workers is by making it easier for bosses to sack them has a pretty strange idea of freedom. I agree that Mr Gruijters sounds to me to be pretty much what we in Britain would call a “Thatcherite” and so his natural home in Britain would be the Conservative Party. His line comes straight from 1980s Thatcherism, it does not even take into account how much has changed since then, so trade unions now are no longer anywhere near so dominant as they were when Thatcher became PM.
At any rate, the experiment has been done, since Tony Blair changed Labour onto a Thatcherite party as well. Has it made Britain a more free nation? I say no. Has it made Britain a wealthier nation? Again no. The history of Britain in the past few decades shows what nonsense Mr Gruijters’ ideas are, we have tried them, they don’t work.
As I have said elsewhere, the reality of this “be free to sack anyone you like when you like without reason” mentality is to give an economy driven by fear. People driven by fear are NOT FREE, Mr Gruijters. So, I say, whatever your party’s history and name, you are NOT a defender of true freedom and true liberalism for anyone but the rich, and if you were an honest man you would use the name that best applies to you, which is “Conservative”. The economy your ideas leads to is not an entrepreneurial one, but one which encourages head-down box-ticking jobsworth attitudes, because sucking up to the bosses and doing whatever they say, however nonsensical and wasteful that may be is how ordinary people work under that system. Without some degree of social security, unless you are one of the super-rich with wealth and contacts to fall back on, you cannot afford to take risks, not even the risk of changing jobs in the world you want, Mr Gruijters – who would leave a menial job where you get on well with the boss for another where you run the risk if the boss doesn’t like your face, you will be sacked and never work again because who employs someone who was sacked form their last job?
Our economy in Britain, Mr Gruijters, has taken on your ideas more than any other in Europe, and for a growing number of people the result is a miserable hell, and we have not even become a particularly successful country economically after all that. What ROT, you write, Mr Gruijters, what utter ROT.
This article is thirty years behind the times. It’s true that we once had over-mighty and excessively politicised trade unions. Thanks to Maggie (with some further help from Tony), we now have the diametrically opposite problem of over-mighty bankers and over-mighty big business, with weak unions unable to provide adequate checks and balances. Have “liberals” not noticed?
And talking about 30 years ago, the deeply mendacious phrase “protecting workers by deregulation of the labour market” sounds as if it came straight out of Orwell’s classic, “1984”!
Nothing much to add to Matthew Huntbach’s typically excellent post other than to note that according to the OECD we already have the most deregulated labour market in Europe and of developed nations only the US and Canada have as little employment protection and rights as we do.
@Matthew Huntbach
Welss said, again.
@ AndrewR and @Matthew Huntbach
Human capital is a vital part of the production process. Firing a productive worker simply because you do not like his face is like stopping a profitable machine from running. It is a bad business decision. Evidence from the German Economic Review 7(3), when comparing the deregulated Swiss labour market and the regulated German labour market, suggest that a more deregulated labour market encourages more risk taking and training by both workers and employers.
The reason the deregulated British labour market is not working properly at the moment is due to the economies heavy dependence on public debt spending, which is still influence by politicised trade unions. Other countries with a excessive public spending and a regulated labour market have worse outcomes; Portugal, Italy and Greece.
Completely agree with Tabman and Grammar Police. “What we should be doing is working to “take back” the unions, supporting and training liberal TU officers who’re interested in standing up for their fellow workers’ working conditions, not furthering their left wing political agendas. ”
It’s hard work being a LibDem councillor AND a TU steward in a non party-affiliated TU that consistently bombards all of its members nationally with Labour spin whether they have signed up to it or not. But I do it because we need to get in there and challenge the rhetoric, champion employees’ rights and seek to represent the views of all the membership, not the vocal few. Many workers join the unions for legal backup to safeguard their employment rights, it’s a form of protection rather than a party political gesture
Interestingly one of our members has resigned today because he thinks a strike is a selfish action when everyone in the country has to share in the situation left behind by the last Labour government……
Couldn’t disagree more with the article, and am glad to agree with most of the comments. Liberalism as I understand it is about removing privileges and power imbalances. Unions, when they do their job properly, move power away from the employer and towards the employee. The original poster seems to want to move power from employees and towards employers – *increasing* inequality.
If we have bad unions at the moment, the solution is to set up better ones, and to reform those that are existing, not to get rid of them altogether.
Ruth W
“Completely agree with Tabman and Grammar Police. “What we should be doing is working to “take back” the unions, supporting and training liberal TU officers who’re interested in standing up for their fellow workers’ working conditions, not furthering their left wing political agendas. ”
Your precursor party, the Liberals wouldn’t have lost the affiliation of Trade Unions at the beginning of the Twentieth Century if Churchill, Lloyd George and other prominent Liberals had not sent in the troops to break strikes. Those actions led to the alienation and antagonism of the Trade Unions towards the Liberals and the Trade Unions’ subsequent affiliation to the Labour Party. Without the affiliation of those Unions the Labour Party would not have not have come into existence. That is the historical reason for the Labour Party’s bond with the trade unions. Then, as now, Liberals would always seem to prefer to serve the interests of capital rather than the workers. As for the “vocal few” on the left in Trade Unions as you call them, they are the ones who are in the vanguard of improving worker’s pay and conditions. The paradox is that those working class Tories and Boss’s poodles who criticise them are always very happy to take advantage of the improvements won on their behalf by those so called “vocal few”. Unless the Liberal Democrats are prepared to serve the interests of workers and not of capital I see no possibility of them ever “taking back” the Trade Unions.
While the article makes some interesting points, it does so only in the first third. As many have pointed out, it doesn’t represent the LD party and doesn’t really line up with LD views at all.
The title is still true. But it’s also true that unions aren’t all that important to workers in the UK any more. When unionisation was new, they played a major role in improving conditions – but today, UK workers are mostly protected by legislation and the government. Unfair dismissal isn’t something that’s dealt with by union action, it’s dealt with by employment tribunals.
Even pay isn’t really improved by unions – remember that recent study which observed union strikes in the UK were often losing propositions for workers, whose pay gains were less than the amount of money they didn’t get paid while on strike.
I’m not saying that I’m opposed to having unions – they’re still a good idea – but I’m not too impressed with the way they’ve been working lately, and they just aren’t as important as they used to be.
@ Andrew Suffield
“but today, UK workers are mostly protected by legislation and the government. Unfair dismissal isn’t something that’s dealt with by union action, it’s dealt with by employment tribunals.”
You really are completely out of touch. Trade unionists know that they can’t just rely on legislation which can be overturned by the Tories as soon as they are returned to office. This Tory led coalition is proposing to change the employment legislation so that workers can only sue for unfair dismissal after two years instead of one year. The Liberal Democrats and the Tories are also making it easier for bosses to sack workers on a whim and are going to deny workers the legal aid with which to defend their rights in the courts. Serving the interests of capital once again. Very little difference between you and Gruijters in that respect.
@MacK
I think it is you who is “out of touch”.
How can you justify unions such as the RMT threatening and, indeed, taking industrial action when cases are already before an Industrial Tribunal? That’s rather trying to have your cake and eat it.
Talking of RMT, can someone explain what is morally defensible about (say) Tube Drivers, who are currently paid £46,000 pa (according to the Guardian – http://www.guardian.co.uk/uk/2011/oct/03/tube-drivers-salaries-50000 ), securing a pay rise of £10,000 over 4 years?
Assuming that is down to “union muscle” how can that be defended? And what is the alternative?
Or is “might” always right?
You really are completely out of touch. Trade unionists know that they can’t just rely on legislation which can be overturned by the Tories as soon as they are returned to office. This Tory led coalition is proposing to change the employment le
Simon, considering how much it costs me to get a ticket on the Tube, I think it would be reasonable for the drivers to get 100K pa. Just so long as the drivers realise that there will come a point where its cheaper to make the trains driverless… as they increase their pay and the frequency of their strikes the sooner that day will come.
Oh, rubbish. The current legislation – including the whole system of employment tribunals for dealing with unfair dismissal – mostly predates Thatcher. If she couldn’t overturn it, no Tory ever will.
Pure fantasy.
There is no legal aid funding for employment tribunals in England and Wales, therefore it cannot possibly be cut. You’re just making things up now.
Directgov on employment tribunals
“What is morally defensible about (say) Tube Drivers, who are currently paid £46,000 pa …..securing a pay rise of £10,000 over 4 years? Assuming that is down to “union muscle” how can that be defended? … is “might” always right?
Well now, what about bankers’ bonuses? Assuming that is down to “financial muscle”, is might always right?
I think the answer is that might generally wins the day, whether we like it or not. It is morally reprehensible in the case of the bankers. It is also morally doubtful in the case of the Tube drivers, though not exactly in the same league.
How can we get away from “might is right”? Well, one answer could be to revert to old-fashioned Liberal principles, and stop slavishly supporting one class party against the other.
Another should be to accept that an equitable balance of powers between business and unions is the ideal. Thirty years ago, unions had too much power. Today, it is business which has too much power.
I think we should go away from this worker versus business mentality. The Liberal Democrats should encourage mutually beneficial employment relationships. Only morons among managers believe that a worker’s effort does not count. The simple fact is that happy workers make more productive workers.
The fact that the Labour Party is dependent on unions, and unions, themselves, have become political entities has fuelled the need for a public perception that there is an eternal struggle of workers versus business. This is simply not the case.
It would be more beneficial if the Lib Dems realized that most workers are not unionised and prefer employment relationships that reward them for their effort. With a high burden of regulation, employers take the cost of firing inappropriate workers into account. This cost is a direct burden on the reward going to productive workers and increases the likelihood of the unemployed becoming long-term unemployed.
This article is the usual ranting diatribe that comes from so many on the dominant Thatcherite wing of the Liberal Democrat party. Matthew Huntbach makes excellent points based on his thorough analysis of life for those on low wages. I will pick out one particular aspect of this article for criticism: the writer refuses to analyse why so few private sector workers are members of unions. The primary answers are that employers are allowed to refuse to recognise trade unions and that decades of anti-union propaganda from the press have discouraged workers from joining the much-demonised unions. For any private sector workers who feel that they need more protection (and they need it) the answer is simple: join a union and support it. I note that the writer only writes critically of working-class unions. He expresses no opinions of the unions of the wealthy: in law, medicine, surveying, accountancy and a host of middle-class jobs there are “professional unions” that combine to protect their privileged members interests, to restrict acccess to those jobs and to increase their high salaries. Someone who truly believed in free-markets and de-regulation would surely have a critical opinion of these privileged bodies.
Ed Shepherd, I agree that “professional unions” are an issue as well. Individuals must be allowed to compete with these professions with privileged positions. (A competing legal system, which individuals could opt to use would be a good step forward).
I do not believe creating more of such rigid employment relationships and excluding many people form a host of other opportunities through unions is the right response.
“I think we should go away from this worker versus business mentality.”
Shame the rest of Henry Gruijters postings suggest exactly that mentality.
“The Liberal Democrats should encourage mutually beneficial employment relationships.”
Agreed. Why no mention of common ownership as the best way to deliver that relationship?
“Only morons among managers believe that a worker’s effort does not count.”
Sadly, Henry, some managers are morons. Doesn’t an employees have a right to protection from a moronic, bullying, prejudiced manager?
@David Allen
“It is also morally doubtful in the case of the Tube drivers, though not exactly in the same league.”
I’m interested in your use of the word “doubtful”, David. Are you not sure? How much should Tube drivers be paid? How about as much as is needed to recruit and retain decent ones.
I really can see nothing moral (no “doubtful” about it) about using union “muscle” to secure £46,000pa salaries which I assume are well in excess of the market rate. And I really think you should unequivocally say so too.
“Another should be to accept that an equitable balance of powers between business and unions is the ideal. Thirty years ago, unions had too much power. Today, it is business which has too much power.”
I really don’t follow that. Are you saying RMT (for example) has too little power these days? Surely it is the other way round.
@ Andrew Suffield
“You’re just making things up now.”
Am I really? So you’re denying that the length of employment needed before a worker is entitled to make a claim for unfair dismissal is to be lengthened from one year to two years? You’ll actually find that this comes into effect on the 6th April 2012. We can then look forward to thousands of bosses sacking their workers just before the two years and replacing them with other workers who will again be sacked before their two years are up. This effectively removes the right of hundreds of thousands of workers to sue for unfair dismissal and makes it so much easier for bosses to sack people on a whim or if relations between them deteriorate.
And the Liberal Democrat/Tory coalition is ensuring that it will be even more difficult for workers to sue for unfair dismissal in future by placing steep financial barriers in their way. In future it is going to cost workers £250 to lodge a claim for unfair dismissal with a tribunal and they will have to pay a further £1000 into court as surety for costs if the case goes to hearing. This will only be refunded if the employee wins. Many workers particularly part time workers barely make much more than £250 a month. Where on earth do you think they are going to get £1250.00 to finance their claim? You are right —there was hithertoo no legal aid funding for employment tribunals in England and Wales because previously it was not needed. It will be needed now but your unfair coalition will make sure that it will not be available. Doesn’t that strike even you as unfair? That is why I say that you are out of touch and that Trade Unionists cannot rely on those who serve the interests of capital such as the Tories and the Lib Dems to protect their hard earned rights. If you still think what I say is rubbish why don’t you follow this link to the Guardian articles which quotes Osborne announcing how much easier it will be to sack workers from now on: http://www.guardian.co.uk/money/2011/oct/03/employees-pay-unfair-dismissal-claims
It’s definitely interesting that Henry Gruijters is proposing a more LibDem line from within the more classical liberal tradition – a sign that European liberalism is moving in our direction perhaps!
Certainly the problem is not with regards the LibDem attitude towards trade unions which is primarily social and economic, but with the behaviour of some British union officials which is primarily political.
Firstly it’s shocking that unions have used their position to reduce their accountability to the public by focussing instead on workers in the public sector, but it is equally if not more unhelpful that unionisation has been discouraged by association with the same protectionist tactics in the private sector where this is less appropriate.
I completely agree that ‘Liberal Democrats should encourage mutually beneficial employment relationships’ on the grounds that happy workers are more productive and productivity depends on innovation, but I’d like to ask what can the party do to end the imbalance in union representation?
Would it be possible to block TUC membership for politically-affiliated unions, and thereby encourage disaffiliation?
Would it be possible to lower employer recognition thresholds for unions so private sector workers can be encouraged to act collectively and not solely in their short-term intersts?
Would it be possible to adjust negotiating privileges, so that the roles of market and unions are disentangled and are therefore better able to coordinate effectively in the wider interest?
MacK
“Am I really? So you’re denying that the length of employment needed before a worker is entitled to make a claim for unfair dismissal is to be lengthened from one year to two years?”
So where are the tens of thousands of workers that (under your logic) are currently being sacked at the 11 month stage?
You clearly have no idea how businesses work – whether in the private or public sector.
Recruiting and training new staff costs a fortune, and the idea that businesses get to the 11 month (or, in the future, the 23 month stage) and then say “Oh,. let’s start all over again” is ridiculous.
I happen to know of a company that frequently sacks people in the first 6 months of employment. It also does not pay sick leave and it docks pay if you cannot attend work due to the weather.
On one ocassion it invented a reason to sack someone that he had been watching porn on his PC when there was no evidence of it.
There is no union in this company, and my friend who works there is worried that he will get sacked if he starts one up.
I think Alan Sugar is a powerful role model for many aspiring entrepreneurs and we know he likes sacking people.
It is the culture of hire and fire that is wrong. Companies should do more to invest in the workforce and improve them. That way they are more likely to retain staff as well. They should also take recruitment more seriously so that they hire the right people. If they did that now they might find it would save them money, but in truth many companies are obsessed with the short term and don’t bother.
You make good points about the workers of the UK being a much larger group than the members of trade unions and it is definitely the case that unions have an incentive to campaign on behalf of their current members with the risk that this can be at the expense of the employment prospects of others and, in particular, often includes favouring distinctly illiberal immigration policies. However, I do think the references to ‘red-tape, which hamper entrepreneurship, job-turnover, innovation and growth’ smacks of the CBI-style right-wing attitude that any constraint on employers is an attack on employment and harmful to the interests of the masses. In practice, much of this ‘burden’, such as safety at work regulations and the working time directive etc., is designed to protect workers (whether they’re in unions or not) and some regulations need to be imposed since experience shows that without them employers do not act in the interests of their employees. Completely unfettered entrepreneurial activity leads to child labour, low wages, unsafe working conditions etc. I would hope that you would not wish to see the Liberal Democrats campaigning for a return to industrial revolution era deregulation, which is how your piece currently reads. I’m sure that’s not what you meant but it’s how it comes across.
PS I simply don’t understand your point about supermarkets. Self-service checkouts have been introduced in most supermarkets to replace some of the previous human-operated checkouts so that the companies can cut costs and increase profits by reducing their headcount. How can this process be used as evidence in support of a theory that employers find it too hard to reduce their workfroces when it is an example of them doing just that?
Simon Shaw writes: “You clearly have no idea how businesses work – whether in the private or public sector. Recruiting and training new staff costs a fortune, and the idea that businesses get to the 11 month (or, in the future, the 23 month stage) and then say “Oh,. let’s start all over again” is ridiculous.”
In that case, the entire justification for the government’s planned change (that lengthening the qualifying period for unfair dismissal claims will help the economy) falls apart.
I think, however, that you take an excessively optimistic view of the practices of some employers (and I speak as someone with experience in both the public and private sectors).
The Conservatives have been seeking for years to introduce further curbs on the unions (even though the UK’s unions are already subject to tighter restrictions than most of our European neighbours) and are now using the UK’s economic difficulties as an excuse to do so. It is saddening that some Liberal Democrats seem inclined to go along with this agenda.
Simon, what makes you think 46K is over market rate?
Because it’s double the average wage? I admit that I’m not an expert on the skills and responsibilities on Tube driving but it would have to be something pretty special to demand such a high wage.
@John
“In that case, the entire justification for the government’s planned change (that lengthening the qualifying period for unfair dismissal claims will help the economy) falls apart.”
Quite. The reason the qualifying period for unfair dismissal claims has been extended to two years is to make it easier for employers to lay people off and walk all over their employment rights.
@Simon Shaw
“You clearly have no idea how businesses work – whether in the private or public sector.
Sadly, I do. I have been working for nearly fifty years in commerce, the Law, industry and public services. Also in the Theatre. I am authority on corrupt and unprincipled employers. That’s why I speak with authority. I notice that you do not even attempt to address my point about the financial barrier this Lib Dem/Tory government has erected to stop workers bringing unfair dismissal claims. Disgraceful for a party that calls itself “Liberal”.
Daniel Henry,
You make the mistake of thinking that skills, effort, productivity etc. have anything to do with remuneration. In a free market the only thing that matters when negotiating your salary is the power you have. This is why the increasing inequality of society has coincided with our decreasingly unionised labour force. The market rate for a job in a free market is that which you can negotiate; nothing more, nothing less.
@Alistair
“Simon, what makes you think 46K is over market rate?”
Common sense, really. My assumption is that you don’t have to pay a salary in the top 10% of UK salaries to get competent Tube drivers.
Also if it really were the market rate why would RMT engage in industrial action (which results in a short term loss of pay to their members)? The only logic to industrial action (in relation to pay and benefits, as opposed to concerns over safety etc) is to secure pay and benefits in excess of the fair market rate.
MacK
“I am authority on corrupt and unprincipled employers. That’s why I speak with authority.”
Bit of a circular argument there, surely.
@JRC
“You make the mistake of thinking that skills, effort, productivity etc. have anything to do with remuneration. In a free market the only thing that matters when negotiating your salary is the power you have.”
So does that mean that you have no problem with Tube drivers being paid £46,000pa (+ a costly public sector pension contribution as well, I would assume)? And that these salaries overwhelmingly are paid for by people who earn less than £46,000pa?
Or is it a case of “might is right”?
Do I detect snobbery in the comments about Tube drivers? The underlying idea seems to be train driving is a “blue-collar” occupation, and therefore is only deserving of a relatively lowly salary, rather than the sort of salary that (some people think) should be reserved for white-collar workers, in particular managers. I’ve no truck with such thinking. I’m not an expert, but I do understand that train driving is a highly skilled occupation, involving a lot of concentration and attention to detail, and with a rather heavy responsibility (for the lives of the people one is driving, as well as for anyone else who might be on or near the track). I am an office worker on rather less than £46Kpa. I do not begrudge Tube drivers earning that much, because I rely on at least one of them to get me to work safely every working day.
Simon Shaw,
I have no idea what the job of a tube driver is so have no idea what true desert is in that circumstance but no I do not have any problem whatsoever with the salary that a worker has managed to negotiate. The desire of those in this party who wish to demonise public servants for their pensions and salary is wholly illiberal. The salary of a worker is paid by their employer and nobody else, the money those employers use for this comes from those to whom they sell either their services or their goods. The emotive gobbledegook that claims that those wages and pensions are being paid by those with less than them is not actually an argument, it is a rallying cry to those with chips on their shoulders. The trains of the London underground are fundamental to the functioning of the entire city. So what is the value to the market for a tube train driver keeping our financial centre mobile? Probably a lot more than £46k. Ultimately though it is irrelevant, because as you say, in a free market; might is right.
As you seem to have a problem with the idea that ‘might is right’ though, is there a point at which your criticism of the system is applied to those who take far more than their market value at the top of industry or are your criticisms only for those who have managed to negotiate a decent wage for living and working in London? Should i take it that your position is that; might is right, but only for the rich, not for the workers?
Those who would defend the free market should realise that when they do they are defending a system under which might is right. Those who attack others on the basis of their social standing or prejudices about the value or complexity of their job, when they stand up for themselves within a free market against its iniquities should therefore also realise that, if they otherwise defend the free market, they are engaging in either bigotry or snobbery.
@Simon Shaw
“@David Allen
“It is also morally doubtful in the case of the Tube drivers, though not exactly in the same league.”
I’m interested in your use of the word “doubtful”, David. Are you not sure? How much should Tube drivers be paid? How about as much as is needed to recruit and retain decent ones.
I really can see nothing moral (no “doubtful” about it) about using union “muscle” to secure £46,000pa salaries which I assume are well in excess of the market rate. And I really think you should unequivocally say so too.”
I really think I should stick with “doubtful”. As you can see from the postings, people tend to think it is on the high side, but have no definite proof that it is any higher than is needed to attract recruits to a skilled job in central London. However, yes, it is probable that these unionised workers have been able to do rather better than non-unionised workers would have done. Insofar as the union strength actually hurts non-unionised workers, you might call this outcome morally doubtful.
But can you think of a better way to allocate remuneration, in some sort of theoretically ideal way? Perhaps you would like a centralised all-powerful Government job evaluation commission to adjudicate between tube drivers and toilet cleaners, and decide who should earn more? Or perhaps you should just accept that unions are one more jungle beast in (what is clearly your beloved) free market, and as entitled to snarl and growl as any other player?
Which brings me round to what really sticks in the craw about your posting, and that is your complete unwillingness to engage with the thought that bankers might be abusing their market power rather more seriously than trade unionists do! Are you on this site because you are too right-wing for the Tories, by any chance?
From Henry Gruijters “I do not believe creating more of such rigid employment relationships and excluding many people form a host of other opportunities through unions is the right response.”
As a trade union member, I agree, Henry. The closed shop has long gone in the UK for working-class jobs. It is time that the closed-shops for the wealthy (bankers, lawyers, doctors etc.) should also be abolished and their unions be subject to the same rules as the working-class unions have to follow. Perhaps if these upper-class industries were subject to more competition perhaps their services might be less expensive and they might be under pressure to do a better job.. Abolishing unions won’t stop strikes, walk-outs and industrial disputes, it might simply make the workplace more chaotic. Many years ago, I worked in a call-centre where conditions were awful. It was not unionised At lunchtime, 38 workers held a meeting and decided to never go back. Were they crazy, left-wing union militants? No, just workers who no longer wanted to be treated unfairly.
The article states that unions do not represent the unemployed. This is incorrect. Many union members are unemployed. Many are retired. Many are students. When a worker loses his job who will help him at hearings and tribunals? The Liberal-Democratic party?
@David Allen
“Which brings me round to what really sticks in the craw about your posting, and that is your complete unwillingness to engage with the thought that bankers might be abusing their market power rather more seriously than trade unionists do! Are you on this site because you are too right-wing for the Tories, by any chance?”
A bit of shoddy thinking on your part there. You seem to be confusing the fact that some “bankers” have rare skills that are financially valuable to their employers with the issue of “abusing their market power”. They would only be doing that if they secured pay higher than their market value.
It seems to me that it is only when you have unions involved in relation to pay bargaining that you have the potential for people “abusing their market power.”
The fact that some people are very highly paid doesn’t (of itself) mean that they are abusing their market power – in most cases they simply have highly prized skills. And that goes for Premier League footballers as much as (some) “bankers”.
Henry Gruijters
Human capital is a vital part of the production process. Firing a productive worker simply because you do not like his face is like stopping a profitable machine from running. It is a bad business decision.
Yes, it may be, that was part of the point I was making. The deregulation you are calling for allows for such bad busienss decisions to be made. Why do you suppose those with the power to hire and fire would never make bad business decisions? A worker who is lazy is also stopping a profitable machine from running. So by this argument you are now using workers would never be lazy so bosses would never want to fire them – but that contradicts your original argument.
So, what you are really saying is that bosses are always wise and their decisions can never be questioned because they will always be to the good of the whole company, but workers are fools who cannot be trusted, so in any dispute between boos and worker, the boss must always be right, and that is so 100% always the case that there is no need at all for any sort of protection for the worker against poor bosses.
And you say you want to “go away from this worker versus business mentality”? Well, whatever planet you come from, I don’t think it’s this one, because your view on how things work doesn’t fit in with my lifetime’s experience.
The Swiss and German labour markets are very different to the UK’s. Aprox 60% of the pupils leaving secondary school enter vocational training. What is interesting to note, though, is that a study comparing Switzerland and German found that Swiss firms tend to get higher benefits from vocational training, because its labour market is less, yes less, regulated. The main reason for firms to train more in Switzerland is apparently not the cost, but the difference in benefits. Benefits from training seem to be higher in more competitive and less regulated industries.
In addition I totally agree on more competition in all labour market including those for lawyers, doctors and accountants. It is important for these industries to be subject to market forces and to deliver in accordance to customer needs. The Liberal Democratic party has a role to play in this respect. It could make compliance to many rules and regulations which often require a lawyer or accountant a lot more accessible to ordinary individuals.
@Simon Shaw
“Bit of a circular argument there, surely.”
You obviously haven’t read much philosophy. Being an authority is a prerequisite for speaking with authority. I note that you are still unwilling to address the ethics of the Lib Dems’ support for a crippling financial barrier to stop workers bringing wrongful dismissal claims. Could that be because you are not really an authority? Rather someone who simply yearns for the free market, hire and fire heaven of “the Lump”?
@Henry Gruijters
What I find really offensive about your proposals is your presumption that employers should be free to treat workers as just another factor of production and not recognize their humanity or human needs. I suggest that you read a biography of that magnificent welsh employer Robert Owen.
@MacK
“Could that be because you are not really an authority?”
I am absolutely not an “authority”. I also try not to be pompous. I am also not anonymous.
Simon Shaw
A bit of shoddy thinking on your part there. You seem to be confusing the fact that some “bankers” have rare skills that are financially valuable to their employers with the issue of “abusing their market power”. They would only be doing that if they secured pay higher than their market value.
And just how “rare” are these skills? What is the way in which these rare skills are detected and all those who do not have them are rejected? Oh, come on, the banking industry takes on good but not spectacular graduates, and most of those it takes on for the high-flying role are earning pretty big money pretty soon.
The reality is that if your job is passing around large amounts of money, and you take a cut of the money you pass around, you can very easily take large amount of money for what is in reality pretty mundane admin work.
@ Simon Shaw
“bankers have rare skills that are financially valuable”: “It seems to me that it is only when you have unions involved in relation to pay bargaining that you have the potential for people abusing their market power.”
So there we have it. One guy can earn more than another for a whole host of reasons: hard work; education; natural ability; luck; knowing the right people; coming from a favoured background; co-operating with his well-placed friends and their families in order to gain mutual benefit and advancement; outright nepotism; being a forceful, bullying competitor who overcomes opponents by fair means or foul; being able to offer something which is a scarce commodity and hence commands a higher market price; and finally, co-operating with other workers to gain some market leverage and hence command a higher market price. That last item on my list means forming a trade union, and for some peculiar reason, to you that is uniquely immoral.
My view is different. In my view, if you are able to get hold of a ludicrously high share of our finite wealth, and you just go ahead willy-nilly and do that, then you are abusing your market power. This applies, to a certain extent, even if you are (say) a dedicated and brilliant heart surgeon who saves lives and can charge huge fees for doing so. It applies more clearly if you are (say) a banker who outsmooched or outfought your rivals to reach the top. It applies if you are clever and can use your wits to make a fortune. Warren Buffett recognises the truth of this, which is why he would prefer to give away (or let the state take away) that part of his accumulated wealth which is ludicrous and excessive.
Oh, and if you are an ordinary working trade unionist earning a tiny fraction of what a banker earns, and you threaten a strike which could harm others, then you do also have to question your moral rectitude. However, you may be able to argue that your action is necessary if you are to gain a reasonably equitable share of the proceeds of your labour, and that you are therefore morally in the right. Even when that ain’t so, your sin is generally going to be pretty petty by comparison with that of the capitalist fat cats who have ruined our economy!
We really need to think rationally about the effects of trade unionism, not just plump for knee-jerk support or antipathy. In fact, the role of the unions has changed beyond recognition with the passage of history. The early trade unionists were heroes whose achievement in conquering poverty and inequality was massive. The trade unionists of the post-war period can often reasonably be described as villains who held the country back and contributed to our industrial decline. Whereas nowadays, I would argue that the unions are too weak. Stronger unions would, on the whole, help us all by providing a better counterweight to rampant capitalist excess.
Well, I for one am unwilling to engage in debate with somebody who just makes a bunch of random claims, and then when those claims have been disproved, posts another bunch of random claims and a rant about how he must be right because in his secret identity he is authoritative and nobody is responding to his new claims.
It’s just a waste of energy.
Not at all – that’s almost completely backwards. The market rate for a job in a free market is what somebody is willing to pay you in order to get you to leave your current employer and go work for them instead.
It is only in a highly controlled market – where for whatever reason, workers can’t switch employers or employers can’t recruit other workers – that “negotiating power” decides pay. Typically these are also monopolies of some form, where there is only one employer (like the tube drivers) or only one union (like the film industry).
@David Allen
“Whereas nowadays, I would argue that the unions are too weak. Stronger unions would, on the whole, help us all by providing a better counterweight to rampant capitalist excess.”
Three questions arising from your comments:
1. Are RMT (as the union of £46,000pa Tube drivers) “too weak”? Or are they an exception to a general rule?
2. As unions in the UK are now largely confined to the non-capitalist public sector, do you think that weaker unions there would be beneficial?
3. Is the logical conclusion of your comments that it would be better if the (mostly non-unionised) “bankers” were unionised so that they could achieve higher pay and combat some of the excesses of their manifestly rampantly capitalist employers?
@Matthew Huntbach
“The reality is that if your job is passing around large amounts of money, and you take a cut of the money you pass around, you can very easily take large amount of money for what is in reality pretty mundane admin work.”
But’s that what the Banks as businesses will do, not the “bankers” who are the employees of the Banks.
Why, exactly, do you think that a Bank (as employer) would pay “bankers” (its employees) more than it needs to? Of course they wouldn’t. To do so would mean that David Allen’s naughty capitalist Bank would make less profits than it might have done. Or maybe you also think that “bankers” should be unionised so as to secure a greater share of the profits.
@Andrew Suffield
“It is only in a highly controlled market – where for whatever reason, workers can’t switch employers or employers can’t recruit other workers – that “negotiating power” decides pay. Typically these are also monopolies of some form, where there is only one employer (like the tube drivers) or only one union (like the film industry).”
I very much agree with your comments, Andrew (including what is meant by “the market rate for a job”).
One thing I would add to to you above comment, however. It is particularly in the transport sector that unions are able to secure excessive pay (including RMT’s Tube drivers, but also airlines etc). The reason is that in the case of a strike in the (say) widget manufacturing industry, it is always possible for the employer to seek to recoup its lost widget production post-strike.
However it is impossible for London Underground ever to recover Tuesday’s 15.25 service from Brixton (etc, etc) lost due to strike action. This means that transport workers have more industrial muscle than most workers and have been able to secure (in many cases) excessive pay.
The irony that many of them work in the public sector, or in the publicly-subsidised sector, is not lost on most of us. Nor the irony that some on the far left seek to defend this.
This discussion reminds me of an ironic comment on a guardian podcast few weeks ago to the effect that the only people in the UK who enjoyed the full fruits of their labour were bankers and tube drivers. I don’t really have an opinion about whether 46k is too much for a tube driver, perhaps it is, but I do think the RMT are very much the exception rather than the rule. As others have commented the problem we face today is not over-mighty unions but a heavily subsidised and dysfunctional financial sector. I do find it extraordinary that after the biggest market failure in human history we still have people who believe uncritically in the rationality of markets. The problem is at least twofold – 1) we cannot assume that the aggregation of the actions of irrational agents operating with incomplete information will lead to rational outcomes 2) powerful self interests (such as executive renumeration committees) will always arise in a market and subvert them.
The question which comes first to mind is: Does the United Kingdom really need three right-wing parties?
If not, then the Liberal Democrats might want to reconsider their association with continental ‘liberal’ parties which are actually right-wing conservatives; and maybe also remember that the “Democrats” part of their name comes from “Social Democrats”.
@David when the Liberals merged with the Social Democrats it was actually the Liberal party that was to the left of the SDP.
Things have changed since the 1980s because it became trendy in both the Labour party and the Liberal Democrats to start adhering to free market ideology. ironic for the Liberal Democrats given that free market ideology started to go go in 2007 just at a time when advocates of the Orange book were taking over the party leadership.
@David
“The question which comes first to mind is: Does the United Kingdom really need three right-wing parties?”
I think the question that more obviously comes to mind is why people from the far left of the political spectrum see the overwhelming mass of the British electorate as being “right wing”.
In fact most people would see the 3 major UK parties as being in the centrist/centre-left/centre-right area.
@Andrew Suffield
“Well, I for one am unwilling to engage in debate with somebody who just makes a bunch of random claims, and then when those claims have been disproved, posts another bunch of random claims and a rant about how he must be right because in his secret identity he is authoritative and nobody is responding to his new claims.”
I can’t believe that you are still in denial despite the fact that I have provided you above with a link to The Guardian which verifies my claims that the Liberal Democrats and the Tories are extending to two years the period workers will have to be employed before bringing an unfair dismissal claim and are also going to introduce cripplingly expensive and prohibitive barriers to any worker who wishes to make a claim for unfair dismissal. Here’s another “random claim” as you would say: Leaked extracts from the report that the Tories commissioned from venture capitalist Adrian Beecroft to scrap so called “red tape” show that he is recommending that the right for workers to claim unfair dismissal should be completely scrapped. Don’t believe me? Go to http://www.guardian.co.uk/politics/2011/oct/26/unions-condemn-report-unfair-dismissal
If you want further verification visit the BBC iplayer and tune in to yesterday’s “The Week in Westminster” How much longer can the Liberal Democrats go on shoring up these Tories?
Andrew Suffield,
“The market rate for a job in a free market is what somebody is willing to pay you in order to get you to leave your current employer and go work for them instead.” if you add in “or, what your current employer is required to offer you to stay in your current job”, which is a necessary addition to your definition, then you have the definition of ‘negotiating power’. So your point is, in effect, that the use of the term “negotiating power” is to get the argument backwards whereas to use its definition is to get it forwards.
Your subsequent point though is, to use your term, backwards. Negotiating power is weakened in controlled and monopolistic markets.
An individual’s negotiating power is greater the fewer others there are who can do their job. The lesser skill set you have the more others there are who can fill your role. Therefore your negotiating power is diminished. In order to achieve a balance of negotiating power between employer and employee it is necessary to negotiate collectively for most employees. As soon as it is possible for an employer to replace an individual without any loss of productivity then that individual has no negotiating position other than to undercut the other worker. It is conceivable that this could be fair if, and only if, there is a state of full employment but even then this concept only works in a perfect free market where all individuals are employed at the level their skill set fits. Even in such a market it would still be logical for most employees to negotiate collectively.
The free market is a system where power prevails. If it is right for one side of the negotiation to exert their power then it must be right for the other side to exert what power they have. To argue that this does not then represent the ‘market value’ of a job is simply absurd.
Simon Shaw,
You seem entirely convinced that the salary of £46k is excessive for a tube driver and you justify your position by saying that they can only achieve this by their exertion of union power. You offer no reason to justify the assertion that such pay is excessive. On the contrary your point seems to be that train driving is self-evidently a lowly job and therefore it is expected that such an individual should not expect or be rewarded with a comfortable life. That they do achieve such can only be representative of systemic abuse. For what its worth, my opinion is that, if someone is prepared to hurtle around a tunnel, never seeing daylight for eight hours a day, taking responsibility for the safety of of hundreds of thousands of people and keeping the city of London functioning, then their value to the market is inestimable and a comfortable home life should be the least they are due. I am willing to accept though that my opinion is no more a valid market rate than is yours, it does however have the merit that it takes some of their contribution to society into account rather than your prejudice about where in the social structure a train driver should sit.
For both of you though it is apparent that you have a romanticised view that free markets are fair and just but that collective negotiation is unjust. This is simply wrongheaded reasoning. Without collective negotiation all negotiating power is put in the hands of the employer, therefore a different and unjust market value for labour emerges. Market value is determined by the system the market follows. Genuinely free markets imply the justice of collective negotiation. You want to argue the merits of a free market but are unwilling to take the consequences of it. The consequence of it is that: wages are determined by negotiating power so whatever is negotiated represents market value. The free market is not benign, it is a battle that continuously needs to be fought. It is the living embodiment of might is right. You wish to see a controlled market where labour is hamstrung.
JRC
“You seem entirely convinced that the salary of £46k is excessive for a tube driver and you justify your position by saying that they can only achieve this by their exertion of union power. You offer no reason to justify the assertion that such pay is excessive. On the contrary your point seems to be that train driving is self-evidently a lowly job and therefore it is expected that such an individual should not expect or be rewarded with a comfortable life. That they do achieve such can only be representative of systemic abuse. For what its worth, my opinion is that, if someone is prepared to hurtle around a tunnel, never seeing daylight for eight hours a day, taking responsibility for the safety of of hundreds of thousands of people and keeping the city of London functioning, then their value to the market is inestimable and a comfortable home life should be the least they are due. I am willing to accept though that my opinion is no more a valid market rate than is yours, it does however have the merit that it takes some of their contribution to society into account rather than your prejudice about where in the social structure a train driver should sit.”
I think you are basically prejudiced, aren’t you, JRC? Because you think people look down on Tube drivers you think they have a right to be paid a salary that puts them in the top 10% of earners in the country.
So what about all the other workers that you think people look down on? Why shouldn’t they also be paid a top decile salary? In fact lets pay everybody a top decile salary. Oh, apparently that’s mathematically impossible, but a nice (and generous) thought on your part.
And the logic of your view that they are “inestimable” is that they are underpaid at £46,000.
@Simon Shaw
I think you are basically prejudiced, aren’t you, JRC? Because you think people look down on Tube drivers you think they have a right to be paid a salary that puts them in the top 10% of earners in the country. . . .And the logic of your view that they are “inestimable” is that they are underpaid at £46,000.
I think you’d find that if the tube drivers in the capital went on a protracted strike, say for three months, most Londoners would be more than happy to see them retain their position in the top 10% of earners in order for them to return to work. Whereas, if the casino bankers went on strike no one would care less.
Woops, Omitted quotation marks!
@Simon Shaw
“I think you are basically prejudiced, aren’t you, JRC? Because you think people look down on Tube drivers you think they have a right to be paid a salary that puts them in the top 10% of earners in the country. . . .And the logic of your view that they are “inestimable” is that they are underpaid at £46,000.”
I think you’d find that if the tube drivers in the capital went on a protracted strike, say for three months, most Londoners would be more than happy to see them retain their position in the top 10% of earners in order for them to return to work. Whereas, if the casino bankers went on strike no one would care less.
MacK
“I think you’d find that if the tube drivers in the capital went on a protracted strike, say for three months, most Londoners would be more than happy to see them retain their position in the top 10% of earners in order for them to return to work.”
No, I would have thought that most Londoners would want them sacked and replaced by other people who would be more than willing to do the job at (say) two thirds the rate Tube drivers are currently paid, wouldn’t you?
Now it may be that it would be impossible to recruit good drivers at that level (2/3 x £46,000 = £31,000pa) but because of the excessive power of trade unions in this area, we’ll never know.
And I think you’ll find that “casino bankers” aren’t generally unionised, so don’t go on strike. However I am sure that there are some that say to their employer “Hey, I’m worth more than my current pay of £X”, to which their employer may well say “Good luck then, Bye Bye.” I’m not clear whether you would then think they were being awfully abused by their nasty capitalist employers in that situation?
Simon Shaw,
“I think you are basically prejudiced, aren’t you, JRC? Because you think people look down on Tube drivers you think they have a right to be paid a salary that puts them in the top 10% of earners in the country.”
What a bizarre interpretation of what I wrote and what a bizarre use of the word prejudiced.
“And the logic of your view that they are “inestimable” is that they are underpaid at £46,000”.
No, the logic of the view that their desert is “inestimable” is that it is not possible to calculate. The level of their actual desert is not within my ken. Nor is it in yours. If you view their desert to be relative to their productive contribution to the value of the market then there are too many factors to take into account for a calculation to be made. In other words; that it is inestimable. Under such factors they may be underpaid at £46k they may be overpaid. However, the factors that constitute their desert are irrelevant. it is a market. All that matters is how much you can negotiate using the muscle you have. It is an untenable position to advocate the free market and then try to deny some from using the tools they have to negotiate within it.
“So what about all the other workers that you think people look down on? Why shouldn’t they also be paid a top decile salary? In fact lets pay everybody a top decile salary. Oh, apparently that’s mathematically impossible, but a nice (and generous) thought on your part.”
As this is straightforwardly a product of your own imagination and bears no relationship to anything I actually wrote perhaps you could also do me the favour of working out my contradiction to it.
JRC
“However, the factors that constitute their desert are irrelevant. it is a market.”
Very sensible comment.
However it was you who brought the question of “deserts” into it. The problem that you seem to have genuine difficulty in understanding is that unions such as RMT seek to distort the market so that Tube drivers are paid more than the market rate. If £46,000 were genuinely the market rate then (in relation to salary issues) the RMT would be an expensive irrelevance.
@JRC
“No, the logic of the view that their desert is “inestimable” is that it is not possible to calculate.”
Just so you don’t think I ignore the rest of what you say, the reason why I said the following:
“And the logic of your view that they are “inestimable” is that they are underpaid at £46,000″.
is that you had said this: “For what its worth, my opinion is that, if someone is prepared to ……… then their value to the market is inestimable and a comfortable home life should be the least they are due.
If you think that £46,000 (for a comfortable home life) is “the least that they are due” then you clearly think they are underpaid. Or were you just being sloppy in your use of language?
Also, it does rather beg the question of why you think the millions of people who work in London (often in really vital jobs) earning a lot less than £46,000 are not entitled to a “comfortable home life”?
Maybe it’s just class prejudice on your part.
Simon Shaw,
Actually your entire thesis is based upon your view that the tube drivers receive more than their desert. I have merely pointed out that in a market it is not what you deserve that counts but what you can negotiate using whatever power you have. You have again claimed that the market has been ‘distorted’ by those employees using their negotiating hand to its fullest thus raising the spectre of desert. For every wage demand by a unionised workforce or an individual there is an employer who must agree to pay it. Therefore £46k is the market rate. It is the market rate because it has been negotiated on a fair basis. You on the other hand wish the market to be distorted by refusing those employees the right to use their full negotiating power. You wish to apply some notion of desert to train drivers that is being superseded by the market in order to justify your position that their rewards are somehow not the result of a market negotiation. Your justification, along with others above, is that if some workers have an unfairly weakened position by not being unionised then it is unfair for unionised workers to have a fair negotiating position. This is straightforwardly the politics of envy.
@JRC
I note you have failed to address my last question: “Also, it does rather beg the question of why you think the millions of people who work in London (often in really vital jobs) earning a lot less than £46,000 are not entitled to a “comfortable home life”?”
In terms of your most recent comments, where you said: “For every wage demand by a unionised workforce or an individual there is an employer who must agree to pay it. Therefore £46k is the market rate. It is the market rate because it has been negotiated on a fair basis” this begs the question of whether you think the employer should be permitted to dismiss those who go on strike if they believe that they could recruit alternative staff at a lower salary (in this case lower than £46,000 pa)? Is that what you believe? If not, why not?
If you don’t believe that, then under your logic Tube drivers (if they had the industrial muscle, which I think they do) would be perfectly entitled to demand £100,000pa or £200,000pa and for that to be “the market rate” (at least in your view).
One last point: you referred to “unionised workers to have a fair negotiating position.” The use of “fair” suggests some sort of value judgement on your part. But I thought you were saying that fairness was nothing to do with it.
In your “utopia” (by which I obviously mean distopia) it is perfectly acceptable for those who happen to work in sectors where industrial action is much more effective (and the transport industry is the obvious example) to be made more than the market rate. This obviously has to be at the expense of other workers (I’m thinking of how the cake is divided up) – most people don’t regard that as “fair”.
As for that being “the politics of envy”, I think we leave that to the Labour Party and their friend in the Trade Union movement.
Simon Shaw,
I hadn’t responded to your other points because they were not posted at the time i was writing my previous post.
“If you think that £46,000 (for a comfortable home life) is “the least that they are due” then you clearly think they are underpaid. Or were you just being sloppy in your use of language?”
My language was deliberate and meant exactly what it said. You can extrapolate it to mean something other than what it does and argue with that but be aware you are arguing with your own prejudices of my view rather than my stated view.
“Also, it does rather beg the question of why you think the millions of people who work in London (often in really vital jobs) earning a lot less than £46,000 are not entitled to a “comfortable home life”?”
Your understanding of a begged question is flawed. If one is in receipt of that to which they are entitled it does not follow that those who are not, should not. They are equally entitled to a comfortable life which they might have a chance of getting if they had sufficient power in the market place.
“this begs the question of whether you think the employer should be permitted to dismiss those who go on strike if they believe that they could recruit alternative staff at a lower salary (in this case lower than £46,000 pa)? Is that what you believe? If not, why not?”
The right to strike is wholly different to an an obligation to give in to the demands of strikers. This question is not begged by the preceding point. If an employer is enabled to dismiss employees during a legitimate industrial dispute then there is no balance to negotiations. The market would have been rigged in the favour of the employer. You claim to champion free markets but again suggest that those markets should be rigged.
“If you don’t believe that, then under your logic Tube drivers (if they had the industrial muscle, which I think they do) would be perfectly entitled to demand £100,000pa or £200,000pa and for that to be “the market rate” (at least in your view).”
Yes that is the consequence of the free market. There would however, as stated above, be no obligation for that demand to be met.
“One last point: you referred to “unionised workers to have a fair negotiating position.” The use of “fair” suggests some sort of value judgement on your part. But I thought you were saying that fairness was nothing to do with it.”
You thought wrong.
“In your “utopia” (by which I obviously mean distopia) it is perfectly acceptable for those who happen to work in sectors where industrial action is much more effective (and the transport industry is the obvious example) to be made more than the market rate. This obviously has to be at the expense of other workers (I’m thinking of how the cake is divided up) – most people don’t regard that as “fair”.”
The market system, I repeat, rewards power. This “utopia”/”dystopia” you accredit to me is the world we live in now. The solution to the iniquity for those who do not work in unionised industries is to become unionised. It is not for those who have the requisite power to negotiate on a fair basis to be deprived of their strength. You seem to believe that their is such a thing as market rate that can be determined by productivity, social status, effort, skills and talent (Some would describe this as the worker being in receipt of the full fruits of their labour). And that there is a finite cake that must be shared according to these criterion. It might well be just for the distribution of goods and wealth to be determined by such methods but it is not what a market does. Markets distribute on the basis of power. It thus follows logically that in a free market, the market rate is whatever you can get. That is the flaw of the free market. If you espouse the virtue of the free market you are obliged to accept that simple truth. If you feel that this is unacceptable then support a system different to the free market. You are not though at liberty to accuse those who point out to you that this is the logic of your position of being proponents of this “dystopia”. You advocate this system but refuse to accept its true nature.
“As for that being “the politics of envy”, I think we leave that to the Labour Party and their friend in the Trade Union movement.”
I shouldn’t be surprised that you have wilfully misrepresented what I have said and failed to understand the difference between the description of a viewpoint and the advocacy of it when you fail to understand the consequences of the arguments you have made yourself.
@David: I do not accept the common but rash claim that our ALDE colleagues are “right-wing conservatives”. Only VVD, FDP and Venstre really fit the mould of the “right-wing liberal”. The rest seem to be mostly centrist. Their rhetoric is sometimes different from ours, but often this because their countries have much more regulated economies than ours, and/or they have much stronger trade unions, and/or a significant hard-left faction in their national politics. I don’t get the impression either that Lib Dem MEPs form some sort orf rebel group within ALDE; in fact the group is somewhat cohesive.
@Simon Shaw
“No, I would have thought that most Londoners would want them . . . (i.e. tube train drivers) . . . sacked and replaced by other people who would be more than willing to do the job at (say) two thirds the rate Tube drivers are currently paid, wouldn’t you?”
You obviously have no idea how long it takes to train tube drivers. But why should you know, when you are so obviously prejudiced against them or any worker who provides a public service and earns more than the minimum wage. Very well, I’ll enlighten you. It takes six months to train a tube driver and then they have to drive the train with somebody else for at least another six months. Only after that are they allowed to take the train on alone. So if you have sacked all the tube drivers, where are you going to find the experienced driver who is going to mentor the trainees for a year? But why should that matter to right wing deregulators who care nothing for the public’s safety?
@MacK
May I remind you of the question you asked:
“I think you’d find that if the tube drivers in the capital went on a protracted strike, say for three months, most Londoners would be more than happy to see them retain their position in the top 10% of earners in order for them to return to work.”
Are you really claiming that after 3 months most Londoners wouldn’t want them sacked and replaced by other people who would be more than willing to do the job at (say) two thirds the rate Tube drivers are currently paid? You didn’t ask me how long it took to train Tube drivers, you asked me what I thought the general view of Londoners would be.
As to the length of time it takes to train Tube drivers, I didn’t know but the 6 months/12 months sounds about right.
In terms of other jobs where people (even in London) are paid less than £46,000 pa, do you think it takes more or less than 6 months to train:
– Teachers
– Nurses
– Accountants
– Fire-fighters
– Planners
– Police officers
Are you saying that they all ought to be paid in the top 10% (or even 5%) of earners because it takes more than 6 months to train them? Or do you just think that absolutely everyone should be in the top 10% of earners?
@ Simon Shaw
Now you are simply being captious. You are the one who is suggesting sacking an entire work force of tube drivers for going on strike and planning to replace these skilled, trained people with untrained people who cannot be trained because they will have no-one to train them! So where will your replacement tube drivers come from? Apart from the impracticability of such action the extra costs involved would be far, far greater than simply maintaining the tube driver’ standards of remuneration. And that’s apart from the industrial unrest and loss of working days involved. Industrial relations is obviously your strong point! If you are a typical liberal democrat no wonder we are witnessing such levels of government incompetence and a flat lining economy.
I think we can all agree that different occupations have different amounts of monopolistic power. Tube drivers get most of their market power through a strong union, bankers have a strong market power due to the implicit government bail-outs. Most people in the workforce do not belong to these parts of the workforce. I think most people would agree that reducing this monopolistic power and enabling wages to reflect productivity would be a welcome development. Especially for those people paying for the cost of high prices, pension payments, bail-outs and disruption due to strike action. The Lib Dems should realize this!!
Henry Gruijters,
It is the collective power that unions utilise that has forced employers to pay something closer to the value that a workers productivity implies. There is no possibility that reducing the negotiating power of collective bargaining would result in wages reflecting productivity. That is simply not how a market works. The monopolistic power that exists in wage negotiations rests with the employer yet it is the worker who you wish to strip of their only strength. History shows us that it is only when employees organise that their contribution to the generation of wealth is recognised. It is impossible to reduce the monopolistic power of the employer, it is only possible to strengthen the hand of the employee. You may think that the case you make would improve the lot of the average worker but you are wrong. Your case is simply to strip the benefits from those who have managed to retain them during the war on the worker that has been engaged in for thirty years. It is, as i said to Simon Shaw, the politics of envy. Cower the majority of non-union employees and then point at the bogeyman of the public sector and claim that they are living high on the hog and should be cut down to size. As Warren Buffett correctly observed “it is class war and my class are winning”.
Some Liberal Democrats, (if you read the contributions to this site then most) agree with you. This is not however what could be described as ‘realisation’, that would imply your case to be true when it is patently false. Liberals on the other hand, realise that any attempt to restrict collective action is entirely illiberal.
JRC,
Empirical and theoretical evidence simply disagrees with you. Workers’ effort is an important input. Effort is costly to the employee, as being lazy is easier than working hard. To induce effort, a wage which compensates the worker for extra output must be paid. If the wage is too low or workers are treated badly, the employer will not have productive workers.
Unionized or not, workers that are treated in a “fair” manner are better workers. Paying above a “fair wage” does not increase output. Companies that realize that a fair wage is the optimal will thrive, those that do not I am afraid will fail.
references:
Baker, Gibbons Murph (1994) “Subjective Performance Measures in Optimal incentive Contracts” QJE, 109 (4) 1125-1156
MacLeod Bentley And Malcomson “Motivation and the Markets” AER 88(3) pp. 388-411
Cohn, Fehr, Goette (2008) “Fairness and Effort – Evidence from a Field Experiment”
Henry Gruijters,
Forgive me for not researching the reference material you cite but if it offers the information that you say then it does not refute anything I have said. It tackles a different subject. I have been talking about fair negotiation. Your point is about the wisdom of good industrial relations.
The evidence you cite may be good reason for an employer to pay better than minimal wages. Historically it has not been the case that employers recognise this. However, it does not change the fundamental nature of the power relationship in wage negotiations. If you leave all of the power on one side of the negotiation it is at the whim of the employer whether to treat their employees ‘fairly’ (your usage of ‘fairly’) and ‘fair’ will only be what the employer says it is. This is not a ‘fair'(my usage in which fairness means that neither side is hamstrung) negotiation. Enlightened employers might wish to negate the need for negotiation by treating their employees well but generally it has been the organisation of labour that has ‘required’ employers to treat them justly. An employers and an employees view of ‘fair’ are rarely the same. Even within your example it is only the perception of fairness that is relevant, not actual fairness, an employer would always try to create this perception for the lowest possible cost.
If we look elsewhere in the world do we see workers in regions where trade unions are absent being paid better wages in order to encourage effort? Or, do we see workers continuously being undercut by unemployed competitors and threatened with the loss of an income in order to ‘encourage’ effort?
The fundamental difference between your position and mine is that your view takes human beings and treats them solely as economic units rather than individuals equally entitled to fair negotiation. As nothing more than economic units for you it seems they should be expendable in the search for profit and it is the sole purpose of remuneration to maximise their productivity. This is a dehumanising doctrine. To paraphrase Kant: people should not be used as a means but always as an end.
The concept of “theoretical evidence” has me baffled. Surely theories must be *based on* evidence from the real world; they cannot themselves be evidence for the way that the world is supposed to work. Unless the idea that there can be “theoretical evidence” for a political dogma is supposed to be a joke, I am forced to conclude that continental neoconservatism is little more than a repolarized parody of Marxism.
@MacK
“Now you are simply being captious. You are the one who is suggesting sacking an entire work force of tube drivers for going on strike and planning to replace these skilled, trained people with untrained people who cannot be trained because they will have no-one to train them!”
I’m not sure what “captious” means, but I certainly know you like misrepresenting what people say (as well as talking garbage in your own right).
I never suggested “sacking an entire work force of tube drivers for going on strike and planning to replace these skilled, trained people with untrained people”.
You made an unfounded assertion as to what Londoners’ attitude would be after 3 months of a Tube drivers strike. I made an (equally unfounded) assertion of what I thought their view would be. Or are you saying that your own view is what you think other people think? That’s a bit populist, isn’t it?
One thing I cannot understand about your position. Why you (apparently) think it is progressive to argue for those whose earnings are in the top 10% of UK workers to be paid even more. Shouldn’t your concern rather be with the 50% of workers whose pay is below the median?
Hmn — I think that you should find a dictionary and look up the word “captious”.
Simon Shaw
Why, exactly, do you think that a Bank (as employer) would pay “bankers” (its employees) more than it needs to?
Why does anyone with a big pot of money in front of them take more from it than they need to? Because they can, obviously. Part of protecting the massive sums of money those at the top take is allowing those below them to take huge sums of money as well. Take Bob Diamond at the top and move down. How much any of them took could be questioned if they did not let the layer below take big dollops as well.
In other parts of the world, those involved in government think this way. They assume that as President, government minister etc handling millions they should be paid millions. To protect themselves, they must let their henchmen take big dollops as well. There would be plenty of others wiling to be henchmen for much less, but the system would not work so well if the henchmen were paid peanuts. In those places we call such things “corruption”. So, are you saying white people working in Europe and America are beyond the corruption that comes from handling big sums of money and would instead always take rational decsions involving their own income and that of those surrounding them?
JRC
Workers do have power, even without unions. Those paid an “unfair” wage in the workers eyes, do not use effort. Those that are paid a fair wage exhibit a larger effort. Effort is not directly observable and not contactable, thus this is bargaining power for the employee. The employer will therefore need to pay a relatively high wage and or a bonus. I might see workers as economic units, this however does not make workers less human and more dispensable.
David,
“Theoretical evidence” is indeed a bad choice of words. I meant theoretical work and empirical evidence. The first two papers are theoretical work. The final paper is very recent empirical research freely available online, which shows that an increase in wage for those workers who already receive a “fair wage” does not increase output. Yet an increase in wage for other workers who are paid below a “fair wage” does increase output (frequently more than the additional payment).
Matthew Huntbach well done!
European liberalism IS predominantly something that we in the UK would identify as Thatcherism, indeed if the Liberal Democrats stood for something similar I would tear my membership card up.
Right wing economics have resulted in the society that we have today, with a highly indebted populace who are insecure in their jobs, coupled with an over reliance on an avaricious financial sector which has come at the expense of manufacturing quality products and exporting them across the globe.
For me it also illustrates the importance of groups such as the Social Liberal Forum and the Liberator Collective in ensuring that UK based Liberals remain true to their progressive roots.