The development of collective bargaining in Britain 1945–80 HR Management

By 1945, 15.5 million employees from a working population of 17.5 million (Palmer, 1983: 157) were covered by some type of national agreement. The influence of corporatism, where joint negotiations between employers and trade unions are encouraged by the state, ensured that industry-level collective bargaining became firmly established. The nationalisation programme and the advent of the welfare system ensured that the state became a major employer and indeed, the postwar Labour government enacted legislation which obliged management in the newly nationalised industries to establish negotiating procedures for all employees.

It is incorrect, however, to presume that local or domestic bargaining ceased to be of relevance because of the formal establishment of national bargaining machinery for the majority of British labour by the early 1950s. In fact, the conditions of full employment, coupled with high demand, offered considerable leverage for local bargaining by shop stewards in the less bureaucratic, private manufacturing sector.

  • Negotiation issues

Such local shopfloor bargaining increased wage drift, growth of short informal disputes and a growing tendency for national agreements to be utilised as a bargaining floor upon which local agreements were based, leading to inflationary pressures. This latter point generated concern from a then Labour government, given the problems of introducing and operating incomes policies in the face of informal, unregulated local bargaining and growing inflation.

The growth and economic effect of domestic bargaining was deemed an ‘industrial relations problem’. Batstone et al. (1977), however, found that local shop stewards in the car industry were not, in fact, independently bargaining but remained in close contact with full-time officials. In fact, the Commission on Industrial Relations (CIR) found many managers reluctant to move away from the intimate, local channels of negotiation they had established.

Given, however, that domestic bargaining was a problem for employers who faced increasing international competition and found wage costs difficult to control and was also a potential threat to government economic policy, a Royal Commission was established to examine industrial relations practices and procedures in both the public and private sector. The Donovan Commission reported in 1968, arguing that Britain had two systems of industrial relations, the formal and informal (Donovan Commission, 1968: 12).

In private sector manufacturing, the formal system was based upon national bargaining between employers’ organisations and full-time trade union officials. The informal system was based upon local bargaining between management and shop stewards under the influence of full employment and buoyant demand for goods. Overall, the Donovan Commission argued that workplace bargaining had become of greater importance than national bargaining in the private manufacturing sector.

This local level of bargaining, it was suggested, was ‘largely informal, largely fragmented, and largely autonomous’ (Flanders, 1970: 169) as it was based upon verbal agreements backed by custom and practice. Fragmented bargaining was undertaken by individual or small groups of stewards negotiating with individual or small groups of managers who did not consult with employers’ organisations or full-time trade union officials, and did not respect national agreements.

The Commission argued that multi-employer bargaining on a national industry level could no longer effectively accommodate differentiated working practices throughout the private sector. The responsibility for introducing reform lay with management; local informal agreements were not dismissed, but it was insisted that local agreements should achieve a level of formality such that they did not totally ignore and undermine national agreements.

Moreover, the system of local informal bargaining effectively hampered the development of effective and orderly workplace bargaining: ‘. . . the objection to the state of plant bargaining at that time, therefore, was its doubtful legitimacy and furtive character’ (Clegg, 1979: 237). What was required was a rationalisation of the existing system which would effectively combine the two systems of industrial relations into one coherent, ordered process which did not then undermine the formal rules in multiemployer agreements.

Such reform of the content and structure of existing bargaining arrangements should, it was argued, be undertaken by senior management within their own companies. It was necessary to develop a framework of bargaining issues with extensive procedural agreements where management and trade unions could formally negotiate terms and conditions of employment. Changes in pay should be linked to changes in productivity, establishing a clear connection between formal domestic bargaining and enhanced profitability, with this tactic verified by the National Board for Prices and Incomes.

  • The reform of local-level bargaining

In consequence, most organisations, encouraged by the Conservative (1970–74) and Labour governments (1974–79), undertook voluntary reform of collective bargaining procedures. Using survey evidence from Brown (1981), it was apparent that by the late The development of collective bargaining in Britain 1945–80 471 1970s, single-employer bargaining at establishment or corporate level had become the most prevalent level of bargaining for both manual and non-manual employees.

The basis of this survey evidence indicated that significant changes had occurred in collective bargaining processes since the recommendations of Donovan. It was found that management had facilitated the formalisation of domestic bargaining by recognising shop stewards, supporting union organisation through closed shop agreements and check-off procedures (whereby union subscriptions are deducted by the company from wages and then paid to the trade union account).

It was also noted that industrial sector and size of establishment affected bargaining level where, according to Deaton and Beaumont (1980: 201), single-employer bargaining was associated with larger firms, foreign ownership, multi-site operations and the existence of a professional tier of senior industrial relations management.

The reform of collective bargaining during the 1970s offered clear benefits to trade unions, with increased formal recognition and better facilities (for a critique of the incorporation of shop stewards into formal management/trade union bargaining hierarchy – ‘the bureaucratisation thesis’ – see Hyman, 1975). It became apparent, however, that rapidly rising inflation, growing international competition and greater foreign ownership, combined with state intervention in industrial relations issues, created a climate favourable for management to press for further reforms.

So, for example, there emerged a trend towards decentralisation of bargaining and a growth in formal recognition of domestic bargainers, but there remained considerable variation in collective bargaining processes within British industry during the 1970s.

  • Summary

In the postwar period there was a rapid expansion in domestic bargaining at local level in private sector manufacturing industry despite the existence of national agreements negotiated by multi-employer organisations and full-time trade union officials. The Labour government of 1964–70 was concerned that local bargaining was compromising its incomes policy programme, adding to inflationary pressure and adversely affecting Britain’s competitive performance.

The Donovan Commission was charged with investigating contemporary industrial relations and concluded that Britain had two systems of industrial relations, informal and formal. The solution was to incorporate the two, establishing formal bargaining processes and procedures at the domestic level with an emphasis upon productivity bargaining.

It should be noted that whilst it was recognized that the process of collective bargaining was creating economic and industrial relations problems during this era, there was no suggestion that the practice should be constrained or abandoned, but reformed. Governments throughout the 1960s and 1970s continued to support collective bargaining as the most appropriate and equitable manner in which to establish the terms and conditions of employment.


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