Labour relations and industrial productivity

Abstract

Britain and Sweden have often been cited to illustrate the contrasting fortunes of post-War European economies. Britain seemed destined to struggle with bad labour relations and comparatively poor levels of output, whilst Sweden established a reputation as a model of corporatist management and high productivity.¹ The industrial turmoil of the 1970s swept Scandinavia as well as the U.K. and blurred this convenient contrast, but it was the dramatic improvement in the performance of British manufacturing in the 1980s which has forced us to reappraise the nature of ‘the British disease’. This improvement has been attributed by a number of writers to the changed climate of industrial relations, as many employers broke with the bad bargaining practices of earlier decades.² The power of the unions has been curtailed if not completely extinguished and resistance to new technologies has been overcome in many of the traditional strongholds of craft production. It seems logical to conclude that the defeat of the unions and the reform of industrial relations have been essential prerequisites of improved output.³ Yet the evidence is, at best, ambiguous. Current debates on productivity in Britain during the 1980s indicate the difficulty of measuring changes in contemporary output and the limits of the data available for such an exercise.⁴ The Swedish economy, and Scandinavia more generally, were historically successfully in combining a steady improvement in output with very high levels of trade unionism.⁵ It was able to sustain this progress during the 1970s and 1980s in the face of mounting pressures on the Swedish model. Established agreements were called into question by the outbreak of large scale strikes whilst dissatisfaction with central negotiations became apparent on the shop floor and in the board rooms of Swedish industry. Wage differentials increased whilst productivity improvements declined during the 1980s, particularly in the export industries. The trade unions were less attractive to manual workers in Sweden as well as Britain and in the opening months of the 1990 the Social Democrats were thrown into crisis by the resistance to their efforts to introduce austerity controls on labour. Sweden seemed to have belatedly arrived at the same impasse which British labour faced a decade earlier.