A Policy for Wages

The publication of Mr B. C. Roberts's book on wages policy has revived academic interest in this subject, though there has never been any real possibility of a wages policy on the lines of those adopted in some other European countries, notably Sweden and the Netherlands, being accepted here. In these countries, the main responsibility for fixing wage rates has been given to a central body in the hope that this procedure would help to stabilize both wages and prices, thereby bringing the inflationary spiral to an end. As a secondary aim, it was hoped that centralized wage fixing would bring about a more equitable and rational wages structure than would free collective bargaining. In this country, though we have been faced with the same kind of economic problem, the trade unions have preferred to retain their traditional independence and freedom in collective bargaining.The argument that a centralized wages policy will check inflation rests upon two assumptions: first, that rising money wages are a cause of inflation, and secondly, that centralized wage fixing will in fact lead to a stabilizing of wage rates and labour costs. The Cohen Report showed that personal incomes in this country, in which wages and salaries are the biggest item, have risen more rapidly than output since the war. Between 1946 and 1956, production rose on average by three per cent a year and the wage and salary bill by eight per cent a year. This, however, is not proof that wage increases have been the principal cause of rising prices, or that the wage increases have been the result of irresponsible demands by trade unions

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