1980s >> 1982 >> no-940-december-1982

The Assault on Wages

Most members of the working class find it difficult to imagine a society without wage earners. Born into a world where the majority of people depend on wages to survive, they imagine that there is something inevitable about this arrangement and perhaps forget that it was not always so. In primitive societies there were no wage-earners; in slave-owning and feudal societies, very few. The preponderance of wage-workers in modern societies is the result of the development of capitalism as a mode of wealth production.

Wages are the price paid by the capitalist employer for the physical and mental energies of the worker for an agreed period of time – typically in this country for a forty-hour week – although the period of time may be much greater, especially among what are known as “salaried employees” or the “executive class” who are nonetheless wage workers like the rest. However, during whatever period of time is customary for the type of work, the employee must accept that any wealth produced, whether in the form of commodities or services, belongs to the employer to dispose of at whatever price the market will bear.

Profit is not something added on by the employer when the product is marketed. A moment’s thought will show that this cannot be so. If it were, then we would need to ask ourselves why profit margins vary so much, why occasionally some employers make a loss, and why they are so concerned about wage levels when all they would need do is add to the costs of production, including wages, a percentage profit

At a time when there is a shrinking and therefore highly competitive market, employers are under greater pressure to reduce wages in order to survive. This downward pressure on wages takes many forms, some of which may not be immediately evident.

In a period of high unemployment employers may present workers with the alternative of a direct cut in wages or redundancy as has happened recently on Sealink Ferries.

Employers may search the labour market for workers who will accept the lowest pay, compatible with efficient work, for example by employing women instead of men, younger workers with smaller financial commitments or immigrant workers accustomed to a lower standard of living. They may even transfer their activities abroad to take advantage of a cheaper labour market. 

The introduction of machinery, or the updating of existing machinery, may reduce a company’s wage bill by making it possible to employ unskilled instead of skilled workers or simply by reducing the numbers of workers required for a given volume of production.

By changing the organisation of the productive process, for example by division of labour, the actual numbers employed may be reduced or production may be increased without adding to the labour force. The stress put on “increased productivity” should sound a clear note of warning for the working class in spite of the fact that many so-called representatives of the workers go along with the idea. Just as the capitalist class consider their interests as a class, so should the working class view their collective interests.

In the road transport industry the increase in the size of lorries is designed to reduce the number of drivers and therefore the total wage bill. Thus we see on the roads today lorries of a capacity many times those used a decade ago – yet still under the control of one driver. A similar development is seen in the size of aircraft, which results in a more intensive use of airfields.

In the retail trade self-service has been introduced wherever practical. For some products, for example groceries, people may welcome the saving in time. Some may deplore the lack of personal service. These considerations do not however enter into the calculations of the capitalist, who will weigh in the balance the cost of installing the self- service system against the saving in wages which may result. This is often a two-fold saving: in numbers of staff relative to the volume of sales and the level of wages required to operate the system.

To maximise profits wages should ideally be just adequate to maintain the worker’s efficiency and to rear children as replacements. When during World War II reformers were advocating a system of family allowances – in this case payment to those with large families – Sir William Beveridge put the matter quite clearly from the employers’ point of view. In a letter to The Times (12 January 1940) he wrote: We cannot in this war afford luxuries of any kind, and it is a luxury to provide people with incomes for non-existent children.

A system of family allowances is not the only way in which wages can be made to fit more closely the minimum needs of the working class. Any form of government subsidy must be viewed with suspicion from this point of view. We may take for example the recent debate on the need to subsidise public transport. Its advocates present such measures as a benefit for those workers who travel to work each day by train or bus. In fact it is only a benefit to employers who would otherwise have to include in the wages of all their employees enough to pay the “economic fare” – whether or not they all make use of public transport. To paraphrase Sir William Beveridge’s comment: “We cannot afford the luxury of providing people with incomes for non-existent journeys”.

We leave to last the most general assault on wages, an assault which has occurred in all those countries which have departed from a currency linked to gold – in other words, those countries using inconvertible paper money. Where paper money is issued, unrelated to the wealth production of a country, then the purchasing power of that money falls. The massive increase in prices which we have seen in this country over the last ten years has been almost entirely due to the excessive printing of paper money; that is, currency inflation which successive governments have employed to meet part of their public spending requirement. In a speech in the House of Commons Sir Keith Joseph reminded MPs that

“The Government had to obtain the money it spends from taxing, borrowing or printing. There is no other source” (The Times 27 January 1981).

and during a debate on exports Michael Neubert (Conservative) stated that

“She (Margaret Thatcher) should emphasise that, if we are not to have higher taxes or higher borrowing leading to higher interest rates, then calls for higher public expenditure can only mean printing money” (The Times 28 October 1981).

The Prime Minister heartily agreed. Nevertheless, the over-issue of currency has continued, though much abated, so that the resulting price inflation still runs at around 8 per cent.

If any worker imagines that the present assault on wages is temporary, he should be warned by a statement made recently by Sir Terence Beckett, Director General of the Confederation of British Industries. The Times (29 July 1982) reported him as saying:

“In practice, employers should try in the forthcoming pay round to keep increases in labour costs down to a ‘remarkable 3 per cent last year’ , as far below those of their overseas competitors as possible. But pay restraint should not be exercised for the next 12 months or the next decade. It is for ever.”

Any government, whether it be Conservative, Labour, Liberal, Social Democrat or “Communist”, is forced to assist in the downward pressure on wages in face of the fierce competition for the sale of commodities and services at a profit.

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