Stare at the Sun for long enough and you’ll get blinded—at least to the facts.
The tabloid opened the week by splashing the “news” that “this country is returning to the 1970s.” This claim was explained in terms of a “£1bn” rail strike, plus “threats to bins, schools and post,” all sectors in which workers stand charge with giving a putative 1970s-style wage-price spiral another twist. Deputy PM Dominic Raab sounded very much like he’d been reading it this morning, as he brushed off his party’s byelection battering by simultaneously decrying the industrial action over pay, and trumpeting “high-wage” jobs as the centre-piece of the government’s long-term plan.
There is one obvious echo of that era in rocketing energy costs. But a quick poke around the government’s own statistics is enough to establish that, however much “chaos” may loom in the present, the past is another country.
Let’s concentrate on three things.
First, pay. There is surely an important difference between workers pushing to land themselves big pay rises on the one hand and, on the other, their running to catch up with prices that will otherwise gobble their wages up. And that is also a very clear difference between the 1970s and today.
Take historic series on wages, deflate them by estimates of historic inflation and home in the 1970s—as Our World In Data does here—and you find real inflation-adjusted pay typically inched up something approaching 3 per cent annually. That cumulated into real gains of roughly a third over the decade. An advance that, through all the inflationary chaos of those years, millions of families could see translating in their first colour TV or package holiday.
What about more recently? Fortunately, with the 21st-century numbers, official statisticians do all that fiddling with inflation for us. Unfortunately, what their calculations show is that average real pay across the whole economy this April, at £511 a week, is actually £2 lower than the prevailing rate of £513 in February 2007 (and the fall only gets bigger if you prefer a benchmark of £522, recorded for February 2008). That is now 15 long years where average pay has cumulatively failed to advance one jot.
Of course, averages can conceal a lot that’s important. So, let’s turn—secondly—to inequality, both between rich and poor, and between different types of workers.
Official estimates of the so-called “Gini coefficient,” an inequality measure that ranges from 0 (in a perfectly equal country where everybody has the same) to 100 (for a society where one fat cat grabs the lot) go back to the late 1970s. They record that the income gap widened by about 10 points on this 100-point scale between 1978 and the dawn of the pandemic. The Institute for Fiscal Studies extends the calculations back even further to 1961, establishing both that the late 1970s were in fact the historic low point for British inequality, and also how inequality as of 2019-2020 remained at the stubborn historic heights that have prevailed ever since the 1990s.
Chuck in the documented rise in the risk of poverty specifically for people in work, and the worry today—far more than in the 1970s—is that if wages lag prices then some households will be left trailing unacceptably far behind.
But the current and threatened strikes are not, of course, all about the low paid. The action will instead be concentrated on industries where workers happen to remain heavily unionised, which often means the public sector—hence the Sun’s “bins, schools and post.”
That’s yet another big difference with 1979, when half of all workers across the economy as whole carried a union card. Today the official numbers say it’s less than a quarter overall, and down to 12.8 per cent in the private sector. Is this a recipe for unfairness? Potentially, for sure.
In practice, however, there’s less reason to worry. The IFS finds that while real private-sector pay has crept up 4.3 per cent against a 2010 baseline, real public pay is down by exactly the same proportion. For some public servants, such as experienced teachers, real pay has now cumulatively fallen nearly twice as much. They may not be the poorest, but all our children will pay a price if they lack motivation or drift out of the profession.
Third and finally, it’s worth bringing some perspective to bear on just how big these strikes are likely to be. The official series on days lost to industrial action goes right back to the late 19th century, but the period since the 1950s is enough to make two things clear: first, the “long 1970s”—between the late 1960s and the 1984 miners’ strike—truly was an exceptional period; secondly, that industrial action has been on the floor for the last generation. If a new mood of militancy truly is abound, it has some way to go to get us back to the postwar norm, never mind the “chaos” of the 1970s.
It is important to understand how all these trends on strike days, union membership and the rest fit into a broader political economy. From Harold Macmillan’s National Economic Development Council to the Wilson-Callaghan “social contract,” by bumpy way of Barbara Castle’s abortive reforms and Ted Heath’s “U-turn,” the trade unions were understood to have some sort of irreducible role in the economic governance of postwar Britain. After all, economic policy centred on securing full employment, plus a tolerable inflation rate and balance of payments, via the moderation of wages. That could hardly be done without involvement of those who bargained over pay.
But after the 1980s neoliberal revolution, which I explore in depth in this month’s Prospect, all this changed, and changed utterly. Stable prices became the only aim, and monetary policy the only means. Employment could take the strain, and the unions could lump it—and clear out of the way. To a remarkable extent, this revolution succeeded in marginalising them in ways that went beyond their collapsing numbers. Laws against secondary action, “closed shops” and informal “shows of hands” that triggered walk-outs all sapped their muscle—yet another reason why there can be “no return to the 1970s” today.
But the increasingly stark failure of an avowedly efficient, post-union order to make durable gains on productivity or pay is one reason why so many disruptive questions are today being pressed—and not only by union leaders. There are few easy answers for tackling dismal productivity or arresting inflation if it takes root. Not for anyone, and especially not for a prime minister who, post-Wakefield and post-Tiverton, is firmly on probation. But one final stark statistical contrast with the 1970s may embolden hopes that the 2020s could be different from the 40 years that went before. Daily sales of the Sun, the popular face of neoliberalism in Britain, were nearly 4 million in 1979. In 2020, when they stopped releasing the numbers, that figure was just 1.2 million.
