Unions feel the chill

They've moved with the times, but calls to help manufacturers may not be heeded, says Barrie Clement
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The Independent Online
THE GOVERNMENT is heading for a long, fractious autumn of political conferences during which its policies toward the economy in general and manufacturing in particular will come under sustained fire.

The first barrage will be heard this week at the annual conference of the TUC, where six cabinet ministers will be held to account for mounting job losses and urged to adopt a policy of reflation.

So far, union leaders have got little change out of the Government. Last week the Prime Minister met senior employees' representatives at No 10. The leaders of 6 million workers declared that it was time that the Government put its foot on the economic accelerator.

Tony Blair politely but firmly told them they were wrong. There was no question of a pounds 3bn package to stimulate employment. Mr Blair said that responsibility for setting interest rates would remain with the Bank of England and its duty would be to keep the lid on inflation.

So what do unions want? Is there any coherence to their economic analysis? They have long since abandoned a devotion to the idea of a command economy - although the enthusiasm for the political conversion varies. Only the once-powerful, but now minuscule, National Union of Mineworkers still harbours a vision of wholesale nationalisation and central planning.

The big affiliates to the TUC have now accepted that the electorate and all foreseeable governments support a stable, mixed economy based on a relatively free market. Marks & Spencer rather than Marx.

Central to unions' critique is that while the doors to the corridors of power are now open to trade unionists, there is no sense of "social partnership" as seen on the Continent. Unions want an input into policy- making at the highest level and at the earliest possible stage, but they also accept - indeed are anxious to promote - the idea that employers' opinions should carry equal weight.

A paper drawn up by TUC's Congress House officials earlier this summer envisages a structure involving ministers, employers and unions to advise the Government on "how best to combine real wage increases, low inflation and high employment". Such discussions would centre on how long-term investment could be encouraged and how the productivity of British industry - which still lags behind our competitors - could be enhanced.

Leaders of the labour movement believe that the present economic slowdown cannot solely be blamed on global influences. The gloom has been made considerably worse by tight fiscal and monetary policy, they argue.

Symbolic of the government's attitude to the economy is the terms of reference of the Monetary Policy Committee, union leaders contend. They were highly critical last week of its decision to maintain the rate at 7.5 per cent. John Edmonds, the TUC president, summarises the movement's attitude thus: "Manufacturing industry is being steered on to the rocks of recession by a crew who do not seem to mind how many jobs go overboard as long as they ultimately get to the Holy Grail of low inflation."

He pointed out that the interest rate-setting committee was dominated by representatives of the City and academe. Only one member of the nine- strong group, DeAnne Julius, had recent experience of industry, having worked at British Airways and Shell. She was the only member of the committee to call for an interest rate cut in June, Mr Edmonds pointed out.

In the TUC's view, it was a mistake to rely too heavily on monetary policy alone to maintain growth, investment and employment. Roger Lyons, leader of the Manufacturing, Science, Finance union, says a tripartite taskforce should aim to develop access for manufacturing companies to long-term capital investment on the same terms enjoyed by Britain's main European competitors.

He points out that German industry is supported by specialised investment banks which encourage long-term planning. Companies should also communicate more forcefully to their shareholders the benefits of long-term investment over short-term dividends.

Congress House believes Britain should have signed up to the euro in the first wave. In the absence of such a commitment, it believes the Chancellor should make explicit Britain's exchange rate policy towards the new currency to create a more stable environment for long-term investment.

At home, ministers should bring forward an urgent pounds 3bn "stabilisation package" to prevent a rapid fall in growth and employment.

From the Government's viewpoint, the measures envisaged by the labour movement may smack too much of the Keynesian Seventies when, under the tripartite National Economic Development Council, inflation was regularly in double figures. Ministers may feel a certain deja vu as they listen to union leaders' proposals.