Productivity Agreements

an exposure of the latest and greatest swindle on the wages front

Author: Bert Ramelson;
Publisher: Communist Party of Great Britain;
Published: 1970;
Printer: Farleigh Press Ltd. (TU), Watford, Herts. - CP/C/16/1/70;
HTML Markup: Pierre Marshall.


Cover of the book

The Government’s latest White Paper Productivity, Prices and Incomes Policy1 is but the latest in a mounting campaign, unprecedented in scope, to sell “productivity” agreements to wage and salary earners in this country.

The BBC is beaming special programmes designed to win the stewards to accept productivity agreements, and many employers are giving special time off to stewards to View them; the Universities are pouring out papers, pamphlets and books on the subject; and Barbara Castle writes a foreword commending a book by an academic2 on the subject. Hardly a speech is made by a Cabinet Minister or industrialist without singing the praises of “productivity bargaining”. The popular as well as the “quality” press are devoting thousands of column inches to the theme. The TUC, in addition to co-operating with the BBC in the special programmes, is devoting the major part of their educational syllabuses to “productivity deals”. And as is only to be expected, the ETU/PTU Esher College is organising schools for stewards, branch officials and top business executives to discuss jointly the “boon” of productivity agreements.

The PIB in almost every one of its over 100 Reports manages to plug “productivity”, and it has produced a Special Report3 entitled “Productivity Agreements”, the essence of which is included in Appendix 3 of the Government’s latest White Paper on Productivity, Prices and Incomes Policy.

To underline the importance attached to this subject by the employers, millions of pounds are paid out by them yearly to the hundreds of Industrial Consultancies that have mushroomed in recent years with one purpose in mind, to advise employers how to con workers into falling for productivity bargaining.

The effect of this campaign has been considerable. Barbara Castle boasts in her latest White Paper that “over 6 million workers have been involved in over 3,500 productivity agreements.”4

There is more confusion in the Labour movement on this subject than on probably any other aspect of the wages struggle. Yet in my opinion, “productivity bargaining”, as projected by the Government and employers, is the greatest threat to the workers’ living standards and fighting capacity since the attempt was made to saddle the movement with an “incomes policy” and its stable companion anti-trade union legislation.

The tragedy is that while after a slow start the trade union movement recognised, by and large, the dangers of the incomes policy and its running mate “restrictive trade union legislation” and launched a counter-offensive against it, there is no comparable campaign against the equally dangerous evil of productivity deals. At best some trade union leaders are passive, while others are co-operating actively with the employers and the Government to facilitate their members’ acceptance of so-called productivity agreements.

The purpose of this pamphlet is to express a point of view on the main features of productivity bargaining and the motivations behind the campaign for it, as a contribution to the widespread discussion on “productivity” agreements that is now taking place in the trade union branches and especially on the shop floor, in the hope that it will help alert the movement to the dangers, and contribute towards defeating this new threat to the workers’ ability to achieve, in struggle, a bigger share of the wealth they produce, without undermining their working conditions, or losing the rights they have won in over a century of bitter struggle.

The Philosophy of Productivity Agreements

In essence productivity bargaining is the practical means devised by the employers and backed up by the Government to implement the class biased philosophy of “incomes policy”.

All productivity agreements have one thing in common. They are based on the assumptions that workers have no right to demand and fight for higher wages and salaries if the cost of living rises; or if the bosses’ profits soar; or if other workers’ wages or salaries in similar trades and occupations have risen since the last agreement; or to achieve a fairer division between wages and profits (redistribution of the wealth that the workers and only they create); or even if total output in their work or enterprise has risen. In other words, the underlying philosophy of all productivity bargaining is a denial of what has been hitherto the main and traditional basis of collective bargaining. It requires that wage increases be paid for by the Workers themselves through extra effort and redundancy.

The aim of productivity bargaining is to change the whole basis of collective bargaining from arguing about how much to increase wages, to how to reduce the wage cost per unit of output. And the point at issue in the negotiations centres around how much of the reduction in the wage cost per unit output is to be retained by the worker and how much is to go to the boss in extra profit.

It cannot be over-emphasised that productivity agreements are not concerned with increasing total output and therefore the total wealth of the country, but only with reducing labour costs per unit of output.

It can be argued with justification that productivity agreements far from being an incentive to produce more and contribute to an expansion of the economy can have the opposite effect. They act as a disincentive to expansion. The employer’s sole interest in a capitalist society is to increase profit. That’s what he is in business for. This was stated quite graphically by Mr. Klaas de Waal, shipping manager of the Royal Netherlands Steamship Coy, when criticising the ex-Minister of Transport, Richard Marsh, for his nationalisation plan of the port industry. He said:

“Mr. Marsh should understand that we are not in shipping or stevedoring because we want to do our job properly for the nation. We are in shipping to make profits. We are not in shipping because we must help exporters or because we are building up our country’s image as a mercantile marine nation.”5

If he can increase his profit by reducing wages per unit of output as a result of a productivity deal, the incentive on the part of the employer to produce more is thereby diminished. With the productivity deal his profits can be increased on present or even reduced output.

That’s why the campaign for “productivity agreements” is accompanied by demands for new wages structures and attacks on the system of payment by results, which relates earnings to output, and aims to increase total output per worker, by providing an incentive to increased production.

Retarding economic growth — a deliberate policy

There was a time when we used to hear a lot about increasing the cake if workers wanted more. There was some point to it, for it is a self-evident truth that total output determines a country’s total wealth available for consumption. The workers’ justifiable fight then was how the cake should be shared out.

But we don’t hear so much now about increasing the size of the cake. With the increased propaganda for productivity agreements, a curtain of silence has dropped on the "increasing-the-size-of-the-cake" argument. For the “productivity bargaining” merchants are quite content with the present or even a smaller cake; what they are concerned with is to slash the numbers who bake the cake, thereby reducing the workers’ share of it.

After all, Barbara Castle, Roy Jenkins, Harold Wilson, Aubrey Jones, the CBI, and the Press Moguls, who are all champions of productivity bargaining are also the architects of the Government’s economic policies designed to hold back the growth of the economy, in short to reduce the size of the cake. And this is a deliberate policy reflecting the interests of big capital.

It’s no accident that the drive for productivity agreements gained its momentum in a period when the economy, as a result of Government action in the interest of the employing class, is prevented from growing, is kept at near stagnation.

It’s precisely in such conditions, when the greed for increased profits is hard to satisfy by increasing total output, that the employers see increased exploitation through the means of productivity agreements as the main way of increasing profits.

That doesn’t mean that the pressure to replace traditional wage bargaining with productivity bargaining is a temporary phenomenon, which will disappear, if and when the economy begins to grow. The employing class, so long as they remain employers of labour, will never give up their drive to increase their profit by raising the intensity of exploitation of their workers. And productivity agreements are ideally suited for that purpose. What it does mean, however, is that in a low growth phase of the economy, the drive for productivity agreements, as the sole means for wage and salary increases and as a device for reducing the labour force, assumes a special urgency.

Profits and the technological revolution

The rapid technological changes in production are also an important factor in the employers’ frantic efforts to replace traditional wage bargaining, existing working conditions, and wage structures based on payment by results, with “productivity agreements”.

Two features of the technological revolution are directly responsible for the employers’ mania for “productivity agreements”. Both are related to their irresistible drive to maximise profit.

Modern equipment once installed leads to a rapid increase in output with the existing labour force. The extent of the increase may be judged from the following example in the Docks industry.

“A container ship carrying 1,400 containers — and these are of various sizes up to 40 ft. — which is in fact a very large vessel, can be discharged in under 48 hours, whereas a conventional cargo liner could take up to 3 weeks.”6

While the new wage offered to the dockers is £36, it is merely £4 more than present average earnings and in contrast to the tremendous increases in productivity it amounts to a rise of only 8%. No wonder the dockers are less than enthusiastic about the highly publicised “generous” offer of the Dock employers. The strings attached include shift working, mobility, multi-job working, and giving up the right to a significant share in the phenomenal increase in output.

In the absence of productivity agreements workers would share the benefits of increased output. Where some form of payment by results operates, their earnings would rise with increases in output. Even where earnings are not based on payment by results, increased output would be a powerful argument for wage increases.

But productivity agreements exclude any such possibility. The lion’s share of the benefit from the new equipment or increased productivity would go into the profit kitty. The PIB Report on Productivity Agreements spells it out that increases in the workers’ earnings under a “productivity agreement” must come only from their own contribution to efficiency. They must have no share in increased efficiency from changes in equipment etc:

“Particular care also needs to be taken to distinguish the contribution of workers from other sources of more efficient working.”7

The whole object of a productivity agreement is to divorce earnings from output. In conditions of rapid change in technology with consequent increases in output per worker, it is the ideal set-up for the profit-hungry corporations to deprive the workers of their share in the benefits of technological advance.

The arguments used to justify this robbery by employers and Government alike, that capital and not labour is responsible for the increased productivity resulting from capital investment, is as phoney as all the other arguments used to “justify” productivity deals.

The whole modern trend is to operate on a profit-rate high enough to accumulate sufficient funds to pay for modernisation, called “self-financing”. The source of the capital invested in scientific and technological advance is therefore profits, the wealth produced by the workers for which they receive no payment. It is, therefore, labour that pays for the modernisation of plant. Yet productivity agreements, unlike the traditional wages structure, preclude workers from sharing in the benefits of modernisation.

Productivity at the workers’ expense

The other feature of the technological revolution relevant to this discussion is the expensive nature and relatively short life of the latest, most modern equipment. Thus in the 1930’s the average depreciation period of equipment was 25 years, in the 1950’s 15 years, and in the 1960’s only 5 years. To extract the maximum profit the employers are desperate to keep the equipment working continuously, and eliminate or reduce to the minimum “non-productive” time. This is why a common feature of “productivity” agreements is to increase shift work, eliminate tea breaks, washing, cleaning-up and waiting time. The consequences are certainly increased profits for the employers but a disastrous undermining of working conditions, heightened tensions, and a disruption of social and family life for the workers.

There are two other major and related features in the post-war economic and industrial life of the country acting as a spur to the employers and the state to establish productivity agreements as the sole means to determine wages and salaries.

In the post-war economies of all developed capitalist states, including Britain, there has been a growth in the size, strength and militancy of the trade unions, particularly on the shop-floor, and also persistent inflation, with as a consequence, a continuous rise in the cost of living.

We cannot discuss here in detail the causes of inflation. The undisputed fact that inflation has been a constant phenomenon in periods of wage stand-stills, as well as of wage increases, and in all capitalist countries, irrespective of the level of wages and earnings, is sufficient evidence that wage increases make only a minor contribution, if at all, to the modern phenomenon of continuous inflation.

What is relevant to this discussion is that the combination of strong workshop organisation, the highly developed shop steward movement, the existing wages structures, and traditional wage bargaining, enables workers through their shop stewards to be involved in frequent, if not continuous bargaining, to achieve improvements in wages and earnings to compensate for rises in the cost of living.

Basic to productivity agreements is the elimination of workshop bargaining during the life of a productivity agreement (often lasting considerably longer than a year), and the exclusion of rises in the cost of living as a justification for increases in wages and earnings.

Such agreements from the bosses’ point of view kill two birds with one stone. By limiting the shop stewards’ negotiating role, his function and status is undermined, workshop organisation weakened, and the entire burden of inflation is passed on to the workers.

The Anatomy of a Productivity Agreement

It is estimated that there are over 3,500 productivity agreements in operation and many of them took months, and some, years to negotiate. In the course of the recent couple of years and in the preparation of this pamphlet I have scrutinised several hundred of them. The over-riding impression one gains from studying them is their striking similarity: the similarity of conditions and objectives common to all of them, regardless of the industry, plant or enterprise they cover.

They only differ in the amount of verbiage and the particular jargon used to describe the same aim. This is so whether you examine the Pay and Efficiency agreements for the Railway industry, the Pay and Productivity agreement covering Electricity Supply, the Vauxhall or Ford agreements in Motors, the ICI or Docks agreements, or the scores of productivity agreements applicable to small or middle-size plants. What are the common elements?

Clauses designed to eliminate the workers from having any say in the tempo, pace and process of production and restore the sole prerogative to management

The main means of achieving this aim is the insistence in all productivity agreements on introducing where it doesn’t already exist work measurement and the management’s right to allocate the labour force as it thinks fit.

While there are scores of different methods of work measurement, what is common to all of them is that the time and method, and often who is to do the job, is taken out of the field of negotiation between the workers’ representatives and management, and becomes the sole prerogative of the management through the device of bringing in a consultant, or permanently employed “efficiency expert”. In either case they are paid by the employer to determine the time and method of doing the job.

This is, of course, nothing new. The workers have been fighting for decades against the introduction of the stop watch, and the multitude of more refined methods of the same thing, passed off as “works study”, to make it appear as something “objective and scientific”.

There’s nothing objective or scientific about it. As every experienced worker knows, and even the TUC manual has to admit, it is a highly subjective exercise, and a subjectivity heavily biased in favour of the bosses: the “efficiency merchant” is the piper, and the boss who pays him calls the tune.

But what is new, is that the concept of “work measurement” is smuggled in as part of a productivity agreement in industries and plants where it has been successfully resisted for years, and also that it is now rapidly spreading to offices and designing departments, to non-manual workers.

Clauses aimed at reducing the total labour force with the proviso that the level of output is at least maintained

The objective of cutting the labour force is never left as a vague hope. The means to achieve it are usually spelt out in precise terms, eg:

The undertaking to provide special training for craftsmen and production workers to use tools and acquire a degree of skill enabling them to do these jobs outside their normal sphere is irrelevant. The fact remains that the effect of these conditions contained in productivity agreements is to reduce the number of workers required to maintain the same level of output, and results, in a very short time, in a reduced labour force.

The latest example to illustrate this is the reduction by 11,000 out of a total of 140,000 workers employed in Electricity Supply during the last 12 months alone, as a result of the Pay and Productivity agreement in that industry.

Similar examples can be given from the Railway industry. Thousands of railwaymen lost their jobs as a result of the clauses in the Pay and Efficiency agreement on “versatility working,”8 reducing the total wages bill by £2 m., despite the wage increases resulting from the agreement. Nor are such effects restricted to manual workers. Large scale redundancies in offices, and other enterprises employing non-manual workers, is the common experience where efficiency or productivity agreements have been concluded.

Clauses providing for the elimination or drastic reduction of “non-productive” time

This is a fancy phrase to describe doing away with standard tea breaks, washing after a day’s work, a few minutes after clocking in before getting down to the grindstone, and sometimes even specifying how much time should be allowed for responding to the call of nature. This is far from a trivial matter. It can make all the difference between working under constant strain, with the harmful effects on health and safety, and working under more relaxed conditions.

It’s extremely doubtful whether such pressures and continuous work without a periodic break lead in the long run to greater efficiency. The weight of industrial research goes to show that a major factor in strained industrial relations and consequent inefficiency is due to the strain and monotony of modern production. Anything which increases the strain and eliminates breaks in the monotony of work not only constitutes a threat to the health of the workers and increases the hazards of industrial accidents; in the long run, it reduces efficiency. But the employers’ insatiable greed to squeeze the last bit of energy out of his workers blinds him to the long term harmful effects on efficient production, and is the reason why such clauses find their way into most productivity agreements.

In many cases the elimination of tea breaks and washing up time provides the employer with the means of paying for a considerable proportion of the offered wage increase, with most of the rest of the concessions made by the workers adding to the employers’ net profits. Thus if we assume the average tea break and washing up time to be only two hours a week, this alone would provide the employer with the means of offering a 5% wage increase paid for directly by the workers.

Clauses to increase the total time equipment is used

Double and treble shift working, staggered shifts, rostering and compulsory weekend working are the most usual conditions contained in productivity agreements to achieve this aim.

Provision for reduction in overtime working, or even the total elimination of overtime, often to be found in productivity agreements is not due to the gaffer’s sudden concern for what the long hours of overtime means for his workers. Overtime is often an obstacle to the introduction of multiple shift working and is costly to the employers because of the premium rates it carries. To do away with overtime is another means of boosting profits, especially as it is often stipulated that the worker must produce as much during normal hours as previously with overtime, and that if overtime should become necessary it will not carry a premium rate but be, compensated by time off. That is not to say that overtime working is desirable. But the way to end unnecessary overtime is to fight for and achieve an adequate basic wage for a normal week’s work.

The most recent productivity agreement at Fisons fertilizer plant at Immingham, Lincs, is a good illustration of the common pattern. In exchange for a wage increase the workers have agreed to:

  1. “Seven-day operations on a rostered day-work system;
  2. Greater flexibility in the use of manpower;
  3. Craftsmen working without mates and doing non-specialist work in other trades;
  4. An end to official tea breaks;
  5. Simplified wages structure cutting 22 job grades to eight.”9

So far I have dealt with those aspects of productivity agreements which are obviously of benefit to the employers and make the greatest demands on the workers. What about the workers’ quid pro quo, the bait to tempt the workers to sign on the dotted line?

The money bribe

The juiciest bait is to offer what appears to be a handsome wage increase relative to the derisory increases negotiated by traditional means over the‘ last few years when incomes policy and wage restraint have dominated wage negotiations.

In reality, these money offers are far from what they seem. In many cases the new basic rate is often little more than the average earnings in the industry or plant, and is offered as a new basic rate for a normal working week, replacing the payment by results system in operation, and eliminating or reducing overtime. While it appears to be a big advance in the basic rate, no longer dependent on output and therefore not subject to fluctuation, with a reduction in total hours worked, in essence it is a consolidation of earnings into a flat time-rate. Some who may be earning above the average could actually lose by it.

The following clause in the latest productivity agreement for the building industry, signed December 18th 1969, and lasting for two years, illustrates this point.

“It is the intention that unofficial payments10 in excess of existing standard rates shall be overtaken and absorbed in the new and higher standard rates.”

Nor is it true that the wage is no longer related to output. Any drop in the output rate which yielded the average earnings would bring the management down on the workers like a ton of bricks. A worker falling consistently below the expected output, based on work measurement, would face the sack. That’s the essence of measured day work, the basis for payment in productivity agreements.

The big disadvantage in earning capacity is that the possibility of earning above this new basic rate is ruled out in most agreements, and in a minority of cases earnings above the new flat basic wage are reduced to a minor factor in take-home pay. The shorter working week due to the elimination of overtime is also illusory. As I pointed out earlier, the same output is expected in a normal working week as was produced when there were bags of overtime.

Productivity agreements based on eliminating the differential between wages and earnings, far from yielding higher pay packets than traditional agreements, in the long run actually keep earnings well below them. This is not idle theorising but can be easily proved as fact.

The big campaign for “parity” in the motor car industry of the Ford and Vauxhall workers is due precisely to the fact that Fords and Vauxhalls are factories where productivity bargaining has been the basis of wage negotiations for years, whereas traditional payment by results bargaining operates in the Midlands motor car factories.

The result has been that the Ford workers’ “parity” claim was based on a calculation that they earned nearly £10 a week less than in the Midlands.

No wonder the BLM management in the Midlands has for some time now been flying kites to prepare the ground for going over to productivity bargaining.

Who pays for the increase?

As we have seen, some of the carrots of “big increases” dangled by the advocates of productivity agreements are illusory. But it is true that in some cases a substantial increase is actually offered. As I pointed out earlier, however, even where that is the case it will soon be eroded by inflation with no opportunity during the lifetime of the agreement to negotiate increases to maintain the purchasing power of the wage packet. Perhaps the best example to illustrate this is to quote the results from the agreement at the Esso Refinery at Fawley, the first and most quoted productivity deal in this country signed in July 1960.

To sell the agreement to the workers they were offered a wage increase of up to 40% which included increases in 1962 and 1963. The bait was the promise of the highest wages in the country. Alan Flanders, the architect of the deal (now a member of the CIR) in his book describing in detail this agreement says:

“Fawley management had declared in its Introduction to the Blue Book that one of the aims was ‘to place our employees among the highest paid in the country’. This had been achieved.”

But what were the actual results. For four years between 1963 and 1968 there were no increases at all. Between 1960 and 1968 inflation (at an annual rate of 4%) swallowed up the 40% increase. No wonder then that Fawley workers, as a result of the agreement, were left behind in terms of real earnings. And here is the evidence for it:

“We did a recent survey in the Southampton area in the oil industry, chemicals, shipbuilding, heavy electrical, light engineering, a nationalised industry and a contracting industry. We found in these eight industries, on hours worked in the week it was lowest; and on total weekly earnings it came sixth out of the eight.”


But that is not the whole story by any means. Whatever the increases in money terms agreed upon, it is not only not paid by the employers, it is paid for several times over by the workers themselves.

The guide lines for productivity agreements laid down by the PIB12 and repeated as Appendix 3 in the latest Government White Paper on Productivity, Prices and Incomes Policy make it clear that the workers affected by a productivity agreement must not only pay for their own increases. They must also bear the cost of redundancy payments to workers who have been made redundant as a result of the agreement. They must shoulder the cost of any consequent increases in the pay of foremen and supervisors, and contribute towards the cost of reducing prices which would rarely come about in any case. And to really rub it in, the workers are expected to pay the fees of the consultants hired by the employers to advise them how best to put over their swindle. Here are the relevant passages from Appendix 3 which spell all this out.

“3rd Guideline: A realistic calculation of all the relevant costs of the agreement and of the gains attributable to the workers‘ contribution should normally show that the effect is to reduce the total cost of output or the cost of providing a given service. ‘Relevant costs’ may include, for example, the cost of redundancy payments or a proportion of consultants’ fees where they are an integral part of an agreement, and these should be apportioned as necessary over a reasonable period rather than charged only to the first year following the agreement.

“4th Guideline: There should be effective controls to ensure that projected increases in efficiency are achieved and that higher pay or other improvements are made only when such increases are assured. In order to observe this guideline managements must operate effective controls, including an information system which makes it possible to estimate in advance, and subsequently monitor, the extent to which increases in efficiency are in fact being achieved. In so far as the information system shows that progress exceeds or falls short of the original projection, some adjustment may need to be made.

“5th Guideline: There should be clear benefits to the consumer by way of a contribution to stable or lower prices. This guideline is of particular importance in areas of rapid economic expansion, since the most needs to be made of opportunities to reduce prices in these areas in order to contribute as much as possible to raising the real incomes of the community as a whole. In some cases the community may benefit by an improvement in quality while prices remain unchanged or by the use of the gains to compete more effectively in export markets.

“6th Guideline: An agreement applying to one group of workers only should bear the cost of consequential increases to other groups, if any have to be granted. An example would be if supervisors have to be given a pay increase to prevent the disappearance of a differential as a result of a pay increase granted to the workers whom they supervise.

“7th Guideline: Negotiators should avoid setting levels of pay or conditions which might have undesirable repercussions elsewhere. Where large increases in pay are shown to 'be justified negotiators should consider the possibility of staging the increases over a period of time or, alternatively, of a non-recurring lump sum payment. Failure to do so might raise expectations for future increases which could not be fulfilled and might also, because of the exceptional size of the increases, have repercussions which would eventually rebound on the undertaking granting the original increase.”

There is one additional item of course not mentioned in the guidelines but taken for granted. In addition to paying for his own increase, redundancy payments for the sacked, the supervisors’ increase, the consultants’ fees, and allowing for price reductions which never happen, there is the very important additional contribution the workers must make, and that is a hefty contribution to increased profits. From the employers’ point of view, this is the whole point of the exercise.

The greatest stress is laid on the fact that productivity agreements must be effectively costed to take into account all the above guidelines and not be based on mere expectations of increased efficiency and productivity. It is extremely doubtful whether even management with all the aids of the latest techniques of work measurement and computers can make an accurate estimate of increased productivity and efficiency in terms of extra production or services resulting from a productivity agreement. It can only be at best an approximation. It stands to reason that as the workers cannot possibly have the necessary information to make their own estimates, and even where they do, they have to rely on information supplied by the employers, the result of such “costing” will nearly always underestimate the productivity gains. The Pay and Productivity agreement in Electricity Supply is a good example of this. Productivity rose considerably more than originally estimated, and is the real reason for the £100m. profit made last year.

It is sometimes argued that some of the productivity agreements are phoney. I think the number of such agreements is exaggerated. But what is really important is that even if some “first generation” productivity agreements do not conform to the specific guidelines, their introduction will have established the principle, and there can be no doubt that in subsequent agreements the “phoney” aspects will be eliminated.

No Redundancy Clauses

As the biggest resistance to productivity agreements is the workers’ fear of redundancy, the employers, to break down this resistance, include a no redundancy clause in the agreements.

The first thing to note is that these “no redundancy clauses” are not based on undertaking to retain the existing labour force. On the contrary, they make clear that the objective is a reduced labour force but agree that the reduction should take place through “natural wastage” and “voluntary redundancy”, not by sacking workers.

By “natural wastage” is meant reduction as a result of deaths and workers reaching retiring age. It, therefore, means bargaining away the jobs of the rising generation. It means less jobs for school leavers, and is undoubtedly a factor in the rising rate of unemployment among school leavers. It means less jobs for the workers’ children, as well as lessening the opportunities for the over 600,000 unemployed to find a job.

It also means compulsory retirement at 65 in a society where the state pension means a life of poverty. It means throwing out on to the streets many who have worked a lifetime in a factory, but who feel fit and active and might want to continue at work.

Once the agreement is signed the pressures are on for workers to accept “voluntary redundancy” and many workers accept the “lump sum” payment in the hope of finding alternative work. Thousands of workers who have accepted voluntary redundancy have spent up the redundancy pay and are still looking for a job. But even those who do not become redundant, and are young and fit enough to work, are far from secure in their jobs because of the “no redundancy” clause.

Capitalism cannot provide security of employment. Capitalism cannot guarantee an expanding market, or even a market for current output. Increased output as a result of increased productivity may not find a market, and this may still lead to lay-offs and redundancies.

The notorious ICI">ICI/MUPS agreement is a good illustration of this. It includes an “annual salary” clause giving the impression of guaranteed work for a whole year. But the following qualifying clauses show that it has not eliminated the insecurity of lays-offs, and presumably, if the condition referred to persists, redundancy:

“Although it is the Company’s intention that there should be full stability of earnings in all normal circumstances, there are two cases in which it will not be bound to pay the weekly salary to an employee. The first case is that salary need not be paid for any period in which that employee has, by his own words or actions, shown himself to be unavailable for work. In this case the weekly salary may not be payable at all or may be proportionately reduced. The second case is where production is dislocated either by strike action of others or by circumstances beyond the Company’s control. In this case, too, the weekly salary may not be payable at all or may be proportionately reduced, but the Company will ensure a week’s notice to each employee before any salary change is made.”

Workers’ Participation

As I have argued earlier, productivity agreements undermine the role and status of shop stewards and undermine workshop organisation.

Fearing that this would provoke resistance from shop stewards and militants, great stress is laid in most agreements on shop stewards’ participation at all stages of negotiation of the agreement. Indeed, the current propaganda is that productivity agreements will enhance the role of shop stewards. Unfortunately some trade union leaders argue along similar lines.

But what are the facts? The guidelines for productivity agreements which include acceptance of all the harmful principles are decided nationally, between national union officials and the employers’ federations or top executives of the non-federated giants. Such guidelines usually cover the acceptance by workers of “work measurement”, “elimination of non-productive time”, “transferability”, “mobility”, “multi-job” working, etc.

What’s left for the shop stewards is to bargain how to implement at plant level these agreed conditions (not whether they are acceptable or not) and the price the employers are to pay for them. Even the price is only marginally negotiable, since it is largely determined by the “costing” information supplied by the employers. In some productivity agreements this limited role for the shop stewards doesn’t exist, e.g. Electricity Supply, Electrical Contracting and. the recent agreement in the Building industry. In all these industries detailed comprehensive productivity agreements were negotiated and Signed by national trade union officials without any consultation, let alone participation, of shop stewards at any level.

Fringe Benefits

A number of agreements offer improved holidays, payment for sickness and improvements in pension schemes. The cost of these “benefits” are included in costing the scheme and are therefore paid for by the workers. There is no reason why improvements in fringe benefits cannot be obtained in traditional negotiations. After all, holidays, sickness payment and pension schemes have been negotiated long before productivity agreements came on the scene.

Summary of Arguments

The productivity agreement is the latest and most sophisticated technique devised by the ruling class to implement its main objective on the wages front — “incomes policy”; that is, to limit wage and salary increases to a portion of the results of increased efforts on the part of the workers; or to use an old-fashioned, but nonetheless true description of what is involved, to increase the rate of exploitation.

Its purpose is to replace traditional bargaining based on a true reflection of the balance of strength at any given time between the organised workers and employers. The intention, and this cannot be over-emphasised, is not to provide a supplementary means of collective bargaining, but to do away with traditional collective bargaining on a national, firm or plant basis. The aim is to deny workers the right to use their collective strength to demand and achieve increases through struggle, on the basis of furthering their inalienable right to a greater share of the wealth they produce, eating into enhanced profits, compensating for rises in the cost of living, and levelling up wages to that achieved for comparable work elsewhere (comparability). Above all, the aim is to restore to managements the sole prerogative to decide the allocation of labour, manning, tempo and pace of work, and what jobs and tools a worker should use (really dilution of labour). In other words, the plan is to deprive the workers of the limited encroachments they have made on managements’ prerogative to be in sole control of the workers’ environment and the process of production. The Grand Design is to ensure that the bulk of the benefits of technological change accrue to the bosses and not to the workers.

Shop stewards

Central to the employers’ objective is to use productivity agreements to destroy the shop stewards movement and workshop organisation. The aim is to convert the shop stewards from being the key lay trade union officials leading the daily class struggle at the place of work, into staff men with the major task of monitoring the successful operation of the productivity agreements; and, as a cover, to permit them to deal with petty grievances, and to act as trade union administrative clerks, collecting dues, transmitting national trade union directives, etc.

What has given urgency to the employers’ and Government’s drive to foist productivity bargaining as the sole method of wage negotiation in the present situation is a combination of economic, technological and political factors.

The post-war economic situation for a variety of reasons (some transient) has considerably reduced the size of the permanent army of unemployed, and combined with the increased strength and militancy of the trade unions (particularly at shop level) has improved the bargaining position of workers by traditional methods. The other factor has been the comparative failure of state sanctions to impose wage restraint on behalf of the employers, and therefore the need to find other methods to supplement the state’s continued efforts to impose wage restraint.

The rapid technological changes that are taking place continuously, in conditions where wages structures are largely based on payment by results, provides an avenue for workers to share in the increased yields resulting from technological advance. Productivity agreements, especially as they cover, in the main, a relatively longer span than a year enable the employers to hog the bulk of the benefits of technological change for the duration of the agreements.

The so-called benefits to the workers, when closely examined, are largely illusory, and can all be achieved, given militant struggle, through traditional bargaining without surrendering the numerous rights and gains achieved in a century of struggle.

What must be emphasised is that the second round of productivity agreements will weaken the workers’ bargaining position even more. Some of the rights “sold” will not be there to sell again. There will be no labourers’ jobs to sell, nor “unproductive” time, nor transferability, nor mobility. And as productivity agreements are based on strict costing, the increases offered in the second round are bound to be considerably less, while the door to traditional bargaining will have been firmly closed.

It is argued that increased productivity is essential to the well-being of the economy as a whole and therefore to the country. It is not the function of a trade union to make capitalism work. Its function is to defend and advance the interests of the workers it represents. To the extent that the trade unions succeed in their task, they advance the interests of the overwhelming majority of the people, the wage and salary earners and their families.

Phoney arguments on productivity

But the whole argument on productivity agreements is phoney. The main means of increasing productivity is the modernisation of industry resulting from big increases in capital investment. It is the Government’s policy on behalf of big capital, the freeze and squeeze and deflation, which reduces consumption and inhibits investment. This is what is responsible for holding back productivity. Increased efforts by the workers can only improve productivity marginally. The real purpose of productivity agreements is not so much to raise productivity but to increase exploitation and profits.

Jack Jones, General Secretary of the T&GWU, commenting on the Government’s guide lines for Productivity Agreements in the first issue of the newly designed Union journal “Record” said:

“Far too much emphasis has been placed on trading away hard-won rest facilities and reasonable protective practices for minimal and doubtful gain and insufficient recognition of the main source of productivity improvement through the use of better-trained management, improved layout and the introduction of advanced machinery, plant and equipment.”

“A cause of hostility towards productivity bargaining is the growing emphasis placed by employers on strict managerial control of manpower assignments and performance standards. It appears that this approach is encouraged by the DEP

No one should really be surprised at this. The DEP approach sums up the whole point of the exercise. To think that it’s possible to negotiate productivity agreements by ignoring the Government’s guide-lines is illusory.

Closely related and stemming from the campaign for productivity agreements is the growing emphasis on plant bargaining as against industry-wide bargaining. Indeed, the Donovan Report made plant bargaining one of its central recommendations. It certainly has its attractions for many militants, particularly in well organised plants.

So long as plant bargaining is supplementary to, and not a substitute for, industry-wide bargaining, and so long as it is confined to bargaining on payment by results agreements, relating earnings to output, it can be a useful way of increasing take-home pay and can encourage other workers in similar jobs.

'But that is not what Donovan and the employers are after. They aim to use plant bargaining to impose productivity agreements and eliminate payment by results. Payment by results has been an important factor in lifting earnings and enhancing the status and authority of the shop stewards. Plant bargaining as the sole or even the main means of determining the level of earnings would lead to the fragmentation of the struggle and would militate against a nationwide united struggle on wages.

Nor can the movement be unconcerned about the earnings of millions of low paid workers in sectors of industry or plants where organisation is poor and the bargaining position inadequate.

That is why there must be the greatest vigilance to ensure that plant bargaining does not become the thin end of the wedge, replacing regular industry-wide negotiations for higher basic wages, supplemented by local bargaining on the basis of payments by results, with “productivity agreements”.

An Offensive Strategy for Trade Unionists in Modern Conditions

To expose and condemn “productivity bargaining” as defined by the employers, the Prices and Incomes Board, and the Department of Employment and Productivity is not to be a “luddite”, or to be unconcerned with the state of the economy, or our competitiveness in the world market. It is an old trick of the employers and their establishment to accuse militant workers of “luddism” when they resist attacks on their living standards, working conditions and the fighting capacity of their trade unions. It is a trick as old as capitalism itself.

The real “luddites” are those in the Government and on the Boards of the giant monopolies who deliberately hold back the fullest utilisation of our economic capacity. It is their policies which have held back the economy, under-utilised existing plant, and condemned hundreds of thousands of workers to become redundant and swell the army of unemployed. This is because they are motivated not by the desire to achieve maximum use of plant and labour, but by the greed for maximum profit.

Workers are very much concerned to increase the total wealth produced. They realise full well that the technological revolution cannot be put into reverse gear, and that it would not be in their interest to do so even if it were possible. But the primary task of the trade unions must be to fulfil the function for which they were created in over a century’s bitter struggle against the employers and the state. That function is to extract from the employers the biggest possible share of the wealth the workers produce, the best possible working conditions, and an increasing say in determining the environment in which the workers spend their working life. The size of that share, the sort of working conditions and the degree of determining their working environment always has and always will be determined, while capitalism exists, by the readiness to struggle of the working people, and the organised strength and democracy of the trade unions. At all times it will reflect the balance of strength between the organised workers and the employers.

Our opposition to “productivity agreements” is precisely because in conditions of rapid technological change, inflation and relative growth of trade union militancy, they are an obstacle to maximising the workers’ share and an obstacle to trade union development.

The urgent need: radical changes in Government policy

For the trade unions to fulfil their function in these conditions an offensive strategy is essential. Such a strategy must be both political and industrial in concept. The trade unions at every level must be ready to use their full strength in the political arena and in the field of collective bargaining.

To achieve really significant advances in productivity requires a radical change in the economic and political strategy of the Government. It requires an end to the policies of economic restriction which inhibit investments and limit the consumer market. It requires a halt to many of those mergers and take-overs aimed not at achieving more efficient production but at restricting competition and increasing profits.

It requires a fight for an expanded economy, and that means the fullest utilisation of plant and labour available. It means an end to deliberately created unemployment, and an end to Government intervention aimed at keeping down the workers’ purchasing power through wage restraint, whether by the use of legal sanctions or by influencing collective bargaining through Government agencies such as the PIB (soon to be renamed CIM) or by “voluntary” norms and guide lines.

It requires a fight against the search for the most profitable investments abroad and the waste of a big slice of our wealth on military expenditure at home and abroad. Here is a vast fund which could be used to modernise and found new industries at home.

The TUC is on record, by and large, for such a radical change in policy. But the organised labour movement needs to use its considerable strength to fight for its implementation. An essential part of the offensive strategy is to raise the level of the political struggle to implement these policies. The other essential and more easily attainable aspect of such an offensive strategy is the struggle in the industrial field; the direct confrontation between the workers and employers.

Increased productivity through the fullest utilisation in the most efficient way of modern technological development, while desirable, cannot be an end in itself. It is the task of the trade unions to safeguard the workers’ interests, to ensure that workers benefit and do not suffer from changes in production.

By definition increased productivity means the same output with a reduced labour force, and no amount of “no redundancy” clauses can prevent that happening in the fairly short run. Increased productivity in conditions of a stagnant market must lead to large scale unemployment.

What then is the answer? It is not to become modern Canutes and undertake the impossible task of holding back the fast tides of technological and scientific advance. But neither is it to fall for productivity agreements which can only aggravate the problem for the workers.

The answer is an offensive strategy based on safeguarding the interests of the workers, and ensuring that they benefit from technological change through higher living standards, improved working conditions and a greater say in the process of production. Basic to such a strategy is:

The fight for higher wages and earnings

An expanded home market is essential to absorb the increased output resulting from increased productivity with the existing labour force, and reabsorb into the labour force the over 600,000 at present unemployed.

The bulk of the purchasing power on the home market is the aggregate take-home pay of the wage and salary earners in this country. That is why increased wages and earnings are essential not only to improve living standards but as the main factor in securing jobs. But to be effective it must be a real increase in wages and earnings, not eroded by inflation, with the workers benefiting from increased output.

The only way to achieve this is a wages policy based on regular (annual) negotiations for substantial increases in basic wages, with no strings attached, as most strings are aimed in one form or another to reduce the labour force, out the workers’ share of what they produce, and raise the intensity of work. The acceptance of strings would therefore fail to achieve the objective of the sort of wages strategy needed. The amount of the increases must be related to changes in the cost of living, the profits of the industry or firm, increased productivity arising from changes in method of production, changes in rates in comparable spheres of work, as well as an improvement in the worker’s share of the wealth he produces.

Payment by results and other incentive schemes have become an important feature of the wages structure in large sectors of industry, particularly in manufacturing. They have played an important part over recent years in the struggle to improve take-home pay, and provide workers with a means of sharing the benefits of changes in the production process. Such incentive schemes have nothing in common with “productivity agreements”. On the contrary, one of the objects of “productivity agreements” is to do away with them.

An offensive wages strategy would include the retention and improvement of payment by result schemes, as a means of supplementing earnings over and above a decent basic wage. Unlike productivity agreements, payment by results ensures that the pace, work load, manning and the price is determined in negotiations between the workers’ representatives and management, and must be mutually agreed and not predetermined by an outside consultant or management “efficiency expert”. Also, unlike “productivity agreements”, payment by result schemes in no way replace normal and regular bargaining on an industry-wide basis for increases in basic wages. But the greatest of vigilance must be exercised to prevent management’s attempts to infiltrate “productivity agreement” conditions into a payment by results scheme, and thereby Whittle away the basic principles of a positive payment by results scheme, that is, mutual agreements negotiated between workers representatives and management on pace, load, manning, and price; and the right to re-negotiate whenever changes in the process of production take place.

This is not to say that payment by results schemes are always the ideal systems of payment—they are not, and sometimes cause divisions. But in establishments where good trade union organisation has been built up, this has been able to offset divisive tendencies. Often the struggle around payment by results has been the means of building strong plant trade union organisation and enhancing the authority and role of the shop stewards.

A reduction of working time

The pace of change is so rapid, however, that it is impractical to envisage in capitalist conditions an equally rapid expansion in the market to absorb the extra output and retain full employment, even given a successful militant wages policy. Capitalism by its very nature cannot ensure continuous, uninterrupted expansion at a rate that modern technology makes possible. While socialism is the only ultimate solution, we are here concerned with a workers’ strategy under capitalism. Of equal importance to the fight for increases in wages and earnings is to develop the struggle for a reduction in working time.

It is high time that a serious campaign leading to a 30-hour, 5-day working week, in the not too distant future, was launched. The whole of our industrial history has shown that a reduction in the working day and working week, far from increasing the costs of production, has had the opposite effect. It has acted as a spur to capital investment and more efficient management. It has raised productivity through a reduction in industrial accidents by reducing the strain on the workers. It has led to improved industrial relations and a smoother rhythm of the process of production.

It is the only answer to the use of multiple shift working to get the most out of costly equipment. When combined with a high basic wage, supplemented in some sections of industry by a positive payment by results scheme, it could lead to the elimination of regular overtime.

Alongside the fight for the shorter working week we ought to develop the struggle for a shorter working year, 4 weeks holiday; and a shorter working life with earlier retirement on an adequate pension, and a higher school leaving age.

Only the combined struggle for increased wages and earnings, and shorter working time, can ensure that the advances in technology and science do not result in a catastrophe for the workers in terms of mass unemployment, speed-up, and increased strain for those remaining in work. It alone can guarantee that increased productivity resulting from technological advances benefits the workers, whether by hand or brain, and their families, who constitute the overwhelming majority of the population.


The implementation of such an offensive strategy requires the simultaneous struggle in the political and industrial fields, one complementing the other. It requires raising the degree of struggle at all levels, at the point of production and in the branches, district committees and national bodies of the unions.

Militant struggle from below far from creating difficulties for the official leaderships of unions is positive assistance to those trade union leaders who are actively fighting to advance the interest of their members. Such militancy and actions by the membership strengthens the bargaining position of the official negotiators. Without such militancy and action, the left wing members on the Union Executives and the General Council of the TUC could never have shifted the Executives of Unions and the General Council itself to conduct the campaign which compelled the Government to withdraw In Place of Strife.

A powerful united movement

Mass activity by rank-and-file trade unionists is an essential part of the struggle to realise the offensive strategy I have discussed in this pamphlet. It ensures that the unions are genuinely democratic, involving the membership not only in framing policies to advance their living standards, but also in determining whether agreements reached on their behalf by the trade union leaderships reflect adequately the views of the membership. But it must be made clear that such activity is no substitute for official trade union action. Its main function is to stimulate and assist the official movement.

To achieve a programme like this requires a powerful united movement, militantly led, conscious that the primary objective of the trade unions is not to make capitalism work, nor to concern themselves with “efficiency” and “productivity” in the abstract, but to maximise unity, solidarity and struggle as the only means of securing the benefits of advanced technology for their members.

Productivity bargaining does the opposite. While it may in the very short run provide for wage increases for sections of workers, in the long run it is designed to secure the benefits of increased productivity for the employers. It leads to increased unemployment and the incidence of industrial injuries. It heightens tensions through increased strain and weakens workshop organisation by undermining the status of the shop stewards. It fragments the movement. That is why “productivity bargaining” constitutes today and in the coming years the greatest swindle on the wages front.


This pamphlet concerned itself with the strategy and tactics of today’s wages struggle within the framework of capitalism. This strategy would not only be in the best interests of the workers in their present struggle. In the course of pursuing it, the workers, learning from the lessons of the struggle, would deepen their political awareness of the nature of capitalism and the need to replace it by a new society; a society whose motive force would be production aimed at satisfying the growing needs and aspirations of the people, not production for maximum profit, a Socialist society. In such a society, the people’s ownership of the means of production would make it possible to plan the maximum utilisation of the material and labour resources of the country in the interests of the working people. Unless this sort of change is brought about the gains in the daily struggle will be marginal and the same battles will have to be fought over and over again.

The trade unions can and will play a big role in furthering the understanding of the workers of the need for revolutionary change. But the trade unions, having as their prime function the struggle for immediate demands, and including non-socialists as well as socialists, cannot by themselves bring about a socialist transformation of society. The socialist revolution requires the working class and its allies to take political power. For this to happen demands a political party whose membership is consciously socialist, and understands the nature of capitalism; a party with a programme for advance to socialism in Britain.

The Communist Party is the only such party in Britain. Throughout its history it has fought consistently for the creation of a Socialist Britain. The Morning Star is the only daily newspaper which agitates every day for socialism, while at the same time supporting all the struggles of the working people on immediate issues.

Increasing the circulation of the Morning Star and the membership of the Communist Party is the greatest single contribution which militant workers can make to achieving a Socialist Britain.


1 Cmd. 4237
2 Nora Stettiner on Productivity Bargaining and Industrial Relations
3 No. 123
4 Para. 42. p. 14
5 Tribune 31.10.69
6 Dec. 1969 issue of “Record”
7 4th Guide line, PIB Report 123, p. 40
8 Railway jargon for one man doing more than one job
9 Daily Telegraph, 29.12.69
10 Earnings from bonus payments agreed at sites
11 Donovan Commission, Report No. 39, Esso Petroleum Co. Ltd. evidence, p. 1676
12 Report 123