Lowering Living Standards Is No Solution

Press magnate Rupert Murdoch has furiously fought U.S. unions at his newspapers in New York, Boston and Chicago in recent years but the unions are still functioning, still able to do battle when necessary.

Nevertheless, Murdoch’s workers in the United States have been forced to give up past contract gains. And their problems are similar to those of millions of other American workers who are taking pay cuts in the struggle to keep their jobs.

Even worse, as more millions of U.S. workers lose manufacturing jobs that are still pay relatively well, the new ones they find almost always pay them substantially less. It has been a different story in Britain.

Workers on Murdoch’s papers there have taken to the streets in old-fashioned pitched battles in often-vain attempts to hold onto their jobs and keep their unions alive despite his onslaughts. He has won most of those battles, hands down.

In a microcosmic way, the outcome of labor’s fights against Murdoch in the United States and in Britain represent an intriguing difference in the way workers are being affected by current economic conditions in those two nations and in the rest of the industrialized world.

Far more of Murdoch’s workers in Britain lost their jobs than his U.S. employees did. But the British still on the job for Murdoch have not been forced to lower their standard of living to keep those jobs, which is what happened to his U.S. employees.

The sad, overall conclusion for workers in most industrialized nations is that the economic changes now going on are having a devastating effect on them as their mostly conservative governments fight inflation and their employers fight increasing competition from developing nations, where labor costs are a fraction of the costs in First World countries.

But workers are being hurt in different ways in Europe and in the United States.

Though disgracefully high, the U.S. unemployment rate of about 7% is much better than the 12% jobless rate in Britain, the 14% rate in Italy, Belgium’s 15.8% rate, France’s 11% rate or the Netherlands’ 14.2% rate.

Even Japan, which customarily has a jobless rate of 1% or 2%, now has 6% unemployment as measured by U.S. standards--the highest in that country since the end of World War II.

But for the most part, the real income of European and Japanese workers who have jobs is not dropping. There is now price deflation in several European countries and in Japan, and wages have not stopped rising.

In Britain, where there is still inflation--less than 3%--wages are up 7.5%. In other words, those lucky enough to have jobs also have an increasing standard of living.

One cruel way to curb inflation is for a government to allow unemployment to go up--people without jobs cannot buy goods, and if sales drop off enough, companies are usually forced to lower prices to get rid of inventories.

It’s tough on millions of unemployed workers, but the callous theory is that at least the rest of the population doesn’t suffer the ravages of inflation, which is lower in Europe than it has been in 25 years.

In the United States, inflation is also down, partly because of high unemployment. Our jobless rate is near the record for a non-Depression year, but it is well below that of Europe.

This is good news only when compared to Europe, however, and it is made even less attractive by the continuing deterioration of the living standard of the average American as low-paying new jobs replace relatively high-paying jobs in the “smokestack” industries.

The damage being inflicted on the average worker in industrialized countries, either by high unemployment or lower real income, is intensified by the increasingly hard-nosed attitude of employers and the conservative economic policies of the governments of most European countries and the United States.

President Reagan boasts of the low U.S. inflation rate and the millions of new jobs being created, mostly in the service sector. But because the new jobs pay so little, the average real income of American workers has dropped considerably.

In Britain, Prime Minister Margaret Thatcher went into office in 1979 with her own economic theory. As the Economist news weekly put it the other day, Thatcher was convinced that two factors were doing the most damage to the British economy: inflation and British unions. Crush both, she argued, and production and employment would flourish.

Inflation in Britain is down, and British unions are have been weakened. But the economy is far from healthy, and joblessness is as high as ever.

Except for Sweden, no country has come up with a workable theory of how to keep inflation down without badly damaging a large section of the work force. Sweden has an inflation rate of about 3%, and unemployment is also about 3%.

Most economists say that Sweden is too small to serve as a model for large nations. And few other countries want to follow the Swedish example, which includes, among other things, a massive, costly job-guarantee program, job-training programs that have created one of the best-trained and most productive labor forces in Europe, and a temporary price freeze.

Sweden may not be a good model. It, too, has had its economic recession, and the once-harmonious relations between labor and management have deteriorated.

But a country with a system that has kept both inflation and unemployment down is worth studying more closely, particularly for its extensive job-training and job-guarantee programs.

Certainly, the United States should not continue to accept a steady decline in the living standards of vast numbers Americans and a jobless rate that looks good only when compared to the masses of unemployed in most European countries.

Thatcher’s Policies Take a Heavy Toll

Prime Minister Thatcher’s unabashedly anti-union policies have taken their toll on unions that were once among the most powerful in the world.

British unions were the controlling force in the Labor Party, they represented well over half of the British work force, and they rarely lost strikes, which were frequent.

But since Thatcher took office eight years ago, union membership hasdropped from 13.3 million to about 10.7 million today--a hefty 20% decline.

Last year there were fewer strikes than at any time in the past 50 years. Unions lost some critical strikes, often refusing to support one another in their battles with the Thatcher government or private employers. And they are badly divided politically.

But Thatcher cannot claim victory yet in her war against unions.

Membership has plunged, true, but British unions still represent about 46% of the work force. Compare that to the United States, where unions represent only about 18% of the work force.

And the strikes that were lost were hard to justify. For instance, with the help of Thatcher, publisher Murdoch fired 5,500 print workers and, despite a strike, he re-opened operations with computerized equipment that has long been used by publishers in the United States and other countries.

Thatcher crushed the miners’ strike because nobody cared terribly about the goal of the strikers: to keep open coal mines that are not needed in these days of relatively cheap oil.

A sign of the unions’ weakened political power was Thatcher’s ability to push through laws designed to hurt them even more. Yet, while they hurt the unions badly, few of the new laws were harsher than those in the United States. For instance, one prohibits secondary boycotts aimed at forcing other companies not to do business with a firm whose workers are on strike.

Secondary boycotts have been outlawed in the United States for decades.

Unions in Britain have indeed been hurt, says David Blunkett, mayor of Sheffield, England, prominent union leader and a key figure in the Labor Party, who visited Los Angeles recently.

But, Blunkett said, the wounds that Thatcher and others have inflicted on Britain’s unions “are certainly not terminal. Our unions are on the decline but we (unionists) are partly responsible. When we have acted irrationally, we have rightly been held up to ridicule.”

British unions are still the major source of the Labor Party’s political strength, which means that a Labor victory in the next election would do much to reverse the fortunes of the unions. And Thatcher’s anti-union campaign will be far from successful as long as the unions represent almost half of all British workers.