Corus pay cut drive: dangerous dynamic
Posted on Monday 15 December, 2008
Filed Under Trade Unions
CORUS – in UK terms, basically what’s left of once mighty state-owned British Steel – is nowadays part of Indian conglomerate Tata Group. It makes a lot steel, and makes a lot of cash, too. Only last month, Tata Steel chief executive B. Muthuraman told the Financial Times that the outfit is looking to triple profit margins over the next five years.
It has since turned out that one of the ways it intends to do that is by pushing for cuts in the pay of its 25,000-strong British workforce. Tata bosses are seeking temporarily to reduce salaries by 10%, and threatening redundancies if they don’t get their way. Unions have – rather half-heartedly, as once commentator makes clear – rightly rejected the blackmail.
Not so on the other side of the Atlantic, where the United Auto Workers have agreed a series of concessions on healthcare and pensions at General Motors. While nominal salaries for existing employees have been preserved, they have been halved in real terms for new hires. In effect, the clock has been turned back four decades; two generations of progress have been bargained away
As ever, if you want an analysis of what is going on in capitalism today, the best place to start is with the work of an economist who died 125 years ago. Much of what Karl Marx wrote in volume one of Capital centres on the system’s relentless drive to increase the rate of surplus value, or to use an alternative designation, the rate of exploitation.
Many books have been written on Marxian economics. But the central idea does not need any lengthy academic exegesis, and will be intuitively self-evident to anybody who has ever done a working-class job.
There’s a fight on in every workplace over the division of the value produced. The boss constantly pushes for a bigger cut; unions try to resist, and occasionally even go on the offensive themselves. Never is this more blindingly obvious than in the early days of a recession.
As Marx himself remarks elsewhere: During the phase of sinking market prices and the phases of crisis and stagnation, the working man, if not thrown out of employment altogether, is sure to have his wages lowered.
If the notion takes hold that pay cuts are an acceptable means of averting job losses – and a concerted campaign in favour of the proposition is only to be expected – it will mark the start of a dangerous dynamic. This is one line the unions simply have to hold.
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12 Responses to “Corus pay cut drive: dangerous dynamic”
Yes I agree, look at what happened at JCB, in October the workforce accepted short time working, reducing their pay by on average £50 a week to save jobs. Then a month later the firm announces 400 redundacies.
This is one of those overdetermined contradictions.
Unless you’are working for The Guardian – which has a tech contradiction expected to mature in about 5 years – you hunker down and cut costs.
The alternative is The Trabant Economy – a socialist arcadia which occupies the dreams of our Dave.
Well, it’s been tried. It environmentally toxic, it’s completely completely uneconomic and most of the time it doesn’t work.
Your man Marx missed a bit there.
” … one of the ways it intends to do that is by pushing for cuts in the pay of its 25,000-strong British workforce. Tata bosses are seeking temporarily to reduce salaries by 10%, and threatening redundancies if they don’t get their way. Unions have – so far, anyway – rightly rejected the blackmail.”
Umm, maybe Dave. I got told by a shop steward friend that ‘Community: The Union for Life’ (formerly the Iron and Steel Trades Confederation), was pushing for the pay cut but had to back off after their members got a whiff of the sell out.
Incidentally, Community says it “understands that work in the 21st century has been transformed. Work now requires longer hours for less pay and less job security and where small changes in take home pay can have big consequences for the family budget.”
That’s social partnership for you.
Anyone know what proportion of workers at Corus are members of Community, GMB and Unite respectively?
I see michael, islington is another one to condemn Marx without seemingly having read any.
Welcome to the real world.
Unemployment is a horrible situation for anyone to face at anytime. When thousands of people are being laid off around the country each month, you can be pretty sure that something is badly wrong.
People having their pay cut is a terrible state of affairs, but the alternative of losing their job altogether is surely worse.
Thanks Tony. Yes, I’ve now heard that too, which explains some of the apparently conflictual press coverage of all this.
At 10:04, 16 December 2008 Letters From A Tory wrote: “Welcome to the real world. Unemployment is a horrible situation for anyone to face at anytime. When thousands of people are being laid off around the country each month, you can be pretty sure that something is badly wrong. People having their pay cut is a terrible state of affairs, but the alternative of losing their job altogether is surely worse.
Thanks, you patronising dullard. So that’s what the real world looks like. Shucks.
Well, I suppose you could raise unemployment to 3 and a half million, cut wages and benefits to ‘incentivise’ the jobless and abolish corporate taxation altogether to attract inward investment in order to get out of the recession. Oh, damn! Nearly forgot. We already tried that, didn’t we? And it was such a resounding success in the 1980s that we pissed North Sea oil up against the wall to pay for ten years of mass unemployment. That won’t happen again.
Instead of cutting wages and jobs, what about if we cut working hours with no loss of pay? Then we could boost demand instead of just waiting dumbly for the ‘financial stimulus’ to be passed on by the banks to consumers. We could build our way out of recession with public investment in transport, housing and environmental energy projects. What about that?
Yes tonythetiger you are right. There are implications for this though. Meaning that if we preserve salaries we would also need to impose currency controls and price controls. And yes this would require imposition of import controls. I’m not necessarily against doing this in the middle of a crisis, but that is the logical conclusion of what you’re suggesting, and it may be the Least Worst Option.
I agree, whoever.
I agree, whoever. But seeing tonight’s news that the US Federal Reserve has slashed rates to near zero it looks as though the supply-side policies of the past 30 years are running out of ammunition as fast as the Greek riot police run out of tear gas.
It would have been unthinkable even a few weeks ago but over the coming months it now seems increasingly possible that central banks may effectively start giving away money.
The age of the zero interest rate policy is closer than you might think. ZIRP has a long and troublesome history, of course, most famously being employed in Japan between 1996 and 2006.
If we get to the point where to reduce the growing stock of human misery (not there yet) we have to re-establish state control of the levers of the economy, in an Andrew Glyn type of style, the next risk is that the international situation will suddenly deteriorate, as it is impossible to imagine that the EU as it is currently, having the necessary flexibility and tools to handle this job. Not only that, but in the new EU states, the political classes have a worldview which has been misshaped by the mistakes of “communism” since 1945.
The EU would therefore disintegrate or at least splinter, if a large member state (such as France, Italy or the UK) went down this route. It would involve practically sealing off China from a trade perspective, at least to begin with, We’d have to ensure that the economic nationalism was not reflected by political nationalism by establishing new alliances with states on the same path pretty quickly.
What works, works. To take a page from Blair’s book, we should not let ideological prejudices wreck our attempts to recover our economies. I’m serious in that we would also be creating a new type of mixed economy based on social enterprise with a localised focus.
If it comes to this, I’d like to see gradual re-introduction of world trade in a managed way. Certainly, no return to the 1990s. I worry that the last 20 years will be seen as Golden Age, whereas they were absolutely unsustainable from an economic and environmental perspective.
” … to re-establish state control of the levers of the economy, … it is impossible to imagine that the EU as it is currently, having the necessary flexibility and tools to handle this job. Not only that, but in the new EU states, the political classes have a worldview which has been misshaped by the mistakes of “communism” since 1945.
“The EU would therefore disintegrate or at least splinter, if a large member state (such as France, Italy or the UK) went down this route.”
Bring it on.