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The origins of the CIR.

The need for procedural reform

In the 1940s and 1950s the UK's apparent harmonious industrial relations were attributed by many observers to the comprehensive, well-developed procedures established at industry level at the turn of the century. There was very little criticism of the prevailing system of joint industry councils and industry disputes procedures. However, by the 1960s strong criticisms of industrial relations in the car industry, the docks, shipbuilding and engineering were made because of the high incidence of unofficial and unconstitutional strikes.

Flanders (1965) published Industrial Relations: What is Wrong with the System?, drawing the various threads of criticism together into an influential analysis of the ills of the UK's industrial relations. He argued that most of the problems of small domestic strikes and wage drift arose because negotiating institutions and disputes procedures which had been established many years earlier had become inappropriate as the locus of union bargaining power had shifted in many cases to the shopfloor. The established structure of bargaining was being "challenged from above" - by governments who were concerned with inflation, wage drift and the growth of unofficial and unconstitutional strikes and "challenged from below" - by the power of shop stewards and workgroups. Domestic bargaining was informal, fragmented and autonomous.

The Donovan Commission

The origins of the CIR lay in one of the major recommendations of the Donovan Commission, the Commission itself having been influenced by the evidence of Flanders (1967) who first proposed such a body.

The Royal Commission on Trade Unions and Employers' Associations (subsequently known as "The Donovan Commission" after its Chairman, Lord Donovan, a judge) was established in 1965 with the following terms of reference:

To consider relations between managements and employees and the role of trade unions and employers' associations in promoting the interests of their members and in accelerating the social and economic advance of the nation with particular reference to the law affecting the activities of these bodies (Donovan Commission, 1968, p. 1).

The Commission was noteworthy, not only for the contents of its Report (it was after all the first Royal Commission on industrial relations for 60 years), but for the research which it commissioned and published in a series of papers (Donovan Commission Research Papers 1966-68, e.g. Fox, 1966). It was not content simply to hear the formal evidence of the interested parties, but sought its own information in a systematic and co-ordinated manner.

The Commission's Report was published in 1968 (Donovan Commission, 1968). Among its central conclusions was that collective bargaining was the best and most democratic means of conducting industrial relations and that the role of the law in collective relations should be a very limited one. It rejected various proposals for legal restraints, for example to ban closed shops, make collective agreements legally enforceable, restrict the right to strike, intervene in union rule books and impose "cooling off" periods and ballots before industrial action. Donovan did not say that the law should never be introduced in industrial relations. It said that it would be inadvisable to do so on practical grounds and that voluntary reform, if it could be achieved, was preferable.

Central to its analysis was that Britain had two systems of industrial relations. One was the formal system, embodied in the official institutions of collective bargaining at industry level. The other was the informal system based on the actual behaviour of managers and shop stewards, with the informal system undermining the formal system. One symptom of this was the growing gap between actual earnings and industry-wide rates of pay, called "wage drift". Domestic bargaining had also led to fragmented bargaining and fragmented pay structures. Moreover, the growth of workplace bargaining had put industry-wide disputes procedures under pressure at a time when plant and company-level procedures were virtually non-existent.

Its recommendations were designed to bring shop stewards into the official fold. Trade unions had to come to terms with them and employers had to accept them "officially" in settled procedures. Donovan's remedy was not the use of law, but the reform and reconstruction of industrial relations procedures by voluntary means. It argued that it was neither desirable nor possible to suppress plant and company bargaining. Industry-level agreements should be confined to those matters which they could effectively determine, while plant and company bargaining should be recognized and formalized. The objective was the development of authoritative voluntary collective bargaining machinery and comprehensive procedural agreements at plant and company level. The responsibility for this should rest with the parties themselves, although the prime responsibility had to be with top management for they had the final power. However, to help the process Donovan proposed that larger organizations should register their agreements with the Department of Employment and Productivity and that an independent standing commission should be established to facilitate the voluntary reform of collective bargaining.

Donovan, having concluded that collective bargaining was the best method of regulating questions of pay and conditions of employment, of providing a means for orderly and constructive change and of conducting industrial relations generally, further concluded that the practice of collective bargaining was deficient in many respects. Over large areas of employment it did not exist at all and where it did exist its scope and subject matter were often narrowly limited. In many industries, including some of the most important, actual pay and conditions which were nominally the subject of industry-wide agreements were often in practice effectively settled informally by local management and work groups.

The Donovan Commission was clear in its support of the need for a restructuring of dispute and negotiating procedures. It developed Flanders' "challenge from below" as the reason why reform was necessary, illustrating the argument with the notion that the old, industry-wide formal system was a facade, no longer reflecting reality. It then suggested a relatively specific list of changes in bargaining machinery to remedy the defects that it saw. These recommendations were without doubt the most well known of the Donovan prescriptions. Donovan argued for formalised, precise procedures, preferably written, that would end fragmented bargaining and place the main level of joint decision making at company or factory level.

In Place of Strife

The Government's response was contained in its White Paper, In Place of Strife (1969). It accepted most of the analysis of the Commission and its recommendations. It agreed that there was a major gap in the public apparatus for change in that there was no institution primarily concerned with the reform of collective bargaining. Hence the decision to establish immediately the Commission on Industrial Relations as a body to promote collective bargaining and good industrial relations, on a voluntary basis. However, the Government felt that this was not sufficient to deal with the country's industrial relations problems and put forward some legal changes which went well beyond what Donovan considered practicable or desirable. It proposed reserve powers for the Secretary of State to enforce a conciliation pause in unconstitutional strikes and other stoppages where adequate joint discussions had not taken place, compulsory ballots in certain severe strikes, and measures to deal with inter-union disputes.

The proposed legal changes aroused strong opposition from the TUC and led to prolonged and often bitter discussions between the TUC and the Government (Jenkins, 1970). These culminated in an agreement whereby the Government withdrew its proposed "penal" clauses in exchange for the TUC's promise to alter its rules so that more control could be exercised by the TUC over unofficial strikes, inter-union disputes and disputes which affected workers outside the company or industry directly involved.

In his evidence to the Donovan Commission, published as Collective Bargaining: Prescription for Change, Flanders (1967) had argued the need for wide-ranging reform of the industrial relations system. He advocated not only changes in the existing structure and nature of procedures, but argued for the extension of voluntary collective bargaining and a widening of its subject area. He was to develop these more wide-ranging ideas in an article with Fox which stressed the urgent need for a new "normative order" in the industrial relations system (Fox and Flanders, 1969). According to them, Britain was suffering from a state of anomie caused by an excessive proliferation of different normative systems and the breakdown of the previously acceptable system of norms. Conflict about substantive rules was not the problem: "more fundamental, was building up agreement on procedural norms which regulate substantive relations" (Fox and Flanders, 1969, p. 179) and procedural norms were defined to include:

the constitutional provisions of machinery for negotiation and the settlement of disputes, but equally methods used in determining differential levels of rewards, rights and principles, or in recruiting employees and allocating them to jobs, or in promoting, supervising, disciplining and dismissing them (Fox and Flanders, 1969, p. 157, emphasis added).

The procedural reform being advocated here did not simply involve changes in agreed disputes and negotiating machinery. Fox and Flanders (1969, p. 180) were advocating "an attempt to fashion agreed normative codes regulating the production and distribution of wealth in modern industrial society".

Previously, Fox (1966) in Donovan Commission's Research Paper No. 3 had argued that many managers did not value joint regulation, but that they ought to do so. Clegg (1975) later pointed out the ease with which advocates of pluralism could "take the short but momentous step from 'what is' to 'what ought to be': that is to say, can move from arguments that there should be a consensus on the value of pluralism to the argument that there is such a consensus". Was the Donovan Commission guilty of this? It probably was. Fox (1973) subsequently certainly thought so, and attacked pluralists on the grounds that they assumed a consensus about the value of joint regulation.

Stimulated by Fox's attack, Clegg (1975) subsequently tried to clarify precisely what a pluralist perspective did imply in terms of ideological consensus. Clegg's reformulation of pluralist theory was clear: "pluralist theory requires the possibility that its rules may be overridden by other moral values" (Clegg, 1975, p. 312). Donovan implied that the values of joint regulation inherent in pluralism could and would dominate over any values that might conflict within the industrial relations system. The basic consensus about the value of joint regulation was thought to be present. All that was needed was a change agent to show how to express this value in new social structures. When the time came the CIR was to find several cases where the parties held other values dearer to them than that of joint regulation.

The separation of procedural from substantive issues

The idea of an advisory, third-party change agent was in many ways the most original to emerge from the Donovan Commission. State vetting of agreements had become familiar in the 1960s with successive incomes policies, but the provision of a Government-financed research and advisory agency - rather like a highly-skilled consultancy body with a wide brief to promote the reform of "industrial relations procedures" was something new. McCarthy (1971) pointed out the belief that established negotiating procedures could be changed in a planned and purposeful way, and this developed to some extent with the spread of productivity bargaining in 1965-1968. The idea developed at the same time that suggestions for such changes could usefully be made by a public agency. Some courts of inquiry made suggestions in these areas but the most important influence was undoubtedly the National Board for Prices and Incomes (NBPI).

The NBPI, which existed between 1964 and 1971, was concerned not just with wage restraint but with promoting productivity bargaining. This required detailed investigation of the manning and other agreements of many of the companies studied. A specialist industrial relations branch headed by Flanders and recruited from universities, unions and companies, grew up to work closely with Board members and the civil servants on the detailed investigatory work and reports. This industrial relations branch gained considerable influence within the NBPI, particularly in its early years, and many reports showed the results of its concern to point out the wider implications of the institutions and procedures that were scrutinized.

To some extent, therefore, the embryonic model of a public agency with an investigatory and advisory function already existed in the NBPI. What the Donovan Commission proposed was to take this model and suggest that it should consist primarily of staff with research and consultancy skills rather than primarily of civil servants - and that it should concentrate on procedural, rather than substantive, matters.

The CIR's most important differences, compared to the NBPI model, were that it should have no sanctions backing its recommendations and that it should be limited to procedural issues. The lack of sanctions was to increase its authoritative, yet informal, weight as an advisory body attempting to promote voluntary reform. The avoidance of substantive issues was largely based on the same argument: moreover, to include them would have meant overlap with the NBPI until 1971.

The Donovan Commission seems to have believed that procedural change would not, on the whole, provoke resistance from the parties. There was little existing evidence to support this belief. One possible piece of influential evidence was that of Mr Richard O'Brien, Managing Director of Delta Metal, who described how its management had radically reconstructed the negotiating and disputes procedures for its manual workers by negotiating new procedures covering the steward's role, redundancy, discipline and dismissals, without any interrelated agreements altering substantive matters (O'Brien, 1971). Experience of productivity bargaining, however, had usually shown that changes in negotiating or disputes procedures could involve costs to one or both the parties which had to be included in the negotiations. This was certainly: Flanders' evaluation of the industrial relations reforms negotiated by the Esso Oil Company at its Fawley refinery in the early 1960s (Flanders, 1964).

Conclusion

The CIR's role as the change agent responsible for promoting the voluntary reform of procedures rested on two basic sets of arguments. The first was that outmoded industrial relations procedures lay behind many of Britain's industrial relations problems in the 1960s. The second was that the necessary reform could be encouraged and promoted by a particular type of third-party "change agent".

The development and popularization of both arguments, as we have seen, owed much to the work of Flanders (1967). Both were seized on and developed by the Donovan Commission and both were endorsed by In Place of Strife (1969). By the time the CIR was founded, both arguments were accepted, at least in part, by the TUC and the Confederation of British Industry(CBI).

The Labour Government accepted the majority arguments for voluntary procedural reform. However, Donovan's mechanisms for promoting the policy were weakened by the downgrading of the policy of registering agreements. When the register of agreements was established only procedural agreements were called for. This no doubt had administrative advantages of limiting the complexity and size of the task. But the register of procedures was never seriously pursued. The task proved too large for the resources which the Department of Employment and Productivity (DEP) were prepared to give it and the material that was collected, codified and filed was hardly ever used. The CIR was left as the main public agent for procedural reform.
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Title Annotation:The Commission on Industrial Relations in Britain 1969-74: A Retrospective and Prospective Evaluation; Commission on Industrial Relations
Author:Kessler, Sid; Palmer, Gill
Publication:Employee Relations (Emerald Group Publishing)
Date:Jul 1, 1996
Words:2520
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