Last year I prepared a historical timeline looking at trends in work, human resource management and the related political context during the past century. In the light of yesterday's news of the death of Baroness Thatcher, here is my brief account of what happened during the Thatcher era.
Margaret Thatcher entered Downing Street in 1979 as Britain’s
first woman prime minister. The Thatcher government broke the post-war political
consensus by prioritising low and stable inflation, achieved by controlling the
supply of money, rather than full employment as the principal objective of
macroeconomic policy. Raising economic growth and cutting unemployment were
instead the target of structural or supply side policies, such as de-regulating
markets, privatising state run enterprises, switching more of the burden of
taxation from incomes to VAT, abolition of the Wages Councils, and curbing the
power of trade unions to affect pay bargaining or prevent managers from
changing work practices.
The initial combination of tight monetary policy, tight
fiscal policy and economic restructuring was a major recession, lasting from
1979 to 1981 and soaring unemployment. Unemployment rose above 3 million (close
to 12%), higher than at any time since the 1930s Depression, and remained at
around that level until 1986. Manufacturing bore the brunt of job losses,
partly because tight monetary policy caused the value of the pound to rise
which priced UK goods out of global markets, and partly because the recession
coincided with greater use of advanced robot technology and increased
competition from emerging economies. Society became imbued with a strong sense
of economic insecurity and it was commonly said that people could ‘no longer
expect a job for life.’
The efforts of unions to counter the impact of global
competition and technology on jobs clashed with the Thatcher government’s aim
to fully embrace market forces by weakening union resistance. That resistance
was broken most visibly and violently in the Miners’ Strike of 1984-85 and the Wapping
newspaper dispute of 1986. Broader social unrest was in turn witnessed in a
series of inner city riots, often involving conflict between the police and
disadvantaged ethnic minority communities. Trade union membership, which had
peaked at around 12.2 million in 1980, entered what was to prove the start of a
period of continual long run decline (the number falling to less than 6 million
by 2011).
As in the 1930s, the 1980s witnessed a widening north-south
divide. Recession, increased competition and technology hit manufacturing and
heavy industries, concentrated in the north of Britain particularly hard. By
contrast economic recovery, boosted by reductions in interest rates, a boom in
house prices and a surge in spending on consumer services, favoured the south.
The growing economic power of London and the south east plus the shift from an manufacturing to finance based economy was symbolised by The
Big Bang financial deregulation of 1986 and fictionalised by Harry Enfield’s
comedy creation Loadsamoney, an
employed brash southerner who delighted in flashing his wad of banknotes at
poor, jobless, northerners.
Once the economic recovery gathered pace more generally,
resulting in a sharp fall in unemployment from 1986 onward, personnel
managers in the private sector schooled in the strife ridden post-war era of
collective industrial relations and pay bargaining, made full use of the structural
and legislative changes taking place.
There was a clear strategic decision
to depart from traditional collective procedures and instead focus on employees
as individuals. British managers also started to adopt the new US fashion for calling
personnel management Human Resources management (HR or HRM). This combined the
concept of treating employees as a resource with investment potential with that
of treating employees as people who needed to be nurtured and motivated. More
and more HR professionals started to specialise, focusing on specific roles in
training, reward or diversity. The development of the European Community plus
the emergence of multi-national corporations operating in different countries
in turn set in train a shift toward what would later be labelled ‘global HR.’
HR managers led HR departments and
started to introduce individual performance appraisal, individual performance-related
pay conditioned by market forces rather than national or sectoral collective
agreements, and direct communications between front-line managers and their
employees. Organisations also started to be influenced by the management
practices of overseas businesses, especially in the car industry, that started
to invest in the UK. Increased attention was paid to the quality movement
inspired by management writers like William Edwards Deming whose 1982 study Out of the crisis drew on his post-war
experience of Japanese management practice. Concepts like lean production and
just-in-time systems entered the management lexicon.
British employers and HR gurus
started to talk in terms of ‘flexible firms’ comprising a core of workers on
permanent contracts working alongside armies of temporary staff and
self-employed contractors. Charles Handy published his study on The Future of Work in 1984, forecasting
that fewer people would have a single employer but instead be ‘portfolio
workers’ performing jobs for a number of different employers. The shift of
employment from manufacturing to services also shifted the gender and hours
balance of the workplace, with women taking advantage of the greater
opportunity to work part-time and workers in general more likely to be employed
to work flexible hours rather than on a traditional ‘9 to 5’ basis. Labour market flexibility in turn helped price more low skilled people into jobs, eventually enabling the UK to achieve a lower rate of structural unemployment than seen in the still strongly regulated economies of continental Europe, albeit at the cost of a return to early 20th century style wage inequality.
Government and employers claimed
that greater labour market flexibility explained why unemployment started to
fall rapidly from 1986 onward once strong demand returned to the economy, though part of this improvement was due to shifting some
people receiving unemployment benefits onto incapacity benefits which disguised
the true extent of joblessness and welfare dependency. Unfortunately, however,
as the decade drew to an end, economic recovery once again turned into an
unsustainable inflationary boom (nicknamed the Lawson boom after the then
Chancellor of the Exchequer Nigel Lawson). And as usual a bust was soon to
follow. Unemployment began to rise again
and was soon on its way back to 3 million.
Without an incomes policy to combat rising prices the Thatcher
government instead in 1990 decided to fix the value of the pound and set
interest rates at a relatively high level within the constraints of the European Exchange Rate mechanism (ERM).
The result was a depression of demand which resulted in recession. Alongside political
turmoil caused by the government’s plan to replace the household rates system
of local taxation with a poll tax, this
marked the end of Mrs Thatcher’s 11 and a half year premiership.
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