The Economic Effects of Industrial Relations Legislation Since 1979

Abstract

This is the fourth article from members of the CLARE Group to appear in the Review. Future articles will normally appear about twice a year. The Review is pleased to give hospitality to the deliberations of the CLARE Group but is not necessarily in agreement with the views expressed. Members of the CLARE Group are M.J. Artis, A.J.C. Britton, W.A. Brown, C.H. Feinstein, C.A.E. Goodhart, D.A. Hay, J.A. Kay, R.C.O. Matthews, M.H. Miller, P.M. Oppenheimer, M.V. Posner, W.B. Reddaway, J.R. Sargent, M.F-G. Scott, Z.A. Silberston, J.H.B. Tew, J.S. Vickers, S. Wadhwani.The industrial relations legislation of the 1980s has been widely credited with having made a major contribution to Britain's economic performance. This study evaluates its actual impact. The costs to trade unions of strike action have increased, but the legislation has had some perverse effects, not least in encouraging unions to tighten up their own organisation. The economic consequences predicted by the policy makers are investigated by means of a number of econometric studies. They suggest that the expected employment and wage effects did not occur. They also failed to provide improvements in labour productivity. The study offers an alternative explanation of these findings.