Printed for the Cabinet. August 1949
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C.P. (49) 173
8th August, 1949
CABINET
RETAIL TRADE WAGES
MEMORANDUM BY THE MINISTER OF LABOUR AND NATIONAL SERVICE
The Wages Councils which have recently been set up for certain branches of the retail distributive trades have either submitted wages regulation proposals to me or have published proposals which they intend to submit to me. The Wages Councils in question are the following:
Councils which have submitted proposals to me-
Retail Food (England and Wales).
Retail Drapery, Outfitting and Footwear (Great Britain).
Hairdressing Undertakings (Great Britain).
Retail Bookselling and Stationery (Great Britain).
Retail Food (Scotland).
Retail Newsagency, Tobacco and Confectionery (Scotland).
Milk Distribution (England and Wales).
Councils which have advertised proposals but have not yet submitted them
to me-
Retail Newsagency, Tobacco and Confectionery (England and Wales). Retail Furnishing and Allied Trades (Great Britain).
2. In Appendix A is a summary of the position on the various proposals, indicating how they have been dealt with so far and showing also the increases in the rates now proposed as compared with current rates fixed by Joint Industrial Councils (J.I.C.) or otherwise. All the proposals contain minimum rates in excess of those fixed by current J.I.C. agreements, but it will be seen that in most cases the J.I.C. rates were fixed some time ago. Moreover, we have no certain evidence as to the extent to which these J.I.C. rates are actual current rates; it is possible that in many establishments the actual wages being paid are above the agreed rates. All the proposals have been put forward with the agreement of both the employers' and workers' sides of the respective Wages Councils. Some of them were first submitted to me several months ago; in the case of four of the trades (i.e. Food (England and Wales), Drapery, Outfitting and Footwear (Great Britain), Hairdressing (Great Britain) and Bookselling and Stationery (Great Britain)), I referred the proposals back to the Councils for reconsideration, and in the first two of those cases proposals have been re-submitted to me. I am now being pressed by the trades concerned to confirm the proposals. Before I reach a decision on this question I feel it desirable to obtain the views of my colleagues in view of the repercussions of granting wage increases to such a large section of the retail distributive trades.
3. The proposals of the various Councils are substantially in step with each other and so long as the rates of wages proposed are not in themselves unreasonable (and I think it would be very difficult to argue that they are) I do not feel that I could draw a distinction between the various branches of the retail distributive trades as tophage Bshould beat the various proposals. The decifiogel 35keowflecher
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to confirm the proposals or not must, I feel, be applied over the whole field and mustPage3gar662the general economic position ofgthe bunty62
4. Detailed figures of the number of workers covered by the various Wages Councils cannot be given. It is estimated that the number employed in retail food distribution, etc., as a whole in July, 1948, was 678,000, but this figure includes workers not covered by the Retail Food Wages Council, e.g., those engaged in meat and milk distribution. The estimated number of workers employed in retail distribution of non-food goods at July, 1948, was 794,00; and this figure again includes workers (e.g. workers in hardware) not covered by the Wages Councils with whose proposals this paper is concerned. In the absence of informa- tion as to actual wages being paid at present, it is difficult to estimate the increased wages cost resulting from the proposals. If, however, the increases now proposed are accorded to all workers in the trades concerned, including those who at present receive wages in excess of the J.I.C. rates, and if the whole of the 1,500,000 workers in the retail distributive trades referred to above receive increases comparable to those proposed for the trades under consideration, the increase over the whole field is likely to be between £15 and £20 million per annum.
5. When the Retail Food Trades Wages Council (England and Wales) originally submitted their proposals on 14th April, 1949, they were asked to reconsider the wage rates contained in them. On 14th July they re-submitted the same proposals without modification of the wage rates. The establishment of these new statutory minimum wage rates may be made the occasion by the employers for pressing still more strongly their existing claim for increased margins. It will be remembered that the margins provided by current retail food prices were not large enough to permit a price cut such as has been effected in the retail prices of utility clothing, footwear and household textiles. If these new wages rates come into force retail food distributors may submit that they will not be able to absorb them within their present margins. If that be the case the cost will have to be passed on to the public and will have to be borne in the form either of higher subsidy payments or of increased food prices. It is difficult to estimate the total cost to employers of these proposals. as we do not know the actual rates now being paid. The date and nature of any necessary price increases and consequently the effect on the Index of Retail Prices cannot be estimated in advance.
6.
The Retail Drapery, Outfitting and Footwear Trades Wages Council (Great Britain) met on 3rd August to reconsider their wage proposals, which had been referred back to them. The workers' side and the independent members were in favour of re-submitting the rates without amendment, but the employers' side asked for more time to consider the effect of the recent 5 per cent. price cut in utility lines. The Council has adjourned for three weeks. If the present proposals are re-submitted and confirmed by me we shall face difficulties in defending the policy of first compulsorily cutting prices and then confirming increased wages within a period of a few weeks. The pressure on the Board of Trade to reverse the recent price cut will certainly be increased. In this connection I have received the strongest representations from the President of the Board of Trade against the proposals of this Wages Council and, indeed. against any increase in wages in any section of retail distribution at the present time. In his view a substantial increase in costs of distribution cannot be warranted in the present economic situation, increases in wages in retail distribu- tion would be an incitement to workpeople in the manufacturing and other trades to put in wage claims, the present proposals have no justification in the provisions of the White Paper on Personal Incomes, Costs and Prices, and the proposed increases would be entirely irreconcilable with the Chancellor of the Exchequer's repeated declarations about the crucial importance in the present situation of pursuing vigorously the Government's policy as set out in that White Paper.
7. There are certain further considerations which I should mention at this point:---
(i) The proposals now made would bring wages in the retail distributive trades above wages in the generality of Wages Councils' trades and might thus give rise to further claims in respect of other Wages Councils' trades.
Page The increased wages now proposed might have the undesirable result of attracting still more of the available supply of workers into the retail
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