'Cost of Living' Indexation Agreements in Post-War British Collective Bargaining.

For what now seem to us to be obvious reasons associated with the difficulties of data collection there has been no published study of the operation in Britain of agreements which provide for the automatic adjustment of wages to changes in the official prices index. The purpose of this paper is to fill a gap in the literature on collective bargaining by examining the extent, characteristics and some of the effects of such agreements in post-war Britain. This seems particularly appropriate given the recent increase in interest in indexation associated with the T.U.C.'s advocacy of a variant of the traditional form, namely cost of living 'threshold' agreements. Threshold agreements are a conditional form of indexation, somewhat akin to another variant, the 're-opening clause'. The latter makes provision for further negotiations within the period of an agreement in the event of specified changes in the prices index, but leaves the degree of compensation to be negotiated. However, our concern here is with the traditional type, that is, collective agreements which provide for the automatic adjustment of wages on a pre-arranged sliding scale basis in accordance with changes in the official Index of Retail Prices. Our survey is restricted to multi-employer agreements covering manual workers, i.e., agreements which could claim to be 'industry-wide' in a loose sense. We have not considered salaried employees or single employer agreements. The paper is arranged in the following way. The first section examines the arguments which have been advanced, largely on economic grounds, supporting and criticizing such agreements. Secondly the incidence and coverage of indexation agreements in post-war Britain is established by applying a number of measures, and the reasons for their rapid decline in in the late 1960s are considered. The third main section examines the characteristics of the agreements in a number of industries. The fourth section reports a survey of the opinions of the parties based on their experience with indexation agreements. This is followed by an assessment of their effect on real wages and wage movements in the industries concerned. The final section summarizes the major findings and presents some conclusions. [ABSTRACT FROM AUTHOR]