Trade Union militancy as an explanation of inflation: an international comparison

Abstract

Trade Union militancy as an explanation of inflation: an international comparison* PART I I n this paper we investigate the influence of trade unions on the determination of the rate of change of money wage rates in Belgium, France, Germany, Italy and the Netherlands. For purposes of comparison we present some results for the U.K. but not in the detail which characterizes the studies of other investigators, e.g. Hines [5], Godfrey [3], Taylor [19]. Although to diagnose the cause of inflation is of interest in itself, more important are the policy implications that follow from a particular diagnosis. If it is the case that wage inflation can be explained in terms of trade union pushfulness, then incomes policies may be a potent anti-inflation weapon. If, on the other hand, trade union militancy explanations find no empirical support, then the adoption of incomes policies will have to be justified in terms other than as a means of insulating the economy from the inflationary effects of trade union pushfulness. I n part I1 we review briefly prevailing views on the role of trade unions in the inflationary processes and discuss the policy implications that follow from regarding inflation m a sociological rather than an economic problem. I n part I11 we present our empirical results and consider the experiences of the countries under consideration vis-a-vis the rate of inflation prevailing in the rest of the world. Finally, our conclusions are given in part IV. Briefly, these conclusions are that for the countries we considered the trade union militancy explanation of inflation is unsatisfactory. PART 11Any particular diagnosis of the causes of inflation must be capable of explaining the following features present in the industrialised countries during the recent past : firstly, the world wide acceleration of inflation rates; secondly, the persistence of higher rates of inflation despite increases in unemployment as, for example, in the U.K. and the U.S.A.; thirdly, the emergence of industrial unrest in a number of countries of an intensity reminiscent of that of the inter-war period.The debate on the causes of inflation has been, essentially, between two schools of thought. The differences in their approaches are most 'Manuscript received 16/10/73; final version received 2/1/74. 46

Distributive Struggle and Economic Development in the 1970s in Developed Capitalist Countries*

“…Hypothesis 3.2. A high level of distributive conflict causes inflation (Ward and Zis, 1974;McCracken etaf., 1977;Goldthorpe, 1978;McCallum, 1983). Employers try to increase their share by raising prices.…”

Measures of Union Militancy in Australia 1949-77

“…Other investigators, notably Godfrey (1971), Godfrey and ?aylor (1973), Knight (1972) and Taylor (1974) have found that strikes variables are also significant in wage inflation equations. More recently, some loubt has been cast on the significance of militancy variables (see 'is (1974), (1976), Ward and Zis (1974), Henry, Sawyer andSmith (1976), lurkitt andBowers (1976) and Zis (1977). The most recent Australian tudies to incorporate militancy measures are Perry (1978Perry ( (a), 1978) and 'hipps (1977).…”

On the Role of Strikes Variables in U.K. Wage Equations

“…Economists investigating the determinants of wage inflation have sought to isolate the independent influence of trade unions on the rate of change of money wage rates by using strike activity as a proxy for trade union pushfulness, e.g. Godfrey (1971), Taylor (1972), Johnston and Timbrell (1973) and Ward and Zis (1974). The choice of these particular four studies for consideration reflects the limited objectives of this paper.…”