As shown in our previous post, the background to the strikes of 1978-9 had been several years of wage restraint under various phases of the Social Contract.
In July 1978 Prime Minister James Callaghan published a White Paper that sought to impose Phase IV of the Social Contract – a 5% limit on wage increases. Inflation in 1978 was at c.8% and by 1979 would rise to c.13%. The 5% limit was not compulsory, but the Government intended to apply sanctions to firms that broke it. At a meeting on 26th July 1978 the TUC voted to reject the 5% limit, demanding a return to free collective bargaining.
The pay awards of large employers in the private sector, particularly Ford Motor Company, were seen as benchmarks for the whole sector and in September 1978 Ford offered a pay rise within the 5% limit. Ford workers began a strike in response. A Day of Action was called for October 11th and by November Ford decided to accept Government sanctions and break the limit by offering a much increased pay offer. This was accepted by the workers on November 22nd.
Callaghan had already lost a vote on the 5% limit at his own Party’s annual conference during the Ford strike, and by December a series of votes in the House of Commons made it clear that the Government would not be able to impose its threatened sanctions in the private sector. A further strike took place among lorry drivers in December and January, which began to affect oil and food supplies. In the midst of the strike Callaghan returned from a summit in Guadeloupe and made a comment that was spun by The Sun newspaper into its famous headline: “Crisis? What crisis?”
By mid-January 1979 the disputes began to spread into the public sector. The civil service union CPSA produced the leaflet below, which represented the mood among many public sector workers.
A “Day of Action” was called for 22nd January, in which public sector workers staged a 24-hour strike.
Many public sector workers stayed out on strike indefinitely after the 22nd January, causing serious disruption to many public services. The strikes continued into February, affecting health services, education, transport and refuse collection.
The industrial situation provoked renewed negotiations between the Government and the TUC and on 14th February they published a joint statement – “The Economy, the Government and Trade Union Responsibilities” – which became known as the Concordat. Strikes did not immediately cease, but by March many unions had returned to work, accepting pay settlements well above the 5% limit.
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