GEOFFREY GOODMAN is the lndustr:ial Correspondent 
of the Daily Herald. 


FABIAN TRACT 340 

THE FABIAN SOCIETY, 
I l, Dartmouth Street, S. W .I 

Note.-This pamphlet, like all publications of 
the FABIAN SOCIETY, represents not the collective 
view of the Society but only the view of the 
individual who prepared it. The responsibility of 
the Society is limited to approving the publications 
which it issues as worthy of consideration within 
the Labour Mo vement. 

October, 1962 


I. Introduction 
ALMOST every day now we can read in the newspapers about a fresh 

outbreak of what has become known, perhaps euphemistically, as 'The 
Redundancy Problem'. A large aircraft factory is shutting down because 
the Government has changed its mind-a few thousand men will be looking 
for new jobs; a small chemical plant in X-shire is having to close 
because the parent company is rationalising production-150 people are 

thrown out of work ; the Coal Board is to close more pits ; the railway 
workshops are to be placed on Dr. Beeching's operating table for phase-
one of his ' surgical ' treatment of the railways ; an old-established brewery 
in an old industrial area is closing down-not because people are less 
thirsty but because beer is now just as much part of business rationalisa· 
tion as soap, toothpaste or even women's magazines. 

And all of it adds up to that ugly word, redundancy. It's a pity we 
cannot find a more sympathetic phrase than one which connotes superfluous, 
uncalled-for and unwanted. But I suppose we might just as well have an 
unpleasant word for an unpleasant fact of life. 

Behind the word may lie anything from temporary inconvenience 
to profound social upheaval and even prolonged distress and misery. 
Of course this is not a new phenomenon in capitalist society. The older 
generation of industrial workers know this well enough. But its form and 
character have changed markedly in our so-called affluent society. Being 
out of work, even temporarily, is very different nowadays to what it was 
when there were two million or so people standing in the dole queues. 
Yet that is scarcely the issue: for the man who IS out of work-sacked, 
dismissed, redundant, call it what you like-unemployment can still be a 
major blow. It is no consolation to him to reflect that there are not many 
others who are similarly placed. 

Of course there are some ' experts ' who will claim that redundancy 
is really the mark of a healthy, vigorous economy; that it reflects a 
society in a state of flux, with workers moving from job to job and competition 
operating along classic lines. It is rare to find among these ' experts ' 
any one who has experienced real redundancy. 

The Rate of Ohange 

The growth of the 'redundancy problem', as distinct from the long 
periods of enforced decaying idleness which was pre-war unemployment, 
is the mark of a society that has grown richer, infinitely more varied .and 
prolific. This society is not merely changing rapidly but the rate of change 
itself is surpassing most of our predictions. The quickening of this tempo 
makes the redundancy of many of our tasks as inevitable as the casting 
off of a pair of old shoes. It is a fact of life; harsh but inevitable. 

The more rapid the rate of technical and social change the greater will 
be the strain on the nature of human relationships. This applies no less 


REDUNDANCY IN THE AFFLUENT SOCIETY 

to day-to-day redundancy than to the less mundane question of space travel. 
It fs~:au part of the same complex. 

Already it is recognised that redundancy today is in many ways harder 
td ' bear than the pre-war long stretches of unemployment. Misery is 
easier to share when there is meanness and squalor all. around.-A social 
revolution in thinking, habits, taste, attitudes and family commitments 
separate the two periods of our modern history. Our legislators have not 
quite grasped this, nor have our institutions responded to it. They do 
not show that they have yet understood that redundancy is a problem ' 
that will grow with the speed of change, not diminish. 

This growth is brin•ging bewilderment to workers and managements. 
Our institutions, of Government, industry and trade unions, have been 
incredibly slow to react to ' the challenge of change. But it has now to be 
faced because it is forcing its way in through the door. The price that 
will have to be paid If; we wait till widespread unemployment fans out · 
from ''!!he patches (concealed or otherwise) of redundancy that already exist 
will be'' the price of making a mockery of the affluent society. 

:J 'J ·~ 

2. The Problem 
,. ' I ' Full employment means that unemployment is reduced to short 

·":Jintervals of standing by with the certainty that very soon one will be 

. , . wanted in one's old job ·again or will be wanted in a new job that is 

.,_. · wjthin one's powers.' 

: ·.... ' For men to have value and a sense of value there must · always-' 

.L ~be useful things waiting · to be done with money to pay for doing 

them. Jobs, rather than men, should wait.' 

-Beveridge in 'Full Employment in a Free Society.' 

; ) r 

pART of the difficulty about tackling redundancy as an overall national 

problem is to identify its nature. It can develop from a variety of 
causes with no common denominator. Often it is temporary as is the · 
case with many of the motor industry's lay-offs ; seasonal as in the building 
or catering industries ; or permanent as when the cotton industry was 
deliberately contracted. Again it can be caused by fundamental changes 
in the structure of the economy inducing 'structural unemployment' in 
one jndus.try or, in its more extreme forms, widespread · slump. Or it can 
arise from . technical cl;la~ge apd innovation, slower and less dramati~ at 
first but ultimately no less decisive than structural change. ' Technological 
un,erpployment , is perhaps the principal challenge to any system of social 

security. , 

Structural ~nemployment stemming from a , basic collapse in the economic 
syste!ll-the result, perhaps, of great changes, in the economic relationships 
between Britain and the rest of the world-would obviously shake 
the foundations of any modern industrial society, and we are not now 
concerned with this apocalyptic question. Such a situation would demand 


REDUNDANCY IN THE AFFLUENT SOCIETY 

crisis measures far beyond even a comprehensive State-run redundancy 
scheme. But structural unemployment in a less extreme form could easily 
arise as a result of Britain's association with the Common Market, in 
whatever form, or even as a result of our decision not to join the Six. 
British ·entry, for instance, would have an impact on shipbuilding, parts 
of the cotton textile industry, some mining areas, sections of the building 
industry, and printing and paper manufacture. Geographically the parts 
of the United Kingdom furthest from the Channel link would be most 
seriously threatened, partly because of transport costs and difficulties-
Northern Ireland, Scotland, Wales and possibly the North-east Coast. In 
this way the structural shape of Britain's economy might undergo basic 
changes over a period of say five to seven years. 

Technological Unemployment 

Technological unemployment, on the other hand, can emerge from a 
variety of causes without any consistent pattern. Scientific developments 
in the nature of production, such as automation, which eliminates jobs or 
radically changes the work involved, is now one of the principal causes 
and, in the United States, is already regarded as the main reason for 
American's persistent high level of unemployment compared with Europeanstandards. 

It is extremely difficult to measure the true impact of technological 
redundancy in Britain or Western Europe so far, because general economic 
expansion has been able to conceal it. Redundant workers are frequently 
reabsorbed within the same firm. In industries such as engineering where 
there is an acute shortage of labour-especially of skilled hands-there 
have been few really difficult problems up till now. Yet in many respects 
this is an unreal picture because the technical know-how for a rapid transformation 
in production methods is already available. All kinds of factors 
are holding up its application-principally the uncertain economic (and 
political) climate in the world. 

In the United States technological development introduced in the 
investment boom several years ago is only just beginning to reveal itself 
in terms of real unemployment. The virtual stagnation of the American 
economy has underlined the problem though one can assume that this 
will apply only a temporary brake to the application of new technological 
developments which tend to carry their own specific momentum once the 
catch has been slipped. In any event it would be a great error of optimism 
to assume that the drive to reduce production costs-principally in respect 
of their labour content-will be suitably balanced either by existing levels of 
economic growth or by current attitudes on social planning. The creation 
of new jobs will more and more tend to require positive planning powers. 

Then there are the processes of the business machine itself ; rationalisation 
of industry involving take-over bids, mergers or ' arrangements ' 
between separate companies and even the streamlining of the internal set-up 
within existing firms. Equally powerful as an influence on technological 
unemployment are the shifts dictated by social change itself-such as the 


REDUNDANCY IN THE AFFLUENT SOCIETY 

emergence of new fashions, designs, tastes and demands, whether it is in 
motor cars, women's clothes or furniture. 

But that is not to say that the two basic forms of unemployment-
structural and technological-are mutually exclusive ; indeed, the cumulative 
effects of technical change may induce structural upheaval, and vice 
versa. The more complex industry becomes, the more interdependent will 
be the separate national economies, as we can already witness, so that the 
problem of identifying and separating the two conditions of unemployment 
is likely to grow more difficult. 

But there is a consolation: the impact of structural unemployment in a 
'smaller world' is less likely to be as catastrophic as it once was unless 
the politicians ignore all the lessons of recent history. International economic 
movements are more predictable than they were because more people 
are aware of the danger-signs and conscious of the social and political 
pitfalls of ignoring them. This does not mean that we are insured against 
shocks. The fundamental uncertainties-or as Marx would have put it, 
' the contradictions of capitalism '-are still with us. The experts are as 
divided about the underlying reasons for the Wall Street collapse as they 
are about the immediate future of the American economy. Yet it remains 
true that the knowledge and equipment available to us today, intelligently 
used, is capable of preventing or at least ameliorating economic catastrophe. 
The draconic results of pre-war structural unemployment are scarcely 
likely to be repeated if the economic 'indicators' are used effectively. 

But these optimistic thoughts do not minimise the acute dangers 
inherent in swift technological change. Nor is the problem confined to 
the older, contracting industries like coal, cotton, railways or shipbuilding. 
The 'modern' ones can be hit equally hard as we have seen recently in 
motor cars, aircraft and even steel production. Of course, there are industries, 
traditionally conditioned to periods of redundancy-such as building, 
catering, distribution and the seasonal forms of service industries. For 
these the problem is simply a specialised feature of the total challenge which 
now faces the affluent society ; the guarantee of genuine full employment 
and social security. 

Government Control 

The Government-and that means any Government in the modern 
State--has it in its power to expand or contract the economy almost at 
will. The threads of economic control ultimately all lead back to the 
nerve-centre of Government policy. It is immaterial whether this is due 
to the placing, or cancelling, of defence contracts, to credit policy, to fiscal 
or budgetary actions. There is no reason at all why a Government, 
equipped with the machinery of planning and controls necessary to manage 
a complex economy, should not be able to produce a redundancy scheme 
capable of insuring against the less extreme forms of structural, as well as 
technological unemployment. This should certainly be the objective of a 
Labour Government. The maintenance of overall full employment is not 
just an axiom now accepted by all political parties-however reluctantly 


REDUNDANCY IN THE AFFLUENT SOCIETY 

by the Conservatives, it is a precondition for any civilised society. The 
problem which now faces our society is how to smooth down the ripples 
on the surface of fu11 employment, which sometimes develop into larger 
bulges of social distress, as a result of shifts in the economy. If these 
' shifts ' are due to a temporary lapse in demand the easiest, even if not 
always the most economic, solution is simply to share the reduced amount 
of work by slipping into short time or curbing overtime. This is not as 
wasteful, nor short-sighted, as some critics claim, either to management or 
workers. Provided the lull in work is not prolonged and there is a 
reasonable prospect of recovery, there is much to be said for keeping a 
labour force together and even insisting that it is part of the overhead costs 
in industry to bear short-term setbacks-provided they are short term. To 
talk as if this would be an ' unfair burden ' on management would be as 

reactionary as to question industry's responsibility to bear the cost of 
workers' holidays or shorter working hours. 

The real difficulty arises when technological change, or public demand, 
forces more permanent changes in the pattern of employment. Quite often 
these 'ripples on the surface' mean the sack for thousands of workers. They 
may be concentrated in one unfortunate 'black spot' or spread over a 
number of places. 

The chances of finding a new job quickly will invariably depend on 
where the unemployment occurs. If it is in a Midland town, or in the 
London area, the choice of alternative work can be wide, though this is 
not always true. But in Scotland, or the North East of England, or in 
South Wales, a 'redundancy bulge' can quickly amount to considerable 
hardship. A minority of the jobless, the skilled workers, may have no difficulty 
in finding fresh employment within days or certainly a few weeks. 
The majority, however, will not be skilled men, but semi-skilled or labourers 
for whom there is no great demand in their home area. The fact that there 
is a general scarcity of labour in a town 100 miles away is of little use if 
the redundant worker is married with a family, because those areas where 
there is a high demand for all types of labour are the very areas where the 
housing problem is most acute. 

The Sense of Insecurity 
This is the sort of vicious socio-economic circle which exists in Britain 
and it goes to the roots of the 'labour mobility' problem. It explains why 
the fear of the sack is still a frightening spectre to most workers, despite 
all the years of full employment and the Welfare State; it underlines the 
residual insecurity which remains deeply ingrained in the psychological 
make-up of the majority of workers, old and young. The older ones, especially, 
remembering the years which have scarred the minds of several generations; 
the younger ones, having heard what once happened to their fathers, 
are suspicious and, imprisoned behind a wall of Hire Purchase commitments, 
fear redundancy no less than the older workers, and in some ways, perhaps, 
even more. 
An Affluent Society in which there is a wide choice of consumer 



REDUNDANCY IN THE AFFLUENT SOCIETY 

comforts has made the average worker more, not less, dependent on 
continuous employment. It may also have raised his personal stature and 
determination to keep what he's got and when this comes into conflict 
with the underlying fear of what redundancy can bring-even for a brief 
spell of unemployment-the result is tension in industrial relations. 

There is no doubt that this accounts for much of the restrictive practice 
'mentality'-where it genuinely exists-and for a great part of the mistrust 
between management and worker. It also reflects the profound sense of 
injustice over the inequality between wage earners and the top strata in 
industry. Very few workers are unaware of the great inequalities in rewards 
for service, and this is most pronounced in cases of redundancy. A managing 
director whose services are no longer required generally receives a handsome 
'golden handshake'; the worker who might easily have been with the 
same firm longer than the managing director may find himself out of a 
job with very little to show for his years of service. For all our social 
progress there remains two laws in industry which make an absolute mockery 
of Mr. Macmillan's irritatingly repetitive theme about Britain being 'One 
Nation' and classless. Over a large sector of industry there is still the · 
assumption that labour is an easily expendable commodity. Often the moral 
standard seems still to be based on the 18th century concept of 'labour' as 
simply muscle-power, hands, which carries with it a minimum of social 
charge and less consideration than that given to mechanical plant. How 
else is it possible to explain the disparity between £10,000 or £20,000 or 
more given to a redundant director, the substantial sums set aside for plant 
depreciation, and the one, or perhaps two, weeks' pay given to a redundant 
worker? ... or in many cases nothing at all. 

But even if a redundant worker has received severance pay the problem 
is far from solved. It may be that his only opportunity to get fresh employment 
is to move home, with or without his family.If he leaves his family 
behind he has then to keep two homes provided for. That would soon 
melt away any severance pay, quite apart from presenting other difficulties. 

If he takes his family with him, assuming it is possible to find a new 
home, the social uprooting can be extremely disturbing, as several social 
surveys have found. It often involves the break-up of family and even 
wider social circles; the children may be at a decisive stage in their schooling. 
The fact is that neither the nation's housing nor its education services are 
-or might be-geared to a society which is in a state of rapid change. 

Mobility of Labour 

One of the most extensive of recent social studies on redundancy was 
carried out by the Acton Society Trust in 1959. From the case histories of 
a group of redundant workers, mainly in the Midlands, it was found, perhaps 
not surprisingly, that there was a profound aversion to mobility where ·it 
involved moving home, though less where it meant merely changing industry. 

The conclusion reached was that any policy to deal with the problems 
of redundancy could not simply rest on making it less economically difficult 
for the worker-either with severance pay, removal grants or other 


REDUNDANCY IN THE AFFLUENT SOCIETY 

financial assistance-but in making it "less disagreeable" in terms of social 
uprooting. Plainly this is an argument in favour of taking work to the 
worker where possible, but there are instances where it is neither practicable 
nor desirable as we shall discuss later. In any event, it has to be remembered 
that the Acton study was made mostly in the Midlands where the 
competition for labour-even unskilled-is greater than in most areas. 
Even so the study revealed that in a minority-of some fifty households-
redundancy meant considerable hardship and distress over a period of 
months during which time living standards were seriously impoverished 
and dislocated. 

The New Job 

There is a general impression that professional workers and executive 
grades often accept mobility as part of the 'normal conditions of employment' 
and that they are therefore less reluctant to move home. There is no 
great weight of evidence to prove this point and I personally would question 
it. 

The experience of many companies has been that it is difficult to recruit 
younger-and even senior-management for factories in development areas. 
principally because of the 'social disadvantages'. The wives of management 
personnel are particularly reluctant to leave an established 'social circle" 
in exchange for pioneer work. Some firms have found it necessary to prepare 
the ground by helping to create the 'proper social climate' for management 
transferees. 

In any case it is hardly a fair comparison to set professional and man-
agement-grade attitudes against those of the average manual worker. The 
former are 'staff employees' who invariably enjoy privileges of financial 
and social status within the firm out of the reach of the average manual 
worker. Firms with redundancy schemes normally have a 'top haf or 
'second tier' scheme for professional and-executive grades just as they have 
for retirement pensions. It is precisely in these spheres that industrial class 
divisions reveal themselves so profoundly. 

We have said enough to establish that the redundancy problem for the 
wage earner is not something which can be resolved simply by severance 
payments, however generous. More fundamental is the need to get the 
worker into a new job as quickly as possible at a skill which is not diminished 
by his change and to reduce to a minimum the interim period when 
his income may be subject to •a sharp drop. This is obviously the aim of 
any social security programme, but equally it should be the objective of any 
enlightened broad economic policy which hopes to foster an expanding 
economy. 

In extreme cases of prolonged redundancy, where older and unskilled 
workers are involved, the social programme may easily necessitate rehabilitation 
work, rather than the narrower concept of re-training. Any enlightened 
programme must allow for these instances even though they may be few. 

Above all the problem involves national policy on housing, the location 


REDUNDANCY IN THE AFFLUENT SOCIETY 

of industry, social insurance benefits, the re-training of workers in new 
and changing skills; in short, national economic planning. 

No redundancy scheme can be really effective unless Government 
brings together all these strands by regarding the solution of the redundancy 
problem as part of an overall social and economic responsibility. That is 
not to say that industry should not carry its share of the burden. It should 
and, indeed, it must; but the short-term .contribution from industry should 
serve to supplement the State responsibility, which is a long-term one of 
seeing the economy projected in the right direction and shape. 

Of course, this is socialism and we are hardly likely to get it from 
a Conservative Government. Yet, as the Prime Minister's July speech indicated, 
even the Conservatives recognise that something needs to be done 
urgently about planning the economy, overcoming the bottle-neck in retraining 
workers and generally facing up to the challenge of change. The 
problem is presenting itself in the United States in an acute form where 
the 'lay-off rate' in manufacturing industry in the years 1947-59 has increased 
from 1.0 per cent to 1.6 per cent of the total labour force, which itself 
has expanded rapidly. The same trend can be observed in Britain though 
we appear to be at an earlier stage of the process. 

3. The Present Situation 
£STIMATES of the number of workers who become redundant in Britain 

each year vary widely, and even wildly. Some put the total as low 
as 1 00,000; others, guessing at other extremes, have suggested one million. 
The Ministry of Labour is quite candid about the position; it has no 
accurate statistics. Nor does i't have any figure showing the number of 
workers who experience unemployment during any year-even for a short 
spell. All we know from Ministry of Labour sources is that something like 
three million job changes occur every year, in manufacturing industry. But 
this figure includes job changes from all causes, including retirement, and 
the Ministry believes that redundancies, as such, account for only a very 
small part. I would estimate that our rate of redundancy is less than the 

1.6 per cent of the United States and is probably as low as 1 per cent at the 
moment. If this is so, the annual rate would be about 240,000 workers. ) 
But the fact remains that we do not have an accurate picture of what is 
happening to our industries and just how many workers should be classified 
as redundant each year. 
All the time there are profound movements of labour taking place in 
our economy. In the last decade the rate of change has increased measurably 
despite the apparent reluctance of workers to move, and there has 
been a very great shift of workers both geographically and between industries. 
In the years between 1950 and 1961, the movement of manpower in 
manufacturing industry produced this picture: 

Mechanical engineering gained about 230,000 workers; motor vehicles 


REDUNDANCY IN THE AFFLUENT SOCIETY 

and cycles 115,000; aircraft 125,000; paper, printing and publishing 110,000; 
radio apparatus 95,000; electrical appliances 90,000; electrical machinery 
65,000. The principal fall was 125,000 in cotton textiles. Outside this field 
the main manpower losers were agriculture and mining. 

Alongside this industrial mobility, which in itself may have involved 
only a minimum of home-moving, there has been a continuous and growing 
flow of population toward the South-eastern corner of the country and the 
Midlands. The result has been to increase the pressure in the already overcrowded 
conurbations around London, Birmingham and Manchester areas 
(inflating land and other prices) while at the same time accentuating the 
decline in other parts of the country-especially Scotland, Northern Ireland, 
parts of Wales and the North East of England. 

Redundancy Schemes 

While all this has been happening there has been a steady growth of 
redundancy schemes throughout industry. Allowing for possible overlapping, 
it is reckoned that between 3 and 3t million workers are now covered by 
redundancy agreements in some form. In other words just short of one in 
seven worke~s in Britain are offered some protection-and it is usually only 
a minimum form-from the cold blast of a redundancy notice. Even if we 
take the top limit of the estimate, 3t million, half of them are in the 
nationalised industries which, by and large, have the best schemes. There 
are of course some extremely advanced redundancy schemes in private 
industry, not always confined to the larger companies. But there is no 
fixed pattern; some offer compensation, advance notice and joint consultation; 
others offer compensation and advance notice; most offer very little. 

The most recent attempt to assess more accurately the redundancy 
practices of British industry was the Ministry of Labour's survey of 236 
redundancy policies-'Security and change· published in July 1961. This 
study was based on a sample of schemes in private as well as public 
industry. Only a quarter of the redundancy arrangements under review were 
set down in writing according to this publication and these were usually in 
the form of management circulars to employees. In a minority of cases 
the policies of the firms have been issued to employees in the form of a 
printed document. Typical of this method is the I.C.I. scheme called, significantly, 
'Protection of Employment'. The system of notice and compensation 
for redundancy in I.C.I. is not the outcome of trade union 
agreements. I.C.I. drew up a scheme-which is certainly a liberal one-
and offered it to the unions as an arrange ment-not as an agreem ent 
which required union approval and signature. In fact it was accepted by the 
26 unions concerned as an undertaking of what I.C.I. was prepared to do 
to offer job security to its employees. 

The scheme is worth detailed attention to illustrate what sorpe of 
the more enlightened companies are prepared to offer. The I.E.I. proposals 
set off with the preamble that it is the firm's intention to avoid redundancy 
and protect ·employment. The company 'proclaims 'that all practicable steps 
should be taken to avoid redundancy' and accepts the principle of consulta



10 REDUNDANCY IN THE AFFLUENT SOCIETY 

tion with the unions as early as possible if redundancy threatens. Dismissals, 
where necessary, are based on seniority-last in, first out, though 
this is not an unshakeable attitude. The terms of notice vary from two 
weeks after I year's service to 12 weeks after 15 years with the firm. In 
addition 'Resettlement allowances' are paid for 3 weeks after 3 year's service 
to 10 weeks for 10 years or more if the employee has not found a new 
job within the period of notice. And for those I.C.I. workers with five years' 
service the company makes ex gratia payments in addition to any other 
compensation. It is worth noting that I.C.I.'s rate of redundancy for 
1960 and 1961 for its 76,000 industrial labour force averaged )ess than 
2 per cent, and that was mainly due to the cancellation of a Government 
defence contract, and the closure of a factory owing to the falling off in 
the demand from South Africa for an I.C.I. product. 

The l.C.I. scheme is a useful yardstick to have in mind when comparing 
the results of the Ministry of Labour's survey for the 236 firms 
whose redundancy policies were reviewed. Only 90 o·t them made provision 
for severance payments. In the main they were the larger companies-
employing three fifths of the workers covered by the Ministry's survey, and 
they tended to give Jump sums, related to length of service, rather than 
weekly payments. But 45 per cent of the firms under review, employing 
between them just over one fifth of the workers, had neither provision for 
severance pay nor for extra notice of dismissal. In only half the cases 
examined was there prior consultation with the unions or workers' representatives 
at factory level. It was also found that very few written redundancy 
schemes contain any reference to pension rights, though the usual practice 
where a pension scheme exists is for the firm to refund the employee's 
contribution, or offer him the choice of remaining in the fund and taking 
a reduced pension on reaching retiring age. 

The Nationalised Industries 

All the nationalised industries have some form of redundancy agreement 
and though they vary in quality they are, as a collection, easily the 
best thing we have. That is not necessarily because the compensation payments 
offered are generous-in most cases they are not-but rather that 
the public sector of the economy has acknowledged and understood the real 
challenge of the redundancy problem; to find new jobs for workers who are 
displaced and, where necessary, to re-train them and help to offset the 
financial and even social difficulties involved in moving home. It is in this 
respect that the nationalised industries' schemes score heavily over the 
private ones. A common thread runs through all of them-la strive to avoid 
redundancy; but where it is unavoidable, to give ample notice to the trade 
unions so that everything possible can be done to reduce hardship. 

The Railways 

The example set by the nationalised industries was in many ways a 
deliberate attempt to establish a pattern of enlightened employment practices 
for ·private industry to follow. The original Transport Commission agree



REDUNDANCY IN THE AFFLUENT SOCIETY 

ment of February, 1958, stated hopefully: "The British Transport Com


mission and the Railway trade unions regard the staff redundancy arrange


ments for British Railways as setting a high standard for industry generally'. 

The example has been slow to !percolate through private industry. 

Now Dr. Beeching has been pushed into a fresh attempt to set a pattern 

as a result of the redundancy crisis precipitated by his own proposals to 

streamline the railways. The original conception of the Transport Com


mission's redundancy scheme was not designed to meet widespread redund


ancies but rather a readjustment from a system based on the steam loco


motive to diesel-electric modernisation. Therefore only railway workshop 

redundancies were covered by .severance payments under the original plan. 

Th~ latest Beeching proposals are designed to meet a new and much more)senous emergency. 

The railways, more than the coal industry, seem likely to provide the 

first major test of an industry-wide redundancy scheme in full operation. 

It is as well that this is taking place in a .nationalised undertaking, especially 

one in which Government policy has a direct bearing if only because the 

Treasury will, in the end, have to underwrite the financing of Dr. Beeching's 

redundancy. It puts real responsibility where it rightfully belongs: on the 

Government's doorstep. 

Coal Mining 

The most comprehensive attempt to tackle redundancy in a nationalised 

industry must surely be the Coal Board's policy. This provides for a sever


ance pay arrangement as well as a large scale re-development plan for the 

transfer of miners from pits which are closing to the expanding coalfields. 

The Board's scale of severance pay is not generous, despite the recent 
improvements announced by Lord Robens. But its principal aim is to relieve 
the burden of redundancy for those least able to weather the blow-the 
older miners. The notable feature of the recently improved Coal Board 
scheme is that it introduces a £1 a week pension for all redundant miners 
who have reached the age of 60 and have had 10 years' service in the pits 
-regardless of whether they find other employment. The second important 
improvement in the Coal Board scheme is to extend lump sum compensation 
to all redundant miners over the age of 51. Under the previous scheme 
pensions and lump sums were confined to miners who were retired off at 
the usual age of 65. Underground men received a maximum of £203 payoff 
plus their pension; surface workers however bad a maximum of only 
£89. These maxima may no'w be revised, but in any event Lord Robens 
proposes to extend lump sum payments, on a graded basis, to all redundant 
miners above 51, as well as providing weekly amounts. The weekly sums 
will be based on the now commonly accepted formula of two thirds the 
basic rate less unemployment benefit which, for an underground man, comes 
to £4 Ss. 2d. a week. Of course the miner would receive unemployment 
benefit as well. 

The lump sums increase according to length of service in the industry; 

the duration of the weekly amounts, however, decreases as the age scale 


REDUNDANCY IN THE AFFLUENT SOCIETY 

rises so that a man aged 51 who was redundant, would be entitled to the 

maximum of 26 weeks benefit-but at age 64 the duration would have 

diminished to three weeks' payment because of the nearness to retirement. 

None of this can be described as erring on the side of generosity, but 

against this, the Coal Board's allowances for miners whQ are transferred 

from declining to prospering coalfields is one of the most enlightened 

industrial programmes in the country. A deliberate attempt is being made to 

minimise redundancy by offering miners well-paid jobs in new pits and 

providing them with Jwuses and special moving allowances. The Coal 

Board works with local authorities to build houses in the expanding coal\
fields to accommodate transferees. Local authorities set aside a proportion 
•of their housing allocation to miners and the Board itself is currently 
engaged on a housing programme to build 7,000 houses. 

The Board's social resettlement scheme, which was also recently improved, 

provides transferred miners with financial assistance to meet higher rents in 

lodgings or in rented houses. This aid is of particular assistance to men 

who move with or without their families from rent free or low-rented 

houses to houses with higher rents. The financial help is based on a diminish


ing scale of assistance up to 26 weeks. 

The Board's scheme also offers: fare for the first journey and other 

travel expenses, followed by a 'settling in' grant, when the miner arrives, 

of 24s. 6d. and a 'weekly lodging allowance of 59s. 6d. for men separated 

from their dependents-who also have their fares paid when moving. The 

cost of removing furniture is borne by the Board, to which is added a £50 

settlement grant when the miner and his family have found a new home. 

The Airlines 

Probably the most generous severance pay agreement of all is that of 
British Overseas Airways Corporation for its engineering and maintenance 
workers. It begins modestly with 4 weeks' pay for those with 3 years' service, 
but as length of service extends the payments grow more and more generous, 
on a sliding scale arrangement until those with 24 years' service 
are entitled to 48 weeks' compensation-that is almost one year. Even 
those with less t:han 3 years' service qualify for a £25 ex gratia payment. 
There is nothing quite like this elsewhere, but then B.O.A.C., like B.E.A., 
employ a smaller and much more concentrated staff-skilled as well as 
semi-skilled-than other nationalised industries. 

The Cotton Scheme 

The Cotton industry scheme is an exceptional instance of the Gov


ernment moving into private industry with funds to expedite its con


traction and re-organisation. Again it is not as an example of generosity 

that this scheme is worthy study, but as a blueprint for State intervention 

in the affairs of a declining private industry and therefore as a policy 

to counter structural unemployment. 

Of course, the cotton industry had been in a state of steady decline for 

years when the Government proposed its £30 million plan to assist the 


REDUNDANCY IN THE AFFLUENT SOCIETY 

modernisation of the industry and reduce its size. ,The reduction of 1959-60 
was a short, sharp surgical operation. It brought the industry's labour force 
down from 222,610 in October, 1959 to 183,730 at the end of 1961 (it is 
now 165,000). Some of ~hese workers did not qualify for the redundancy 
scheme but about 35,000 have received payments totalling ,£3-!-million. 
The unique feature of the scheme agreed between the cotton employers 
and unions was the use of age as the criterion for compensation-not length 
of service. This was because there had already been so much contraction 
in cotton with workers moving from one closed mill to another that length 
of service in any one mill offered no satisfactory guide. Age was a much 
more reliable yardstick-in fact the only realistic one. This is a valuable 
precendent to have in mind-especially for decLining industries concentrated 
in particular areas-as is cotton in Lancashire. 

Private Industry Schemes-and Views 

The overwhelming view in private industry, which is after all the dominant 
sector of the British economy, is that compensation for redundancy 
is a State responsibility. That is why there are so few industry-wide agreements. 
In some cases such .agreements are actively discouraged by the cen'tral 
employers' organisation for the industry but in most instances the national 
bodies tend to take the passive attitude and leave it to individual firms to 
make up their own minds on compensation terms and even general policy 
towards redundancy. In a few cases lines of principle are suggested. But 
we shall discuss those more thoroughly later. What we discover on any 
analysis of private schemes is an amazingly wide variation in attitudes, 
principles and even compensation terms, though in the latter instance bare 
subsistence is the usual pattern. 

The industry-wide agreements in general deal with broad principles, 
leaving the details to be settled by local negotiation. Agreements, or rather 
recommendations, have been made between employers and unions in the boot 
and shoe, rayon, silk, tin box, cement, chemical, furniture, glass, hosiery and 
pottery industries about length of notice. There is no consistent pattern to 
these agreements except that they all proclaim the principle of consultation, 
advance notice, measures to minimise dismissals and recognition of previous 
service if re-engagement becomes possible. Severance pay is accepted in 
principle with the amounts left for individual firms to deeide. Possibly the 
most comprehensive industrial agreement in the private sector is the tinplate 
scheme which was first established in 1946, when it became clear that 
the old hand mills in South Wales would have to close down. The Tinplate 
Labour Fund was set up to levy 1d. for each 'box' of tinplate produced 
in the industry (a box is equivalent to one cwt.). By 1958 the fund had 
buill up a very impressive sum-£873,000, of which £356,000 had been paid 
out in lump sums to tinplate workers based on a points system which took 
account of the grade, age and ·length of service in the handmills. Up to 
the end of 1961, 5,500 tinplate workers had received compensation from 
the fund. Some of the older workers have had up to £395 apiece though 


14 REDUNDANCY IN THE AFFLUENT SOCIETY 

most have had much less than that. Now there is only about £100,000 left 
in the kitty. 

Diversity of Treatment 

The surprising feature about the schemes m private industry 
is their diversity. It even invades sections of the same group of 
companies. Unilever, for example, has within its empire companies 
with redundancy schemes, and some without. In fact one of the 
reasons Unilever do no't publicise their schemes is because they are not 
common to all sections of the vast enterprise. The average Unilever scheme 
provides for severance payments of two-thirds basic pay (less unemployment 
benefit) for up to 13 weeks. There are other schemes which can give a 
month's pay for each year of service up to age 55, with a five-year service 
qualification. Above that age an employee qualifies for extra consideration 
because the prospect of alternative work diminishes. And at top management 
level, Unilever has a 'top hat' scheme with highly generous ex gratia pay-
ments-because, it is argued, management types find it much more difficult 
than the average worker to get another job at the same status. 

Unilever have their ,own 'secret' method of assessing redundancy compensation. 
Publicly the company will admit to no fixed general yardstick 
of calculation. Payments may vary almost with every case, particularly 
among senior staff. Age and the prospect of future employment are the 
principal factors taken into consideration in assessing amounts. An employee 
aged 60 with 15 years' service will be treated more generously 
than one aged 40 with the same number of years service. Premature pensions 
are given when an employee, close to retirement age, is declared redundant. 

One of the most fascinating sidelights on redundancy attitudes in 
private industry are the contrasting policies which ultimately determine 
which workers should go when the crunch comes. 

Some firms stipulate that the first to go should be 'foreigners' or 
'Italians'. One large rubber company lays down that Workers of 'foreign 
nationality' should be among the first to go-claiming that this is 'at the 
insistence of the trade union'. In a metal firm, with 3,000 workers, a contract 
provides that Italians shall be the first to go. J have seen no written evidence 
which commits a company to dismiss coloured workers first, though I am 
satisfied that this condition does exist in some firms. The most commonly 
accepted factor for determining who goes first is length of service. But 
there are innumerable variations on this theme. A chemical firm with 
47,000 employees lays down this priority: part-time women, full-time married 
women, foreigners. Then; last in-first out. Finally an assessment 
based on 'merit and value to the company'. It also differentiates between 
factory workers-who get one week's notice-and clerical grades who get 
one month's notice. This latter form of discrimination is not, of course, 
uncommon. 

'Ability' is often used as a determinant; so too is age, standard of factory 
efficiency (the least efficient going first, of course). 'Time-keeping and work



REDUNDANCY IN THE AFFLUENT SOCIETY 15 

room conduct, etc. being equal or nearly so (to) length of service· is the 
view of a food firm employing over 9,000. 

The star example of judicious selection comes from a firm with an 
excellent redundancy scheme-a firm of printers in the Midlands with a 
staff of just over 100. Any worker who becomes redundant in this company 
receives a minimum of 3 months' pay plus non-contributory pension benefits, 
with no specified maximum. The decision about who goes first rests 
like this: unmarried persons; married persons with children .over 15; anyone 
with an invalid wife, husband or child; anyone engaged to be married who is 
in the pension scheme; and finally-no dismissal for anyone with children 
under 15 or who may be expecting a child. 

This firm's policy is to avoid redundancy at all costs-even to the extent 
of reducing overall wages by 10 per cent and directors' fees and senior 
staff salaries by 5 per cent before contemplating dismissals! 

The Guaranteed Wage 

The American Guaranteed Annual Wage principle has made little 
headway so far in this country. It has been discussed as a possible counter 
to the fluctuations in job security for motor industry workers, but there is 
no common agreement among the trade unions. Yet, since 1947, one large 
American-owned company in Britain has had a variation of the G.A.W. 
for its hourly paid staff with two years' service. This is Thomas Hedley, 
the soap firm, part of the American Proctor and Gamble group, which 
itself introduced the guarantee system in the U .S.A. in 1923 . Hedley's 
guarantee employment for 48 weeks each year. This is done by guaranteeing 
a minimum of 48 standard weeks' work each year-employment, not wage 
rate. The point about that is that if work slumps it might involve transferring 
workers to other jobs, possibly at a lower wage rate. To cover itself 
against the possibility of a severe setback in trade, the firm's agreement 
carries a clause permitting it to guarantee only up to three quarters of the 
established working week, in bad times. Hedleys claim that since the scheme 
was introduced, overall labour turnover has dropped from 46 per cent to 
18 per cent in 1961 (compared with the national average for that particular 
industry of 36 per cent) and for those of its workers covered by the 
guarantee plan it had dropped to 6.8 per cent in 1961 . 

To sum up; there are some extremely generous schemes in private 
industry and, in a small minority of cases, schemes which seriously attempt 
to cushion the social distress raised .by redundancy as well as providing a 
financial cushion to bridge .the gap between jobs. But they are few and 
almost always confined to the larger firms. Inevitably the greatest problem 
exists with smaller firms who have neither the finances, nor perhaps the will, 
to tackle the question. Even the majority of large companies tend to evade 
the thought till they are brought up against it-sometimes sharply. After 
all the most dramatic redundancy clash in recent years was the extraordinary 
sacking of over 5,000 'workers by British Motor Corporation in 1956. 
This left a deep scar across labour relations in the motor industry. 

The redundancy schemes in the nationalised industries were not drawn 


16 REDUNDANCY IN THE AFFLUENT SOCIETY 

up to meet large-scale dismissals but to provide an insurance against localised 
unemployment and to establish at least the framework of enlightened 
employment practices which could be developed more generously as the 
need arose. They were also designed to set the pattern for private industry, 
and perhaps Government, to follow and improve on. This has not happened, 
save in a few isolated instances. But the time has plainly arrived for a 
major leap forward in all the spheres of industry, public as well as private. 

4. The Position Abroad 
HOW far is Britain behind most other industrial nations in providing 

protection against dismissal, either by law or practice? The evidence 
that we have fallen back is substantial. By general European standards the 
degree of protection for the dismissed worker as an individual or in a group, 
in Britain is small. In most countries of Western Europe legal cover is 
extensive and unemployment benefits higher. After the war it became 
axiomatic to assume that Britain's Welfare State was superior to anything 

anywhere else and this was probably true for a short period. It is certainly 
no longer the case. Western Europe strode ahead both in legal protection 
and social benefits, and the emergence of the Common Market with its 
elaborate social security schemes is only the crowning point of a steady 
post-war improvement in European labour relations. 

In Belgium, Austria and Italy, legal cover goes back to the early years 
of the century, though at first th~se Acts were designed mainly to protect 
salaried employees. But they have since extended their cover to all workers. 
Italy provides one of the most impressive examples of this. As far back 
as 1924 a law was introduced to protect salaried workers. It provided for 
two weeks' pay for every year of service. In 1942, the law was extended 
to cover all workers, and in 1960 the severance pay was increased to compensate 
at the rate of one month's pay for each year of service. That 
was not all. Within the broad legal structure, which can be enforced 
through the courts, the central employers' and workers' organisations in 
Italy signed an agreement in 1950 under which an employee who has been 
wrongfully dismissed is entitled to re-instatement or compensation. The 
minimum is 5 months' remuneration-the maximum 8 months with the 
decision, in cases of dispute, resting with the court of arbitration tribunal. 
Of course, compensation for the unjust dismissal of an individual worker 
is altogether different from redundancy. Yet in Italy, to make the position 
perfectly clear, it is underlined by the stipulation that any compensation 
for the wrongful dismissal must be paid independently from, and in addition 
to, any severance allowance. 

The legal protection for the individual in cases of wrongful dismissal 
is more widespread than redundancy protection.1 In several countries 

1 In more than 70 countries dismissal procedures are regulated principally 
by legislation. I.L.O. Report, 1961. 


REDUNDANCY IN THE AFFLUENT SOCIETY 

specific compensation terms are laid down (see for source material ; Report 
on Termination of Employment-International Labour Office, 1961). 

In Belgium legislation (which dates back to 1900) now entitles both 
manual and salaried workers to minimum notice or compensation for loss 
of job. Manual workers are legally entitled to a minimum of seven days 
for a period up to six months in employment. After that, unless there 
is a specific clause inserted in the contract, the notice is two weeks ; one 
month for those workers with ten years' service or more; two months after 
20 years' service. Office workers with less than five years' service are 
entitled to three months' compensation ; one year's notice after 15 years 
and rising to a maximum of two years after 35 years' service. 

The essential feature of this legislation is that it compels an employer 
to give a minimum amount of notice. 

Granting salaried, or white collar workers, more favoured treatment 
than manual and hourly-paid employees, is enshrined in the legislation 
of numerous countries. Apart from Belgium similar-though not so liberal 
regulations-exist in Austria, Brazil, Chile, Western Germany, Greece. 
Poland and Switzerland. 

In France the only people covered by legislation for severance pay are 
professional journalists, though there are many collective agreements 
throughout industry which provide for redundancy schemes including the 
motor industry. But there is a legal code which lays down specific procedure 
to be followed when ' collective dismissals ' are scheduled. The 
employer is under an obligation to consult with the Works Committee in 
advance (it is compulsory in every firm with more than 50 workers to have 
a Works Committee). Ordinances enforcing this procedure were introduced 
in France in 1945-46. Most collective agreements now spell out in detail 
the action which should be taken to a void dismissals-reduction in hours. 
changes in work allocation, work sharing. Nor can management arbitrarily 
select the workers who are to be laid off. It must keep to the order laid 
down in the works' rules which, unless otherwise covered by a collective 
agreement, must include general provisions on the order to be followed 
in dismissing redundant workers. The chief considerations to be taken 
into account are: job qualifications, family responsibilities and length of 
service with the firm. 

There is no legislation for severance pay in Western Germany, though 
by an Act in 1926 salaried employees with five years' service with the same 
employer are safeguarded by a provision for prolonged notice. More 
recently-in an Act of August, 1951-legal protection was extended to 
cover any ' unwarranted dismissals '. This was a straight piece of social 
legislation based on a text, negotiated and agreed between the German 
Employers' Associations and the German Confederation of Trade Unions 
(the T.U.C. of West Germany). The freedom of the employer to sack 
his workers without good reason was in fact legally restricted in order to 
increase the employee's social security. The assumption on which the 
legislation was framed was that since the loss of his job would seriously 
affect the social as well as the economic position of the worker and his 


REDUNDANCY IN THE AFFLUENT SOCIETY 

family, the State should provide him with some protection against arbitrary 
dismissal. 

Even more significant, perhaps, than these legal regulations is the 
system of unemployment and social insurance benefits which has been 
established in West Germany. The basic aim behind the system is to 
maintain living standards in the event of a worker becoming unemployed. 
Instead of unemployment benefit being a fiat-rate amount, as in Britain, 
it is based on average earnings in the 13 weeks before the worker becomes 
unemployed. The duration of benefit is related to the period of paid 
contributions-26 weeks' contributions entitles the worker to 13 weeks' 
benefit; 52 weeks' contributions to 26 weeks' benefit, etc. The rate of 
benefit varies according to earnings so that those on lower levels get a 
higher percentage of their normal pay packet-at the very lowest level 
it can be almost 90 per cent.-but the average is more like two-thirds and 
at the top end of the earnings scale as low as half. In addition there are 
flat rate dependents' allowances. The contributions are raised direct from 
the employer and worker as are also, contrary to British practice, full 
health insurance contributions. In Britain of course all this is operated 
through the taxation system, and I am certainly not making a plea for 
the direct levy principle which has many disadvantages compared with our 
own system. 

Sweden 

Outside the comprehensive ' re-adaptation ' schemes of the Common 
Market, which we will discuss, the most advanced system for handling 
redundancy problems in Westeru Europe seems to have been developed 
in Sweden-where unemployment benefits are also related to earnings and 
administered by the trade unions. The core of the whole operation is the 
planning power vested in the National Labour Market Board-equivalent 
to our Ministry of Labour. The Board has secured an agreement under 
which firms threatened with closure, or proposing to reduce activity, give 
advance notice to the local office of the N.L.M.B., at least two months 
beforehand. Armed with this information it then takes steps to find alternative 
jobs; provide re-training courses at State-expense for workers who 
have to change their trade; make allowances for travel, removal and family 
inconveniences for workers who are compelled to find jobs away from 
their homes; and finally, but perhaps crucial to the problem, organises house 
building programmes. A separate National Board of Vocational Schools 
operates courses in practically every trade and where it is necessary to open 
a new course it will request the pubilc financing of building construction to 
house trainees. Sweden would probably claim that it has no ' national 
redundancy policy ' as such ; the claim would be justified because the nature 
of social and economic policy in the country simply absorbs redundancy 
problems as part of overall planning. The trade unions in Sweden help 
in this respect by making it easy, in fact automatic, for the transfer of a 
worker from one union to another if he has to change jobs. Union demarcation 
problems therefore offer no hindrance to the mobility of labour. 


REDUNDANCY IN THE AFFLUENT SOCIETY 

But the key to the whole situation is the fact that for 30 years Sweden has 
had a Social Democratic Government which has established a highly civilised 
and advanced social security system in which the unions play a leading 
/role. These are aspects which make comparison with Britain so difficult. 
One is constantly reminded that the political shaping of a nation over a 
number of years provides a totally different atmosphere in which to operate. 

The Communist Bloc 

The same is true of course in the Communist countries where labour 
relations are covered almost entirely by legal codes. In the U.S.S.R., for 
instance, dismissals in connection with a reduction of staff in any undertaking 
can only be based on an administrative order. The whole of Soviet 
labour Jaw is founded on statutory regulation . 

The ' redundancy problem ' as such is not officially recognised in the 
Communist countries though this does not mean that there are not significant 
pools of unemployment which develop from time to time. The 
normal method of handling such a situation is to maintain under-employed 
labour until the State machine is ready to absorb it elsewhere. Obviously 
no Communist country has been entirely free from this situation, and in 
some of the more advanced industrial economies, like Czechoslovakia, 
technological redundancies, resulting from automation techniques, have 
become a major challenge to the economic planners Prolonged hoarding 
of unwanted labour is costly, wasteful, inefficient whether it is in a Communist 
or a capitalist economy. Forced transfer from one factory to 
another, or from one industry to another, even in the same town, is against 
the new-found enthusiasm for ' liberal methods '; and special incentives 
to transfer can play havoc with wage norms apart from containing the 
seeds of inflation. All this accounts for the fact that 'management tech


niques' are nowadays the most studied item in the industrial curriculum of 
Communist countries. 

But with overall planning powers the State can decide in advance-
at least, in theory-whether to retain workers in a particular plant even 
if they are not fully productive ; or to transfer them to alternative work ; 
or by long term integrated planning such as is now the practice in Eastern 
Europe, to re-shape the industrial geography of a country and the location 
of work. 

The United States 

There are virtually no legislative restnchons on an employer's right 
to fire a worker in the U.S.A. But there is a wide area of coverage for 
redundancy, under collective agreements in industry. 

It has been traditional in American industry to rely more on collective 
bargaining than on State provision of benefits-whether for health, 
pensions or lay-offs. In fact the growth of the American system of Guaranteed 
Annual Wage agreemen'ts (or as they have been renamed, Supplementary 
Unemployment Benefits) reflected to some extent the low level of 


20 REDUNDANCY IN THE AFFLUENT SOCIETY 

State insurance benefits in the U.S.A. compared with European standards. 
There is no common Federal benefit, nor method of assessment, nor is 
t·here a Federal minimum duration period for unemployment benefit. Each 
State fixes its own paymen't levels and methods of calculation, normally 
based ,on a percentage of the current weekly wage, when the worker was in 
work. Dependents' allowances also vary. Minimum and maximum amounts 
are laid down with the lowest levels at both ends of the scale in the .Southern 
States. Several of the States in the deep South have minima-maxima standards 
which are at a bare subsistence level. Private redundancy schemes are 
also much more rare in the Southern States than in the Northern ones, all 
of which reflects the cheapness of 1al>our in the South (especially m the 
negro areas) and the weak organisation of 'the trade unions. 

But enlightened redundancy policies are much more common in the 

U.S.A. than in Britain. Well over 2.000 .agreements covering lay-offs and 
severance pay have been filed with the United States Department of Labour, 
whose record department puts to shame our own Ministry of Labour. About 
half of the larger manufacturing companies in the U.S.A. (employing the
I

big majority of the labour force) have some type of severance pay arrangement 
and the practice is growing rapidly. 

The Guaranteed Annual Wage System-or S.U.B.-which began in 
the motor industry owing to the pressure of Mr. Waiter Reuther's United 
'Automobile Workers, has now spread to steel, aluminium, rubber. agricultural 
equipment, glass, food and can-making industries. It is certain to 
1spread further stil1. Recently in the Ford pay settlement the maximum 
duration for the supplementary benefits was raised from 60 per cent for 39 
1weeks to 75 per cent (inclusive of ~tate benefits) or normal earnings up to a 
1full year. One large company in the food processing industry has under


taken to give 90 .days' not'ice of any shut down; a meat packing firm has 
j agreed to pay about £23 a week to workers permanently laid off for 
periods up to 39 weeks, in addition to notice-time. 

The Garment Workers, in a national agreement with the employers, 
have secured a scheme which provides for 48 weeks' pay at the top end 
of the scale plus lump sums for redundant workers. The employers will 
fund this scheme by paying one half of one per cent on all payrolls (about 
5 million dollars a year) and the fund will be administered jointly by the 
employers and union. The garment .industry has a high rate of labour 
turnover-about 17 per cent go oll't each year. 

The astonishingly good schemes in American industry tend to overshadow 
much that is still extremely backward. Indeed the redundancy provisions 
in the United States are less of a tribute to the enlightened outlook 
of big business than to the militant campaigning of the American unions 
who have insisted on employers building up special 'contingency funds' 
in advance of actual redundancy. This was the great merit of Waiter 
Reuther's 'break through· in 1955. 

Common Market and the Coal and Steel Community 

Clearly the most comprehensive attempt to get to grips with the 


REDUNDANCY IN THE AFFLUENT SOCIETY 

redundancy problem has come from the European Coal and Steel Community 
which effectively laid the basis for the Common Market's re-
adaptation plans. The E.C.S.C. could never have achieved anything, had 
it not been able to guarantee a measure of security to the workers displaced 
by the closure of mines and steel works as a result of the rationalisation 
process. The High Authority of the E.C.S.C. took over part of the 
cost of re-adaptation. It was given power to grant compensation of up 
to 90 per cent of wages to workers who lost their jobs; to pay part of 
the cost of re-training and re-settfing miners and steel workers who had to 
move to a new job-and perhaps a new home. Member Governments 
did not .have to pay back the ,grants but they did have to match them 
with an equal contribution of their own-unless the Council of Ministers 
decided otherwise. This overcame many of the obstacles to industrial redevelopment 
and workers' mobility and up to 31st January, 1962, the 
High Authority had made available over £15 million for re-adaptation 
schemes in aid of some 120,000 wo'rkers. * This is an impressive achievement 
though it met some snags. No amount of pressure has succeeded in 
persuading many Belgian workers to move into Walloon area and vice 
versa. Workers prefer to remain where they are, drawing generous unemployment 
benefits for which Belgium is renowned, rather than move to 
'strange parts' even if jobs are available. 

The E.C.S.C. experience in industrial rationalisation has provided a 
valuable guide for the Larger Common Market which, so far at least, has 
not produced a major redundancy problem. It is true there are pockets of 
serious unemployment, for example, in Southern Italy, but these, in the 
main, existed before the European Economic Community was established. 
Even so, there is still a .great deal of uncertainty about just how much 
redundancy is likely to occur when the Common Market moves nearer 
to its declared objectives and all the barriers are down. It is this uncertainty 
that accoun'ts for the insistence by the British trade unions on a 
specific clause being written into the Treaty of Rome making full employment 
an obligation on all the countries if Britain should enter the 
Common Market. 

The Common Market has now set up a Social Fund under the 
European Commission which will do much the same as the E.C.S.C. 
scheme-re-train and re-settle redundant workers and maintain earnings 
where workers are affected by factory conversion schemes. But the Fund 
will meet only half the cost of this-and act only at the request of the 
member Government concerned. This condition to the scheme of assistance 
limits the usefulness of the Social Fund. It has no powers of initiative 
over Governments and no authority ,to plan the location of industry unless 
the member Government takes the initiative. Again the Fund will only pay 
grants when the workers-who were redundant-are in full ,employment 
for 6 mon'ths after they have been re-trained and possibly re-housed, or 
after their old firm has .been conver~ed. In short a member Government 

'* See lOth General Report of Coal and Steel Communi'ty, 1962. 


22 REDUNDANCY IN THE AFFLUENT SOCIETY 

helping workers thrown out of jobs by the impact of Common Market 
economic changes will be taking the full responsibility, socially and financially. 
Only if the re-adaptation is a success will that Government be able 
to claim its fifty per cent grant from the Social Fund. At least that's how 
it stands at present. 

/ The significant factor about E.E.C.'s Social Fund is the assumption that 
member States will want to draw out of the ·Fund .as much as possible 
of their obligatory outlay. It is, after all, financed by the member States-
under Article 200 of the Treaty-and this gives them an added incentive 
to recoup contributions. Experience so far suggests that the member countries 
are anxious to take the ini'tiative in setting up projects which ~ill 
qualify for 50 per cent repayment from the Fund after six months' qualifying 
period if only to make quite sure that other member countries do not 
monopolise the Fund's resources. 

Still, the si'ting of new industries in areas of high unemployment or 
declining trades (such as coal mining) remains primarily a responsibility 
of national governments. Socialists will not quarrel with this concept, but 
it does raise obvious problems within the terms of the Common Market 
itself. The location .of new industries may well hinge more on the profit 
motive than social factors. After all there is nothing intrinsically .socialist 
about the Common Market. But the correct social planning of new industries 
should be fundamental to the re-location of industry and to the extent 
that the Common Market scheme does not underline this condition it 
must inevitably fall short of the ideal. This may sound like a counsel of 
perfection for there is n·o doubt that, on paper, at least, the Social Fund 
clearly contains the basis of a good scheme. 

Moreover one is not arguing that the Commission should have more 
powers to impose industrial planning. The fact remains however that 
unless there is a coherent social policy behind the re-location of industry the 
inevitable process of rationalisation in the Common Market will simply 
repeat the errors now evident in Britain. 

The Commission's leaders have already stressed the importance of 
'taking work to the workers' as a principle of policy. The High Authority 
of E.C.S.C., for instance. undertakes expert studies of the economic prospects 
for such developments and its recommenda'tions are likely to ensure, 
or at least greatly encourage, a firm to move in that direction since a High 
Authority economic report is usually regarded as a passport for the easy 
raising of a development loan. The Common Market has similar arrangements. 


Last year-1961-was the first full year of effective operation for 
the Social Fund. It received appeals for aid from all six Common Market 
countries. except Luxembourg. for a total of just short of £10 million. 
That mean the appficant States have spent the same again on re-training 
and re-settting tberr unemployed. Western Germany has drawn heavily on 
the Fund because of the influx or refugees into the Federal Republic-a 


REDUNDANCY IN THE AFFLUENT SOCIETY 

feature which brought complaint from Italy whose own unemployment 
problem is worst of all. Still, with all its obvious flaws and with the real 
practical test still to come, the conception behind the Social Fund is the 
correct one; to attack the redundancy problem by re-housing, re-training 
and the alleviation of financial hardship to the unemployed. Where it falls 
down is in its inability to plan the location of industry and, where practicable, 
to take work to the worker. For specialists this is a crucial question 
since it is inconceivable that a properly regulated redundancy scheme can 
operate in isolation from an overall social as well as economic plan for 
national-and international-development. 

5. The Conflict 
Government-Employers-Trade Unions 

STATE intervention of some kind is now widely accepted as an abso


lute essential if the redundancy problem is to .be successfully handled. 
This is not simply a question of providing reasonable 'tiding over' payments 
for redundant workers but of shaping the entire national economy so that 
the prospect of continual employment, even if changing jobs, is always 
present. Intervals between jobs could ,be filled by re-training courses; encouraging 
workers to move from one area to another or from one industry 
to another, or both; the social re-planning of an area as part of a policy 
in which work is taken to the worker; or even a short period of plain idleness. 
Whatever it is, the object -is surely to protect the living standards not 
only of the worker himself, but also of the family as a unit; to see that 
new work is 1found quickly and that compensation ensures that living 
standards do not collapse into hardship, even distress, while the search for 
a new job goes on. The Governmen~ has already gone some way to doing this 
both by recognising the need for taking work to the worker and for 
helping the worker to become more mobile in his search for alternative 
employment. The Conservatives, for all their protestations about the dangers 
of planning, are, in fact, quietly expanding the entire planning mechanism 
of central Government. The Board of Trade scheme of Industrial Development 
Certificates, with its special system of grants, is a case in point. It 
has the obvious fault of lacking real and positive planning powers, but 
even so it has succeeded in 'persuading' industry into areas of high unemployment 
where it would otherwise have refused to go. Pushing the motor 
industry into Merseyside is, of course, the principal achievement. 

By refusing I.D C.'s to firms wanting to expand in already congested 
areas, thereby steering them away, and granting inducements to get firms 
to open factories in development areas, the Board of Trade claim to have 
provided 70,000 new jobs in the past two years. The cost of these operations 


REDUNDANt. Y IN THE AFFLUENT SOCIETY 

has been £70 million (according to the President of the Board of Trade) 
or £1,000 per job. Scotland has been the main beneficiary, having received 
£46 millions worth of 'inducement aid'. 

The Ministry of Labour has its modest system of grants and allowances 
to workers accepting jobs away from home either for temporary transfer 
or permanent re-settlement. Quite recently these have been increased. The 
Ministry of Labour, in the administrative sense, does a great deal of 
immensely constructive work, but the Ministry, in the political sense, now 
carries less weight in the Cabinet than at any time since pre-war. This, in 
itself, is ,a reflection of the Government's complete failure to appreciate 
the potential role of this Ministry in the re-shaping of British industry. 

The Ministry's recent booklet on redundancy-'Security and Change'was 
a highly informative and Well compiled documen't; a great deal of 
Ministry of Labour publicity and exhortation to industry, seeking to encourage 
firms to pay more attention to job security, joint consultation, 
redundancy schemes, is exceedingly valuable. One should not underestimate 
the contribution all this makes to industrial progress. Even the Minister 
himself, doubtless reflecting on the 'nearness of a General Election, is beginning 
to take a much wider interest .in job security and redundancy. He 
has had talks lately with union leaders about widening apprenticeship 
schemes to absorb redundant railwaymen and miners. Mr. Macmillan has 
promised legislation laying down a st'atutory minimum period of notice. 1 
am sure that the Government will attempt something like this because the 
principle of greater job security is now becoming an acceptable concept 
in many quarters1 . No doubt it has electoral attractions. But there is no 
evidence to show that the Conservatives will edge very far away from their 
basic belief that legislation embracing all aspects of redundancy is unde-\ 
sirable-because it would interfere too much with the sacred right of \ 
industrialists to shape their own welfare; i.e., profit. This came out clearly 
enough when, on ;the eve of 'the Prime Minister's July speech, Mr. E. J. 
Hunter, the shipbuilding employer, and President of the British Employers' 
Confederation, spoke out against redundancy legislation. He argued that 
the problem was 'best Jeft 'to individual employers to work out in consultation 
with their workpeople'. Mr. Hunter's speech was significantly 
timed and issued to the press by the RE.C. itself, not by ·his own firm. One 
must therefore assume that 'this was the authoritative voice of the big 
employers. 

While the B.E.C. is against legislation for redundancy payments, they 
are, as we shall see below, in favour of the State accepting responsibility for 
unemployed workers. To this extent there is a measure of conflict between 
Government and big business, with the former seeking to shift some of 
the econom'ic burden of social and economic change on to industry ilnd the 
industrialists-understandably, perhaps-wanting as little of it as they can 
reasonably get away with. But ,it is a matter of degree. Fundamentally they 
concur. Despite what Mr. Macmillan told the House of Commons in July, 

That such a proposal is imminent, has just been revealed in the press. 


REDUNDANCY IN THE AFFLUENT SOCIETY 

and in spite of the Government's supposed 'enlightenment' ,c,n job security, 
it still believes that industry itself must carry the main weight of responsibility 
for introducing severance schemes and that, with NEDDY's help, 
the upheavals of social and economic change will eventually fall into place 
without drastic interference by ·Government. This is the comfortable ponservative 
theory about things emerging naturally from the industrial conflict. 

The same kind of short-sightedness is adopted towards apprenticeship 1 
training, when almost every other Government in Europe has established 
State training schools for industrial courses. Part of the difficulty is that 
civil servants have little real knowledge about the condition of Britain's 
labour force; its mobility, its.poten'tial, its capacity. ·Only .now is a Government 
study on the mobility of the la,bour force under way. The view is 
now held that ·there is a .great deal more moving about than was imagined 
and that the British are not such an immobile nation as was once thought. 
Little is known about the problems ;<>f re-training, how easy or difficult it 
is for a worker to grasp new skills especially if he is in the 'problem age 
gr.oup'-between 40 and 55. A recent Working Party on the Manpower 
situation-set up by the Ministry of Labour-spot-lighted many of the 
problems about the shortage of skilled labour, the need for more training 
cou!'ses, the necessity for 'some control over the location of indust'ry' etc., 
but none of these problems can begin to be solved till the Government 
accepts the responsibility for a national policy. That implies relating the f. 
need for changing skills, labour mobility and redundancy, to industrial location, 
housing policy, re-training, social security and even town planning. 

The Employers' Aftitude 

The British Employers' Confederation, whose member associativns 
employ something like three-quarters of the workers in private industry, hold 
strongly to the view that the State should carry the main burden of financial 
responsibility for redundancy-possibly through a different kind of social 
insurance scheme with graded unemployment benefits. This conception would 
throw the main burden of redundancy on those industries-employers and 
workers-where it is mos't likely to occur. B.E.C. encourage what they 
describe as 'good personnel policies'-and these include forward planning 
of labour needs; the longest possible notice if redundancy threatens, and 
consultation. But severance pay, they feel, is something that should be left to 
the individual firm depending on its circumstances. The same applies to 
industry-wide agreements. It is a'rgued that these are unreal because the 
circumstances vary from industry to industry and, within each industry, 
between firm and firm. 

Because there has been a general shortage of labour for most of the 
time since the war, employers tend to take the view that a worker simply 
has to cross the street to find a new job. So, they ask, 'Why should we pay 
severance money if we have to dismiss a .redundant man? He can soon find 
a new job. And if there is a social problem arising-then that is for the 
Government to handle'. This attitude is not confined to the smaller firms 
nor even the less prosperous industries. One finds it extensively in engineer



REDUNDANCY IN THE AFFLUENT SOCIETY 

ing, and perhaps understandably in the prosperous sectors of engineering, 
like motor cars. In the motor towns employers will claim that the wage 
rates and earnings are so good in their factories that workers should 
provide for themselves against the risk of redundancy. They bold the view 
that the higher earnings in the industry are a reflection of the greater 
'security risk' involved in working in it. This is probably why such a powerful 
organisation as the Engineering Employers' Federation has discouraged 
its members from adopting a redundancy policy as such-though it stresses 
the importance of avoiding redundancy. The Federation has given serious 
thought to the problem and several years ago set up a special sub-committee 
to consider the question. It came down against compensation. True 
there was little or no encouragement from the trade unions in engineering 
who are hopelessly divided over the best way of tackling redundancy. Nor 
is there any general agreement about length of notice or consultation in 
engineering; it is all left to individual circumstances with the result that a 
redundancy situation can, and frequently does, produce an atmosphere of 
crisis and conflict not only between workers and employers but also between 
shop stewards and union officials. 

For this reason some employers take the extreme view that notice can 
be too long and in consequence affect the whole tempo of work in the 
plant and possibly infect the entire 'atmosphere' in the firm. By making 
this point, employers simply underline the fact that workers are entitled to 
something more than just their wages for work done. 

Employers now realise this and the more enlightened ones even 
take it into account over earnings or bonus payments. But it is a different 
story when redundancy arises. The contribution which the individual worker 
has made to the achievements of the firm is invariably undervalued. He is 
regarded as a single unit of production and scarcely any account is taken 
of his contribution as part of this 'collective product'. Management tend to 
ascribe this product principally to their own techniques and investment 
policies, to their capital equipment and new machinery. They are wrong. 
The workers' contribution is the most vital factor of the lot. 

But it is a contribution most frequently ignored-especially when there 
is rationalisation, either through a merger or a take-over bid. Here the 
principal concern is for economic efficiency and the human problems of the 
workers affected are too often taken as an afterthought. 

The Unions 

The failure of Government and of the bulk of employers to present 
a coherent policy for redundancy does not exonerate the trade unions from 
some of the responsibility for letting the subject go by default. Of course 
their dilemma has been that they could not decide whether to oppose it-
or come to terms with it. Ever since the mass dismissal at the British Motor 
Corporation in 1956 there has been a deepening reluctance inside some 
unions to come to terms with an employer-except as a very last resort. This 
is still the official policy of unions like the Amalgamated Engineering Union 
and the Electrical Trades Union, and others. At the A.E.U. National Corn



REDUNDANCY IN THE AF FLUENT SOCIETY 

mittee conference in 1962, the now well-established code of resistance 
to sackings was again endorsed; no overtime where redundancy is threatened; 
if this fails to spread the work sufficiently then the labour force 
should switch to the basic guaranteed week in engineering of 34 hours 
(from the normal working week with its basic 42 hours); and finally where 
management refuses to 'co-operate' then the union at local level-and 
national Ior that matter-should attempt to 'insist' on a shorter week. In 
practice, of course, the policy is more flexible than it sounds and doesn't 
always lead to a crisis. Management is aware of the A.E.U. line and frequently 
·co-operates, deciding that 'this is the more judicious attitude to 
adopt. But sometimes, as in the famous case of British Light Steel Pressings, 
Acton, in 1961, the result is a prolonged and bitter conflict, with the union's 
national leadership lining up, however reluctantly, with the employers in 
order to combat unofficial strike leaders who were apparently convinced 
that they were upholding A.E.U. policy by fighting against redundancy or, 
rather, in this case, what was regarded as the threat of it. Of course the 
men's action was highly unconstitutional. But such refinements do not 
stop men who are convinced that an injustice i~ being done; and in the 
Acton strike it was not helped by the A.E.U.'s own split mind over 
redundancy. This was an extreme case which is said to have had all kinds 
of political undertones. One might doubt the more sensational allegations on 
that score. The truth is that where men fear for their jobs, whether they are 
ill-'informed, misguided, or otherwise, there will always be suspicion, friction 
and, in the end, real trouble. 

It may be 'that the only way out of the dilemma is for the unions to 
adopt a dual policy of resistance and negotiation. Since circumstances vary 
widely from case to case, there may be instances where outright resistance 
to dismissals is the correct policy-at least until management has been 

, made to see the virtue of negotiation. It is because many union leaders 
recognised the weight of this view tha't no national policy has yet emerged. 
The attempt was made to produce a model agreement for redundancy by 
the Confederation of Shipbuilding and Engineering Unions, but this was 
dropped because of the basic conflict of view between those unions who 
were ready to negotiate such agreements ;ind those who refused to tolerate 
the mere mention of the word redundancy. 

One should not be too impatient with this latter view. There is a strong 
support for it on the factory floor and it is common to hear delegates at 
trade union conferences claiming that this policy has saved the jobs of tens 
of thousands of workers who would otherwise be on the dole. Consider the 
arguments used by delegates at trade union conferences and by workers 
on the factory floor against an easy acceptance of redundancy; 'compensation 
is no compensation for work'; 'Life in the welfare state is all right 
so long as you have a job--but as soon as that is threatened real trouble 
begins'; 'Why should the union make it easy for employers simply to "buyoff" 
surplus labour at the cheapest possible price?' 'It is our duty to protect 
jobs-not to bargain them away'. 

There is a powerful group protective instinct behind the concept of 


28 REDUNDANCY IN THE AFFLUENT SOCIETY 

work sharing and it is hardly in keeping with trade union traditions ('unity 
is strength') to dissuade members from practising it. Most trade union leaders 
know that real flexibility will never be attainable without an underlying 
security guarantee for the worker and that so long as the State evades its 
responsibility on this, a genuinely satisfactory redundancy scheme is impossible. 
More and more workers are moving from industry to industry 
within the great conurbations because in the semi-skilled and unskilled (if 
any worker is really unskilled) grades, the difference between one industry 
and another may be marginal. This is true of some skilled classes as well. 
The realisation that this is happening, and likely to be speeded-up as in


dustry becomes more automated, has discouraged many union leaders 

, from pursuing industry-wide redundancy agreements. They tend to prefer 

' arrangements with individual firms_ Moreover, it is also felt that an industry-
wide pact, say in engineering, might establish minimum standards of severance 
pay which would quickly become the maximum. Better, it is argued, 
to obtain a good redundancy agreement from a prosperous firm and then 
use this as a blueprint for bargaining with other individual employers. For 
these reasons there is some hostility to a national industry-wide agreement 
among union leaders as well as employers_ 

This does not mean that the trade unions have simply shelved the 
problem on a national scale and are resigned to tackling it piecemeal. Most 
of the big unions are trying to think out a solution_ Imaginative thinking has 
come recently from smaller organisations such as the Association of Supervisory 
Staffs, Executives and Technicians, whose research work laid the 
foundations for Mr. Jack Diamond's Private Member's Bill on severance pay. 

Some time before the Prime Minister's July speech to Parliament it 
had been recognised by many Labour M_P.s that only Government action! 
could cope with the redundancy problem both as it now exists and in its 
potential scope. This view lay behind the Bill introduced by Mr_ Diamond, 
Labour MP for Gloucester. His proposal limited itself to providing 
minimum terms for severance pay, as a basis for any operation. He 
suggested a minimum of one month's pay for each year of service. Of 
course the Bill got nowhere and nobody expected that it would. But it 
performed a useful function by focusing attention on the legislative possibilities 
while the Government remained silent. The two large general 
workers unions are also taking the initiative in throwing up ideas on the 
subject. The T .U.C. itself has put down some views in a document drawn 
up for the economic committee of the 'General Council to help guide its 
thinking on the longer term problems facing the British economy. It 
courageously admits that some of the attitudes and practices of the trade 
unions-and, of course, employers-might impede change and expansion 
in the economy ; that some sections of industry will contract (it suggests 
coal, railways, textile engineering, shipbuilding, furniture, pottery, wool, 

cotton and jute and agriculture as examples) ; that some sectors of the 
economy will grow more rapidly than others and the redundancy problem 
could be either a steady decline or a sharp collapse depending on the 
circumstances of particular industries. Then it states forcefully : 'Sympathy 


REDUNDANCY lN THE AFFLUENT SOCJETY .. 29 

with workpeople who lose their jobs cannot obscure the fact that redundancy 
is going to occur whether the economy expands more rapidly or 
not . .. There is a case on economic grounds for speeding the contraction 
of some industries. Where an industry is obviously in decline it will often 
be much better to deal with the situation by a planned scheme of rationalisation 
than to let it crumble away.' 

The T.U.C. document then sets down this guidance for trade union 
thinking : 'The planned contraction of an industry would be acceptable 
and indeed sensible (for unions) only if it was accompanied by adequate 
provision for compensating displaced workpeople and for placing them in 
new jobs. This could only be done effectively on a State basis ; if the 
community wants the workpeople concerned for employment elsewhere, 
then it should be prepared to pay.' 

Precisely. This is the essence of the socialist case for a national, 
State-sponsored, redundancy scheme closely integrated with an overall social 
and economic policy for expansion and re-development. The trade unions are 
perfectly justified to hold the view that flexibility without security it unthinkable; 
the employers are equally justified, guided as they must be by the 
profit and commercial motive, in taking the view that their responsibility 
for dealing with the redundancy problem can at best be a limited 
one; the general social and economic implications are too vast for any 
single group of employers, or any one industry, to tackle in isolation. 
But this does not release private industry from its burden. To this extent 
the Government attitude has some sound sense; industry itself cannot be 
relieved entirely from its share of financial responsibility. It would be an 
idiotic policy to throw the whole weight on to a State system and exclude 
private industry from its obligations. So long as private industry exists it 
must pay the price for existence, just as, in the T.U.C.'s words, the community 
itself, if it wishes to live in a prosperous and expanding economy, 
must be prepared to foot the bill for a redundancy scheme. 

Special State Responsibility , 
There remain certain spheres of industrial change and upheaval which 
are specifically Government responsibility; for example, where its own 
policies directly or even indirectly lead to the creation of redundancy, as in 
defence. We have seen what can happen when the Government scraps a 
missile project or switches from one form of aero engine or weapon to 
another. Overnight thousands of workers are affected by a decision which 
may be due to Ministerial or departmental miscalculations-or even gross 
error. The muddle over the scrapping of the Blue Water missile is the 
most recent example of this. It should be a direct responsibility on Government 
to underwrite redundancy compensation payments to all workers 
affected by changes of this nature if no alternative work can be provided. 
The aircraft industry as a whole is in the same category since it is 
largely sustained by Government and military orders. Less apparent, though 
no less justified in claiming Government responsibility, are basic industries 


30 REDUNDANCY IN THE AFFLUENT SOCIETY 

like railways, coal mining and even important sections of civil engineering. 
especially those concerned with road and transport policy in general. 

As a deliberate act of policy the Government seems intent on reducing 
the nation's railway services. It is not so much a question of making out a case 
for Government responsibility here-1 believe that to be self-evident-but 
rather the extent of that responsibility. Dr. Beeching's recent redundancy proposals, 
though an improvement on an earlier scheme, are quite inadequate 
to meet the hardship that wiH arise. But the chairman of the Transport 
Commission is inevitably limited by the bleak financial situation in his own 
industry. He can moreover argue that his job is to provide an efficient railway 
system-it is for the Government to accept responsibility for the social 
repercussions. The Government must accept the social charge-not only 
to see that redundant railwaymen are adequately compensated but-and 
this is the crucial issue--quickly found alternative work. 

The miners are in a similar position to the railwaymen. though their 
situation is less critical because the problem is not so widespread. Yet this 
makes the burden no less onerous for those who are involved, especially 
in those areas of already high unemployment like Scotland and the Northeast 
of England. Lord Robens is now being compelled, by Government 
financial policy for the nationalised industries, to rush through a rationalisation 
campaign in the pits. The Government has imposed financial obligations 
on the Coal Board which leave it with no option but to hasten the 
closure of pits in the least profitable coalfields like Scotland, South Wales. 
the North-west and North-east. Surely this is a clear case of direct government 
responsibility. 

The measures on job security proposed by the Prime Minister have 
a•lready been described as 'Too late and too little.' But they are nevertheless 
welcome at least as a sign that the slow machinery of Government 
and the administration behind it is now wakening to the needs of a changing 
society. Neither the Labour Party nor the trade unions are in any position 
to pour scorn on these proposals until they have cleared their minds about 
the drastic changes which are required in current thinking over the problem 
of redundancy. 

6. What is to be Done ? 
Proposals 

WE live in an economy in which private interest controls four-fifths of 

industry and most of the commanding heights. It is true that the 
State plays an increasingly powerful role in determining the shape, if not 
the ownership, of the economy, and that this influence is certain to increase 
even if the Conservatives remain in power. It is one of the inevitabilities 
of life in a society growing more complex and integrated with each fresh 
technological advance. 

Redundancy, like any other problem of industrial conflict, is closely 
related to the ownership and control of industry. The issue would be 


REDUNDANCY IN THE AFFLUENT SOCIETY 

altogether simpler to handle if it could be resolved within the general 
pattern of socialist planning. Public ownership is the central condition for 
the widespread national economic planning needed to ensure social security 
and balanced industrial development. It seems to me that this should remain 
our principal objective. 

More immediately we are faced with the continued existence of large 
and immensely powerful sectors of private industry, and although it is 
self-evident that only a national plan can provide real security for the 
redundant worker it would be wrong to allow private industry to escape 
its obligations for employing the bulk of the nation's manpower. The ideal 
solution would be to develop a scheme combining State aid with supplementary 
assistance by industry. This is easier stated than conceived. 

The three alternatives would seem to be as follows: 

1. A scheme operated completely by the State and financed out of 
contributions to the national insurance fund or a special Redundancy Fund. 
The advantage of such a system would be that the burden of financing 
redundancy compensation would not fall most heavily on the declining 
industries-that is, on those least able to afford it. The disadvantages 
include the real difficulty that there would be nothing to deter any firm 
from dismissing workers it did not need without having to consider any 
further obligation. The firm's contribution to the National Redundancy 
Fund based, say, on the number of its employees, would be largely independent 
of how many people it discharged, or only marginally so. 
2. There could be a system of redundancy payments which placed the 
burden entirely on the firm or, perhaps, the industry. This might lead to 
widespread ' hoarding ' of labour which would stifle economic expansion. 
Moreover, if it were related to the risk of redundancy in each particular 
firm, or industry, the cost to some would become prohibitively high. Such 
a system would compel private industry to plan its labour requirements 
with extreme care and propel firms toward concentrated ' forward planning.' 
Yet this form of planning is becoming more and more dependent 
on Government policies, so it would seem unjust, and probably unworkable, 
to throw the entire burden on to industry itself. 
3. The most attractive proposition is certainly a twin-system of State 
and industry working a complementary scheme. The State would set the 
basic provision of higher unemployment benefits more closely related to 
average earnings. Industry would be compelled, by legislation, to fix a 
minimum term of notice (say one month); consult with workers' representatives 
in advance of any redundancy and provide severance payments. 
One method would be the establishment of a redundancy fund to provide 
dismissed workers with payments to make up the difference between State 
benefit and their average earnings prior to redundancy. For one month 
they might get full average earnings while they search for fresh work and 
then, to discourage malingering, payments could decline gradually in the 
succeeding two months to three-quarters the average earnings level. If 
the worker was still unemployed at the end of that period the State unemployment 
benefits would take over completely; and if re-trainmg was 

REDUNDANCY IN THE AFFLUENT SOCIETY 

necessary to equip the worker for a new industry Ministry of Labour 
supplementary grants could help to overcome any financial difficulties. 

This would provide a form of supplementary unemployment benefit 
similar to the system operating in the United States ; the period of three 
months might be regarded as a minimum. 

An alternative, in many ways preferable, would be a scheme to legislate 
a basic ' framework redundancy arrangement ' which would entitle all 
workers to State unemployment benefits nearer to average earnings, with 
the Government being responsible for re-training and re-housing where 
necessary_ In addition firms could be compelled to give a minimum of 
one month's notice to any worker with at least one year's service ; advance 
consultation with a joint works council, or trade union negotiating committee 
made obligatory; and a basic severance payment of two weeks' pay 
for every year of service up to say five years with one month's pay for 
each year after that period. It is vitally important to protect the older 
worker who might be thrown out of work at the age of 45 plus, but before 
reaching the age when he might reasonably expect to draw an early retirement 
pension from the firm. Legislation for such a basic ' framework ' 
agreement would not prevent trade unions seeking to improve on it at 
company level-or industry wide-through the normal processes of collective 
bargaining. 

The financing of the higher unemployment benefits would be a straightforward 
operation through the National Insurance Fund. It is worth 
remembering that unemployment pay is less today than pre-war in relation 
to the level of earnings-the only valid guide. In 1938-39 the benefit for a 
man, wife and two children was 33s. a week against the average earnings 
level of £3 9s. Today the similar comparison is £5 19s. 6d. in relation 
to the average pay packet (October, 1961, Ministry of Labour Gazette 
figures)-of £15 6s. IOd. Pre-war, therefore, it was about half the earnings 
level, today it is two-fifths. Before the war unemployment benefits accounted 
for 23.4 per cent. of social insurance payments by the State: today they 
represent a little over 4 per cent. Of course, the situation is different, yet 
for those workers who are out of work today, social needs require that 
benefits should if anything be closer to the level of employed earnings. 

There is possibly a case for new social insurance legislation which 
based unemployment benefits on a percentage of the individual's ean•ings. 
This would mean graduated contributions too, by employers and 
workers-against which the trade unions have strong objections. But 
there is nothing to prevent State benefits being raised nearer the current 
earnings level and retaining the present flat-rate contribution system so 
long as this is supplemented by legislation which compels industry to 
subscribe to additional severance pay schemes. The financing of these would 
be the responsibility of employers. The system could function either 
through a National Redundancy Fund, or separate industry-wide schemes 
administered jointly by employers and unions. 

It would be necessary to build into such a system an Appeals machinery 
against unjustified dismi~~al~. The combination of these provisions 


REDUNDANCY IN THE AFFLUENT SOCIETY 

would make it costly for employers to dismiss workers-but not prohibi


tive. It would encourage long-term planning of labour requirements-

without encouraging any extreme form of labour ' hoarding.' Holding on 

to a valuable and trained labour force, which is not fully productive, is 

neither economically nor socially wrong. It would, in fact, be wasteful and 

costly, apart from socially unjust, to disband such a trained labour force 

unless it became quite obvious that it could not be fully employed in the 

foreseeable future. Even then a judiciously planned recruiting policy can 

adjust the needs of a firm without large scale redundancy by allowing 

'natural wastage' and retirements to reduce the labour force. 

Of course it is necessary here to distinguish between short and long 

term declines in production. Quite plainly although work sharing is a 

perfectly reasonable and legitimate alternative to lay-offs for short term 

production changes it is no solution, for workers or management, in cases 

of long term decline. This is specially true when the decline reflects a 

permanent contraction in the industry as in the case of coal mining, rail


ways or shipbuilding. 

Once it has been established that the decline is long term-and the 
trade unions should be a party to joint consultation which establishes this-
then a redundancy scheme should operate. In any event workers themselves 
have an intuitive sense when their industry is in long term decline. 
There is a natural and continuous drift away, particularly where alternative 
work is available. 

One hears a great deal about labour ' hoarding ' being more comm.m 
in Britain than elsewhere. There is no evidence to support this view and, 
it was, in fact, rejected in a recent Ministry of Labour report on the manpower 
situation. One thing is quite certain; the existence of a legal obligation 
would persuade employers of the value of building up a National 
Redundancy Fund and of conducting an altogether more coherent manpower 
policy. 

But this is really only one side of the picture. The fundamental issue, 
as I have tried to establish, is not the amount of compensation a worker 
should get nor even how he should get it-but the ease with which he can 
be found a new job. This is where the State plays its principal role. 

Distribution of Industry 

Most important of all is the distribution of industry. It is impossible 
to separate the social from the economic case to justify priority treatment 
for this. On the whole it should be obvious to anyone that it is desirable 
to retain 'natural communities' wherever possible by preventing social 
and economic erosion due to technological or structural changes. This 
means taking work to the workers. Of course there are cases where because 
of transport, industrial efficiency, national need and overwhelming economic 
considerations, it is necessary to bring workers into an already overcrowded 
industrial conurbation, such as London, Birmingham or Manchester. These 
instances should be the exception. Today they appear to be the rule. 

Low factory rentals, Board of Trade grants, Ministry of Labour in



34 REDUNDANCY IN THE AFFLUENT SOCIETY 

ducements to employers, are still insufficient to persuade many industrialists 
to venture into the remoter areas because they fear the high costs of transporting 
raw materials and getting their products back to the industrial 
centres, or ports. The Board of Trade system of Industrial Development 
Certificates has helped to curb the rush to London and the Midlands by 
requiring all industri'al building of 5,000 sq. ft. and over to have a certificate. 
But this is not enough. Positive direction of industry is needed into 
places like Scotland, North East England, and Ulster, not just to mop up 
pools of chronic unemployment, but to even out the economic development 
of the nation. 

There is a serious prospect of the country heeling over toward the 
south eastern corner if the current drift of population continues unchecked. 
It has been suggested that, by the 1980s, more than 20 million people may 
be living and working in the South East. The trend is already unmistakable. 
rBetween the middle of 1955 and mid 1961 there was an increase of 316,000 
·employed in London and the South Eastern Region (an increase of 5.9 
per cent). To get a complete picture of what is happening one should add 
to that the figure of 255,000, which was the increase in people working in 
the Eastern and Southern part of the country, which would include the 
Home Counties. That was equivalen't to a rise of 11.8 per cent. Together 
these two increases came to 571 ,000 out of a total increase in the working 
!POpulation of 965,000 during that period. Compared with these figures 
Scotland lost 10,000 workers between mid 1955 and mid 1961 ; the North 
West picked up a mere 11,000, Wales only 20,000 and the North East 35,000. 
Even in the Midlands, the next most prosperous zone to the South East, 
the increase was only 100,000-4.7 per cent of the whole. 

At the end of May, 1961, the London and S.E. region held 25.3 per 
cent of the total number of people employed in Britain. This compared with 

13.3 per cent in the North West; 10.9 per cent in the Eastern and Southern 
area (which, in any revent, can be added to the south-easterly drift), 10 per 
cent in the Midlands, 4.3 per cent in Wales, 5.7 per cent. in the North and 
North East and 9.5 per cent. in Scotland. 
This trend is not simply increasing-but the rate of increase is rising 
gradually. If Britain enters the Common Market there is every reason to 
believe the tempo ·Of the drift will intensify. The South Eastern corner of 
the country, a near stepping stone to European markets, will become even 
more attractive to industry and workers. Unless the Government handles the 
problem with great firmness the situation could quickly deteriorate into 
chaos-in housing, travel and industrial and social relations. It is plain to 
see the vital need for a Government plan which involves everything from 
town and country planning and industrial development to transport and 
housing amenities. Moreover, none of these factors can be divorced from 
a national policy for redundancy. In the light of the figures quoted above 
industrial location certainly becomes a priority issue. 

Housing 

This is probably the next most vital aspect of the problem requir



REDUNDANCY IN THE AFFLUENT SOCIETY 

foundations on which an enlightened redundancy policy can be established. 
A percentage of all new local authority houses should be set aside for 
industrial re-development purposes and a National Housing Authority set 
up with powers to finance and organise rapid building developments for 
expanding and new industries. Whether work is taken to the worker or vice 
versa, a housing policy is required which knits into the nation's general 
industrial development. A small experiment in this kind of planning 
is, of course, the Coal Board's housing scheme for providing 
homes for miners transferred from the contracting to the expanding coalfields. 
The Coal Board co-operates closely wi'th local authorities in the 
mining areas which are expanding and ·a proportion of new houses are set 
aside for transferees. In addition the Board has its own Coal Industry 
Housing Association which builds houses for the miners. This is what is 
required nationally. 

Training Schemes 

Perhaps the greatest individual assistance which can be given to the 
redundant workers-severance pay apart-is by re-training him in new skills. 
The natio• is critically short of skilled workers and the policy of the 
present Government-if it has a policy at all-appears to rely on the painfully 
slow growth of apprenticeship schemes in industry, to which the State 
offers hopelessly inadequate assistance. Apprenticeship courses should be 
freely available to older workers who become redundant and require training 
in new skills; the period of training should be considerably reduced, 
which it could be . without any loss in standards. A Labour Government 
would need to set up industrial training establishments, through the Ministry 
of Labour, which would be serviced and manned by industry.3 These 
would provide courses in new skills for all grades of older workers as 
well as younger apprentices. The trade unions might objec't to such sweeping 
proposals which would threaten demarcation lines and raise the horror 
of dilution. ·But the unions must face up to the future. They cannot possibly 
maintain their present restrictive atitudes towards craft training. It is 
true that these ahitudes have been fashioned in the insecure atmosphere of 
a fiercely competitive capitalist society. Some unions would argue that they 
must be retained as long as that kind of insecurity exists. But this outlook 
would 'be inappropriate to the system of Stale-aided redundancy schemes 
outlined here. In any event new skills will emerge--indeed are already 
emerging-for which there is no existing trade union category in the rigid 
sense. 

It would also be worth considering legislation setting up a Government 
appointed Board with powers to see that no unjustifiable obstacles 
were put in the way of legitimate entry into a trade. There is a strong case 
for linking this kind of operation with the general development of the 
education system so that closer ties can be secured between schools, industrial 
training centres and industry as a whole, for young entrants as well as 

3 See previous mention of the System in Sweden, page 18. 


36 REDUNDANCY IN THE AFFLUENT SOCIETY 

for adult re-training. But if the trade unions are to be asked to sacrifice 
their protective 'wall' in order to provide the economy with greater flexibility, 
then the community, which is the State, must be prepared to give 
the reasonable guarantees the unions are entitled to demand; that the 
security of their members should be underwritten by the State. Without 
these assurances it would be futile to expect the unions to co-operate--and 
in my view wrong of them to do so. 

This may sound like an entire social programme; in a way it is, because 
anything less would be only a palliative. Redundancy itself is part of the 
whole character of social and economic change and unless we recognise this, 
the correctives we apply will always fall short of the needs. Automation, 
the extreme form of technological advance, is the outcome of a drive which 
has been developing since man discovered the use of tools; the drive to 
reduce the labour content of production. There is scarcely any need to 
underline the fact that we are now on the brink of astonishing changes in 
the methods of concepts of production and that these will induce quite 
new standards of social relationships. We have no precise time factors by 
which to gauge these changes because the very processes of measurement 
are themselves being transformed. In such circumstances who can deny 
that a policy designed to handle redundancy in the latter part of the 20th 
century cannot afford to overfook any social consideration? Socialism, in 
fact, is more relevant than it ever was. 

7.. Summary of Conclusions and Proposals 


1. No redundancy scheme can be genuinely effective unless the Government 
brings together the various strands of national planning. These 
would include: location of industry, housing, social insurance benefits, retraining, 
and even town planning. 
2. The best schemes to compensate for redundancy are in the nationalised 
industries where an a'ttempt has been made to establish a pattern for 
private industry to follow. Some private schemes are very good; but on 
the whole very little progress has been made among private firms. 
3. Cornpared wi'th redundancy schemes abroad, British industry lags 
behind. In over 70 countries dismissal procedures are regulated principally 
by legislation. These countries include some of the most advanced industrial 
nations. 
4. State intervention is essential if the redundancy problem is to be 
successfully handled. But private industry must shoulder its share of the 
burden since it employs the bulk of the nation's manpower. So long as 
private industry exists it must pay the price for existence. 
5. A major extension of public ownership must remain the principal 
objective to provide the overall national economic planning essential to 
ensure social security and balanced industrial development. 
6. The best solution in an economy which is four-fifths controlled by 
private enterprise would be a twin system of State and private industry 
providing complementary redundancy schemes. 

REDUNDANCY IN THE AFFLUENT SOCIETY 

7. There should be increases in unemployment benefits to bring them 
nearer average earnings. Pre-war benefits were half the average pay packet 
in industry; today they are two-fifths. 
8. Two alternative schemes are worth considering for private industry. 
These would be an addition to increased State benefits. Firstly a system of 
supplementary unemployment benefits similar to the American model. This 
could provide a min-imum of 3 months' pay to a redundant worker, starting 
at his normal earnings level and gradually reducing the payments to three 
quarters. When these payments ran out the worker would then revert to 
State benefits. Alternatively; a 'framework redundancy agreement' with a 
guarantee of one month's notice; joint consultation with workers' representatives 
and severance pay. The payments would be two weeks for every 
year up to 5 years, and one month per year after that. All workers with 
one year's service at a firm would be eligible. I regard this latter alternative 
as more attractive. 
9. In either case legislation would be necessary to establish the legal 
right of a worker to these terms, but it would not prevent unions trying to 
improve them through the normal machinery of collective bargaining. 
10. There is a case for graduated benefits-and therefore contributions-
so as to ensure that standards do not fall sharply where a redundant 
worker is thrown on to State unemployment benefit. 
11. Higher State benefits would be financed out of the National 
Insurance fund, which at the moment contributes only a tiny amount to 
unemployment ·benefits. Employers would finance their own schemes, which 
should be administered by a joint committee of employers and unions with 
an Appeals machinery against unjust dismissals. 
12. The fundamental question is getting the worker into a new jo'b 
with as little delay as possible. This is the State's main task. Board of 
Trade powers for the distribution of industry should be strengthened so 
that wherever possible work is taken to the workers. 
13. A National Housing Authority should be set up with powers to 
finance and organise housing schemes in co-operation with industrial planning 
projects. 
14. State-run re-training schemes should be established to provide 
courses for adult workers of all grades who become redundant and require 
training in new skills. Apprenticeship courses should be open to older 
workers of both sexes. The whole system should be controlled by the 
Ministry of Labour. 
15. Trade Unions must re-assess their whole attitude toward apprenticeship 
and craft training. It would be worth considering legislation setting 
up a Government appointed Board to see that no unjustifiable obstacles 
were put in the way of legitimate entry into a trade. But the unions could 
only be expected to co-operate if they were given security guarantees for 
their members. This would be a State responsibility. 
16. What this amounts to, in effect, is an entire social programme. Anything 
less would be incapable of tackling the problem effectively because 
there are so many strands to it. 

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• Prinud in London by Devonport Press Ltd. (T.U.) W./.2