Why you won't find a spaniel trading gilts

TWO one-day stoppages on the railways and a coal strike have suddenly reminded people what it felt like in the late Seventies and early Eighties . . . except that now it is different. True, we have seen the familiar face of Arthur Scargill on the box, and Jimmy Knapp left a meeting with the rail chiefs saying that he had never been 'treated like that in 35 years'.

Now, though, the rail strikes may be off and even the charged issue of the pits has a different tone from the epic struggles of the past. The public also responds differently. There was little of the quasi- heroic struggle to work of previous rail strikes. London traffic was lighter than usual, as many people either took the day off or worked from

home.

The popular explanation is that a series of legislative changes during the Eighties tilted the balance of power against the unions, and now recession has made workers more fearful of losing their jobs. Result: a more submissive workforce. The old tensions exist, so the argument would run, but they have been pushed below the surface.

There must be something in that, for tensions certainly do exist: unrest among teachers and the difficult dispute at Timex in Dundee are signs of that. But Tory legislation and recession cannot explain why strikes in almost every major industrial country are much lower now than 10 years ago, or why they were lower in 1990 when most of the industrial world was still booming.

Thus in the United States, worker-days lost in disputes were 21 million in 1980, but only 6 million in 1990; in Japan, the fall was from 1 million to 140,000; in the UK, 12 million to just over 1 million; in Italy, from 16 million to 5 million. The only exception was Germany, where losses (admittedly from a very low level) actually rose. But that was the year of the initial upheaval of unification.

It is always extraordinarily difficult to pin down the reasons for great social shifts of this nature, but much of the answer may lie in a fundamental change in the implicit job contract between a worker and an employer that has taken place gradually over a period of perhaps 25 years.

On paper, the formal job contract between employer and employee may look much the same as it did a generation ago, but each side makes quite different assumptions about it. A generation ago, most employees assumed that they would spend most of their life working for one employer. Of course, they might move around a bit in their twenties, but once they had settled down they would stay in the job. They would be 'loyal' to the company in the sense that they would not hop off to a rival for a slightly higher salary. In return they would receive the protection and benefits of permanent employment. Occupational pension schemes were (and often still are) organised on that assumption: 40- year employment and a pension based on final salary.

Employers, for their part, looked for 'loyal' employees, people they could train and who would then stay and use that training for the benefit of the employer. They would make sure that real earnings rose slowly, and even though the formal contract might specify that the employee was on such-and-such a notice period it would not normally occur to either party that this would be invoked.

This implicit bargain broke down in the Seventies. Pay rises frequently lagged behind inflation, and previously 'loyal' workers went on strike to try to catch up. Employers laid people off, thereby breaking their side of the bargain too. Others 'poached' labour by offering higher salaries. Labour unrest rose throughout the industrial world.

Now a new stability has been attained, where an employment contract means what it says. Employees do not think in terms of loyalty because they have seen people in apparently secure jobs made redundant overnight. If an alternative employer offers better terms, they are off.

This change in attitude among employees was encapsulated in Michael Lewis's chronicle of life at the investment bank Salomon Brothers in the Eighties boom. The head gilts trader in London was off to Goldman Sachs, and the Salomon top brass suggested that he might pause and consider his loyalty to the firm. His reply: 'You want loyalty, hire a cocker spaniel.'

But now, and this is the crucial change, most companies appreciate that they do not want loyalty. Of course, they rightly expect people to fulfil their contracts honourably. But they do not want employees who will stay until they draw their pensions: partly because rigid pay scales mean that older employees tend to be more expensive than young ones, but also because they do not need them. In as far as companies have any idea of how many staff they will want in five years' time, they reckon it will be fewer than now. Natural wastage is a far more comfortable, not to mention cheaper, way of downsizing than declaring redundancies.

The result has been not only a change in attitude on the part of people still in regular full-time jobs, but a surge in temporary employment. The largest private-sector employer in the US is not IBM or General Motors but the temporary staff agency Manpower. It is quite normal for many people in the new white-collar jobs, like broadcasting, to be on contract rather than employees (though John Birt might be considered an extreme example of the genre).

Charles Handy, the author and guru on our changing lifestyles, suggests that a third of the staff of large companies are already temporary or contract workers of some sort, and that this proportion will rise to more than half. This is a change that can work very well for people with skills which are in strong demand, but for people with fewer skills, or skills that rightly or wrongly are less rated in the marketplace, the shift can be very tough. There are losers as well as gainers.

It is, however, much healthier that the actual contract between worker and employer should reflect the reality - that neither side should have illusions about the relationship. Companies should not expect from employees qualities for which they are not paying. And employees should not expect from employers qualities that they cannot deliver.

Much of the bitterness behind the labour unrest of the Seventies and early Eighties was the feeling that employers were not keeping their side of the implicit bargain, they were not keeping faith. Some of that bitterness, particularly in the public sector, remains. The decline in strikes may not reflect a happier society, but it does reflect the end of romantic illusions about the nature of the job contract.

Finally, the fact that other workers took those rail strikes in their stride is another healthy sign. People are paid to get the jobs done, and if work can be rescheduled or done at home, all the better. They are not paid to make a statement of loyalty that the wise employer would rather not have in the first place.