FEWER working days were lost through industrial disputes in 2005 than in any year since records began nearly 200 years ago. Whatever else may be wrong with the economy, that is a cause for celebration. Every strike or lockout represents a failure. And the ordinary families who lose their pay usually suffer most.

The 156,000 days lost last year compare with about 30 million in 1979, when public sector unions killed off the Callaghan Government with their winter of discontent over pay. The last year of widespread industrial chaos came in 1984, when 27 million days were lost — coalminers were manoeuvred into a prolonged, bitter strike against closures of uneconomic pits, which precipitated the industry’s virtual demise.

During the 1970s disputes typically cost between six million and ten million working days a year. Those disputes were, however, only the culmination of industrial warfare that made the UK the sick economy of Europe.

Disputes began to run at several a day from the mid-1950s, when there was only fractional unemployment and British industry faced little competition from the rest of Europe or beyond. Stoppages regularly cost three million working days a year. They escalated so rapidly in the latter 1960s, especially after devaluation, that the Wilson Government planned but shelved a thorough reform of industrial relations. Sir Edward Heath’s Government, which replaced it in 1970, enacted legislation.

It fell when Sir Edward was ousted by a miners’ strike, although the number of petty disputes did start to decline.

Days lost make up only a small part of the economic damage that industrial disputes caused. Labour relations took a high proportion of management time and mental effort that needed to be spent making businesses competitive, investing for the future, developing new products and exploring new markets.

Change was likely to be resisted by powerful unions, adding to the cost of investment and cutting returns. Bloated stocks of materials, parts and finished goods had to be kept to allow for supply disruptions; that in turn absorbed capital that could otherwise have been invested. Most managers preferred the quiet life or were simply not up to it.

The relentless series of reforms introduced while Lady Thatcher was in charge cut trade union power, curbed contagious disputes and reduced wildcat stoppages. Ending closed shops effectively ended the power of unions to sack their members. But the change to a nearly strike-free 2005 was the product of many deeper economic and social factors.

Manufacturing has declined more than almost anyone imagined. On the way, dirty industries that were highly unionised have given way to services where unions are weaker. In these new employments, individual or family self-interest usually counts for more than solidarity with fellow workers. In a richer consumer society, mortgage payments and credit card bills curb people’s freedom to risk their cashflow.

More competition has probably played an even greater role. The destruction of British Leyland was a terrible lesson to everyone who thought it had a right to exist regardless of what was happening in its markets. Free trade forces managers and employees to fight against products and services from almost anywhere in the world, instead of fighting against each other. Privatisation has brought competition to swaths of industry that had not experienced it for generations. Price caps are even imposed on infrastructure utilities to mimic the disciplines of competition.

More recently inflation has been tamed — that removes the constantly changing relative price levels that obliged different groups of workers to leapfrog each other to maintain financial status and living standards. The growth of single union plants does away with the internal competition between groups of workers. And few now imagine that higher wage costs can simply be passed on in higher prices.

Except, that is, in the public sector. Strikes in highly unionised public services are blessedly rare compared with the 1970s, partly because, as again yesterday, ministers give way at the slightest threat. In education, health, administration and parts of the transport industry, unions can still rely on taxpayers to foot any bill. Over the past eight years public sector strikes have caused the vast majority of days lost.

In the private sector the most encouraging feature of the new realism is that we can now enjoy low levels of unemployment without inflationary pay rises. Even the Governor of the Bank of England is looking for an acceleration in pay deals but it has not come. Avoiding strikes helps to maintain stable prices without economic pain.

No gains come free. Bad employers are now freer to exploit workers than they have been for generations, though markets usually find them out eventually. And trade union barons have been replaced by smoother but less virtuous barons in the boardrooms and counting houses of investment banks. Curbing them will be tomorrow’s battle.

graham.searjeant@thetimes.co.uk

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