The Press MONDAY, JUNE 13, 1966. Strike Pressures On Britain

Press, Volume CVI, Issue 31084, 13 June 1966, Page 12

The Press MONDAY, JUNE 13, 1966. Strike Pressures On Britain

A fortnight ago, when the shipping strike began to bite into Britain’s export trade, the Chancellor of the Exchequer, Mr Callaghan, told Parliament that it was “ clearly setting back the time when we shall “ be able to balance our payments The Chancellor had hoped that a balance might be struck by the end of this year—a prospect which has now completely vanished and, as suggested in the recent Economic Review, may have been too optimistic in the first place. The review estimated the strike’s consequences for the balance of payments—in shipping earnings and exports set against reductions in imports and other external payments—as about £2O million a month. It also calculated, however, that even without the shipping tie-up the economy could be expected to fall £lOO million short of the objective of balance by the end of the year. It was emphasised further that wage inflation was not being checked, in spite of the Government’s resolve to make its prices and incomes policy effective, since in the first quarter alone the wage rise was 2.3 per cent. How, in this context, it was asked, could prices be kept stable when the rise in production barely exceeded 2 per cent?

This reading of the strike balance-sheet to date makes all the more welcome the refusal of the Trades Union Congress and its affiliated unions to support the seamen, whose angry rejection of the settlement proposed by the Government-appointed court of inquiry—the equivalent of a9J per cent pay increase by instalments over two years—must have shocked even those who acknowledge some merit in the seamen’s claims. The T.U.C. leaders must share the opinion of the Prime Minister, Mr Wilson, that, harmful as the strike undoubtedly is, far greater damage would be done to the economy by a settlement that would “ open the way to further spiralling wage demands “ by other large unions ”,

The facts are that the shipowners, after granting an increase of 13 per cent last year, had already made another offer well in excess of the national “ guiding mark ” of 3 to 31 per cent—itself considered too liberal for an economy in which production is rising at a much slower rate. The owners, indeed, have come in for censure for having made the second offer, particularly as the Government had promised a thorough overhaul of the seamen’s conditions of employment—laid down by an Act of 1894 —regardless of the outcome of the strike. Inevitably, sterling has reacted to overseas uncertainty caused by the heavy loss of export rales, and has had to be supported by further sales of gold and currency—this after a loss during May of some £3B million. A week or two ago it was thought that the sterling market, highly vulnerable in terms of confidence to domestic economic disturbance, was standing up very well to the crisis. Clearly, however, the pressures on sterling must increase as the strike is prolonged; and the week-end reports of the first signs of a break in the strikers’ unity and resolution will have been noted with a sense of relief in Britain and beyond. Without substantial support from other unions, the seamen will, no doubt, soon be looking for a facesaving formula. It is doubtful, however, whether the Government can accept the suggestion, hopefully put forward, that it should subsidise the shipowners to compensate them for the extra costs of a shorter working week at sea. Any “formula” of that kind would be seized upon by every discontented union in the country as a precedent and a means to circumvent the Government's wages and prices policy, the key to all its economic plans and hopes.