................................................................................ ON THE RECORD ADAIR TURNER AND JOHN MONKS INTERVIEW RECORDED FROM TRANSMISSION BBC-1 DATE: 31.5.98 ................................................................................ JOHN HUMPHRYS: Britain's bosses have been opposed to a minimum wage and to changes in trade union laws which give the unions back a bit of what they lost during the Thatcher years. What the government wants is a partnership between business and unions. But has it fallen into the trap of trying to please everybody and ended up satisfying nobody? Well, the final decisions haven't been taken yet. The minimum wage is only a recommendation and the trade unions want more than the three pounds sixty on offer. And business does not like the idea of giving workers more rights. Those cases are being argued fiercely by Adair Turner, Director General of the CBI and John Monks, General Secretary of the TUC. Mr Monks, in your case a long way short of what you wanted, that three pounds sixty isn't it? JOHN MONKS: Quite a way short, yes. I mean we were pitching for more than four pounds and we were also- HUMPHRYS: Four sixty, in some cases. MONKS: Well, certainly. I mean there was a long standing commitment, both in the Labour leadership some time ago and in some unions, for a particular formula which would have produced four pounds sixty-one under a particular calculation. In the TUC we always thought that that was at the top end of what we would ever achieve and we shot for just over four pounds. So we're disappointed with three pounds sixty, but on the other hand, we're very pleased to see a minimum wage in place and our main objective is to make sure now that we can see a route over which it can be raised over the years. HUMPHRYS: But not a minimum wage for everybody. Not for the very youngest workers and an even lower level than three pounds sixty for those under the age of twenty-one. MONKS: Yes, I mean we're concerned about that. The-we always accepted that workers under training should get less than the rate for the job. But many between eighteen and twenty-one will of course be doing the full job. And it's going to be very difficult to explain, at a time when many employers have moved away from any rate that just pays young people less than older because they're young, it's going to be very difficult indeed to justify that on the shop floor and on whatever floor it is. A lot of workers are going to want the full rate. HUMPHRYS: And now we see the Treasury wanting to cut it back even further, indeed to have no minimum wage at all for under twenty-fives, if we are to believe the reports coming out of the Treasury. And somebody has been briefing. MONKS: Well somebody has been briefing and there seems to be some indications that some people in the Treasury are unhappy, particularly about the three pounds twenty rate for the under twenty-ones. HUMPHRYS: You mean the Chancellor? MONKS: Yeah, well, we hope very much that they stick by the report that's coming out. I mean we haven't see the report yet. It's not going to be published until June the eighth. It's four hundred pages long, there's a lot of analysis, it's a serious piece of work and at the moment we're just kicking around the headline figures. But we are very keen that even though we don't like aspects of the report, that there is no cherry-picking; picking and choosing by the government. HUMPHRYS: And what if they do. What if they say: well, we're going to scrap the minimum wage for under twenty-ones, under twenty-fives, under twenty-sixes rather. What do you do then? MONKS: Well, we certainly will campaign against it. HUMPHRYS: But I thought you were campaigning against it anyway, against the three pounds sixty. MONKS: We'll be campaigning for an improvement as far as the three pounds sixty is concerned. We want to see a route sketched out whereby we can move towards an elimination of poverty pay, three pounds sixty isn't much. It's not the elimination of poverty pay. HUMPHRYS: But you're prepared to accept it. You are prepared to accept poverty pay. MONKS: Well, it's not a matter-it's not a collective agreement but our representatives on the Low Pay Commission have done a good job and I'm confident- HUMPHRYS: Well, if you've ended up with poverty pay? MONKS: They see the route to a decent pay level coming in, raising the three sixty to three seventy, in the year 2000 and then they see the continuation of the Commission to continue to look at the minimum wage over the years ahead. That's a very important recommendation and I'm very keen that the Government doesn't mess about with that. HUMPHRYS: But you will fight hard any notion of trimming it back more, abolishing it altogether for young people. MONKS: Yes. I mean we think it's low now. The three twenty actually does cover over twenty per cent of the age cohort, the people in that particular range so it will have quite a big impact on wages in that sector. We would have liked it higher, but we certainly find it very difficult to contemplate it being lower. HUMPHRYS: Mr Turner, you'd be glad if the Treasury wins this particular battle? ADAIR TURNER: Well, we certainly think that the issue of the exemption or a lower rate for younger people is one of the ones that ought to be looked at very carefully. We have not actually supported the idea of blanket exemptions below the age of twenty-five and if you actually look at the data, the real difference seems to be between people in sort of eighteen, nineteen, twenty-one and people twenty-three, twenty-four. I think it is vitally important that in setting this minimum wage, we don't do anything which creates youth unemployment. If you look at the data from around the world, the empirical evidence, a lot of it can be read several different ways, but the one message that does seem to come out, is that if you set minimum wages too high for young peeople, you create youth unemployment. And I think, therefore, the Government is quite right to focus very strongly on making sure that there's nothing in this which creates further youth unemployment. HUMPHRYS: Right, but not twenty-five but twenty-one. TURNER: Well, as I say, we are going to look very carefully at this specific issue and I think it is the one that the Government is quite right to flag that it wants to look at carefully as to whether that particular recommendation of three twenty, up to twenty-one is quite right or whether it should be slightly lower or perhaps phased in or extended maybe a year or so. HUMPHRYS: So the Treasury should call off the dogs as far as twenty-five, being a limit is concerned. TURNER: We have not supported twenty-five and I think if you look at the data, by the time people are twenty-three, twenty-four, what the market data says is, they are roughly paid similar amounts to older people at the moment. Whereas I think when you are dealing with eighteen, nineteen, twenty, twenty-one year olds, even if they are not in training, there is a point about experience, there's a point about just having built up an experience which makes them as valuable as older workers. And if that lower level of experience, which is less effectiveness in customer service, less effectiveness in dealing with situations in the workplace, needs to be reflected in a lower rate in order to make sure that those people are employed, then we should be willing to consider that. HUMPHRYS: Its an interesting attitude from the CBI isn't it, because you were opposed as a matter of principle to the minimum wage. You've gone back on that. TURNER: Well let's be clear. Within the CBI membership within the business community, there were always an array of points of view. HUMPHRYS: Yes, but the CBI was opposed to it as a matter of principle. You were.... TURNER: The majority was against it in principle. We always had a significant minority who were actuallly in favour of it in principle provided it was set at a low and sensible level, and therefore after the election last year, given the fact that it was going to occur, we obviously had to concentrate on making sure that it is set at a sensible level and at a level which does not create dangers of inflation or unemployment. That is what we have been focussing on over the last year. HUMPHRYS: So, that's one principle as it were out of the window. Another one is union recognition - enforced union recognition depending on the percentage of workers who vote for it. Now, you're opposed to that in principle, you're now saying it's just a matter of percentage, so you swap principle for percentage there. TURNER: Well, let's be clear on this one. We would have preferred to go on with the voluntarist mechanism of British industrial relations, and we are concerned that any process of enforced statutory recognition is bringing to the industrial relations two unwilling parties, both the employer and indeed the group of workers within a bargaining unit who didn't want to be represented by a trade union. So our preference would have been to stay with the voluntarist mechanism. Again, it was a clear manifesto commitment, we've always recognised that. Therefore we are not in favour of it in principle, but if it's going to occur we have to make it as workable as possible. HUMPHRYS: You.... TURNER: We have concentrated on trying to persuade the Government to introduce a form of it which respects the rights of those who are not in favour of collective bargaining as well as those who are. HUMPHRYS: And you've accepted a forty per cent threshold, or at least reluctantly, but let's ...... TURNER: We would have preferred it to be fifty per cent... HUMPHRYS: Sure. TURNER: But it's closer than zero. HUMPHRYS: Indeed, but Margaret Beckett on this programme last week suggested it might end up getting closer to zero. She said: If it isn't workable, if it shows itself not to be workable over the coming months or whatever the period happens to be, they'll have another look at it. What would your attitude be to that? TURNER: We would be very concerned. Indeed we would be opposed to any shift away from this forty per cent, and certainly we are totally opposed to the idea that you can test workability by whether ballots pass the forty per cent or not. If ballots are brought forward and they fail to pass the forty per cent, that will be proof that the level of support was not there in order to justify enforced collective bargaining, and therefore I think there are real dangers in a approach which suggests that simply because the forty per cent is not achieved you change the rules. Let's be clear. We will be very strongly opposed if there are any rules, any changes, and I think it is important that we create a structure which - it's not a structure exactly as we want it, it's not a structure exactly as John wanted it, but once it's fixed I think we need to have some stability in British industrial relations rather than people feeling that it is continually
subject to ...... HUMPHRYS: Isn't that right Mr Monks. I mean you would like to see - you have doubts about the workability of it yourself don't you, and you would like to see the threshold reduced further. What Adair Turner's saying is not to do that. MONKS: Well, I mean, the CBI forty per cent figure has been accepted by the Government. We're fed up about that. We think it's too high. It may sound if you get forty out of a hundred workers voting yes, that's actually a reasonably easy test to make, but if you're talking about workforces, it could be fast foods, it could be part-time workers in supermarkets coming and going, very dispersed, that's a very high figure, and of course it's a much higher figure than is applied in any other area... HUMPHRYS: But if they wanted it, they'd vote for it. MONKS: Well, if they've got the opportunity to do so, if they're not worried about what the employer might think of them, if they do vote for it, if they think they're under no pressure at all, if the facilities are there for the union to talk to the people concerned, well that may be that it's a fair, rather level playing field to coin a phrase. But often it's going to be the fact that workers do feel rather threatened, are nervous about voting yes for the union, and employers perhaps showing displeasure and disfavour towards those who do.... HUMPHRYS: So you ....... MONKS: That's the atmosphere in which some of these ballots could take place. HUMPHRYS: So you'll be leaning quite hard on the Government, on Mrs Beckett to reduce it from forty down? MONKS: Well, we certainly will, but we're pleased by the way just with other parts of the White Paper, particularly another provision which does give a union a right to recognition if it can recruit a majority of the members, and that was put in the White Paper by the Government and it's a significant step forward - I know it's not one the CBI are keen on either. HUMPHRYS: Hmm. This is the problem isn't it. The Government talks about a partnership between you lot, and you seem to get on very well with each other and it's all very nice indeed on the surface, but, when you talk about workable you have completely different ideas of what workable actually means - workable in your sense .... in your view it means something else, so there is - this idea of partnership begins to look a little bit thin when you've peer beneath the surface doesn't it? MONKS: Well, I think the area of trade union recognition was as difficult an issue in which - and we were never going to agree on trade union recognition even though we did actually narrow the gaps between us in some talks that the Prime Minister kick-started when he asked us to look at it. There are other areas like training, health and safety where there's a considerable area of common ground... HUMPHRYS: Indeed, but trade union recognition as you say, is an absolutely key area. MONKS: Yeah. Well, the Labour Law framework which governs the world of employment is a key area and one - I mean we've been on the receiving end of eight acts of parliament which have reduced union power and increased employer power through the eighties and the nineties. Now we're getting some of that ground back, and I can understand the CBI not liking it but we like it. HUMPHRYS: And indeed not just not liking it. I mean you may say, well, we accept it, and your past president was very hugger-mugger with the Government on all of this. Your new president Clive Thompson had the matter altogether. What was it he said at that dinner on Wednesday night, the CBI dinner. "The Government's trying to create a partnership, but then one of the partners is forced to the table". That is the reality isn't it. Funny kind of partnership when you're being forced - dragged to the table. TURNER: Let's be clear, there is a..in principle a concern about the enforced process of union recognition. But we believe that what we have ended up with is a not unworkable set of rules and the most important element of partnership actually, is not the negotiations that we have about what are bound to be difficult issues, it's actually what happens company by company, work place by work place. And I think the most important forms of partnership are occurring between employers and employees, sometimes in unionised environments, sometimes in non-unionised environments throughout the country. And there are many areas - for instance in unionised environments - where management is working far more effectively with unions than it was in the past, who introduced flexibility of working practices, to pursue training together, to pursue productivity together and that's the reality of what's really important about partnership rather than these inevitable debates about it. HUMPHRYS: Let me just remind you what Sir Clive Thompson said, and this is the President, I think he was sitting next to the Prime Minister wasn't he, statutory recognition is something that should be put in a hand book to help firms improve their pest control terchniques - whatever he meant by that it was very clear he didn't like it, so you are going to have to toughen up a bit under your new president aren't you. TURNER: Well I think late at night at a dinner there are a lot of comments, there are a lot of jokes. It was meant in a jocular fashion... HUMPHRYS: Was it? TURNER: Other things were said, I mean, I can tell you our Prime Minister..our existing President made a jocular joke about William Hague which I wouldn't want to be taken as proof that our existing
President is opposed to William Hague in any fundamental sense. HUMPHRYS: Perhaps you better tell us what it is? TURNER: No, I'm not going to. HUMPHRYS: Alright. You, we are told, when you heard about that, didn't see as a joke, you were splitting blood according to some of your own people, is that right? MONKS: I read in the papers, I was spitting blood. I certainly wasn't laughing when the remark was made. I thought it was a poor joke, in poor taste and when Clive Thompson does take over as CBI President, which I don't think he has yet, I just hope his scriptwriters get a bit better and I'm sure Adair and colleagues will try and avoid that kind of thing. HUMPHRYS: There is a serious issue here isn't there. I mean, it might be alright at this stage, it is going to get more difficult isn't it. TURNER: Well obviously there are dangers that if we have a tightening labour market, you have at that stage arguments about whether there should be higher rates of pay, rapid increases. In a sense we have had a environment for quite some time, where we haven't had some of the inflationary pressures we had in the past. But the key thing actually, is to focus jointly together on the improvement of productivity because if you have an improvement in productivity, you can actually afford increases in real wages, which are truly affordable. And that's the mechanism which we have to jointly achieve in order to have the sort of economy where people can have real income increases without that being a source of industrial conflict and inflation. HUMPHRYS: While we're on the subject of jobs, that coal story, the thirty last deep mines. What are you saying to the Government, you've got to do in relation to those mines. MONKS: Well we're saying support the coal industry. The coal industry has got a future- HUMPHRYS: Meaning? MONKS: In other words give it some special treatment. HUMPHRYS: Special treatment? MONKS: Special treatment - I mean as far as we are concerned coal has been a special case for a long time- HUMPHRYS: Force the generators to buy coal? MONKS: Yeah and give them some extra incentive. HUMPHRYS: And what do you say to that Adair Turner? TURNER: We are not supportive of special treatment. We are supportive of looking at some of the very odd features of the way the electricity market works now. There are oddities of the way the pool prices are set, which it is arguable actually discriminate against coal- HUMPHRYS: -right but not special treatment. TURNER: -our argument is: let's deal with those problems but once we've dealt with those problems we should try and create as much as possible, a market based solution in this area, because there are jobs on either side. There are jobs in Rolls Royce's production of Trent turbines which go into new gas generators. There are jobs in the coal mining industry. The role of Government is to try and find a fair market, to create a fair market and there are issues that need to be looked at in the coal-in the electricity pool to make sure that that's the case. But once that's done, it should be left broadly speaking to market forces. HUMPHRYS: Adair Turner, John Monks, thank you both very much indeed. ...oooOooo...