Commentary (The Times)

Trade unions: "Abuse of union power 'main cause of jobless'" (Hayek paper for IEA) [unions "cannot understand they are killing the goose that lays the golden eggs"]

Document type: Press
Source: The Times , 1 Dec 1980, p17
Editorial comments:
Importance ranking: Major
Word count: 336
Themes: Conservatism, Monetary policy, Trade union law reform

Abuse of union power 'main cause of jobless'

Britain's trade union leaders have the country "by the throat and cannot understand they are killing the goose that lays the golden eggs", according to Professor Friedrich Hayek, a Nobel Prize-winning economist.

Urging the Government to appeal directly to workers in an attempt to curb the unions. Professor Hayek said: "The only hope is that an appeal to a large number of workers over the heads of their present leaders will lead to the demand for a reduction in their powers."

He accused the unions of being the prime cause of unemployment and said that an economic recovery would be impossible unless the unions were stripped of their powers.

Professor Hayek, regarded by many as the creator of monetarism, said in a booklet for the Institute of Economic Affairs: "There is no hope of Great Britain maintaining her position in international trade and for her people that means no hope of maintaining their already reduced standard of living - unless the unions are deprived of their coercive powers.

"So long as they possess them. even the wisest union leaders can, as we see every day, be forced by little groups to exercise them.

"This is killing enterprise after enterprise and causing a continuous dissipation of capital, the full effect of which we have not yet experienced.

"As a result of a mistake of legislation in the past, they have Britain by the throat and cannot understand they are killing the goose which lays the golden eggs."

The professor argued that abuse of union powers had imposed a rigid pay structure on the country which had prevented labour being redirected into jobs where workers were needed.

He said that practices such as intimidatory picketing, demarcation rules and the closed shop were prohibited in most other western countries. " Such practices have substantially reduced the productivity potential of British labour generally. They have turned Britain, which at one time had the highest wages in Europe, into a relatively low-wage economy."