BRITAIN: The Unions Scuttle the Social Contract

Scarcely able to be heard above the relentless heckling in the audience, Britain's veteran trade union leader Jack Jones shouted a warning: "If you support this motion, you will not assist the government. You will paralyze it and indeed stand in danger of destroying it."

Ignoring the plea of their chief, delegates to the convention of the Transport and General Workers' Union last week voted for a motion that effectively scuttled the landmark agreement on wage restraint between Britain's unions and the Labor government of Prime Minister James Callaghan. The vote to demand substantial wage increases was a deep personal humiliation for Jones, who in 1973 had helped draw up the agreement. In a weary voice, he declared that the TGWU action would lead to "a wage scramble, renewed inflation, increased unemployment and new trouble for the pound."

No-Confidence Vote. It could also lead to the fall of the Labor government. The agreement on voluntary wage restraints, grandly dubbed the "social contract," had constituted the Callaghan government's most compelling argument for remaining in office. If the Labor Party is unable to control or moderate the unions' wage demands, thus further aggravating inflation (now running at 17% annually), Callaghan could face a no-confidence vote in the House of Commons that he would probably lose. The resulting election might be a Tory landslide. Already David Steel has threatened to withdraw his pledge to support the Callaghan government with the 13 crucial Commons votes of his Liberal Party if no effective new agreement on wage restraints is forthcoming.

The prognosis is grim for new talks on restraints. Until now the TGWU's adherence to the contract had discouraged other unions from breaking the wage-restraint agreement. With 1.9 million members, the TGWU is the largest single union within the umbrella-like Trades Union Congress, which ostensibly represents organized labor in Britain. Now other major unions are demanding release from the agreement. At the mine workers' union convention in Tynemouth last week, delegates representing 262,000 members voted to demand raises by Nov. 1. The 1.3 million-member engineers' union has also voted against further wage restraints, and a host of smaller unions are expected to follow suit, creating a sudden and inflationary wage explosion at the end of this month. This week Chancellor of the Exchequer Denis Healey meets with TUC leaders. He hopes to persuade the trade union body to join the government in an appeal to hold down wage demands. In exchange for this support, the government is expected to promise some form of price controls.

Meanwhile, a 46-week-old strike in London has become a riveting symbol of the Labor government's failure to keep labor peace. Charter Road in northwest London has become the scene of ugly battles between police and protesters as a result of a walkout at the Grunwick Film Processing Laboratories.