In the City
The plight of the manager
Nicholas Davenport
A Bank holiday gi‘es one time to reflect seriously upon whether it pays us to work in this disunited kingdom. Some workers— fortunately a tiny minority—have discovered that it pays them better to stay on the dole. Certainly, the knowledge that being unemployed is no longer the hell it used to be must explain why workers no longer care whether any disruptive action on their part causes their factory to close down. (Perhaps significantly industrial shares turned down last week when it was announced that for the first time in five weeks the Leyland factories were strike-free.) Having a sense of alienation from our mixed-economy society it seems that the discontented or disgruntled or militant worker could not care less whether Britain can now survive as a worldtrading industrial power.
But the managers care, although, being heavily over-taxed, they might well feel as alienated from our society as the Marxistindoctrinated worker. The latest issue of Economic Trends has an article about those managers who qualified in engineering, technology and science in every year since 1958. The significant thing is that there has been a very large increase since 1966 in the numbers with university degrees but no great rush on their part to go into the engineering and allied industries. The reason is that the pay offered is not good enough and that there are better opportunities abroad, or in some other occupation, than in engineering and manufacturing, which is our national life-line.
The report published in January by the Royal Commission on the Distribution of Income and Wealth about the higher incomes—£10,000 upwards—confirms the fact that the salaries for managers—after making allowances for differences in living costs and income tax—are substantially lower in Britain than in other developed industrial nations. The Commission asked an international management consultancy firm to give them some figures and I quote from their report : 'The countries in the comparison [US, Canada, France, Germany and Australia] pay higher gross salaries than the UK—some twice as much . .. The UK provides the lowest purchasing power in aftertax salaries for jobs at any level than any other country'.
Take an example they give for `Job D', which comes half-way between the lowest and the top managerial grades. In the UK this Job D manager got £9,170 in July 1975 or £6,040 net of tax. After allowing for the rise in prices he was actually worse off than he was in I969—his net figure at 1969 prices being £3,030! In the US the same job manager had 833,000 or 825,120 net of taxes.
(Divide by approximately two for a rough comparison in sterling.)The American manager was10 per cent worse off than he was in 1969 but the French counterpart was 25 per cent better off, for he had more than doubled his salary between 1969 and 1975. He got F.177,000 in 1975 which was equivalent to F.142,970 net of tax (say, £20,000 and £17,000 in sterling). The obvious course for the £10,000 a year manager here is to learn French and emigrate, but if he can't learn the language, America would offer him nearly double 'gross' and more than double net of tax.
This alarming fact about depressed managerial life in Britain cannot be allowed to continue if we are to stay in the ranks of the great industrial and trading nations. Mr Healey is said to have recognised the plight of the manager class in this country but all he did in his budget was to offer a pay rise plus tax concession to the workers, which they are now spurning. When he has offered them more, and got their acceptance, I would ask him to read the grim writing on the managerial wall. He cannot run this economy if the industrial managers decide that they cannot afford to live here.
There is another management warning which Mr Callaghan's government must take seriously. This is the almost unanimous opinion among the managers that it would be impossible to manage companies properly and efficiently with a two-tier system of boards if the trade union machine (not the individual employees) has power to elect half the supervisory board. Professional trade unionists, rooted in their rule books, tuned to higher pay and job security. talk an entirely different language from company managers who are trained to find ways of producing more and better goods at a lower cost and with less labour. I am all for industrial democracy, and participation by workers in decision-making on the shopfloor, but I would not choose morticians and grave-diggers to man half the supervisory board of directors of a lively growth business.
The best criticism I have read in the evidence submitted to the Bullock Committee on Industrial Democracy is that put forward by the Council of the Stock Exchange. They rightly point out managers and workers are alike employees of the company and that rights of participation in management should not be extended so as to upset the legal control of companies. This control remains vested in the shareholders who have subscribed to, and have put their savings in jeopardy in, the risk capital of the company. Of course, the legal rights of shareholders are matched by responsibilities—towards employees, towards customers, and towards the communities in which the company operates, both local and national. The shareholders delegate these responsibilities to the board of directors and to have a supervisory board not elected by the shareholders would upset company law and the whole system of raising risk-capital on the Stock Exchange. Last year the City raised nearly £2,000 million of money for British industry of which about 70 per cent was risk capital. The Government must plainlY tell its left-wing supporters that their well meant but amateurish and ill-educated views of worker participation in management will not be allowed to upset the framework of company law and the raising of risk capital for the private sector.
You may well ask why we continue to buy industrial equity shares on the Stock Exchange—the FT index is still over 400when the left wing of the Labour Party seems determined to make sound company management impossible. The reason is that we try to choose those companies which have good industrial relations, good and well-paid managers, and a co-operative work force. Amazingly, such companies do exist but are mostly of a workable size. British Leyland was not; it would have been better to let it break up into smaller units, each managed more competently. But Mr Healey must realise that to get and keep good company managers in this country he must tax them less.
Previous page
