BRITAIN: No More the Social Contract

For 16 months Prime Minister Harold Wilson has cajoled, wheedled and haggled with Britain's powerful labor unions in a vain effort to stop their rampaging wage demands. The basis of his policy was the "social contract," a formal deal (although never written into law) between the government and the labor unions. The government would deliver social welfare benefits in exchange for voluntary restraints in pay settlements. Purpose: to keep workers abreast of—but not ahead of—inflation.

But the unions have welshed on the deal. One major union after another won pay raises of...

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