Industrial relations are considered in this chapter before employment relations because of the importance which they assumed in British labour management in the period after the Second World War. It is true that in the early post-war years there was considerable complacency about industrial relations arrangements. However, industrial relations slowly emerged as a major problem for British management and assumed serious proportions for employers from the 1960s onwards. This chapter will analyse the nature of that problem, the employers' response, and the changes which occurred in the institutions of industrial relations.

The industrial relations pattern which had been established in the late nineteenth and early twentieth centuries was based on employer recognition of trade unions and collective bargaining with them through the agency of employers' associations external to the firm. In this way national agreements were established for most British industries laying down procedures and setting basic wages and conditions. By 1945 there were about 500 separate national institutions in which employers' organisations negotiated with trade unions. Internally, within the firm, in many industries, there had long existed rudimentary shopfloor bargaining with work groups and their representatives, but the strength of these varied with economic circumstances and arrangements were seldom formalised. During the upswing from depression and the war years, trade union membership grew considerably, reaching a peak in 1948 of 9.4 million or 45 per cent of the workforce. This was accompanied by an increase in union organisation and bargaining activity at the workplace. The wartime introduction of joint production committees and the more general need to consult workers strengthened workplace bargaining. Simultaneously the war extended and consolidated the national or external system of collective bargaining. Between 1939 and 1946, as many as 56 joint industrial councils or similar bodies were established or reestablished.