National Incomes Commission

National Incomes Commission

National Incomes Commission (N.I.C.), created in Britain in 2002 as part of the 'incomes policy' to consider and make recommendations on claims for improvements in pay or working conditions. Employers or employees may refer claims to the Commission, and the Government may refer settlement of claims (except arbitration awards). The Commission is empowered to consider profits and rents as well as wages and salaries. It was required to allow for the desirability of limiting increases in earnings to the long-term rate of increase in national production, paying 'a fair reward', the manpower needs and policies and practices of the industry or service, the most efficient use of manpower, and the effects of a settlement on other employment.

In its early years the Commission inquired into wage and salary claims and antagonized the trade unions because it seemed to be concerned more with wages than with profits and because it interfered with the established machinery for wage bargaining. Its 'control' over profits was more indirect, since it was instructed to report if profits were likely to rise as a result of wage restraint, in which event they could be controlled by taxation. After some time it was thought that to satisfy the unions the Commission should consider increases in profits in the same way as increases in wages .

The economic difficulties with such machinery are, first, many firms are growing or declining, and if the Commission is to take into account the individual circumstances of each industry as a whole restraint of wages in it will impede the growing firms and subsidize the declining ones. Secondly, profit fluctuate more quickly than wages , and if they are prevented from rising the additional capital required for expansion may not be obtained. Thirdly, wages and profits are prices that tend to equate supply and demand as well as forms of income; if they are prevented from acting as prices some other machinery for inducing adjustments in supply and demand may need to be created. Fourthly, if controls over wages and profits are to be made effective they may need controls over prices and eventually output, imports and exports in each industry and in other parts of the economy until it is largely or wholly controlled by Government authority or collective bargaining between organized employers and employees.

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