ABSTRACT
During the 1970s the labour market in the United Kingdom was increasingly characterised as being inflexible and, in particular, operating in a variety of ways which constrained macroeconomic performance and international competitiveness. For example, the rate of unionisation was high for a capitalist country, the strike record was poor, nominal wage inflation was high even with rising unemployment and standards of education and training were judged to be lower than in many other industrialised countries. Coupled with this, there was an increasing perception of worsening regional economic disparities, with southern regions generally experiencing significantly higher economic growth and lower unemployment than the northern regions. Throughout most of the post-war period, the government’s response to such disparities was to try to divert investment into economically depressed areas from more prosperous regions and from overseas. During the 1980s, however, government became increasingly convinced that one of the most important ways in which both regional and national economic performance could be improved was to reduce labour market rigidities by, for example, increasing wage flexibility and labour mobility and improving the responsiveness of the training sector to local economic conditions. This had led to major changes in a number of key labour market institutions, particularly those relating to pay bargaining and the provision of vocational training. Indeed, there is a sense in which the reform of labour market institutions became one of the main government responses to the existence of spatial economic disparities in the UK. Unemployment in the standard planning regions of the United Kingdom (April 1995) https://s3-euw1-ap-pe-df-pch-content-public-u.s3.eu-west-1.amazonaws.com/9780429428432/1bd3cd7d-edde-47cd-89c0-d8263ee1db7a/content/fig5_1_B.jpg"/>
