Governmental policies designed to restrict the rate of growth of pay in an effort to reduce the level of inflation. Post-war incomes policies are generally dated from the so-called "pay pause" of 1961, and were in force during the second half of the 1960s and for much of the 1970s, under both Conservative and Labour governments. They are conventionally divided into "voluntary" policies, in which success rests on the government's ability to persuade unions and employers to accept the policy, and "statutory" policies under which the government has the power to invoke legal sanctions against non-conformers. The detail of incomes policies has varied considerably: some have prescribed norms in terms of a percentage increase, others in terms of absolute amounts of money; some have included controls on prices (prices and incomes policies); some have allowed exemptions for such factors as low pay and increases related to productivity improvements (see productivity agreements ). It is generally agreed that they succeeded in having a limited impact for a limited period, but were almost always followed by "catch- up" periods of rapid pay increase, often accompanied by militant industrial action , especially by groups of public sector workers who felt that, for a number of reasons, they had fared worse than the private sector under incomes policies. The electoral defeats of the Conservative government in 1974 and of the Labour government in 1979 are both attributed in part to public disquiet at widespread industrial action related to attempts by unions to defeat incomes policies. Since 1979 the government has followed an economic policy that associates inflation with increases in the money supply (see monetarism ) and hence perceives no role for incomes policies. See cash limits .
Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.