CHAPTER XXVI

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

1. CONTENTMENT IN INDUSTRY

(_c_) Remuneration of the Worker—Uniform National

Wages—Wage-Relationships among the Workers—Wages and the

Community—Are Higher Wages Practicable?—The Settlement of

Wages—Systems of Remuneration—What is a Fair Wage?—Other

Essentials to Industrial Contentment.

(_c_) Remuneration of the Worker

Contentment in industry depends next on a sound and equitable policy

for remuneration of the workers. That implies the summary rejection of

all attempts to fix wages on abstract formulae which pay no regard to

the circumstances of an industry, or conditions affecting the marketing

of the product. If we adopt socialistic nomenclature and call the

remuneration of the workers “pay,” and assume elimination of the private

employer, and each industry conducted under “democratic control,” even

then the gradation of pay between different classes of workers, the

rate of pay of each class, the relation between the general standard

of pay in one as compared with other industries would depend entirely

on the same circumstances as now, and, if the concrete results of past

industrial experience are to be disregarded, would be in each case a

matter for experimentation, and for practical adjustment and not for

pseudo-mathematical solutions.

Uniform National Wages

One of the demands of workers in many industries which, before the war,

paid in different districts rates of wages varying according to local

economic circumstances, is for uniform national wage rates. This is a

result of the war. There was, during the war, no time to consider the

wage-circumstances of individual works—the pressing need was munitions at

any price—hence Government Departments responsible for production were

compelled to treat wages in industries under their control, especially

those in which there had been no pre-war defined district practice,

on a more or less uniform national basis. Thus, substantially the same

standard, as distinct from minimum, rate of wages for the same grade of

workers came in time to operate generally throughout the country, in all

works in a particular munitions industry. In some of the more highly

organized industries the addition of the same war advance preserved

district differentials of the same pre-war nominal amount, but the

pre-war ratios of the district wages to one another were greatly reduced.

So workmen in a particular district, where, for economic reasons, wages

had been lower than in other districts, found themselves on much the

same wage-level as workmen in the highest pre-war rated district. A

difference of 5_s._ between 35_s._ and 30_s._ per week is very different

from 5_s._ between 80_s._ and 75_s._ Naturally, the worker will not

willingly surrender that position; hence the claim to-day in many

industries for standard national rates. It is an impracticable demand

under ordinary commercial conditions, save in exceptional cases where you

have one employer running all works in an industry, as the Government

did munitions during the war, or different employers each possessing

balanced undertakings which comprise establishments both above and below

average efficiency. The demand for standardization is illustrated in the

railwayman’s wage settlement; numerous classes of men (excluding drivers

and firemen) previously in railway service have been reduced to a small

number of grades, and the individual in those grades receives, generally

speaking, one of three descending national rates of pay according as his

work is in the London area, one of the provincial towns, or in a rural

part of the country. Sailors’ and stokers’ wages are also standardized,

the same rates of pay for the same class of man being paid in vessels in

the same trade category. It is obvious, however, that neither railways

nor shipping nor docks are analogous to industries consisting of an

enormous number of widely different concerns. On the other hand, it is

quite practicable to have uniform national conditions of employment,

overtime, night-work, Sunday-work, etc., and in many industries there is

such national uniformity.

Wage-Relationships among the Workers

The war destroyed the delicate pre-war wage-relationship between the

different classes of skilled, semi-skilled, and unskilled labour—in some

cases the new relationship is a complete inversion of the old. This was

partly the result of Government Departments concerned in production—the

Admiralty, War Office, Ministry of Munitions—advancing wages of men under

their control independently and without reference to one another, in

some cases actually enticing men to their employment; partly of strong

sectional Trade Union pressure, and partly of the celebrated 12½ per

cent, bonus to time-workers, and 7½ per cent. bonus to piece-workers.

Since the war, the want of balance has been aggravated by the action of

employers and Trade Unions in industries supplying a national necessity,

e.g. building, whereby wages were so raised that unskilled men were

paid more than skilled men in a trade like engineering. There is no

more active cause of industrial discontent. As an illustration of how

it operates, at the Dockers’ Inquiry, the Transport Workers’ Federation

protested against any comparison between dockers’ wages and those of

other workers—they termed it a “capitalistic device” to deprive dockers

of their rightful advance. The Transport Workers were members of the

Triple Alliance; the railwaymen were also members. A few weeks later the

railwaymen were claiming before their Central Wages Board an increase in

wage because the dockers had obtained a minimum wage of 16s. per day. It

is therefore vital to get back to, and as far as possible preserve, the

pre-war wage relationships.

Wages and the Community

Public opinion is beginning to insist, as it ought to do, on recognition

of the interests of the consuming community, which in the past have been

wholly ignored. If an increase in wages in an industry is, and can be,

secured by an increase in price, as when the output is a necessity, the

workers in that industry benefit at the expense of the workers in other

industries, and of the consumers generally. In other words, the public

pays, as in the case of housing. If an all-round increase in wages in all

industries is financed by a general increase in prices, then all prices

are higher, and the commodity purchasing power of the increased wages is

no greater than that of the wages before increase, and again the public

suffers from the general rise in prices. Already a beginning has been

made in recognizing the interests of the community in placing public

representatives upon the Railway National Wages Board.

Are Higher Wages Practicable?

It is essential to realize the practical difficulties in the way of

the workers getting the higher wages which all would like to see them

receive. There was a Census of Production in 1907 which included all the

manufacturing industries and mining, and covered half the wage-earners

in the United Kingdom. It ascertained the “net output” for each industry

for the year by estimating the selling value of the gross product, and

subtracting therefrom expenditure on raw materials, including the product

of other industries which were further worked up, and fuel and some other

items. The net output thus obtained is obviously for each industry the

only fund from which first, wages, salaries, interest on capital, rent,

royalties and profits are, or can be, paid, and secondly, taxes, rates,

depreciation, advertisement and sales expenses. Professor Bowley, in his

_The Division of the Product of Industry_, Oxford: Clarendon Press, 1919,

takes the total net output of £712,000,000 for the industries covered

by the Census of 1907, and works out how much of it should be allocated

against the first set of items. I set out below in tabular form his

results (pp. 37 and 52):

£. Per

cent.

Wages 344,000,000 58

Salaries under £160 24,000,000 4

Salaries over £160 36,000,000 6

Interest on Capital at 4 per cent. and rent 48,000,000 8

Royalties 7,000,000 1

PROFITS 133,000,000 23

------------ ---

£592,000,000 100

------------ ---

Professor Bowley (p. 52) pertinently observes: “How far this 23 per

cent., or £133,000,000 together with a relatively small sum (probably

well under £10,000,000) for the salaries of managers of companies,

is an excessive or unnecessary remuneration for the organization of

industry employing 6,000,000 wage-earners and £1,200,000,000 capital,

and producing £340,000,000 wages is a question that may properly be

debated: _it is this sum that formed the only possible source of

increased earnings in this group with industries conducted as before

the war and production at its then level_” (the italics are mine).

Supposing the absurd: that in 1907 the whole of this £133,000,000 had

been taken from employers, and handed over to the wage-earners, the total

average earnings of men fully employed in the industries in question, as

Professor Bowley shows (p. 39), would have been only 41_s._ 6_d._ per

week. Supposing half of the £133,000,000 had been handed over, the total

average earnings of men fully employed (including tradesmen) would have

been 35_s._ 2_d._ per week. But even to have handed over half, would,

by reason of the great disparity between the profit-earning power per

man employed of different firms in the same industry, have resulted in

closing down many of the less profitable concerns. These figures show

conclusively that in industry, as a whole, though there may be exceptions

in certain particular industries, the ability to pay higher permanent

wages depends upon greater and more efficient production.

The Settlement of Wages

Wages and conditions of employment must always be matters of collective

bargaining between employers and employed and not for superimposition by

Government upon either or both of them. In my view, national settlement

of wages and conditions in an industry is essential to wage stability. A

national settlement does not, however, involve a uniform national wage.

Complete discussion and national settlement entail for each industry

the organization of all the employers into one effective federation,

and of all the workers, not necessarily into one Union, but into Unions

which are embraced in one executive federation. Only where responsible

representative and disciplined federations of employers and workers

exist in an industry can there be effective national negotiation of

wages questions, or in industries in which Whitley Councils exist,

between the two sides of the Council. I look forward to the time when

the organization in each industry for the settlement of all industrial

conditions will be developed into an organization consisting of

representatives of (1) employers; (2) administrative and technical and

supervisory personnel; (3) Trade Unions, and (4) consumers. Questions

affecting the industry as a whole would be settled by all four sections;

questions, e.g. of wages, by the representatives of the employers, Trade

Unions and consumers. If a wage agreement is negotiated in any industry

providing for excessive wages and therefore high costs of production and

high prices, is it to be unchallengeable when the industry is a public

necessity? There were many such agreements made during and immediately

after the war. I see no way of reviewing such agreements when once made;

all attempts by Government to do so under the Munitions of War Acts were

unsuccessful. The only practicable method of safeguarding the consuming

public is to have, as I suggest, efficient representatives of the public

present at, and entitled to take an active part in, the joint conferences

of federated employers and Unions when wages are being negotiated, as on

the Railway National Wages Boards.

Systems of Remuneration

No one can dogmatize and say what system of industrial remuneration

should be adopted, whether time, piece-work—collective or

individual—premium-bonus, bonus on output, profit-sharing, or

co-partnership. That all depends upon the conditions of the industry, its

peculiar psychology, especially its past history; it must always be a

matter for negotiation. But I am the strongest believer in a fair system

of payment by results, as being, under proper safeguards, the best for

the worker, the employer and the consumer. A steel worker or boilermaker

will swear by it; a carpenter or joiner calls it “the device of the

devil.” Hence my reference to industrial psychology.

What is a Fair Wage?

Wages are, and can only be, payment for work done and services rendered

by the “wages staff.” There must always be a maximum limit to wages and a

minimum. The employers’ maximum is a wage beyond which any advance, with

other costs of production remaining constant, would prevent the marketing

of the product at a commercial profit commensurate with the nature of the

enterprise. The theoretical minimum is a “living wage,” i.e. bare cost

of subsistence, but the Trade Union minimum wage, which is the practical

minimum in industry, is much higher than the subsistence wage. It is a

wage which in the particular industry provides for subsistence for the

worker and his or her dependants, including therein food, rent, fuel,

light, clothing, fares, Trade Union subscriptions, etc., and reasonable

enjoyment and recreation. Trade Union minimum rates for different trades

varied before the war from one another by “vocational differentials.”

A skilled man’s rate exceeded that of an unskilled man by a recognized

excess; the excess is the trade differential in respect of the skill

required of the particular tradesman, the length of apprenticeship

necessary to acquire it, the nature of the occupation and so forth. The

higher rate of the skilled man is naturally reflected, as statistics

show, in a higher standard of living. The whole problem in arriving at

a fair wage is to determine at what point, if any, between the existing

Trade Union minimum and the employers’ maximum, the wage ought to be

fixed, in justice to the workers, employers and the public.

By way of preliminary I would emphasize that no fair wage can be

fixed on any basis of a priori reasoning. It involves constructing a

theoretical household budget, adopting an empirical standard of life,

with no relation whatsoever to the normal circumstances of any section

of the industrial community, ignoring economic conditions, and assuming

that industry can or ought to pay a sufficient wage to maintain that

standard. That is the fatal method of the doctrinaire. The usual

procedure is for the Trade Unions to demand an increased wage, and swear

by all the gods that the employers can easily pay it. The employers then

assert with equal emphasis their inability to pay any increase. Sometimes

a compromise is reached and sometimes not. There should be, and indeed

is, a better method of procedure.

First, there ought to be ascertained the wages which the industry is

economically able to pay at the then prevailing market prices for its

product; we may conveniently call them “ability wages.” They cannot be

determined by picking out and assuming as typical—a frequent stratagem

of Labour—individual firms which are making substantial profits. The

industry must be taken on a national, it may be sometimes on a district

basis, extreme cases at both ends of the scale ruled out, and a proper

estimate struck on methods of accountancy, making due allowance for the

trade outlook and for all the expenses and risks present and prospective,

which, from the conditions of the industry in question, fall upon the

employers. Labour insists on the Trade Union rate of wages being paid

by all firms, whether making large profits or none at all. To consider

therefore the industry as a whole is equitable. Employers making

exceptional profits cannot be taken as norms for wages; so far as their

gains are contrary to public policy, they can only be dealt with by a

“wise and wary Chancellor of the Exchequer.” That an “ability to pay”

estimate can be prepared in respect of an industry by competent joint

accountants on a basis convincing to Labour has more than once come

prominently within my own practical experience. The great point is to

prove to the workers that they are getting a fair share of the product of

industry under its then existing conditions. It is much more important to

satisfy them on that point than to pay them a high wage. If they get a

higher wage than the industry can pay, and are not satisfied, they will

firmly believe that a still higher wage could and ought to be paid. There

is only one way to prove the equity of the wage—to put all the cards on

the table, and show the Trade Union representatives at the conference

what the exact conditions of the industry are, and what are the maximum

wages which the industry as a whole can pay.

Secondly, an exact statement is required of the wages paid in other

industries to workers comparable with the workers in the industry in

question—these may be termed “comparable wages.” They are obtainable

from statistics compiled by the Ministry of Labour, but not published in

collated form.

There are in practice two objects to achieve. First, to ensure that each

grade of worker gets a fair wage which corresponds to the “ability wage,”

and secondly, to try and keep the wages of workers in one industry in

proper wage-relationship with the wages of comparable workers in other

industries. If the existing wages are less than the “ability wages,” and

the latter are either equal to, or less than, the comparable wages, there

ought to be an advance of the existing wages up to the ability level,

and, in my view, a further advance beyond ability level towards, but

not exceeding, the comparable wages-level, if the circumstances of the

industry are such, as for example, in respect of foreign competition,

that the market price of the product can be increased by the necessary

amount. It is so essential for the harmony of industry that the wages

of comparable workers should be generally on the same level. There

is no difficulty in practice in saying who are comparable workers.

Industrial experience and tradition have firmly settled that. In the

case, comparatively rare in practice, where the level of ability wages

is higher than the level of comparable wages, other considerations

arise. Some employers contend that to pay in one industry that can

afford it a higher rate of wages than in comparable industries that

cannot afford it is to upset the equilibrium of wages in those latter

industries, and incite the workers in them to ask for the same wages

rates, thus involving a charge upon the whole or a section of the public

forming the consumers of the product of those industries with the usual

results. Other employers assert that comparable wages are the criterion

of fair wages, and as employers have to stand the risk of paying Trade

Union wages when profits are not adequate, so, therefore, employers,

when profits are exceptional, should be entitled to retain what remains

after comparable wages are paid. I do not see why the employer should be

entitled to appropriate in such a case the difference between the ability

wages and the comparable wages. In my view, if an industry is shown by a

joint cost investigation to be able to pay wages which are higher than

comparable wages, the amount of the proceeds of the industry beyond the

sum necessary to pay wages at comparable rates should be divided equally

between employers and workers and consumers—in the case of the latter by

a reduction in price. The workers thus secure a share in the prosperity

of the industry.

Some wage complexities due to the war urgently need adjustment. Flat

additions as war bonuses on piece-work or tonnage-rates are unsettling

anomalies; they should be incorporated in new piece—or tonnage—rates.

Their existence hinders output. War advances and war bonuses; which,

though originally different, are now in practice indistinguishable,

should, so far as not withdrawn, be merged into the permanent rate or

price—in one-half of industry they have already been merged—difference of

treatment only causes unrest. It cannot be too strongly emphasized that

high rates of wages do not necessarily mean high earnings—they frequently

mean no earnings and no work. Increasing the productive efficiency of

labour does increase the ability of industry to pay. Such alone is the

one sure road to higher earnings.

Other Essentials to Industrial Contentment

There should be open to the workers in this country an opportunity of

rising, that is, of transfer from the wages side to the salaried side

of the staff as is afforded by American employers. Why there should be

such reluctance among so many English employers to promote men from the

wages side I have never appreciated. During the war I had a large number

of workmen under me at the Admiralty, who, after the war, were appointed

to responsible positions on the administrative side of industry in the

establishments of some broad-minded employers, and have abundantly

justified their selection.

Labour policy—false and true · 第 7 / 10 章