A rational wages system

by Henry Atkinson

Thus, the circumstances of the old-fashioned piece work method and the dishonesty of both parties to it lead to misunderstandings and dissatisfaction.

(c) Profit Sharing.

There are various methods of increasing earnings by profit sharing. The employer, from motives which may be good or bad from the standpoint of the worker, desires to present the worker with a certain proportion of the net profit.

In some cases the motive is entirely for the worker's good; in others it is for the purpose of getting the worker to stay with the firm, and to make his interest so large that he dare not be independent in case he should lose his profit. This means that the employer is no longer troubled with strikes and labour disturbances.

However, it is the effects that concern us here, and not the motives.

Under profit sharing the profit is paid out or credited to the worker every six or twelve months, and one must be employed for a certain length of time before one comes under the scheme. So that it holds out little incentive to efficiency until the worker has been with the firm for some years; until then his interest is so small that only the naturally thrifty workers are interested in it.

All profit-sharing firms base their hopes of increased efficiency on the incentive given to the worker by an anticipation of profit; the payment of wages is by day work or piece work, and these have the defects already mentioned. There is no direct and immediate incentive. The slacker gets the same reward as the good man, and there is nothing to prevent piece rates being cut just as in an ordinary shop.

Profit sharing is undoubtedly a splendid thing in principle, but it tends to make a man drop his trade-union and takes away his independence. It also means a rigid selection of workers, only the ones who look ahead being automatically chosen. Already they must be men of thrifty disposition, men who look forward to being employed in one factory all their lives, otherwise they would not be chosen. They are not necessarily the best men; indeed, they cannot be the best men because only a wide experience of different factories and methods produces the best men. But they are essentially steady men, and this is the kind of man most employers prefer, because they are the least likely to cause trouble when rates are cut or wages reduced. It is usually pointed out that, if a rate has to be cut, the worker gets it back again in the form of profit.

This system certainly tends to get rid of the slacker—the worst form of slacker, that is—and there are circumstances under which it would prove of great value.