Labour policy—false and true

by Lynden Livingston Macassey

Anyone acquainted with industry in the United States of America and in England cannot fail to notice one further striking contrast. In the United States of America time- and labour-saving appliances, machines and methods are being continually put into service by employers, and loyally operated by labour. It is recognized as being in the joint interests of them both. It clearly is. Anything that results in a net reduction of output-cost, after allowing for extra interest and depreciation, benefits not merely employers, but also employed. In England, however, workpeople seriously regard time- and labour-saving devices as inimical to their interests, and subversive of trade-rights. It is contended that the introduction of such devices leads to the displacement of labour and to unemployment. In this connection labour has learned nothing from experience. Improved machinery has enormously bettered the worker’s lot. In the United States of America the resultant reduction in output-cost is admittedly the reason for the much higher real wages of American workmen as compared with their English and Scottish confrères. Nor has it led to unemployment in the United States of America. There is no reason why it should do so even temporarily. The introduction of time- and labour-saving appliances is always a gradual process in any factory. Ordinary foresight and organization by an employer ought to enable any men displaced still to be retained in employment. But many English employers have impeded the introduction of labour-saving devices by haggling over the readjustment of piece-rates in respect of the installation of machines giving improved output. The American employer, on the other hand, tries, after allowing for the costs of the new machine, to maintain, as far as possible, the old piece-rates, with the result that the workmen’s daily earnings are increased by its use. The English employer is inclined to think that he is justified in reducing piece-rates so long as the workmen’s daily earnings are maintained. It is unnecessary to point out which policy is most likely to attract the wage-earner to the use of improved machinery.

Payment by Results

Nothing in industry is surrounded by so much confusion and ignorance, both among employers and employed, as the question of payment by results. The value of this method of payment in promoting production is indisputable. I have many actual cases in mind where the introduction of piece-work in place of time-work resulted in an increase of output up to 110 per cent., thereby materially reducing the cost of production. Yet while in some trades, for example the cotton trade, the operatives refuse to work on any basis other than piece-work, in other trades, for example carpentering and many sections of engineering, piece-work is considered a “pestilential system” [sic] tending to unemployment, degradation of the worker, and untold evils. It is in regard to payment by results on the premium bonus system that the greatest misconception prevails amongst both masters and men. That is a system under which a time is fixed for each job. If the job is done in less than the fixed time, the time saved is divided in a definite proportion between employer and worker—generally half and half in England—and the latter paid for his portion at his ordinary time-rate. The system has provoked in this country, unlike the United States of America, the greatest animosity on the part of the Trade Unions. Their point is that on a piece-work basis, where the man is paid a definite price for each article or operation, the more he does the more he is paid. For all time he saves in finishing an article, he receives the full benefit, the employer’s benefit being the lower cost of production resulting from increased output. What right then, it is argued, has the employer, like a parasite, to make anything out of the time which the worker saves on the premium-bonus system. The argument is plausible, but misleading. It entirely overlooks the fact that under a piece-work system, where the workman is paid for all the time saved, prices are necessarily fixed on a much less liberal basis than time allowances on a premium-bonus basis. In the latter case, just because the employer gets a share of the time saved, he can adjust the rate generously, or as rate-fixers put it, “fix the price loosely.” If production is to be furthered in this country, the whole system of payment proportioned to output must be lopped free of its perversion by certain employers, and emancipated from the prejudice of Trade Unions. When displayed intelligibly in its true economic characteristics, the system will speak for itself. The actual rates to be fixed under any particular system are, of course, a fair matter for collective bargaining.

Subdivision and Simplification of Process

An idea is commonly encountered among the rank and file that to keep up the labour costs of every operation or job is the best way to maintain the general value of the labour of the operatives concerned. An illustration may be taken from the engineering industry. In engineering, as is well known, England was the pioneer. The practice in the early days was for a skilled turner or millwright, or other craftsman, to undertake a job, perform all the necessary machine and bench operations, and carry it through to completion. Later, as work increased in volume, and still later in diversity, there gradually evolved a differentiation between the turner and the fitter, and in more recent times, between turners and fitters and other kinds of engineering craftsmen. But the essence of the business was that every person concerned in the work should be a tradesman, or skilled man. In recent times, the employers succeeded in establishing “their right”—which is now being questioned—to promote unskilled men, perhaps shop labourers, to work certain classes of machines, capstan and turret lathes, etc. These men were graded as machinists, and when the trade became organized generally received about three-fourths of the skilled turner’s rate. They were designated “semi-skilled” men. The point to be observed is that any operation among the many thousands that constitute skilled work is deemed to be a “skilled operation,” performable only by a skilled man, and if in special circumstances it is undertaken by any other person, supposing such an improbable case, it carries the full skilled rate of pay. Very similar, but somewhat less rigid, conventions exist in regard to semi-skilled work. The inflexible way in which the engineering Unions enforce these trade practices has certainly reserved exclusively for skilled men a large sphere of work, but it keeps up production costs, and retards development of the industry. Whenever a new and improved machine has been introduced, a machine, say, of a type where the skill was mainly in the machine, and no longer to anything like the same degree required of the worker, there has been a constant struggle between the Unions and the employers as to whether the machine should or should not be operated by a skilled man. Sometimes the employers have won, sometimes the Unions—it is a pure question of relative strength. But the obvious waste of skill in employing one skilled man on one of these machines when he could manage two or more, and the payment of the skilled rate, all added to the prevailing limitation of production, have discouraged English employers from installing up-to-date appliances and so cheapening production.

This is not all the story. In the United States of America the invariable practice is to subdivide every job into its simple constituent operations, allocate each simple machine operation to a machine expressly designed, or “set up” or “rigged” for that special operation, and capable of being tended by an unskilled person after a small modicum of training. So also in regard to non-machine operations, that is to say, assembling or fitting. Each operation is allocated to a special person, in the first instance probably quite unskilled, who becomes proficient and efficient at this one line of work. There is little or no haggling about the remuneration of these unskilled operatives. The volume of production and the consequent ability to pay high wages obviate that. It is never contended by the Machinists’ Union that all of these subdivided operations must be done by skilled men, and by them only. Yet in England it is practically a rule that no man in a Union engineering workshop may lift a file and do the smallest amount of “rough” filing unless he is a skilled fitter.

It is a platitude to insist that the natural and efficient evolution of industry involves subdivision. It is, in fact, the governing condition of efficiency and low production cost. It is equally evident, from American experience, that there is nothing in subdivision really hurtful to the skilled men, their trade, or their standard of remuneration. Subdivision in the United States of America has led to an enormous output. All the vast number of machines in service must be set up, repaired, and periodically overhauled. Only the skilled men can do that. The machine “tenders” or “minders” must be supervised. That, again, is work for skilled men. All the tools for the machines must be ground, repaired, and in most cases “set up”—more work for which skilled men alone are suitable. In short, in the United States of America, the skilled men enjoy better conditions, a higher status, and receive greater real wages than the skilled men in this country. The latter must be helped to realize, and quickly, that their present policy of preserving for skilled men exclusively each simple constituent operation now included in skilled men’s work is detrimental to their interests, is stifling industry, and strangling the trade of the nation.

No “Niggling” at Prices

At the same time, a stern caution must be administered to certain employers. With labour charges forming so large a proportion of the costs of production, some employers are constantly on the alert to pull down wages by fair means or foul. A slight alteration is made in the method of manufacture, or some device that would not deceive a first year’s apprentice is fitted to a machine, and it is then claimed that the work has become such as entitles the employer to put unskilled or semi-skilled men on to it, or alternatively, to reduce the skilled man’s price. Sharp practice of that sort sours the shop. It intensifies enormously the difficulty, at present great enough, of the good employer, struggling to reorganize his business fairly and properly on efficient and honest subdivision lines. Present trade customs, as long as they effectively exist, must be honoured. No employer should be entitled to vary the accepted trade grading of the work or its accompanying rate of wages or prices unless there is a genuine and substantial change in process or machinery which in reality supplants the skill of the worker and manifestly increases production.

So far as improvement of production is concerned, the difficulty first, last, and all the time is the bitter enslavement of the mind of the worker, and, if I may borrow the phrase, the “collective mind” of the Trade Unions, by economic fallacy, and this must be attacked and vanquished before any real progress can be made. The remedy is education.