Various
Essays in Liberalism
A National Industrial Council
I have left very little time for dealing specifically with the question of industrial relations, though much that I have said has a bearing upon it. There has been great disappointment with the results of the Whitley Council movement. Many thought they were going to bring in a new era. But they have not lived up to these hopes, firstly, because they came into being at a time of unexampled economic difficulty, and, secondly, because they were introduced into industries where there was no tradition of co-operative action—being established mainly in industries lying between the entirely unorganised and the highly organised trades. But we must persist in encouraging Whitley Councils, and still more in the associated objective of encouraging works committees. The basis of industrial peace is in the individual works. Co-operation cannot be created by Act of Parliament, but depends upon the development of opinion among employers and workmen. Starting from Works Councils up through the Whitley Council, Trade Boards, or National Trade Union machinery for the negotiation of wages, we arrive at the National Industrial Council, which is the point at which the Government can most directly assist the movement towards more cordial relations. The plan of this Council is ready. It was proposed and developed in 1919, and I personally do not want to change that plan very much.
But I think it is of the utmost importance that we should embody in our Liberal programme the institution of a National Industrial Council or Parliament representing the trade organisations on both sides. Whether it should represent the consumers, I, personally, am doubtful. It should be consulted before economic and particularly industrial legislation is introduced into Parliament. It should be the forum on which we should get a much better informed discussion of industrial problems than is possible in Parliament or through any other agency in the country. The National Council also needs to have specific work to do. I would be prepared to see transferred to it many of the functions of the Ministry of Labour, or rather that it should be made obligatory for the Minister of Labour to consult this Council on such questions as whether it should hold a compulsory inquiry into an industrial dispute. I would also throw upon it the duty of advising Parliament exactly how my proposals as to publicity are to be carried out, and would give it responsibility for the Ministry of Labour index figures of the cost of living upon which so many industrial agreements depend. I believe if we could set out a series of specific functions to give the plan vitality, in addition to the more nebulous duty of advising the Government on industrial questions, we should have created an important device for promoting the mutual confidence of which I have spoken.
The suggestions I have made are perhaps not very new, but they seem to me to be in the natural line of evolution of Liberal traditions. Above all, if they are accepted they should be pursued unflinchingly and persevered with, not as a concession to this or that section which may happen to be strong at the moment, but as a corporate policy, which aims at combining the interests of us all in securing increased national wealth with justice to the component classes of the commonwealth.
THE REGULATION OF WAGES
By Professor L.T. Hobhouse
Professor of Sociology, London University.
Professor Hobhouse said:—The wages, hours, and general conditions of industrial workers are of interest to the community from two points of view. So far as the less skilled and lower paid workers are concerned, it is to the interest and it is the duty of the community to protect them from oppression, and to secure that every one of its members, who is willing and able to contribute honest and industrious work to the service of others, should be able in return to gain the means of a decent and civilised life. In this relation the establishment of a minimum wage is analogous to the restriction of hours or the provision for safety and health secured by Factory Legislation, and carries forward the provision for a minimum standard of life. The problem is to determine upon the minimum and adjust its enforcement to the conditions of trade in such wise as to avoid industrial dislocation and consequent unemployment.
With regard to workers of higher skill, who command wages or salaries on a more generous scale, the interest of the community is of a different kind. Such workers hardly stand in need of any special protection. They are well able to take care of themselves, and sometimes through combination are, in fact, the stronger party in the industrial bargain. In this region the interest of the community lies in maintaining industrial peace and securing the maximum of goodwill and co-operation. The intervention of the community in industrial disputes, however, has never been very popular with either party in the State. Both sides to a dispute are inclined to trust to their own strength, and are only ready to submit to an impartial judgment when convinced that they are momentarily the weaker. Nor is it easy when we once get above the minimum to lay down any general principles which a court of arbitration could apply in grading wages.
For these reasons the movement for compulsory arbitration has never in this country advanced very far. We have an Industrial Court which can investigate a dispute, find a solution which commends itself as reasonable, and publish its finding, but without any power of enforcement. The movement has for the present stuck there, and is likely to take a long time to get further. Yet every one recognises the damage inflicted by industrial disputes, and would admit in the abstract the desirability of a more rational method of settlement than that of pitting combination against combination. Such a method may, I would suggest, grow naturally out of the system which has been devised for the protection of unskilled and unorganised workers, of which a brief account may now be given.
The Establishment of Trade Boards
Utilising experience gained in Australia, Parliament in 1909 passed an Act empowering the Board of Trade (now the Ministry of Labour) to establish a Trade Board in any case where the rate of wages prevailing in any branch was “exceptionally low as compared with that in other employments.” The Board consisted of a number of persons selected by the Minister as representatives of employers, an equal number as representatives of the workers, with a chairman and generally two colleagues not associated with the trade, and known as the Appointed Members. These three members hold a kind of casting vote, and can in general secure a decision if the sides disagree.
No instruction was given in the statute as to the principles on which the Board should determine wages, but the Board has necessarily in mind on the one side the requirements of the worker, and on the other the economic position of the trade. The workers’ representatives naturally emphasise the one aspect and the employers the other, but the appointed members and the Board as a whole must take account of both. They must consider what the trade in general can afford to pay and yet continue to prosper and to give full employment to the workers. They must also consider the rate at which the worker can pay his way and live a decent, civilised life. Mere subsistence is not enough. It is a cardinal point of economic justice that a well-organised society will enable a man to earn the means of living as a healthy, developed, civilised being by honest and useful service to the community. I would venture to add that in a perfectly organised society he would not be able—charitable provision apart—to make a living by any other method. There is nothing in these principles to close the avenues to personal initiative or to deny a career to ability and enterprise. On the contrary, it is a point of justice that such qualities should have their scope, but not to the injury of others. For this, I suggest with confidence to a Liberal audience, is the condition by which all liberty must be defined.2
If we grant that it is the duty of the Boards to aim at a decent minimum—one which in Mr. Seebohm Rowntree’s phrase would secure the “human needs” of labour—we have still some very difficult points of principle and of detail to settle. First and foremost, do we mean the needs of the individual worker or of a family, and if of the latter, how large a family? It has been generally thought that a man’s wages should suffice for a family on the ground that there ought to be no economic compulsion—though there should be full legal and social liberty—for the mother to eke out deficiencies in the father’s payment by going out to work. It has also been thought that a woman is not ordinarily under a similar obligation to maintain a family, so that her “human needs” would be met by a wage sufficient to maintain herself as an independent individual.
These views have been attacked as involving a differentiation unfair in the first instance to women, but in the second instance to men, because opening a way to undercutting. The remedy proposed is public provision for children under the industrial age, and for the mother in return for her work in looking after them. With this subvention, it is conceived, the rates for men or women might be equalised on the basis of a sufficiency for the individual alone. This would certainly simplify the wages question, but at the cost of a serious financial question. I do not, myself, think that “human needs” can be fully met without the common provision of certain essentials for children. One such essential—education, has been long recognised as too costly to be put upon the wages of the worker. We may find that we shall have to add to the list if we are to secure to growing children all that the community would desire for them. On the other hand, the main responsibility for directing its own life should be left to each family, and this carries the consequence, that the adult-man’s wage should be based not on personal but on family requirements.
Women’s Wages
But the supposed injustice to woman is illusory. Trade Boards will not knowingly fix women’s rates at a point at which they can undercut men. Nor if women are properly represented on them will they fix their rates at a point at which women will be discarded in favour of male workers. In industries where both sexes are employed, if the women workers are of equal value with the men in the eyes of the employer, they will receive equal pay; if of less value, then, but only then, proportionately less pay. It is because women have received not proportionately but quite disproportionately less pay that they have been undercutting men, and the Trade Boards are—very gradually, I admit—correcting this error. For well-known historical reasons women have been at an economic disadvantage, and their work has secured less than its worth as compared with the work of men. The tendency of any impartial adjustment of wages is to correct this disadvantage, because any such system will attempt to secure equality of opportunity for employment for all the classes with which it is dealing. But it is admitted that there is a “lag” in women’s wages which has been but partially made good.
If the standard wage must provide for a family, what must be the size of the family? Discussion on the subject generally assumes a “statistical” family of man and wife and three children under age. This is criticised on the ground that it does not meet the human needs of larger families and is in excess for smaller ones. The reply to this is that a general rate can only meet general needs. Calculation easily shows that the minimum suited for three children is by no means extravagant if there should be but two children or only one, while it gives the bachelor or newly married couple some small chance of getting a little beforehand with the world. On the other hand, it is impossible to cater on general principles for the larger needs of individuals. The standard wage gives an approximation to what is needed for the ordinary family, and the balance must be made good by other provision, whether public or private I will not here discuss. I conclude that for adult men the minimum is reasonably fixed at a figure which would meet the “human needs” of a family of five, and that for women it should be determined by the value of their services relatively to that of men.3
How far have Trade Boards actually succeeded in fixing such a minimum? Mr. Seebohm Rowntree has put forward two sets of figures based on pre-war prices, and, of course, requiring adjustment for the changes that have subsequently taken place. One of these figures was designed for a subsistence wage, the other for a “human needs” wage. The latter was a figure which Mr. Rowntree himself did not expect to see reached in the near future. I have compared these figures with the actual minima for unskilled workers fixed by the Boards during 1920 and 1921, and I find that the rates fixed are intermediate between the two. The subsistence rate is passed, but the higher rate not attained, except for some classes of skilled workers. The Boards have in general proceeded with moderation, but the more serious forms of underpayment have been suppressed so far as inspection has been adequately enforced. The ratio of the female to the male minimum averages 57.2 per cent., which may seem unduly low, but it must be remembered that in the case of women’s wages a much greater leeway had to be made good, and there can be little doubt that the increases secured for female workers considerably exceeded those obtained for men.
The Question of a Single Minimum
Criticism of Trade Boards has fastened on their power to determine higher rates of wages for skilled workers, one of the additional powers that they secured under the Act of 1918. There are many who agree that a bare minimum should be fixed by a statutory authority with legal powers, but think that this should be the beginning and end of law’s interference. As to this, it must be said, first, that the wide margin between a subsistence wage and a human needs wage, brought out by Mr. Rowntree’s calculations, shows that there can be no question at present of a single minimum. To give the “human needs” figure legislative sanction would at present be Utopian. Very few Trade Boards ventured so far even when trade was booming. The Boards move in the region between bare subsistence and “human needs,” as trade conditions allow, and can secure a better figure for some classes of their clients when they cannot secure it for all. They therefore need all the elasticity which the present law gives them.
On the other hand, it is contended with some force by the Cave Committee that it is improper for appointed members to decide questions of relatively high wages for skilled men or for the law to enforce such wages by criminal proceedings, and the Committee accordingly propose to differentiate between higher and lower minima both as regards the method of determination and of enforcement. I have not time here to discuss the details of their proposal, but I wish to say a word on the retention—if in some altered shape—of the powers given by the Act of 1918. The Trade Board system has been remarkable for the development of understanding and co-operation between representatives of employers and workers. Particularly in the work of the administrative committees, matters of detail which might easily excite controversy and passion are habitually handled with coolness and good sense in the common interest of the trade. A number of the employers have not merely acquiesced in the system, but have become its convinced supporters, and this attitude would be more common if certain irritating causes of friction were removed. The employer who desires to treat his workers well and maintain good conditions is relieved from the competition of rivals who care little for these things, and what he is chiefly concerned about is simplicity of rules and rigid universality of enforcement. It is this section of employers who have prevented the crippling of the Boards in a time of general reaction. It is blindness to refuse to see in such co-operation a possible basis of industrial peace, and those were right who in 1918 saw in the mechanism of the Boards the possibility, not merely of preventing industrial oppression and securing a minimum living wage, but of advancing to a general regulation of industrial relations. At that time it was thought that the whole of industry might be divided between Trade Boards and Whitley Councils, the former for the less, the latter for the more organised trades. In the result the Whitley Councils have proved to be hampered if not paralysed by the lack of an independent element and of compulsory powers.
Trade Boards Holding the Field
The Trade Board holds the field as the best machinery for the determination of industrial conditions. It is better than unfettered competition, which leaves the weak at the mercy of the strong. It is better than the contest of armed forces, in which the battle is decided with no reference to equity, to permanent economic conditions, or to the general good, by the main strength of one combination or the other in the circumstances of the moment. It is better than a universal State-determined wages-law which would take no account of fluctuating industrial conditions, and better than official determinations which are exposed to political influences and are apt to ignore the technicalities which only the practical worker or employer understands. It is better than arbitration, which acts intermittently and incalculably from outside, and makes no call on the continuous co-operation of the trade itself.
My hope is that as the true value of the Trade Board comes to be better understood, its powers, far from being jealously curtailed, or confined to the suppression of the worst form of underpayment, will be extended to skilled employments, and organised industries, and be used not merely to fulfil the duty of the community to its humblest members, but to serve its still wider interest in the development of peaceful industrial co-operation.
UNEMPLOYMENT
By H.D. Henderson
M.A.; Fellow of Clare College, Cambridge; Lecturer in Economics; Secretary to the Cotton Control Board from 1917-1919.
Mr. Henderson said:—From one point of view the existence of an unemployment problem is an enigma and a paradox. In a world, where even before the war the standard of living that prevailed among the mass of the people was only what it was, even in those countries which we termed wealthy, it seems at first sight an utterly astonishing anomaly that at frequent intervals large numbers of competent and industrious work-people should find no work to do. The irony of the situation cannot be more tersely expressed than in the words, which a man is supposed to have uttered as he watched a procession of unemployed men: “No work to do. Set them to rebuild their own houses.”
But, if we reflect just a shade more deeply, nothing should surprise us less than unemployment. We have more reason for surprise that it is usually upon so small a scale. The economic system under which we live in the modern world is very peculiar and only our familiarity with it keeps us from perceiving how peculiar it is. In one sense it is highly organised; in another sense it is not organised at all. There is an elaborate differentiation of functions—the “division of labour,” to give it its time-honoured name, under which innumerable men and women perform each small specialised tasks, which fit into one another with the complexity of a jig-saw puzzle, to form an integral whole. Some men dig coal from the depths of the earth, others move that coal over land by rail and over the seas in ships, others are working in factories, at home and abroad, which consume that coal, or in shipyards which build the ships; and it is obvious, not to multiply examples further, that the numbers of men engaged on those various tasks must somehow be adjusted, in due proportions to one another. It is no use, for instance, building more ships than are required to carry the stuff there is to carry.
Adjustment, co-ordination, must somehow be secured. Well, how is it secured? Who is it that ordains that, say, a million men shall work in the coal-mines, and 600,000 on the railways, and 200,000 in the shipyards, and so on? Who apportions the nation’s labour power between the innumerable different occupations, so as to secure that there are not too many and not too few engaged in any one of them relatively to the others? Is it the Prime Minister, or the Cabinet, or Parliament, or the Civil Service? Is it the Trade Union Congress, or the Federation of British Industries, or does any one suppose that it is some hidden cabal of big business interests? No, there is no co-ordinator. There is no human brain or organisation responsible for fitting together this vast jig-saw puzzle; and, that being so, I say that what should really excite our wonder is the fact that that puzzle should somehow get fitted together, usually with so few gaps left unfilled and with so few pieces left unplaced.
It would, indeed, be a miracle, if it were not for the fact that those old economic laws, whose impersonal forces of supply and demand, whose existence some people nowadays are inclined to dispute, or to regard as being in extremely bad taste, really do work in a manner after all. They are our co-ordinators, the only ones we have; and they do their work with much friction and waste, only by correcting a maladjustment after it has taken place, by slow and often cruel devices, of which one of the most cruel is, precisely, unemployment and all the misery it entails.