CHAPTER III

WAGES AND PROGRESS

(_a_) ANTAGONISM BETWEEN EMPLOYER AND WORKER.

Let us try to see straight on this point.

First as to the relations between them. The employer wants to get as much profit as he can, and, as wages are usually a large and a plastic item in his expenditure, he always tries to cut down that item either by lowering wages or by getting more work produced for the same wages. "Low labour cost" is the continual cry of the employer.

Next, the average worker wants as much wages as he can get for as little work as possible. He thinks that the less work he does the more there is for somebody else, and it suits his nature to go easy. "High wages and short hours" is the cry of the worker.

Is there anything to choose between them? Only the fact that, as the employer's profits are so high and the worker's wages are so low, there ought to be a better distribution of the wealth produced. Morally there is nothing to choose between them, because each is trying to rob the other. They cannot help it. Neither is to blame altogether; it is the fault of the present industrial conditions. Under these conditions the employer cannot give to the worker a fair share of the wealth produced.

To have a factory it is necessary to have capital. That capital has been obtained from the surplus wealth produced by the worker. The worker cannot work without the capital necessary to provide the tools to work with and the material on which to work. Interest must be paid on capital in order that the employer may live, and in order to accumulate more capital, because there are more workers coming into being every year, and they will want work and there must be capital to provide the means necessary for that work.

And so the vicious circle goes on. It is not the fault of the employer; it is not the fault of the worker. It is, I repeat, the fault of the system.

Take any worker from his work and place him in charge of a factory with a large capital, and ask him to run the business in competition with other businesses; he would soon find how keen a man must be in order to keep the business going successfully. Suppose the profits fell off, what would our worker-employer do? Cut down wages, of course!

There is no getting away from it, and we must look the conditions squarely in the face and blame neither employer nor worker overmuch.

Now, here is where the Reward System scores. The employer gets "low labour costs"; the worker gets "high wages and shorter hours," with good conditions and greater comfort added.

I am quite convinced that there will be less antagonism between them under the Reward System than under any other. It keeps both up to the mark, and it means a mutual dependence on each other and a mutual interest in high and efficient production. An employer who pays wages under the Reward System soon finds that he has adjusted his whole establishment and sales policy on this basis. If he goes back to day work or piece work, the labour costs go up instantly. So he must stick to the system: it pays him to stick to it. Yet he dare not make things too harsh for the worker; if he tries to do so, down comes efficiency. And the essential items that make for efficiency are reasonable hours, pleasant conditions of labour, and a reward in proportion to that efficiency.

(_b_) TRADE-UNIONS AND THE REWARD SYSTEM.

The trade-unions must be properly organised to meet the new conditions.

The trained engineers of the unions should be thoroughly up to date in their knowledge of all the branches of the trade. In connection with engineering workshops, they should be acquainted with the latest practice in all kinds of machines and tools, tool steels, methods of cutting, and everything else bearing on the working of metals.

Such a trained engineer is worth a good deal to the union, and he should be paid highly. The saving to the union cannot be adequately calculated. In many cases an exhaustive inquiry into conditions of work would often prevent an expensive strike or would smooth out difficulties that tended towards a strike. Such a man should be paid anything from £500 to £1,000 a year. This sounds a lot, but it is absolutely essential for the unions to be in a position to let the employer see that they know as much about the business as he does--perhaps a bit more--and they cannot get the sort of man they need for less.

The trade-union must also see that time studies are properly made. This will be no part of the union's duty until disputes arise. If there is a general complaint from any shop that time studies are unsatisfactory, the trade-union engineer should be sent to the factory to study one or two representative jobs.

He will do this side by side with the employer's engineer, and he must allow the firm to choose the worker (who would, of course, be a union man), so that there can be no complaint of unfairness and no accusation can be made that the union desires to impose conditions on the employer.

A comparison between the times thus obtained and the firm's standard times will show at once whether the complaint is well founded.

The allowances on the fastest time in order to obtain standard time is a matter more open to arrangement. It is, in fact, one of the most vital matters in connection with the time study system, and one where the most unfairness will take place. But an approximate check may be obtained because the handling times of each element of the job can be totalled and the cutting times totalled, and according to the circumstances of the case the allowances can be arranged.

The relation between reward and standard times is a simple matter. It is only necessary to see that reward when standard efficiency is reached is at least 25 per cent. of the day wage. That is to say, if wages are 20s., the reward when the work reaches standard efficiency should be 5s.; if wages are 30s., reward should be 7s. 6d.; if wages are 40s., it should be 10s.

(_c_) SCIENTIFIC MANAGEMENT AND THE REWARD SYSTEM.

This Reward System, when based on time study, is a part of what is called "scientific management," and cannot be carried on without proper departments for standardising products and methods of production, planning and routing the work, attending to tool repair and replacement, examining and maintaining machine tools and driving gear, keeping stores and stocks, inspecting the product, costing production accurately, preventing waste, keeping the sales and publicity department up to a high standard, and watching every phase of the work so as to keep everything up to a high pitch of efficiency. All this does not directly concern the worker. His chief interest lies in whether his conditions of work are improved, whether he suffers less fatigue, whether he gets more wages, whether he does his fellow-worker no injury in earning high rewards If he is satisfied on these points, then all the rest does not concern him.

Now, scientific management is not some fanciful suggestion that the worker may accept if it pleases him, and refuse if it doesn't. It is here already, and the war will cause an enormous increase in the number of firms adopting it. And where scientific management is introduced, efficiency in production follows--that is what it is for. The point is, is the worker going to accept it and its consequences, understanding it, seizing its good points, rejoicing in increased efficiency, increased wages, and increased opportunities of a satisfactory life which these things provide, or is he going to resent it and try to fight it as his fathers fought against the introduction of machinery?

If he chooses the latter course, it means bitter antagonism, suspicion, Labour troubles, instability of employment, low wages, loss of earnings, and the whole of the intellectual forces of the country will be against him, because the conditions after the war will demand industrial peace if we are to maintain the commercial position we had before the war. And in the end it will only mean a sullen acceptance of defeat.

Would it not be better for the worker to get a clear understanding of the system, welcome it for its advantages, and reserve all his strength and power to adjust and preserve the bases upon which the payment of labour depends in the various trades of the country?

It is quite true that the worker will work harder and will produce considerably more; it is equally true that prices will be reduced in consequence, and therefore more men will be required to make more articles for the increased demand that is bound to follow the reduction in price. In the long run, the system will mean employing more men than would be employed under present methods, and they will be men of high efficiency, and on the average of a better class, such men as will greatly increase our national assets, and such as will maintain our reputation in the markets of the world for the excellence and durability of our manufactures.

In the clash of interests that will prevail for a time when the war is over, the worker will have to decide whether to be the controller of his own destinies or whether to become servile. Much depends on the attitude of the skilled worker towards the capitalist. The burden of debt left by the war _must_ be shouldered, and both interest and repayment of loans must come from somewhere. Unless the worker is to be ground to the dust, he must assert himself; but he will be utterly ignored if a selfish and stubborn attitude be adopted, and he will be driven by stress of the nation's adversity to accept what is offered to him by the more far-seeing and powerful members of the State. This means losing all the freedom that he fought for in the great war, and it will put back the worker's progress for an indefinite number of years.

Let him follow up the great sacrifices he has made during the war by an intelligent understanding of the altered conditions, and the worker will take an honoured place in the affairs of the State and share its responsibilities and its benefits. If he is to take that place--and no man has a better right to it--if he is to have a voice in the councils of the nation that will compel attention and respect, will it come by antagonism to progress and indifference to the general welfare, or by organisation and efficiency?

The reply is obvious.

The organisation is the duty of the trade-unions, and the Reward System is a method of providing the efficiency. These will compel the worker to take a greater interest in his surroundings and in the way he is governed. He will resent inefficiency in civic and national matters when he realises how he suffers from its consequences and what perils it brings upon him.

And it must always be remembered that the worker will owe nothing to the employer in attaining this position; there will be no paternalism or "giving shares for nothing" about it. It will be clean, honest hard work and endeavour, and the employer will not only be giving nothing away, but will actually profit by it.

And while each benefits by the efficiency of the other, the State will benefit by both.

(_d_) THE FUTURE OF LABOUR.

How will this time study and Reward System affect the position of the worker?

This is a very serious problem.

It is evident that a transmutation of labour is taking place and will proceed more rapidly after the war.

Workers on the whole are becoming less skilled as craftsmen, and machine attendants are taking the place of hand-skilled men.

it is quite impossible to stop this change. But what cannot be avoided may possibly be controlled, and the trade-unions should endeavour to direct these economic changes rather than to obstruct what is inevitable.

Handicrafts can never wholly cease to exist, but the skilled fitter, and more especially the skilled turner, finds machinery and methods of using machinery encroaching more and more on his particular domain.

An unskilled man is given three or four weeks' tuition, and then, if he shows sufficient intelligence, he is put on a machine with an instruction card. The setter-up sets up the machine and gives advice and surveillance, and the man is henceforth a tradesman, getting full wages for that class of work.

The systemisation of production thus means a great increase in the average skill of the workers as a whole. There are about 4,000,000 skilled workers who are members of trade-unions at the present time, and this number will be greatly increased if the machine attendants of the near future are absorbed by the unions. If the trade-unions are to control the organisation of Labour, this new class of semi-skilled workers must be absorbed either in one of the older unions, such as the A.S.E., or else a new union must be formed for its accommodation. The former would be by far the better arrangement.

At any rate, it will be fatal to allow this growing class to be at the mercy of the employers. Such a state of affairs will mean not only the exploitation of the new class, but the destruction of the old, because the more intelligent men of the new class will be selected and trained to take the place of trade-union men. This is a natural process, and is not aimed at the destruction of the unions.

The general result will be to transfer craftsmanship from the craftsman to the standards book. Then the instruction card will be made out from the standards book and handed to the machine attendant, who will work to it, and will earn something in excess of his weekly wages according to his diligence and care in working to the instructions.

A new profession will result--indeed, has already resulted--one that will employ many intelligent people: I refer to the profession of the rational industry organiser.

It will mean, further, a great increase in the clerical staffs of firms who adopt these systems.

Yet, again, it means a new trade, the trade of inspector, a trade especially suitable for women on account of the lightness of the work and the delicate handling of the gauges.

And, above all else, it means a great increase of production per man, with a consequent lowering of prices. Now, a lowering of prices always means a greater demand, which in its turn means more workers. Speaking generally, any article made in very large quantities is sold to a great number of people, which means that it is sold largely to the working class. Therefore the reduction in price of an article tends to be to the advantage of the workers--it would be more correct to say the better-paid workers.

But now we come to the vital point in connection with all industry and industrial systems--namely, the ultimate advantage or disadvantage to the workers as a class.

The employer will, of course, endeavour to reduce wages, because the semi-skilled labourer need not be paid so highly as the fully skilled craftsman.

It is impossible to say what the trade-unions will do--whether they will accept the situation and adopt sliding scales of wages for different classes of labour, or whether they will insist on the same wages being paid to all union members.

Of course, semi-skilled labour would be engaged almost always on repetition work--work, that is, which lends itself excellently to the Reward System. This system means, as I have shown, an addition to the day rate of wages, and therefore the unions might arrange for a lower wage to be paid to semi-skilled workers, and rely on individual efficiency to bring wages approximately up to the union rate.

In such a case it would be necessary for the unions to see that at "standard efficiency" the wages received were at least equal to the day rate for skilled men, and that the tasks were set in such a manner that this efficiency could be reached without excessive strain.

Skilled men would get the ordinary union rate, and if put on reward their individual efficiency would bring the earnings to considerably more than the highest earnings of semi-skilled workers.

This arrangement should be a satisfactory compromise between the employer and the worker, but it can only be brought about by the Reward System, or some similar method, and under trade-union control.

Unless such a compromise is attempted, industry will soon be in a state of economic warfare, and the division of the workers into skilled and semi-skilled camps will be disastrous. If the trade-unions lose control over labour-not only skilled, but semi-skilled labour also--the natural tendency will be for the employers to coerce and intimidate the workers into accepting lower and still lower wages. Our tremendous war indebtedness will provide the excuse, and a "free labour market" will contribute to the success of this reduction.

There is a certain level of necessity to which wages always tend. If wages are high, they tend to be reduced; if they are low, they tend to increase. The tendency to reduction is due to the endeavour of the employer to lower costs, and the acceptance, under pressure, of a lower wage by the worker so long as the wage does not fall below the limit of absolute necessity. The tendency to increase is due to the discontent of the worker when wages are below the necessity level, this leading to strikes, slacking, and inefficiency, which compel the employer to raise wages in order to avoid excessive loss. I am speaking here of skilled labour, where there is always more or less of a demand for workers. In the case of unskilled labour, where the supply is always considerably in excess of the demand, wages are always below the necessity level.

There is a constant "regression towards mediocrity," to use Galton's phrase--in other words, a constant tendency towards the average. It is because this average at present is an average of _necessity_ instead of an average of _reasonable comfort_ that Labour troubles recur so frequently; the slightest variation in the price of necessary articles immediately affects the purchasing power of wages.

It is evident to all unbiased persons that no one can be efficient without a certain minimum income based on comfort; a minimum based on necessity means inefficiency, because no worker can be really efficient when haunted by the constant fear of debt and misery and starvation. And it is also evident that this minimum of comfort cannot be based on the money a man receives as wages, but on what he needs. What constitutes need is open to argument, but there are certain items of necessity which are beyond dispute.

No matter where a person lives, he needs a good roof over his head, food to eat, clothes to wear, fuel, household necessities, and a surplus for emergencies. The cost of living differs in various parts of the United Kingdom, and therefore there should be a scale of wages for each district, based on the purchasing power of wages in that district. This is recognised by the trade-unions, and in consequence union wages are higher in London than in provincial towns.

In each district the amount of wages should be based on the price of perishable articles--food, fuel, household necessities--in that district.[1] It is an easy matter to record the prices of these necessities: and if an annual revision of wages be made, the employer cannot complain about excessive increases, because between one year and another prices do not vary sufficiently to cause any great difference, and all manufacturers would be affected the same way.

[1] What is necessary in the way of food, clothes, fuel, household articles, rent, etc., in order to keep an average family in reasonable comfort can easily be determined. I have worked this out in detail, but it is hardly a subject for these notes.

Fixed items, such as rent, should be revised every five years or so.

Such an arrangement would mean basing wages on what may be termed "reasonable comfort" instead of on necessity. This alteration of the basis of wage calculation, together with the payment of a reward for efficiency, would have a remarkable effect in lessening the difficulties between Capital and Labour, and would make for a permanent and progressive industrial peace.

(_e_) THE ACTUAL AND THE IDEAL.

Whenever scientific management is criticised, there seems to be a tendency to avoid a comparison between the conditions of work under scientific management and other _existing_ conditions. The comparison generally drawn is between scientific management and some non-existent, more or less ideal, condition imagined by the critic.

But we have to deal with immediate practical problems; with prevailing conditions; with a non-producing investing society which is constantly seeking profits; with masters who are in open or veiled antagonism to the workers; with workers who have no chance of obtaining a real education, and whose minds are so confused by the contradictory statements made in the Press--their only means of becoming acquainted with the broader aspects of citizenship--that they can rarely exercise a balanced judgment on any subject. Any scheme of work and wages must take into account these things as well as the present-day desires and ambitions of the average worker, if it is to be of any real use or if it is to assist the worker, consciously or unconsciously, towards the attainment of what are considered better things.

The worker cares more for money than for anything else. In this he is singularly like most other people. The æsthetic nature of his surroundings when at work make little appeal to him, and no appeal at all if two or three shillings a week are in the balance against it. He does not know how his health improves and his efficiency increases when he is in pleasant surroundings, and he will have no hesitation in leaving a pleasant factory for a dismal one if he receives a slight increase in wages by doing so.

Certain employers--Rowntree, Cadbury, Lever, for instance--after becoming wealthy, try to improve the condition of their workers. Increased efficiency is not their aim so much as making the lives of their workers pleasant and happy. But it is impossible for all firms to be wealthy, and there are few even among the wealthy who care how their workers live; hence the multitude of repellent workshops up and down the land.

Scientific management, however, starts in at the beginning with pleasant conditions because it pays to have them. It is frankly utilitarian, and if slavery in a dark house resulted in greater efficiency, then that method would be adopted. But since it _does_ mean healthier and happier conditions, and more wages and greater opportunities for a fuller life, why cling to worse conditions while dreaming of some vague future state which is utterly outside present practical possibilities?

That Capital is necessary is evident to everyone. Whether the capitalist is necessary is open to argument, but we must accept him for the present whether we like it or not. And, accepting him, we must acknowledge that he has certain rights and privileges--rights and privileges which so many of us are seeking for ourselves; for instance, the right to control his capital, to increase it by any legitimate means, to dispose of it in any way he chooses.

One of the ways of increasing capital is by lowering the cost of production and thereby gaining a wider market. Better organisation and the introduction of automatic machinery enable the capitalist to do this. He risks his capital in the hope of greater returns, and no one can deny him the right to better his organisation, to use his brains and energy and wealth to attain this end.

One of the most striking and successful methods of organisation is this of scientific management, of which the Reward System is a part. To oppose the system, to oppose the introduction of machinery, is not to make things better. If one could say we will not have efficient management, we will not have automatic machinery, the case would be different; but this system and this machinery were being introduced before the war, and the installation of automatic machinery has been increased enormously since the war began. This class of machinery has come to stay, and, now that the urgency of war work has forced engineers to realise their possibilities, they are looking forward to the application of automatic machines to thousands of jobs that were previously done on general machines.

Now, automatic machinery is the same under any system of management or wage payment. The same amount of manual skill is required, and the same amount of mental application. But whereas day work means constant close supervision by the foreman, and piece work means mutual dishonesty, the Reward System means a keen interest in both the quality and quantity of the work produced.

Under what system can work on automatic machines be made pleasant? The usual reply of the idealist is to draw a comparison between handicrafts and automatic machinery, dwelling on the skill and interest and beauty of the one and the deadening monotony of the other. But when a man is compelled to take up a handicraft for the sake of a living--and this always _was_ the case--there is not so much difference between being compelled to work on an automatic machine and being compelled, for example, to throw a shuttle through the frame of a hand loom, which is but a man-driven machine, after all. And, to be fair, the comparison should be completed, and the comparative luxury enjoyed by present workers set against the bare, cheerless existence of the artisan of the Middle Ages.

It is assumed that the craftsman of those days had a tremendous pride in his work, but it is to be doubted whether he was really so proud all the time of the work whereby he earned a miserable pittance. How many of those workers would gladly have given up their beloved crafts and tended automatic machinery if they could have obtained the conditions of the present day by doing so!

The conditions obtaining in the Ford motor factories at present show what influences and governs the actions of the worker. Mr. Henry Ford put into practice a bonus scheme which included all workers who had certain qualifications. For some time after this became known the Ford Company received over one thousand letters a day from workers desiring employment. The conditions of the work did not weigh with them at all, but, Mr. Ford being what he is, the conditions were, of course, excellent. This gave the Ford Company the pick of the workers of the United States. As far as can be ascertained, there is great satisfaction among the Ford workers, and it is considered a privilege to get a situation with the Ford Company. Now, an essential feature of the work in this firm is team work. The work is split up into small elements arranged so that, as the work is passed from one worker to another, the least time is taken on each element. Repetition work is the order of the day, and even the man whose work for over three years was to give two turns to No. 16 nut did not leave because the work was too monotonous.

The fact remains that, as a rule, workers do not object to monotony so long as they are well paid for the work, and there does not appear to be any increase of idiocy in the Ford shops owing to the dulness and once-and-for-ever nature of the work.

To produce work by handicraft means a life of unremitting toil for the craftsman, and even then the cost of the finished article is so great, if the worker is to get but a very moderate return, that only the wealthy could buy it. This postulates a wealthy class which is diametrically opposed to the principles of the idealist.

The craftsman would have neither leisure nor opportunity for the study and appreciation of finer things, and in the end it means poverty, and poverty means ignorance and misery.[2]

[2] Since writing this paragraph I have found the following statement in Mr. Graham Wallas's book, "The Great Society" (p. 347): "It is true that Morris, for all his greatness, never faced the fact that we cannot both eat our cake and have it; cannot use slow methods of production, and also turn out without overwork large quantities of consumable wealth. Once, while I listened to him lecturing, I made a rough calculation that the citizens of his commonwealth, in order to produce by the methods he advocated the quantity of beautiful and delicious things which they were to enjoy, would have to work about two hundred hours a week. It was only the same fact looked at from another point of view which made it impossible for any of Morris's workmen, or, indeed, for anyone at all whose income was near the present English average, to buy the products either of Morris's workshop at Merton or of his Kelmscott Press. There is no more pitiful tragedy than that of the many followers of Tolstoy, who, without Tolstoy's genius or inherited wealth, were slowly worn down by sheer want in the struggle to live the peasant life which he preached."

We must accept the fact that wealth is the product of machinery or of some worse form of slavery, and, for my part, I prefer it to be produced by machinery.

Besides all this, machinery is here, and to do without it is absolutely impossible--as impossible as it is for a highly developed organism to revert to its primitive state.

Where shall we draw the line and say, We will have no more machinery than we have at present? We cannot do so; it is manifestly impossible. Where, then, shall we draw the line and say, This work must be done by hand and not by machine; this work must be done on a general machine and not on an automatic; this work must be done by a single man and not by a team of men; this work must be done under this or that old-fashioned system and not under a well-organised system? These lines can never be drawn. Progress, by its very nature, will crush whatever opposes it, even though it has no intention of doing so. And it is not desirable to oppose progress if we desire to live and develop. As automatic machinery is the extreme end of one line of progress, so it is undesirable to sweep it away, even if it were possible.

Now, automatic machinery means cheap production, and this means more wealth. More wealth ought to mean more leisure for everybody. In order to make the best use of leisure, better education, real education, is needed--education in reasoning, in science, in civics, in art, in economics, in freedom.

The trade-unions are not educational; it is no part of their programme. The workers depend on their opponents for their education. Instead of curtailing wealth, the trade-unions should endeavour to control the production and distribution of it, to divert it so that it will benefit the workers, in order that both leisure and education may be theirs.

Under any conceivable system, the man who has the energy and initiative of the man who at present becomes a capitalist would always be a more important and better paid or better rewarded man than the worker. But he would be a leader and not a driver, and whatever he possessed would be looked upon by those who worked under him as a natural and righteous return for his ability. I merely mention this because trade-union control is no menace to the progress and success of the man of ability.

Finally, let me say that, if we must have cheap production, if we must have better organisation and make more and more use of machinery, if we must increase each man's output in order to meet the financial necessities of the immediate future, what method shall we adopt? Is it to be day work or piece work? Is it to be co-partnership or profit sharing that tend to rob a man of his liberty and turn him into a miniature capitalist? Or is it by such a method as this Reward System, whereby a man retains his full liberty, where his work is made more interesting, where he does no harm to his fellow-workers by earning high wages, where his trade-union is his stand-by?

These are the ways, the practical available ways, that confront the worker. It is easy to imagine pleasanter ways, but the devil drives and we have to decide now. The trade-unions would be wise to give close attention to the Reward System and that greater organisation of which it is a part. With trade-union support it will become one of the most satisfactory solutions of the differences between worker and employer; without trade-union support no system will be satisfactory.

It is not efficiency for efficiency's sake that is the issue. Efficiency is only a means to an end, to the end that the worker eventually may be in a position to exercise some control over the making and distribution of wealth. Present conditions drive him farther and farther from that end, and only education, better conditions of living, a certain amount of leisure, and a desire to undertake responsibility, will enable him to achieve it. Following on that will come the realisation of what efficiency would mean applied to the general production and distribution of commodities, to education, to the affairs of State, and with that comes the desire to control, and after that, again--well, perhaps Idealist will begin to see daylight!

These notes are not concerned with the essential rightness or otherwise of this or any other system of wage payment, or of the wages system itself, or of the Capitalist System. These are matters altogether outside the subject. These notes are only written because the writer considers the Reward System, when properly carried out, to be the best of several existing methods of payment for work done; and as this particular method will be adopted more and more, and as it undoubtedly leads to greater production and is to the direct and immediate advantage of the worker, those concerned with the welfare of the worker ought to consider the system in all its bearings, and not hurriedly condemn it because it is new, because it is American, and because it increases the productivity of the worker. If there is any practical scheme that can be immediately adopted and will appeal as strongly to both worker and employer, by all means let us have it and abolish existing methods of wage payment altogether.