Finance & Industry: Report on piecework
The Labour Gazette for September contained the latest report by the Ministry of Labour on the extent to which piecework and other payment-by-results systems are operated in different industries. The advantages to the employer of having workers who, to earn more, speed up their own output without the employer having to bear the cost of supervising them, are obvious, yet payment-by-results systems have never become predominant in industry as a whole in this country; partly because trade unions resisted, but mainly becaus: some work processes are not suitable for practicable payment-by-results systems. What the Report shows is that while 42% of workers in manufacturing industry are paid by results, 58% are on systems of payment which do not vary the amount of pay according to the output of individuals or groups of workers. Generally speaking, piece-work, etc., is much less common in the non-manufacturing industries; in the gas, water and electricity group, for example, only 2% of workers are on piece-work. It is more common among women and girls than among men.
The manufacturing industries are divided into fourteen industrial groups. Among them the two groups with most piece-work, etc., are iron and steel, and shipbuilding (65% and 59%); and the two with least piecework, etc., chemicals (21%) and paper, printing and publishing (19%).
Bevan on piecework
The second world war gave a big impetus to piecework among men. In all the industries covered by the Report (manufacturing and non-manufacturing) only 18% of men were on payment-by-results systems in 1938, but after the war it was 24% and it is now 30%. Among women workers it has fallen slightly, from 46% in 1938 to 44%, but among girls under age 18 it has increased from 27% to 44%.
The ratio among boys of 1 in 5 has remained about unchanged.
When the late Aneurin Bevan was Minister of Labour in 1951 it fell to him to sponsor the Government’s campaign to increase production by going over to piecework and similar schemes, and the Ministry published its pamphlet Wage Incentive Schemes to encourage the idea. One of the reasons given by the Ministry for needing increased production was to help the Labour government’s rearmament programme. “The need for reduced costs of production and increased output has become even more urgent in face of the unavoidable diversion of a substantial portion of the labour force to the carrying out of the government’s defence programme.”
Bevan had read some of Marx’s works and it is unlikely that he had not come across Marx’s derisive remarks about “a fair day’s pay,” (not to mention his denunciations of piece-work), but the Ministry’s pamphlet contained in the Foreword:—”A fair day’s work for a fair day’s pay remains the soundest basis for relationship between employers and workers. . . .”
Impact of Automation
The increase in payment-by-results in recent years goes against some forecasts that it would decline because of the development of automation. The expectation that it would decline was based on the proposition that the employer has no use for a payment system designed to speed up the worker or group of workers, if this is looked after by the technique of production. A rather different view was taken by the Department of Scientific and Industrial Research in their booklet Automation (1956, page 78). They thought that payment-by-results would take different forms.
“Payment by piece-rates, based on the output of individual workers, rarely suits work on automatic processes. The rate of output will be decided by managements on technical grounds, and it will be controlled by technicians rather than operatives. Moreover, the contribution of one operative can rarely be isolated from the contribution of others, so payment will tend to reflect the performance of a team or factory rather than that of any individual ; and it may be based on criteria other than output, for example, machine-utilization.” (Page 78.)
A speaker at a recent conference on automation, Mr. J. Jones, Birmingham regional secretary of the Transport and General Workers Union, pointed out that the old incentive schemes to encourage the individual to increase output have no place because “with automation a worker no longer had control of output” (Financial Times, 29/6/61). But he went on to say that in the engineering industry some managements have tried to adapt old systems of payment-by-results to the new conditions, apparently not at all successfully.
Russia’s Oil Market
The oil companies of the West have for many months been facing a determined drive by Russia to enter their markets with oil at undercutting prices. Russian oil production has jumped from 80 million tons in 1955 to over 120 million, and is expected to double by 1965, so the threat is not a trivial one. Nevertheless, it has to be remembered that Russian production is still only half thai in U.S.A. and her oil exports have to be multiplied many times before they reach the level of the nineteen thirties when Russian oil accounted for about one-eighth of the Western markets.
Back in 1934 Stalin was asked about Russian oil exports, by a visiting delegation of workers from various European and other countries. They wanted to know how Russia could sell so cheaply and were offered the explanation that Russian oil (and wheat) were cheaper because Russian industry “does not require super-profits.” He also told them that Russian policy of cheap export “reduces prices and improves thereby the position of the masses of consumers.”
Among the eighty visitors there must have been some who had seen in their homelands how little falling prices ever benefited the workers, since the employers naturally took advantage of it to press down wages, and in those times of heavy unemployment, with complete success.
However, rumours, so far not confirmed, have been floating around that there is a possibility of the Russian government now doing a deal with the oil companies to cut out undercutting, and to divide up the market.
A writer in the Daily Telegraph (19/9/61) alleges that because the Russian government sometimes uses cheap oil exports to further political ends they have been selling their oil more cheaply in Italy and West Germany than to their own allies, Eastern Germany and Poland.
Our “prosperity”
In its issue of september 16, the Daily Express had one of its cheery little editorials informing readers about the “growing prosperity of the ordinary men and women of Britain.” It claimed, on the strength of the government booklet on National Income, that “in 10 years their income has almost doubled. Allowing for the rise in the cost of living, they are still more than 50% better off.” Seemingly, arithmetic is not a strong point at the Express office, because while the national income in money terms actually has nearly doubled in 10 years the adjustment for the rise of prices reduces this, not to 50% but to about half that amount, making an average annual increase of about 2½% a year. Even that exaggerates the increase because in those ten years the population has risen by two million.
Russian Industry
Many of those who have studied the expansion of Russian industry have remarked on the fact that while some industries have jumped ahead both in size and the use of modern methods, others have lagged far behind the development in other countries.
An example of this is Russia’s backwardness in telephone development. The latest figures show Russia as having four million telephones, compared with about eight million in Britain, 70 million in U.S.A. and nearly five million in Japan. Related to population Russia shows 1.91 per 100 of the population; Britain 15.03; U.S.A. 39.52 and Japan 5.1.
H.