Downsizing and personnel reductions in general

In document Downsizing: Personnel Reductions at the Swedish Tobacco Monopoly, 1915-1939 Karlsson, Tobias (Page 39-45)

2. Reducing labour inputs

2.8 Previous research

2.8.1 Downsizing and personnel reductions in general

employers hired workers in low positions and some of the already employed were promoted. In bad times the employer reduced labour inputs by laying off workers in low positions and degrading workers at higher positions.

A similar pattern has been shown by Barton Hamilton and Mary MacKinnon in their study of the Canadian Pacific Railway for the period 1921 to 1944.58 They argue that human capital theory may explain much of the company’s personnel policy during the Great Depression; workers with general skills were laid off and workers with firm-specific skills were demoted.

In its focus on an individual company and in partly drawing on quantitative evidence from personnel records, our study has similarities with the line of research represented by Solon et al and Hamilton and MacKinnon. However, our study puts more emphasis on combining quantitative and qualitative evidence and in illuminating how labour management is shaped in interplay between company and union. In contrast to the two studies mentioned above, ours is about an industry that was not usually characterized by huge swings over the business cycle. Although a deep recession is a part of the story, other external shocks, such as changed preferences and technological change, are important as well. Finally, unlike most previous research in this field, our study deals with a workforce composed of both men and women.

Labour management in individual companies has also been studied with more emphasis on qualitative evidence. Many Swedish labour historians, inspired by Harry Braverman and his hypothesis about the degradation of work,59 have focused on the struggle over the power to manage and lead work, often using individual firms as the level of investigation.60 Apart from showing that often have the workers been more able to affect the design of work processes than previously thought,61 an important contribution of this orientation of research has been to illuminate power relations and decision-making within firms. Lars Magnusson, for example, has described internal divides regarding the implementation of Tayloristic ideas between top-level managers and

58 Hamilton & MacKinnon 2001.

59 Braverman 1974.

60 More specifically, this wave of research has studied the implementation of Taylorism in individual workplaces and employers’ attempt to increase work intensity. For Swedish examples of studies inspired by Braverman, see: Berglund 1982; Ekdahl 1983; Magnusson 1987; Isacson 1987; Johansson, Alf 1988; Wikander 1988; Johansson 1990; Eriksson 1991a; Berggren 1991; Greiff 1992; Sommestad 1992.

61 Some cases were more in accordance with Braverman’s hypothesis. Greiff 1992; Wikander 1988.

foremen.62 The foremen were quite successful in resisting change, at least in the short run, at the engineering workshop studied by Magnusson.

As is evident, the main interest of these labour historians has not been reductions or downsizing. This is not surprising given their points of departure and the fact that much of their studies dealt with the mechanical engineering industry.63 Although exposed to mechanization, increased specialization and other rationalization measures, employment in Swedish mechanical engineering factories grew substantially from the late nineteenth century until the 1970s.

However, studies of the mechanical engineering industry recognize the industry’s high exposition to business cycles. How to retain a core of skilled workers during slack periods was an important challenge for the managers.64 If the skilled workers were laid off in downturns the companies would face problems meeting the increasing demand in upturns. This group of workers was offered permanent employment whereas less skilled occupational groups were hired on a temporary basis.

Labour market segmentation was not a unique feature of the Swedish mechanical engineering industry of the late nineteenth and early twentieth century. Numerous authors have observed the existence of temporary workers in labour markets of the past.65 In agriculture, farmers hired so-called day labourers to complement the farmhands and the rural sawmill industry offered stable employment only to a small share of its workforce, hiring seasonal labour in the summer and autumn.66 The phenomenon was also seen outside the private sector. The state offered high employment security to some servants and temporary terms to others.67

Workers hired on temporary terms are convenient for employers since they can be released without advance notice. However, the employers still have to make selections among temporary workers at times. What criteria governed

62 Magnusson 1987.

63 Johansson 1977; Svensson 1983; Magnusson 1987; Isacson 1987; Isacson 1990; Johansson 1990;

Berggren 1991; Lundh Nilsson 2007.

64 Svensson 1983, pp 41-49. Lars Berggren has described how the board of Kockums Mekaniska Verkstad decided to produce ships without orders from customers with the purpose to keep skilled workers employed during recessions. Berggren 1991, pp 186-87, 205-206, 240. In the sawmill industry employers are reported to have transferred skilled and senior workers to maintenance work during slack periods and recessions. Gustafsson 1962, pp 125, 157.

65 See for example Cornell 1982, p 70; Blomberg 1995, p 58; Hansson 2004, pp 220-226.

66 Johansson, Alf 1988.

67 Kvarnström & Waldermarsson 1996, p 16-17.

these decisions is not well researched. This is also the case with selection procedures and criteria applied in situations where permanent labour are laid off, which will be further discussed in chapter 9.

Several historians have described how employment contracts of permanent and temporary labour differed in aspects other than employment security.

Permanent workers were not only protected from unemployment but also received higher wages and social benefits, such as company housing and pensions.68 In some cases there were opportunities for temporary workers to attain permanent status by showing loyalty and ability but little has been written about how common such careers were. Likewise, our knowledge about how labour market segmentation in Sweden has changed over time is poor.

There is some scattered evidence that there has been a gradual equalization of conditions for permanent and temporary labour. Day labourers could, for example, according to collective agreements from the early nineteenth century, have more or less permanent contracts.69 Differences between permanent and temporary labour seem to have become less pronounced within the manufacturing industry, in the countryside as well as in urban areas.70 There is also some evidence indicating that the share of permanent labour increased as industrialization went on.71 Such a development is understandable; with increased capital intensity it becomes more important for employers to attain high and even utilization of equipment and facilities.72 Many technological changes have also had the effects of making production less dependent on natural sources of power and their seasonality.

Temporary labour is one way of dealing with short-term swings. Another strategy is to cut working-hours. The importance of hours-reductions in the Swedish labour market has yet to be systematically researched, but there is plenty of anecdotal evidence showing that short hours was certainly not unknown in the first decades of the twentieth century. Previous historical research on hours-reductions is further accounted for in chapter 7.

68 Svensson 1983, chapter 3 & 4; Blomberg 1995.

69 Kollektivavtal angående arbets- och löneförhållanden i Sverige, III: Arbetstidens längd och arbetslönens storlek inom olika näringsgrenar enligt källande kollektivavtal (1907/08)1908.

70 Larsson 1986, p 147; Johansson, Christina 1988, p 118; Svensson 1983; Sommestad 1985, pp 38-39, 44.

71 Svensson 1985, pp 50-53; Cornell 1982, pp 72-73; Norstedt 1994, p 117; Gustafsson 1962, p 178-181.

72 Gustafsson 1962, p 181.

Although not the focus of in-depth studies, companies’ attempts to deal with short-term swings are quite frequently mentioned by business and labour historians. Long-run reductions of the workforce have less often been taken up in accounts concerning the first half of the twentieth century and before. One exception regarding the Swedish context is the rationalization of the sawmill industry in the 1930s, which has been studied by Bo Gustafsson and Lena Sommestad.73 Gustafsson provides a broad picture of labour relations in the sawmill industry on the basis of official statistics and inquires. He observes the existence of various phenomena, such hours-reductions, attrition, transfers and employer support for retraining redundant workers. However, he does not make any effort to estimate the importance of different measures and ends up with the rather vague conclusion: “That compensation in the form of new employment did occur is beyond doubt, likewise that the transition could be made more or less convenient.”74 Gustafsson attaches considerable importance to how the work process changed in the sawmill industry and on what tasks and occupations were lost through rationalization. This perspective is shared with Sommestad, who focuses on a single company. She does not discuss how the workforce changed in other respects – for example with regard to age and sex – but gives a brief account of the downsizing process.75 According to her, the workers’ were negative to the rationalization efforts and their discontent was directed towards the newly appointed manager that was responsible for the changes. His way of dealing with transfers and layoffs was a particular source of discontent.76 Nevertheless, the company also made some efforts to support redundant workers. In order to facilitate the transition to other occupations an aid committee was created, whose members included the executive manager and the chairman of the trade union.

Turning to the latter part of the twentieth century there are more accounts of downsizing industries and firms. Facing increased competition from low-cost producers in developing countries, many industries in the Western world, including Sweden, got into trouble. These industries had been providing employment opportunities for thousands of workers and their decline had great

73 Gustafsson 1962, pp 159-191; Sommestad 1985.

74 Swedish: ”Att kompensation i form av ny sysselsättning förekom är ostridigt, likaså att övergången kunde göras mer eller mindre smidigt.” Gustafsson 1962, p 167.

75 Sommestad 1985, pp 16-17.

76 The management was, for example, accused for having made political considerations when establishing the order of selection. Exactly what that meant is unclear. Possibly, the management took the chance of getting rid of workers with radical opinions.

consequences for labour markets in general, and for certain regions in particular.

‘Deindustrialization’ became a concept and the subject of research.77 The focus of this literature is somewhat different from our thesis. Studies of deindustrialization are often more concerned with the relationships between firms and the surrounding societies than about the relationships between employers and workers. Much emphasis is put on how politicians responded to plant closures; less emphasis is put on what happens within companies.

A part of the societal response to plant closures was to initiate historical research since it was considered important to preserve the memory of the industrial era. This was the background of a project on the Swedish steel industry carried out by a group of economic historians from Göteborg and Uppsala, which resulted in a number of monographs. Of these, Bengt Berglund’s study on the trade union response to the structural crisis is most relevant to mention here.78 Berglund observes that the age structure of the workforce in the steel industry changed during the crisis in the 1970s as the companies released old workers and tried to strengthen the bonds with young workers.79

The vulnerability of old workers was also an important theme in a study of the declining textile industry. Like their counterparts in the steel industry, owners of textile factories faced tough competition and from 1950 to 1969 domestic production fell by 15 percent.80 However, employment fell even more as labour-saving technology was introduced as a response to foreign competition. The number of workers in the industry was halved in this period.

The rationalization measures did not only imply fewer workers but also great changes for the survivors. Many old workers found it hard to cope with the new era characterized by frequent transfers between jobs and a higher work pace.81 Retreat positions, that is, less demanding jobs to which workers previously had been moved after reaching a certain age, had largely disappeared. Finding a new job after being laid off was particularly difficult for old workers since many employers had imposed age bars for hiring; the limit could be set as low as 35 years.82 The situation for senior workers was frequently discussed by the trade union and led to demands for stronger employment protection.83 The Textile

77 See for example Stråth 1987.

78 Berglund 1987.

79 Berglund 1987, pp 55-56.

80 Andersson et al 1986, p 36.

81 For a similar discussion about the development in the printing industry, see Olsson 1986.

82 Andersson et al 1986, p 46.

83 Andersson et al 1986, pp 54-58.

Workers’ Union, for example, pressed for a central agreement on severance pay for redundant workers, which became a reality in the 1960s.84

In document Downsizing: Personnel Reductions at the Swedish Tobacco Monopoly, 1915-1939 Karlsson, Tobias (Page 39-45)