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Layoffs before, during and after the post-war crisis

9. Layoff procedures and criteria

9.4 Layoffs before, during and after the post-war crisis

Few workers would be interested in entering an industry where there is only one notorious employer. So, the Tobacco Monopoly had reasons to treat the workers fairly. But what did fairness actually mean in this context? Did it imply the application of straight seniority or was the need principle more just? And did fairness imply the participation of the union in decision making? The answers to these questions are not obvious and call for empirical investigation.

Finally, it ought to be recalled that the Tobacco Monopoly, from 1918 onwards, applied a wage system that was partly time-based, partly performance-based. This is of potential importance for understanding the company’s policy regarding the selection of workers for layoffs. The wage system indicates that the workers’ performance was measured. The number of cigars and cigar-cigarettes produced by each person was counted and it was thus possible to observe the productivity of different individuals. Since the wage was only partly related to productivity, the company had a clear incentive to keep high performing workers.

Charlottenberg. This plant closure meant that some workers employed in the production of boxes and cartons became redundant and the local manager decided to protect one worker who suffered from caries and to lay off “[…] the younger and most recently hired in this branch of production […]”.35 He also promised these workers preferential rights in the case of future recalls. The instructions of the manager were, however, misinterpreted; the supervisor in charge at the factory in Charlottenberg treated workers employed in box and carton production as separate units, which was not the manager’s intention. This resulted in layoffs of box workers with longer tenures than carton workers. The union called attention to the mistake but though acknowledged by the company management the decision was not reversed. The management considered the matter solved when it, somewhat later, also laid off the junior worker who should have lost his job in the first place.36

The workers in Charlottenberg were not only critical of the company’s failure to follow the seniority principle; they also thought that the company should offer the affected workers jobs in another branch of production. The responsible manager rejected this proposal on the grounds that such an action would force him to lay off other workers already trained for the tasks in question. He also argued that such a practice was not known in other parts of the company.37

Although there was some confusion regarding layoff units, the Charlottenberg case indicates the existence of an implicit seniority norm in the tobacco industry. Another such indication is the union reaction when seven storage workers were laid off in Stockholm in November 1920.38 On this occasion, the union complained to the main office that the storage supervisor had fired senior workers and retained workers with short tenures. In a reply, the management (referring to the supervisor) stated that seniority had been applied as long as the workers possessed the qualities required for doing a good job. The supervisor had laid off the two workers with shortest tenure in spite of the best service records. The other affected workers had been considered less reliable for

35 Swedish: ”[…] de yngre och senast anställda i denna fabrikationsgren […]”. ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 23 October 1919; ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 4 November 1919.

36 ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 4 November 1919.

37 ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 4 November 1919.

38 ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 27 November 1920.

independent duties. According to the supervisor, one of them was also “irregular in work”.39 The management finished its reply with the following statement:

We are in full agreement with you that the most recently hired workers shall be the first to be laid off when shortage of work occurs. However, we are forced to, in cases such as above, to lay off those who have been shown to be less suitable regarding competence and reliability than later hired workers.40

Two days later a correction, which put less emphasis on seniority and more on ability and the management’s discretion, was sent to the union headquarters:

We are in full agreement with You that, when no distinction can be made regarding the capacity for work and behaviour, the most recently hired workers shall be the first to be laid off when shortage of work occurs.41

The seniority principle was again up for discussion in December 1920 when the workforce was reduced at the snuff factory in Göteborg. The union complained that the local factory manager had not followed the ‘last in, first out’ norm and demanded that two male workers should be recalled. This time the management also stated its position of principle.42 When having to choose between workers of equal “skill” and “suitability”, length of service was regarded as “normative”

for the decision on which worker to retain and which to lay off.43 In commenting on this particular case, the management argued that the tasks performed by two junior workers, who had been retained, could not be carried out by the two released workers. One of the retained workers had the responsibility for putting

39 ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 27 November 1920.

40 Swedish: ”Vi äro fullt ense med eder, att de sist anställda arbetarna vid inträdande arbetsbrist första böra uppsägas. Däremot nödgas vi bestämt fasthålla vid att i fall som ovan första avskeda dem, som i arbetet visat sig mindre lämpliga beträffande duglighet och pålitlighet än senare anställda arbetare.”

ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 27 November 1920.

41 Swedish: ”Vi äro fullt ense med Eder, att, då ingen åtskillnad kan göras vid i arbetet ådagalagd arbetsförmåga och uppförande, de sist anställda arbetarna vid inträdande arbetsbrist först böra uppsägas.” ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 29 November 1920.

42 ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 20 December 1920.

43 The whole wording, in Swedish, was: ”[…] om vid nödtvunget avskedande av arbetare inom en viss specialgren två eller flera arbetare besitta enahanda färdighet och lämplighet skall anställningstiden resp. arten av anställningen vara normerande för frågan om vilken arbetare, som bör avskedas.”

ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 20 December 1920.

together a reserve mill; the other had previously worked as a miller and therefore did work of “a special nature”.44

To conclude, management and union seem to have agreed that length of service should have some importance when establishing the order of selection but disagreed about what weight to attribute to this criterion. Except for the first mentioned case (Charlottenberg), the management regarded seniority as a factor of secondary importance that should be used to distinguish between workers who were equally skilled and suitable for the jobs in question. The union, on the other hand, demanded the application of straight seniority.

With regard to procedure, the layoffs before 1921 were not preceded by negotiations. When the union felt that procedures or criteria were unfair, which happened in all three cases described in this section, it protested to the management in the same manner as it would have done if workers had been fired on doubtful grounds. The union protests did not result in any corrections of decisions made and did not end up in the arbitration court, but the management at least felt obliged to state its principal position. In the archival material reviewed for this study no references to the concept ‘layoff unit’, or the like, has been found. Most likely this concept did not exist at the time and did not structure thinking the same way as today, but still, as was seen in the Charlottenberg dispute, there was an idea that workers with different occupations should be treated separately when the order of selection was to be established.

As is clear from the above description, the layoffs before the post-war crisis were, of limited scale and were neither discussed nor decided upon by the company board. There is not much evidence illuminating the decision-making process within the company in this period, but it seems like the local factory manager made the decision on how many workers to lay off and what criteria to apply, and that the actual selection of individuals was made at a lower level by supervisors. The first time layoffs became an issue for the company board was in December 1920 when Wallenberg informed the board that it could be necessary to lay off 40 female cigarette workers in Stockholm.45 Procedures or selection criteria were not mentioned and the reduction did not lead to a discussion among the board members; it was rather regarded as an item of information on the agenda. This was changed when larger personnel reductions were made during the following year.

44 ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, 20 December 1920.

45 SM, STM, Styrelsens protokoll, 13 December 1920.

9.4.2 The seniority principle applied and abandoned in 1921

As mentioned in chapter 6, the management got a green light from the board for a first major personnel reduction on 14 March 1921.46 There was no discussion at the meeting about which jobs to eliminate. Nor did Wallenberg say much about how the order of selection should be established. However, implicit in his proposal to pension old workers and offer retraining courses for young workers was the idea, corresponding to the theoretical propositions made by Carmichael and Lazear, that cuts should affect both ends of the age distribution.

A peculiar thing with the board meeting in March was that nothing was said about how many jobs or what kind of jobs were to be eliminated. Such decisions seem to have been taken jointly by the management and the factory managers after the board meeting.47 At this internal meeting approximate numbers of affected workers at each location were decided upon, which formed the starting point for a following meeting with the union leadership.48 Exactly how the talks with the union progressed is not known but the final result was a declaration by Wallenberg that the layoffs should affect “[…] the youngest of the most recently hired […]” at the cigar factories.49 This must have been an acceptable outcome for the union. At least the order of selection that was established on this occasion did not raise further comments, either in the correspondence between management and union or in the correspondence within the union.50 Apart from being young and recently hired, all of the 400 workers that were laid off in April 1921 had one thing in common – they were women.

46 SM, STM, Styrelsens protokoll, 14 March.

47 Such a meeting is mentioned in the union records. ARAB, STF, Styrelsens protokoll, A02: 4, 16 March 1921. This meeting may of course have been preceeded by informal discussions.

48 The layoffs were distributed among the three cigar factories as follows: 200 in Stockholm, 150 in Malmö and a non-stated number in Gävle. The total figure was later revised upwards.

49 Swedish: ”[…] de yngsta av de sist anställda […]”. The minutes of the meeting between the management and the union leadership are not available. That a meeting actually took place is clear from the minutes of the company board, according to which Wallenberg also defined “the youngest”

as the age group 19 to 21. SM, STM, Styrelsens protokoll, 18 April 1921.

50 The order of selection was not subject to discussion when the union leadership was summoned a couple of weeks after the reduction had been carried through. ARAB, STF, Styrelsens protokoll, A02:

4, 22 April 1921. At a company board meeting it was established that ”[…] the measures had been carried through without any disturbances in production or of the calmness at the workplaces”.

Swedish: “[…] åtgärderna hade genomförts utan att några störningar inträtt i vare sig fabrikationen eller lugnet på resp arbetsplaster.” SM, STM, Styrelsens protokoll, 18 April 1921.