Relative wages and wage forms

Although wages are not the central focus of this study, there are reasons to consider the remuneration of labour when studying personnel reductions. First, the wage level compared with that of other companies is a main determinant of the quit rate; few workers will voluntarily leave a firm that pays relatively high wages, thus limiting the potential of attrition and making other alternatives to accomplish workforce reductions more likely. Relative wages are also interesting since a wage gap between men and women in the same occupation can indicate the existence of a male-breadwinner norm. Yet another aspect of remuneration that is of relevance for this study is whether workers are paid by the hour or on the basis of their performance. As will be discussed in chapter 9, the wage form affects the employer’s incentives when establishing the order of selection at layoffs.

81 ARAB, STF, Förhandlingar, F01: 3, 6 November 1918.

82 ARAB, STF, Kongressprotokoll, A01, 1928, p 25.

83 Swedish: ”För övrigt kan man ju inte helt och hållet bestrida STM all rätt att taga in yngre folk på vissa platser.” ARAB, STF, Kongressprotokoll, A01, 1928, p 20.

84 ARAB, STF, Kongressprotokoll, A01, 1928, pp 27-28.

With respect to wages, the tobacco workers lagged behind many other groups of blue-collars in the first decade of the twentieth century. Both employers and trade union leaders were hesitant to make new agreements because of the uncertainty regarding the future destiny of the industry.⁸⁵ The situation was considerably improved in connection with nationalization. In 1919, female cigar makers earned 60 percent more annually than the average for women in manufacturing as a whole. The lead halved over the following two years and thereafter conditions were stabilized so that female cigar makers earned between 23 and 37 percent more than the average for women in the manufacturing industry. As seen in figure 4.2, the lead remained throughout the 1920s and 1930s and applied to male cigar makers as well. Thus, cigar makers and other tobacco workers had weak incentives to look for jobs in other companies. Even if they had found a job, which was hard considering the high unemployment rate, it would probably have been lower paid.

A striking pattern with regard to the tobacco workers’ earnings relative to workers in other industries is the strong increase in the years following nationalization and the strong decrease during the post-war depression. The principal reason behind these sharp swings was the formal connection of the tobacco workers’ wages to the general price level. As the birth of the Tobacco Monopoly coincided with high inflation that hollowed out wages, the union demanded compensation. Initially, the company’s measures to alleviate the hardships were of temporary character and governed by the need principle; cash benefits were handed out to workers with maintenance obligations, particularly to married men with children.⁸⁶ When the state began to pay wage additions, related to the cost of living index published by the National Board of Health and Welfare (Socialstyrelsen), to its white-collars in 1918, the Tobacco Monopoly soon followed. The white-collars of the company got cost of living additions, like their state counterparts, in a general wage revision at the turn of the year 1918-1919. In a collective agreement made in 1919 the blue-collars were also formally connected to the index. The inclusion of blue-collars in such a system seems to have been an uncommon measure and should probably be seen as a result of state involvement in the company.⁸⁷

85 ARAB, STF, Kongressprotokoll, A01, 1913, p 7.

86 Aktiebolaget Svenska Tobaksmonopolets verksamhet år 1920: Styrelsens förvaltningsberättelse.

This practice was fairly common in the manufacturing sector at the time. Fregert 1994, p 140.

87 In the annual report of 1928 it is noted that a formal connection between the wage system and the public costs of living index was not generally applied by employers. Aktiebolaget Svenska Tobaksmonopolets verksamhet år 1928: Styrelsens förvaltningsberättelse, p 24. This statement seems

With regard to the gender wage gap, it can be established that there were different hourly wage scales for young men and women at the Tobacco Monopoly. The discrimination against women in this respect was less pronounced in the youngest age groups and became increasingly marked among young adults. According to the agreement of 1919, for example, the female to male wage ratio was 0.72 for workers between 17 and 18 years and 0.57 for those who had turned 21. Over time, the gender wage gap for workers paid on an hourly basis narrowed. According to the agreement of 1930, the female to male wage differential for the age group 17 to 18 was 0.79 and 0.65 for 21 year olds.

Although no systematic inquiry into wage bargaining in the tobacco industry has been made, the impression after having gone through the negotiation minutes of meetings between the company and the union is that the gender wage gap was a firmly established norm that seldom was discussed or motivated. Overall, men and women were not compared with each other but with men and women in other industries. Although the Tobacco Workers’ Union formally adhered to the idea of equal pay for equal work, the leadership made no real efforts to abolish the gendered wage scales since they were afraid that wage equalization would lower men’s wages to the same level as that of women.⁸⁸

For workers on piece-rates, who were the majority, the gap seems to have remained fairly constant, at least between 1920 and 1934, as revealed by figure 4.3. It seems like female piece workers suffered greater hourly earnings losses than their male colleagues during the post-war depression, but that the women’s position was improved a couple of years later. Unlike for hourly wages, there was no formal wage discrimination with regard to performance-based pay; the collective agreements did not include different piece-rates for men and women.

Instead, the gender wage gap was caused by the allocation of better paid jobs – that is, finer grades – to male workers.⁸⁹ This practice was not imposed by the company, but was an old tradition that also could be observed in tobacco production in other countries.⁹⁰

to be correct. Indexation of collective agreements was not common in the manufacturing sector as a whole during the years after World War I and existed to a ”limited extent” in the non-traded sector.

Fregert 1994, p 140.

88 ARAB, STF, Styrelsens protokoll, A02: 5, 2 May 1928.

89 Marcus 1911; Karlsson & Stanfors 2007.

90 Webb 1891, p 639; Murray & Keith 2004.

Figure 4.2 The annual earnings of male and female cigar workers in relation to the average for male and female workers in the manufacturing sector as a whole, 1920-1939

0 20 40 60 80 100 120 140 160

1920 1922 1924 1926 1928 1930 1932 1934 1936 1938

Men Women

Note: Earnings do not include overtime and benefits.

Source: Annual reports of the Tobacco Monopoly 1920-1939; Sociala meddelanden 1921-1929; Lönestatstisk årsbok 1930-1940.

Figure 4.3 Female to male average hourly earnings for cigar workers on piece rates, 1920-1934

40 50 60 70 80 90 100

1919 1921 1923 1925 1927 1929 1931 1933

Source: Annual reports of the Tobacco Monopoly 1919-1934.

As has been indicated, tobacco workers could be remunerated both on an hourly basis and based on performance. Hourly wages were mainly paid to young and newly hired workers, to workers employed in tasks were individual performance could not easily be measured, such as storage work, and when the raw material was difficult to work with.⁹¹ The hourly wages were related to individual characteristics such as sex, age and experience. The collective agreements also allowed the employer to pay a bonus to particularly skilled workers.

As far back as the early twentieth century most cigar and cigar-cigarette workers were paid by the piece.⁹² One of the reforms by the Tobacco Monopoly was to introduce a premium bonus system (premieackord), which took both performance and the amount of time used into account.⁹³ The point of departure was the performance of an average worker during an hour. Time gains were shared between the employer and the worker, although the worker’s share was diminishing.

The workers were initially hostile to the premium bonus system, which was one of the causes of the strike in 1918. Eventually, the system gained some support but continued to be an issue of internal divide within the union.

Basically, the high performing workers were dissatisfied whereas the low- and average-performing workers supported the premium bonus wage.⁹⁴

Unlike the hourly rates, the piece-rates were not related to individual characteristics but connected to the job. If new types of products or new production methods were introduced during the period of agreement, it was up to a classification board, consisting of representatives of employer and union and an independent chairman, to decide upon piece-rates. In 1918, it was

91 The scales spanned from 17 to 22 years of age for female workers and from 17 to 24 for male workers.

92 Those involved in preparation work, sorting or labelling could sometimes have time-based pay, but piece work was also the norm for them. In other branches of the tobacco industry time based pay was more common. Kollektivavtal angående arbets- och löneförhållanden i Sverige, III: Arbetstidens längd och arbetslönens storlek inom olika näringsgrenar enligt källande kollektivavtal (1907/08) 1911, pp 85-88.

93 This form of remuneration was also applied in other Swedish industries at the time. See for example: Magnusson 1987, pp 212-223; Johansson 1990, pp 246-249; Berggren 1991, pp 245-249.

For accounts of the premium bonus system in Great Britain, see Zeitlin 1983, pp 39-40 and Lewchuk 1983, pp 84-85.

94 The issue was debated at the congress of 1923 and led to the compromise of trying to improve the prevailing system. Petersson 1999, p 33.

stipulated that in these decisions the board should consider existing rates for similar jobs. The 1921 agreement contained detailed wage norms for various jobs, but from 1924 and onwards, the agreements simply stated what hourly income “a good and, for the job in question, skilled worker” should be able to attain.⁹⁵ This income norm was set higher for male than female workers; the female worker was expected to earn about 63 percent of the male worker’s income. Furthermore, the income norm for piece workers was set somewhat higher than the hourly wages. Thus the hourly wages became accepted as minimum wages, although that concept as such was not used in the agreements.