Procedures and power

The question of who makes decisions about layoffs is ultimately a question of power. As the owners of the means of production and the buyers of labour, employers usually claims the rights to freely choose which workers to hire and which to fire. This was clearly expressed in SAF’s article 23. Unions have, however, considered it of great importance to influence the allocation of jobs in general and the layoff procedure in particular. There are in principle two ways to

attain this influence. One is to include formal rules about layoffs in collective agreements. These rules restrict the employer’s freedom of action and may, for example, stipulate advance notice and criteria governing the order of selection.

Another union strategy is to try to bring about negotiations with the employer on each occasion or to create a permanent institution for this purpose. This kind of union influence over personnel policy is not without drawbacks as it may lead to internal tensions within the organization. The two mentioned alternatives – rules and negotiations – are not mutually exclusive, which, for example, is shown by the conventional practice in present-day Sweden where rules about layoffs are valid only as long as the parties do not agree upon something else. In the inter-war era it was not uncommon for collective agreements with employers outside SAF to prescribe negotiations in connection with dismissals.¹ In the tobacco industry the union had a formal right to protest afterwards, if it thought that the process had been unfair.

From a power perspective it is not only interesting to find out whether the workers’ representatives can influence decisions about layoffs, it is also relevant to ask on what level decisions are made. Negotiations may be held at the workplace level with local employer and worker representatives, at a central level with the top leadership of company and union, or somewhere in between.

Varying degrees of centralization are also possible within the firm. One extreme case is where individual foremen determine the layoff order; another extreme case is where the order of selection is determined by the company board. In between are several alternatives. One scenario is that the company management draws up a proposal with principles for the layoff procedure; a decision is made by the board, whereupon the management sends out instructions to local factory managers. These may then make the personnel selection themselves or delegate the matter to department managers or foremen. Historically, it is often thought that the personnel policies of companies, to which decisions about layoffs belong, were centralized over the course of the twentieth century, implying that power has shifted from foremen to personnel departments.²

It has now been established that decisions about layoffs may be made by the employer alone or with the involvement of worker representatives, that principles for layoffs may be set in advance or be decided from time to time and that the layoff procedure may be more or less centralized. Another important aspect of layoffs is how decisions are made, which has been emphasized by sociologist Daniel Cornfield with the argument that the layoff procedure should

1 Bengtsson 2006, p 126.

2 Jacoby 2004.

be seen as a two-step process. ³ First, the jobs to eliminate are decided and then the individuals to lay off are selected. In Cornfield’s eyes these decisions are closely connected. Those individuals who happen to hold jobs that are eliminated are also those who are laid off. This, however, is not necessarily the case. One may also imagine a layoff procedure where the two decisions are made independently. This implies that the remaining employees are reallocated among the remaining jobs. Some qualitative evidence of such a practice – the transfers of male cigar makers to jobs outside direct production – is presented in chapter 11.

There is also another way, different from Cornfield’s thesis, of seeing layoff decisions as a two-step process, which appears to be of some relevance in present-day labour markets. This is when decision-makers first define layoff units and thereafter make the selection of individuals within these groups.⁴ Layoff units may be defined in various ways, such as: occupation, occupational group, department, division, plant or company.⁵ The concept ‘layoff unit’ was not explicitly used in inter-war Sweden, but collective agreements sometimes stipulated that various categories of workers should be separated when establishing the order of selection.⁶ In present-day Sweden, layoff units are most often the same as operational units, but according to the law unions may decide to merge operational units at a particular geographical location into one big layoff unit.⁷ It is also quite common that layoff units are defined in collective agreements. For civil servants, layoff units are particularly narrow and are constituted by employees with comparable tasks.⁸ This may, in practice, imply units including only a couple of employees each. The definition of layoff units is an important part of negotiations between employer and union. Often, there is a dispute about whether the units should be narrowly or widely defined, where the employer usually prefers to establish the order of selection within small groups of workers and the union strives to make the circles as wide as possible.⁹ If units are narrowly defined, it is more likely that there will be a close connection

3 Cornfield 1983, p 505.

4 Nowadays, the term ‘seniority unit’ is more common but the term ‘layoff unit’ has been deemed to be more appropriate in this thesis since it was not known beforehand whether seniority was actually applied as a selection criterion. The equivalent term in Swedish is turordningskrets.

5 Bailer 1944, pp 562-563.

6 Calleman 1999, pp 54-55. Bengtsson 2006, pp 112, 115.

7 A production unit is a physical building or a department. Calleman 2003, pp 23-24.

8 Calleman 2003, p 24.

9 Calleman 1999, p 62.

between job title and layoff risk, as expected by Cornfield; if not, such a relationship will be weaker or non-existing. Furthermore, groups that have a weak position in the labour market, and which are often crowded in unskilled occupations, are more vulnerable if layoff units are widely defined.¹⁰ This is because job-bumping usually takes place from skilled to unskilled positions.