Lo

The Swedish Confederation of Trade Unions

TRADE UNIONS
AND
FULL EMPLOYMENT
AB Arbetarnes Tr;yckeri, Sthlm 1953
 Pre/ace
A number of motions were submitted to the Congress, olf the Swedish
Confederation o'f Trade Unions - LO* - in 1946, which ailllled at
extending and rendering more effective the activities of the Confedera-
tion. Congress empowered the Secretariat ,of LO to enquire into the
questions raised in these motions, and, consequently, a committee of
enquiry, known as the »LO Organization Committee», was appointed in
December, 1946.
At the Annual meeting, 1949, of the Representative Body ,of LO - the
highest deliberative authority between Congresses - the Committee sub-
mitted a report recommending that the information and propaganda
activities of LO be extended. The Committee also requested - and were
given - authority to i~vestigate present and probable future wage-policy
questions connected with a contemplated enquiry into the suita:bility of
enlarging the LO Research Department.
From May, 1949, to September, 1951, when LO Congress was held, the
Committee concentrated, therefore, exclusivdy on wage-policy problems
and on the demands the laUer would place upon the size and efficiency of
the Research Department. Jn addition to investigating Swedish wage-
developments during the years of full employment of the 1940's,, l!he
Committee studied the endeavours to solve similar problems made in
USA, Great Britain, the Netherlands, Norway, Denmark, USSR, Poland,
Czecho-Slovakia and Rumania.
During the period 194,9--1951, the Committee consi,sted of the follow-
ing: Nils Goude, an official of LO, Chairman; Sten Sj oherg, Secretary;

* This abbreviation (meaning Landsorganis>a,tionen) stands sometimes for the Con-

federation as a whole ( e. g.: the members of LO), sometimes for the highest authority
functioning on any question; e. g. »LO's standpoint» can mean a statement from
the quinquennial Congress, the Representative Body meeting a few times annually,
or the executive and largely policy-making Secretariat which meets weekly.

5
the remaining members being Andreas Karlsson, Carl F. Lindahl, Sven
Jerstedt and K1~ut Johansson, who represented various unions affiliated
to LO. Four officials from the Research Department of LO, Rudolf
Meidner, Gosta Rehn, Nils Kellgren and Arne Henrikson assisted the
Committee as economic experts and drafted the report together with the
secretary.
The work of the Commi·ttee is described in a report of 225 pagecS,
recommending that the wage-policies of the different Trade Unions be
co-ordinated. These recommendations formed the basis of the comments
made by the Secretariat upon the motions regarding wages-policy sub-
mitted to Congress in 1951. This pamphlet in English consists of a series
of extracts from the Committee's report.
The chapter of this edition dealing with The Wages Policy of the
Trade Union Movement (page 73), including the Committee's recom-
mendartions, provide a ,pmctically full translation of the Swedish text.
The remaining parts consist of extracts and summaries of the correspond-
ing Swedish chapters. A chapter on general economic trends since the
1930's, as also appendices dealing with foreign countries, have been
omitted. An addendum to the English edition gives a short survey of the
structure of Swedish unionism. Another one sketches wage policies and
developments 1950-53; except in this case the expression »at present»
relates to 1950 if not otherwise stated. A few explanatory additions and
amplifications have been made in the text for the benefit of foreign
readers.

6
 Background

The following &ummary of Trade Union organization m Sweden is

given as background to the English edition of this report:
The total number of wage and salary earners in Sweden eligible for
trade union membership i& slightly over 2 millions.
The Swedish Union& cover practically the whole labour market as
regard& manual workers and a large and growing part of that for salaried
persons. Manual workers and some of the salaried employee& are organ-
ized in the Swedish Confederation of Trade Unions (Landsorganisatio-
nen, abbr. LO) which has l.3 million members, in 40 industrial unions.
In addition, there are &alaried worker& unions with nearly 400.000 mem-
bers, some 300.000 of whom are affiliated to a confederation of about
50 national unions, many of them on the industrial union pattern. This
is the Confederation of Salaried Worker&' Unions (Tjanstemannens
Centralorganization, TCO) which maintains friendly relations with LO, in
spite of a few borderline di&putes between some of their respective
union&.
The various Employers' Associations cover about as much territory
as the Trade Unions. Their main organization is the Swedish Employer&'
Confederation (Svenska Arbetsgivareforeningen, SAF), a very strongly
organized and centralized confederation of about 40 associations of
12.000 firm& employing 700.000 workers in the manufacturing and build-
ing industries. SAF co-,operates more or less closely with the other em-
ployers' associations in farming, restaurant&, hotel&, retail and wholesale
trades etc.
An employern' association, which is a member of SAF, cannot nor-
mally sign an agreement without the sanction of the central executive of
the Confederation. On the workers' side, the final decision to observe or
not a recommendation issued by LO rests, formally, with the individual
union; morally, however, such a recommendation is often binding. For

7
instance, the pegging of wages to the cost-of-living index during (and, at
times. after) the War, was done in the form of an agreement between LO
och SAF, that they would advise their affiliated unions to follow a de-
tailed scheme elaborated in that agreement, but these recommendations
,vere followed practically JOO per cent., even by unio:1s negotiating with
employers who were not affiliated to SAF. These »Tndex Agreements»
,rere also applied to agreements concludecl by salaried workers organiza-
tions. who. in their practical policy. follow to the greatest extent th::>
patterns set hy LO.
Most labour wage, in Sweden arc covered hy about 200 national col-
lective agreements, generally on an industrial ( as opposed to craft) basis.
The existing craft agremenls (in printing and, to some extent, in build-
ing) are usually negotiated in close cooperation between all the d;fferent
unions of the industry in question. A large number of district or local
agreements in all industries, e. g. with employers outside the employers'
associations, especially in the building, tramsport, and retail trades, the
municipal sector, etc., follow, to an increasing degree, the patterns set
by the big national agreements. The number of agreements under the
jurisdiction of LO totals approximately 20.000. The majority of irn-
por'.ant agreements expire -on December :-Hst, or during the first few
months of the year. The salaried workers' unions use both the method
of collective agreements, and that of individual agreements, for which
they and the employers endeavour to follow certain patterns. Civil
servants salaries are negotiated in very much the same way as thos~
of workers under collective agreements although Civil servants are not
allowed to take strike action.
(From here onwards, the English edition follows the t2xt of the
Report.)

8
 The Trade Union :Movement and the Community

Labour Market Legislation

Modern industrialism did not appear in the Swedish community until

the second half of the nineteenth century. As late as in 1870, 72 '/c of the
population lived hy agriclulture and subsidiary occupations; 15 '/c were
employed in indu,-try and handicrafts; 5 r;,; in distributive trades and
transport; and 8 J'C in the public service and the learned ,professions.
Since then, however, industrialism has brought about a radical change.
In 1950, 25 ';c of the total population of 7 milllions lived by agriculture,
fi,,hing and forestry. Industry and handicrafts gaYe employment to 40 o/r,
,, trade, transport, the learned professions, and domestic work accounting
for the remaining :-l5 <(r.
A:-- in many other countries, trade liberalism in Sweden displaced mer-
cantilism in labour and industrial legislation. The Swedish Guild Statute,
which dated from the early Middle Ages, was abofo;hed in 1846. In 1864,
a l{oyal Order was issued introducing general economic freedom for trade
and industry.
ll nlike what happened in most \Vcstern countries, the strike ,prohibi-
tion existing in former ;mild regulat;ons was not retained in the new
labour legislation, and the forming of trade unions was neither con-
deinned nor condoned, the Government remaining formally neutral
vis-a-vis industrial disputes. In point of fact, however, ancient paternalism
survived until the beginning of the ]9'.\0's, as, up to that date, formal
neutrality did not prevent the Government or its officials from mobilizing
occasionally the ultimate resources of the Stale to support the employers'
interests by suppressing strikes, under the offioial pretext of maintaining
order.
The industrial revolution also deprived the employers in industry and
handicraifts of the privileges and protection against competition they

9
 enjoyed in he Guilds, but the freedom of action which followed their
abolition made up for the loss. For the workers, the freedom brought by
the new system was more formal than real. For all its shortcomings, the
Guild and Hall system did have the advantage of compelling the master
to look after those wonking for hiim. The new free enterprise system wiped
out of rudiments of sickness, old-age, and unemployment assistance
which existed under earlier la'bour legislation.
11he earliest Swedish endeavours to form trade unions-mainly among
craftsmen - were designed to remedy these ,shortcomings of the Economic
Freedom Order. Thus, in 1882, the trade union movement demanded the
statutory limitation of working hours and the introduction of workers'
protection ,and of pensions for aged and infirm workers. Furthermore
they demanded universal suffrage, improved school education, progressive
taxation and the abolition of taxes on the excise necessit,ies of ,life. These
demands ,also appeared in the resolutions adopted by the Constituent
Social Democratic Party Congress in 1889, where Trade Unionists were
in the majority. When, in 1898, the Swedish trade unions, formed the
Swedish Confederation of Trade Unions (LO) it was expressly stated
that trade unionists expected the Social Democratic Party to look after
their ,political interests in Parliament. Thus, the Swedish trade union
movement was, from the very beginning, fav,ourably disposed towa11ds the
State and the community, and ,directed its ,efforts not only towards wage
policy hut also towards the introduction, by legislation, of social reforms.
The absence of every form of legal recognition of trade union organiz:a-
tions did not prevent the Government from taking interest in the legal
side of industrial relations. In a Riksdag motion in 1882 it was stated
that legal punishment for hreach of agreement should be introduce,d to
protect the worker against 'arbitrary treatment by the cimployer; and the
employer and the community against »abuse of the strike principle». The
Riksdag rejected the proposal on the grounds that the offended party was
always at liberty to take the case to court. The idea of avoiding disputes
about the interpretation of agreements by means o1f legislation, was again
put before the Riksdag in 1910, 1911 and 1916, and resulted in 1928 in
the passing of the Labour Court Act, which legalized col,lective agree-
ments and set up a special Labour CO'urt to interpret their meaning.
Under ,this Act, while a collective agreement is in force, strikes or look-
outs arising from its interpretation may not take place. LO and a large
bo-dy ,of opinion among the workers were, at the time, opposed to the
introduction of such legislation, as it was feared that it might pave the
•
10
way for a number of further legislative interventions endangering the
freedom of the trade union movement. Developments during the 1930's
did nut, however, justify these apprehensions, and the activities of the
Labour Court did not bear out the criticism directed against it when it
was set up. fo 1939, in a ,statement addressed to the Riksdag (Parlia-
ment), the LO Secretariat recommended the rejection of a motion
demanding the repeal of this collective bargaining legislation. The
Secretariat substantiated its point of view by referring to the need for
un~form legal practice regarding the interpretation .of the general condi-
tions of collective agreements.
In view of the progress made by ,the trade union movement and its
increased influence on the labour market, its recognition by Parliament
as an authorized negotiating party on the labour manket came in 1906,
when the Labour Concilwtion Act was rpassed, under which employers
and trade unions may apply for the services of a State Mediator to settle
agreements ,disputes. Regulations regarding the advance notification of
work stoppages were added in 1935.
The Labour Conciliation Act was not immediately followed by legisla-
tion in which the authority of trade union organizations to negotiate was
expressly laid down. Not until 1936 were their rights of association and
negotiation legally guaranteed, although they had long been recognized
by bargaining practice.
Once collective agreements questions were •duly legaliz·ed, the Conserva-
tives began agitating, in 1929, for legi,slation safeguarding neutral third
party rights, so that no one should be forced against his will to take sides
in a latbour ,dispute. Discussions about »Third party rights» were very
animated, and comprehensive inquires into the subject were made, but
these did not result in legislation, the question being settled unexpectedly
by direct negot~ation between LO and the Swedish Employers' Confedera-
tion (SAF = Svenska Arbetsgivareforeningen), who signed in 1938 what
is known as the Basic A,greement, which establishes a uniform system of
negotiations to settle labour disputes; a genernl ,practice to be followed
with respect to dismissals and lay-offs; and prohibition of direct action
against a neutral third party; and enjoins both parties to define what is
to be regarded as disputes affecting essential public services; and to
endeavour to the best of their arbility to prevent such disputes.
In 1942, LO and SAF concluded a further agreement concerning the
local application of workers' protection legislation. Two years later, they
concluded an agreement on occupational training in industry; in 1946

11
they agreed to set up »Enterprise Councils» (similar to Joint Production
Committees etc.) in industry; and in 1948 they came to an agreement
regarding the application of time and motion studies.
The joint statement issued in connection with the signing of the B2sic
Agreement in 1938 provides a common platform for the endeavours of
these two main labour market organizations to settle any differ ences 1

between t1:wm by voluntary agreement. The following is a quotation from

the statement:

»Although the organizations are thus consciously a1mmg at a

peaceful solution of labour market problems, disagreement between
the parties cannot always be avoided. The economic losses resulting
from a contest in s,uch a situation are in themselves regrettable, but
they cannot be regarded as sufficiently important to justify that ,the
present freedor>:1 of collective bargaining be replaced by compulsory
Stat2 control of the differences of interest in the labour marfoet.
Nor from other points of view can the State be justified - apart
from the actual sphere of social welfare legislation - in forcing
upon Swedish employers and workers a regulation of working con-
ditions, either in general or in specific instances. So long as the
organizations in the labour mal'.ket arc prepared also to ta,ke note
of ,the ge:ieral ,public interest involved in their activities, the
measures reasonably called for in the interest oif lwbour peace
should most naturally and appropriately rest with the organiza-
tions themselves.»

Discussions about Wage Legislation

After the general election of 1932, the Social Democrats, under Per
Albin Hansson, assumed the reins of Government, which they hav,~ held
ever s;nce - except for a few months during the summer of 1936 -
either as a purely Socialist cabinet, or as the most influential party in
coalition governments. It is not quite correct to describe the present situa-
tion as State planned economy, although the Government is in a position
to indicate the broad outline1S of national economic policy. Yet, on several
occasions, the question of introducinrg laws governing wages has been
discussed in connection with this Government control of free enterprise.
The qurntion of wage laws came to the fore in 1934, when the anti-
depression pro:;rammc of the Social Democratic Government was threat-

12
ened hy a strike in the building trade which had been proceeding since
April 1st, 1933, thus preventing the carrying out of State building works
for 12 million kronor, which would have provided jobs for tens of
thousands of unemployed in other trades. In September, 1933, the Govern-
ment summoned the representatives of the parties concerned to a con-
ference and requested that, in view of the gravity of the situation, rthey
should accept a draft agreement submitted by the Government, thus en-
abling the latter to carry out the anti-unemployment programme. The
workers were willing to accept the proposal in spite of the fact that it
meant reduced wage rates, but the employers refused. A Mediation Com-
1

mission, appointed by the Government submitted new proposals, but with

nQ success. The position became extremely critical in February, 1934,
when the employrrs threatened to lock out 200.000 LO members unless
ag11eement was reached. LO now feared that the Government would
attempt to settle the dispute by introducing compulsory arbitration. In
the circumstances such a step would probably have been favourable to
the wo11kers, as the Government would no doubt have enforced an agree-
mnt in accordance with their earlier proposal, already accepted by the
workers. Yet LO was reluctant to accept compulsory arbitration because
this would create a precedent.
The Secretariat of LO resoived on Feibruary 4th »to admonish the
Building Workers' Union most emphatically to accept a settlement agree-
ing on all essentiBJl points with the Mediation Commission's proposals».
Agreement was reached, removing both the danger of a loa1<-out and the
threat .of compulsory arbitration. Two of the unions involvied criticized
LO's intervention and this attracted attention to the necessity of increasing
the centralist tendency of LO statutes.
ln a motion to the LO Congress of 1936, the Metal Workers' Union
stated that, in view of the central position it occupied in the community,
the trade ,union movement should, ignoring group interests, keep to a
constructive line benefiting the community and the workers in general.
Consequently, the trade union movement should »contribute to a sound
development and the consolidation of the nation's economy», this being a
prerequisite for the improvement of social conditions and the standard
of living in general. It was also stated in the motion that the trade union
movem~nt should aim at securing public control of industry and com-
merce; and that the employees should be given some influence in the
management of enterprises. Furthermore, the trade union movement
should endeavour to bring about a social policy aimed at equilizing the

13
standard of living; and pursue a deliberate wage policy of support for
the lowest-pai,d categories of workers.
Wage policy questions being also raised in a number of other motions,
all motions regarding the trade union movement and economic life or
constitutional questions were referred for investigation to a special com-
mittee, the »Committee of Fifteen», appointed by the Secretariat on
Feruary 1st, 1937.
By February, 1941, the Committee had completed its inquiry and
published a printed report entitled »The Trade Union Movement and
Industry». It consisted of a survey of the evolution ,of tJhe community
and of the trade union movement, together with an analysis of the
movement's position at the time and its immediate aims. In the last
chapter, the Committee expounded its conception of the ,duties of the
movement in modern society; and submitted, in three annexes, proposed
amended statutes for LO, its affiliated unions and for Trade Councils
(FCO).
In a chapter entitled »The State and the Trade Union Movement», the
Committee stated that, in a democratic community, no association can
claim to be beyond the control and jurisdiction of the State, and that,
consequently, this also applies to the trade union movement. In view of
the fact that the moviement is in favour of more State control of industry
and commerce, it would be inconsistent to claim exemption for one's own
sphere of activity. The fact that on previous occasions - apart from
protective labour legislation ·- the trade union movement had rej,ected
State intervention in laibour market questions, could no longer be used as
an argument against such intervention. In those days, the labour move-
ment did not wield much influence in the community, hut had now got
much greater strength. The Committee s:tated that traide union relat,ions
with the State were no longer a question of principle, hut a purely prac-
tical problem. »The question is no longer whether the State is entitled to
lay down rules for the Jabour market and <its organizations, but only how
such control should take place and how far it is justified from the -point
of view of the community.»
Further on in the text, it is stated that it is not possible to maintain
to a !full extent the demand for full freedom for the parties in the labour
market to settle their disputes without .outside intervention. »Whenever
such •disputes give rise to strikes or lock-outs threatening essentwl public
services, the State cannot remain passive. It is obvious that one cannot
1

contest the State's right to uphold the interests of the community - even

14
 The Trade Union Movement and Industrial
Rationalization
The attitude of the Swedish Trade Union movement towards rationali-
zation has been ,determined by its experience of the effects thereof. Such
experience has been both negative and positive. Formerly, rationalization
was generally regarded unfavourably, but in the course of time, a change
of opinion took place, which was due to a large extent to economic deve-
lopments and to the progress of democracy, both inside and outside
industrial enterprises; together with improved knowledge of national
economy among tl'ade unionists.
One of ,the ,drawbacks of the modern industrial community has been
frequent and considerable unemployment, affecting employees, particu-
larly manual wmkers and their famili-es•. Under the circumstances, it was
quite natural that trade unionists - quite apart from the primary causes
of unemployment - should bitterly criticize any laboursaving measures,
which deprived them of their j ohs. A worker who is discharged or laid off
looks at the question from his own -point of view, and disregards the
favourable long-term effects of rationalization. He can hal'dly be ex-
pected to do otherwise, unless labour market conditions in general are so
favourable that he can get another job almost immediately.
Rationalization frequently means a change in the nature of work, which
may easily prnve repulsive to the workers concerned. The importance of
skill is reduced and not infrequently does mechanization subordinate the
imman being to a machine. A highly skilled worker cannot develop any
enthusiasm for a scheme which renders his skill more and more super-
fluous. The constructive, creative part of the job is transferred to machine
designers, time and motion study experts, etc. This risk of the importance
of skill being reduced by rationalization is one of the reasons why trade
unions organized on a craft basis are, as a rule, less favourably disposed
to rationalization than industrial unions.

19
 The foremost task of modern riationalization is to prevent a waste of
materials and manpower and thus to render possible an increase in pro•
duction. Finally, it also profits the worker himself in the form of im-
proved supplies, shorter working hours and easier work. Sometimes, how-
ever, the sense of the word rationalization has been misinterprieted and
»rationalization measures» have consisted merely in speeding up work;
and labour studies, in particular time and motion studies, have also for
that reason been sometimes described as sweated-labour methods. Speed-
ing up work cannot in itself be regarded as rationalization, the object of
which should be to simplify a job and improve its efficiency. The in-
couect use of time and motion studies in some quarters has, to a high
degree, added fuel to criticism directed against such studies and ratio-
nalization in general, not only 1at the place of work concerned.
Time and motion studies and rationalization have also met with
criticism on the part of the workers, who felt prevented from reaping the
immediate results of increased productivity. This appears most clearly in
the fixing of piece-rates. Changes in the l<atter as a result of altered
methods of work, have often been regarded by the workers as a means of
cheating them out of the fruits of rationalization for the benefit of the
employer. This, no doubt, largely accounts for the reluctance of workers
to take an activa part in rationalization.
Rationalization - particularly mechanization - has, in many cases
heen accompanied by an increase in the number of accidents and in-
dustrial diseases. Machines have become heavier and faster, thus increas-
ing the speed of work. Safety devices have not 11Jlways been adapted with
sufficient promptness to the new machines. It has been frequently estab-
1,ished that the extremely specialized nature of modern industrial pro-
cesses may easily result in tedious monotony lfor the workers concerned.
Personal interest in the work is likely to flag among persons dealing with
one small detail only of the final product. The individual worker's skill
and abil,ity loses the importance it had formely in manual arts and trades.
There is no doubt whatever that all these consequences of rationalization
are a very real and serious problem for large groups of workers.
Criticism of rationalization has not been levelled so much against the
very ,principle of rationalization as against its effects and variants, e. g.
rationalization measures causing unemployment, increasing the number
of industrial accidents, or contributing to unhappiness in employment or
to the speeding up of work. Another form of mistaken rationalization is
provided by so-called wrong investments, which are mainly due to faulty

20
 •
judgement of future prospects, but may also be based upon private
economic speculations incompafible with the interests of the community.
Purely speculative investments - which are bound to become wo-rthless
sooner or l,ater - have been rather rare in Sweden -during the last
decades.
Rationalization may also prove ineffective, from the national point of
view, of the manpower thus released cost's the community more than the
economies achieved by the employer. U:nder full employment, this
problem falls, of course, into the backgi:und. What may happen then is
that investments are so comprehensive that sufficient manpower cannot
be found to man the new plant.
Rationalization may be accompanied by a number of disadvantages for
the workers concerned, the most important -of which have been mentioned
above. Nevertheless, the workers, do not, as a rule, oppose a development
.bading to increased industrial efficiency and mechanization, as the
advantages of rationalization are very considerable, in the long run. A
condition for a positive attitude on their part, is, however, that the dis-
advantages of rationalization be removed, as far as possible, by the
efforts of the community, the Labour Market organizations, the industries
th-=mselves and the individual.
The advantages of rationalization are, of course, mainly that it hel,ps
to improve the supply of goods and services, at the same time as working
bours can be reduced.
Ecsier work can also, in many cases, be achieved by suitable ration-
alization measures, e. g. the introduction of machines and other labour
saving devices. Thanks to time and motion studies, methods of work can
be simplified and adapted to the physical and mental aptitude of the
individual. Together with the increased rise in the standard of living, it
has proved possible to improve conditions of work by means of suitable
pr·emises, sanitary installations etc.
The Swedish trade union movement has for a long time been aware of
the fact that, in the long run, an improvement in the economic and social
standard of the workers can only take place if the efficiency of jndustry,
is continually raised and national production increased. This is expressed
as follows in »The Trade Union Movement and Industry»: »The condi-
tions of existence of the broad masses have been considerably altered
during the past hundred years. This transformation of social and eco-
nomic conditions has been •achieved by perfecting production methods.
Without industry, Sweden to-day would live in misery. Without her in-

21
dustry - i. ·e. without her technical metods of work - wjthout her
exports and comprehensive foreign trade, Sweden would problably not be
able to provide for more than half of her present population.»
The fact that the trade union movement considers it one of its tasks to
contribute to such a development, is evidenced, inter alia, by the agree-
ments concluded betwen the parties on the labour market concerning the
training of apprentices; Enterprise Councils; and time and motion
studies. In thre preamble of the latter agreement, signed in August, 194-8,
it is stated that, »The general and essential pre-requisite for an increase
in the standard of living of the workers and the entire population, i3
the continuous improvement of the efficiency of industry. It must he con-
tinuous, if industry is to keep abreast of technical progress. It is to the
best interest of all employees of a concern that the latter should he com-
petitive. The employees, like any other members of the community,
benefit by rationalization, which, by leading to increased production,
creates a basis for a general improvement of the ,standard of li,ving.»
Consequently, the trade union movement has demanded and supported
any such official measures, likely to improve industrial efficiency, e. g.
the control of trusts and the transfer to public ownership of certain trades
and servjces. The parties on the labour market have applied the ahove-
mentioned Saltsjobaden Agreement to spheres of activity where con-
structive cooperation can develop to the advantage of the enterprise, the
employees and the community; the purpose of such cooperation being to
improve industrial efficiency together with happiness at work and in-
creased security for the employees.
The traditional opinion about the harmful effects of rationalization
has, in due course, been revised both owing to increased control of the
disadvantages of rationalization, and also to a better knowledge of eco-
nomics. Regarding unemployment, it is stated in »The Trade Union
Movement and Industry» that history hardly bears out the argument that
rationalization creates unemployment or reduces the poss:hilities of
existence of the broad masses,. Conclusions to the contrary are based upon
isolated cases. There are, of course, many examples of rationalization
which immediately made thousands of men workless. If, however, one
examines developments over a longer period of time, one finds that no
improvement of methods of work ever leads to lasting unemployment:
the new and more -efficient :machines requiring for their production more
labour in other spheres of industry - a fact which is commonly dis-
regarded.»

22
 This statement still applies to-day. On the other hand, pockets of un-
employment may frequently arise locally in connection with rationaliza-
tion; and •economies made by an individual employer result in increased
burdens being placed upon the unemployed and the community, the
situation being of course still worse if unemployment spreads to other
quarters. A high and .stable level of employment is therefore one of the
main goals of the Swedish trade union movement. A high level of
employment also constitutes a suitable soil for rationalization measures,
as the resistance of employees against the introduction of labour saving
devices is turned into a positive attitude towards such improvements.
The alleged connection between rationalization and industrial accidents
and diseases, fatigue etc. was investigated dul'ing the 1930's by the
»Rationalization Committee». No .definite connection, either one way or
the other, could be established: some rationalization measures increased
the danger of accidents or disease while others reduced it. In some cases,
the increased danger was only temporary, as the workers soon got used
to the new machines and methods.
In comparison with other countries, the Swedish trade union move-
ment is very much in favour of rationalization, and the resistance still
encountered in the trade unions of some countries is here, on the whole,
a thing of the past. The differences of opinion displayed by various
countries are mainly due to their different experiences rega.rding un-
employment. During the last decades, Sweden has been spared widespread
unemployment - with the exception of the period 1930-33 - while
many other countries had to gmpple with considerable employment
difficulties. Another important factor in this connection is the relative
scarceness in Sweden of purely craft unions, such unions being inclined
to oppose any changes which render superfluous the trades they represent.
Finially, the existence of a strong homogeneous trade union movement
in Sweden, has probably played a very important part in this develop-
ment, as both the individual workers and the Trade Union bodies, in this
country have felt much more secure, as to the continued existence of their
organizations, than was the case in many other countries. Consequently,
they have been able to agree with the employers on points of common
interest.
The Swedish trade union movement considers that one of its main
tasks is to support and promote a development leading to greater
efficiency in industry. Yet, this should not be at the expense of the work-
ers in the way of speeded-up work, or unhealthy working conditions.

23
Furthermore, the workers should be protected against psychological
pressure, based upon »rationalization mania» on the part of incompetent
foremen or time-and-motion study experts. Continuous and increased
attention should be devoted to questions of happiness in employment
and industrial democracy. The human being is not merely a means of
production, and to establish harmonious relations between him and his
woPk is an end in itself. Far more interest should therefore be devoted
to questions of individual adaptation, and better opportunities should be
given to the individual to find his right place in the industrial process.

Different Ways of Increasing Industrial Efficiency

An indispensable condition for continuous rationaliization is that the

joint technical and economic knowledge of the community is sufficient
to render a further improvement of productivity possible. It is, in the
first place, incumbent upon scientific research to pave the way for such
increased knowledge. If technical progress is to benefit the citizens of the
community, it must be appEed to production by making use of new
supplies of raw materials, creating new types of goods and developing
improved methods of production. This is where private initiative and a
go-ahead spirit can give a good account of themselves. The quicker
scientific discoveries are applied on a large scale, the quioker will a com-
munity achieve a higher standard of living for its ~itizens.
Rationalization of the economy of a private firm can be promoted by
work concentration and lage scale production, mechanization, standard-
ization of products and means of production; and also rational day-to-
day management and continuous flow of output. Of all these measures,
the introduction of labour saving machinery always played, in the long
run, the most important part as regards increasing efficiency. Gradually,
however, the planning and organization of work has acquired more and
more importance, particularly in large undertakings. The mere introduc-
tion of technical means of assistance is insufficient: they must be utilized
in the most effective way. The organization of a firm, and cooperation
between the different individuals working there, are both of paramount
importance as regards the efficiency of work and the rate of continuous
rationalization. Nowadays, good foremanship and personnel welfare are
regarded also by employers as essential factors in their efforts to improve
the efficiency of work within individual concerns_

24
 During recent years, attention has been given to the question of ration-
alizing an entire industry, as many rationalization prohlems within a
particular ,industry cannot always be solved by individual firms, and it
may prove more effective for them to co-ordinate action. Standardization
af certain products or details thereof, limitation of the number of types
manufactured, and the exchange of technical experience, are but a few
instances of rationalization measures which are best achieved by coopera-
tion between several firms within a trade.
The ,best results are no doubt achieved by promoting price competition
on equal terms, so that the most efficient concerns can more easily
eliminate the less effective ones, aided by a price and consumer informa-
tion policy capable of inciting both consumers and firms to buy ration-
ally. A basic problem in this connection is the question ·of competition:
unrestricted competition between firms not being always and from every
point of view the most effective method. In addition to the above-
mentioned forms of cooperation, there are a number of competition-
limiting schemes, which in special circumstances may be conducive to
greater efficiency. There is always the risk, however, that such schemes
will gradually develop into methods of fleecing the consumer, and that
reduced competition and better business results will cause the rationaliza-
tion zeal of concerns to flag.
Private enteprise may occasionally hamper effective rationalization:
private •owners being as a rule more concerned about the interests of their
firms than about the national economy. Should this lead to a non-rational
distribution of work between various enterprises within an industry, to a
waste of means of production or to unemployment, the transfer of
privately-owned firms to State ownership or the starting of competitive
State-owned enterprises may then be considered as a means of increasing
the efficiency of the industry. When the Swedish Labour Movement de-
manded increased collective ownership in industry, it had in mind both
ideological and practical points of view, which are summarized in the
post-war programme by the words democracy and efficiency.
Wage-fixing and questions related to it, must always be one of the
major functions of the trade union movement. In addition, however, it
must necessarily devote the greatest attention to rationalization questions,
since productivity and wages are very closely connected. Inversely, there
exists also a connection between wages and productivity, as wages policy
in itself can promote rationalization, or, in some cases, hamper production
improvements. Particular attention is due to the general rate of increase

25
of wages, differentials between different trades, enterprises and em-
ployee groups; and to the system of hourly or piece rates.

Rationalization of Private Enterprises

The Swedish Trade Union movement's views about how to increase the
efficiency of private enterprises are clearly set forth in the agreement
concerning Enterprise Councils: cooperation there being based on the
joint interest of all the employees of a firm in increasing production
and making work easier and more pleasant.
The agreement provides for the establishment of committees (councils),
including representatives of the employers, the workers and the salaried
employees, at all places of work where at least 25 workers are employed.
The duties of the committee will be seen from the following extracts from
§ 3, 4 and 5 of the agreement.
§ 3. The Enterprise Council, which is an organ for information and
consultation, has according to specifications in §§ 4~ 11, the following
tasks:
1. to maintain continuous cooperation between employer and em-
ployees in order to achieve the best possible production;
2. to give employees an insight into the economic and technical condi-
tions of operation and into the financial position of the enterprise;
3. to promote security of employment for the workers and safety,
soundness, and satisfaction in connection with their work;
4. to encourage vocational training within the enterprise;
5. and to work in other ways for good production and working condi-
tions.
§ 4. In its endeavours to further production of the enterprise it should
be the task of the Enterprise Council to deal with questions concerning
the technique, organization, planning and development of production,
with a view to making use of the experience and insight of the employees.
To this end, it is the duty of the employer to supply the Council with
continuous production surveys, including reports of changes undertaken
or planned or other more important alterations in operating or working
conditions within the enterprise, and of new products, new manufacturing
or working methods, and other technical arrangements insofar as the
revealing of them could not cause damage to the employer.

26
 The representatives ,of the workers and of the salaried employees on
the council may make suggestions to the employer with regard to the
matters mentioned above.

§ 5. With regard to the economic position of the enterprise, it is the

duty of the employer to give the Enterprise Council regular information,
insofar as the revealing thereof couJ,d not cause damage to the employer,
concerning business trends and the state of the market within the industry
in question, with special attention to the position of his own enterprise;
and to supply information concerning the economic conditions of produc-
tion and possible sales.
The Council has the right to obtain from the employer the balance
sheet, profit and loss statement, administration report and auditor's
report of the enterprise to the extent that the law requires publication
of such reports.
It is the duty of the Council to work for an economical disposition of
personnel och material.
The representatives of the w01,kers and of the salaritxl employees on
the Council may make suggestions to the employer in economic matters
which concern the enterprise »

It should be stressed that Councils are not empowered to ma,\e a deci-

sion, nor are they entitled to handle questions relative to wages or agree-
ments.
Most of the different Employers' Associations belonging to SAF have
accepted the agreem~nt on Enterprise Councils, and similar kinds of
agreements have come into force within practically all spheres of private
industry as well as in the Public Service. There are at the moment (1952)
some 3,000 Enterprise Councils in industry, which means that councils
are in operation in the vast majority of enterprises employing more than
25 workers.
At the present stage of development, it is not easy to assess the results
achieved by these councils. However, it may be said that, by ·virtue of
mutual exchange of views and advice, substantial advance has been made
towards bringing together the local parties, and thereby increasing work
efficiency on behalf of the firms in question. Employers and workers
have together expressed satisfaction at the opportunities thus offered
and with the manner in which councils have hitherto operated. It is also
found that the activity of councils is more and more directed

27
towards production problems. There is no information as to the extent
to which production may have been increased by this, but it is significant
that during 1952, industrial workers submitted more than 12,000 pro-
posals in ,respect of improvement in production, nearly half of these
being of i-uch value as to be rewarded.
Continued ,development in local cooperation is a matter for the future.
The ,decisive factors are of course the retention of the parties' interest and
the training of the representatives for the new duties demanded of them.
As to the latter point, the employers' as well as the workers' and salaried
woiikers' organizations have initiated long-term activities including
courses, books and paipers for council members, and several experts on
economics and industrial relations have been engaged by the organiza-
tions.
Another important agreement is that mentioned above, about time and
motion studies. This agreement must be seen against the background of
the continual increase in the percentage ,of piecework in Sweden, where
during 1951, 60 % of working time in the manufacturing industries was
thus employed. Time and motion studies in connection with the fixing of
piece rates have been carried out fairly generally since the 1920's and
their ·scope has widened.
Under the agreement, such employers' associations and trade unions
as have jointly accepted it for their branches, will elect a joint council
for matters concerning the introduction and operation of time and motion
studies, the duties of this council being to further cooperation between
employers and workers in ques-tions concerning these studies and, to some
extent, to handle disputes arising thernfrom. The agreement also provides
for the establishment by the Employers' Confederation (SAF) and LO of
a common body called the Time a:nd Motion Study Board, whose duties
are to follow and further cooperation in matters concerning such studies
and the branch councils mentioned, and, generally, to encourage a sound
and appropriate use of the whole system.
Although the Time and Motion Study Agreement has as yet been
accepted by only a few industries, the opportunity for estahEshing
cooperation which it affords has sel'ved to accelerate the smoothing out
of opposition and to ,direct discussion into more concrete and pi,oductivc
channels. The agreement has furthermore served to emphasize the ques-
tion of recruitment and training of staff engaged in time and motion
studies. That question has been dealt with by experts, both on the manage-
ment and the trade union side.

28
 The other Saltsjobaden agreements are also of importance where pro-
duction is concerned. The 1942 agreement has enabled SAF and LO to
agree on the form in which employers and workers are to cooperate at a
local level on questions of health and safety, and the ,organizations .:have
established a special body - the Labour Safety Board - which is to
deal with this work. In accordance with the recommendations in a special
report on the training of apprentices of 1944, the two organizations have
agreed upon the ·programme in respect of training both by education
committees appointed by the different 1branch organizations, and also
through the channel of an Occupational Training Council, working for
the whole industrial field.
The first Sahsjobaden agreement, the so-called Basic Agreement,
....
negotiated in 1938 between the two central organizations SAF and LO,
does not aim directly at furthering p:mduction, hut its activity is intended
to benefit economic life in general, because of the protection it affords
to a peaceful development of the labour market. By virtue of the agree-
·ment, a permanent body for negotiations between the two organizations
has come into being. Furthermore, it provi-des for unified procedure in
dealing with labour disputes and serves to carry out an accepted course
of action in cases of dismissal and lay-offs. Certain labour disputes
measures have been discarded and the question of disputes involving
vital functions of the community has been dealt with. On the recom-
mendation of the top organizations, the agreement has been accepted by
their affiliates in most branches.
A frequently (but, up to now, rather loosely) discussed question is
whether the employee side should demand some right of co-determination,
e. g. be represented on the Board of the company. Evidence from many
Enteprise Councils shows that the proposals made by the workers' repre-
sentatives on important issues, are frequently ignored; and in connection
with :various other measures, the management si-de does not always consult
the workers, but frequently presents them with a fait accompli. In such
cases, it is indeed rather difficult to exert any influence on the measure
in question!
In spite of this, in the majority of larage or medium-sized enterprises,
management must take into consideration the reactions their various
policy measures may cause within different groups of the community.
They must also reckon with State intervention, if they disregard them.
Thus, management is actually subjected to some measure of indirect
control.

29
 Under current legislation, the right of decision as regards the affairs
of an enterprise, is reserved to the owners, i. e. those who have provided
the necessary capital. This appears clearly in legislation regar,ding joint-
stoo.lc. companies, where the right of decision is given to the shareholders'
meeting, the executive powers being devolved upon a board of directors
and a managing director. In actual practice, however, the influence has
often been taken over by the Board, particularly in companies with a
large number of shareholders. Indeed, the Board frequently has the
interests of the company in view to a far greater extent than the indi-
vidual shareholders, who are more concerned about immediate dividends.
On the other hand it is, in principle, essentially wrong that the Board
should he a!ble to curtail the influence of the shareholders' meeting; as
this means, in reality, that the Boa,rd appoints and controls itself.
This development brings once again to the fore the question as to
whether the workers shouJ.d or should not be represented on the Board.
It could be arranged in many ways, e. g. the Government could appoint
one or ·several represe~tatives acquainted with labour market problems;
and similar rights could be given to the employees' confederations or to
the trade unions of which they are members. Finally, the employees them-
selves might elect one or several representatives to the Board.
ln Sweden the workers are represented, to some extent, on the Board
of State-controlled undertakings. They are, in such cases, appointed by the
(national) trade unions. The advantage of tbeing represented also in
private enterprises lies in the fact that, thanks to better information re-
garding planned measures, the wovkers would acquire more influence
upon the planning and execution of these measures.
On the other hand, a number of definite disadvantages are attached
to workers' representation - particularly direct representation - on the
Board: responsibility for the policy carried out being borne jointly by
the directors, the shareholders and the employees. Disa~reement can
easily arise between the workers' representatives on the Board and the
rest of the personnel. The Board would thus run the risk of being divided
and unable to take quick decisions. Nor wouJ.d tborderlines between the
different parties on the labour market be .as clearly defined as they are
at present. Further, there is a danger of monopoly tendencies being
strengthened, if the employees were also •given a say in business affairs;
and cooperation to that effect between employers and employees might
prove disastrous for the consumer. Finally, one must reckon with tho
fact that the Board majority would meet informally to discuss important

30
matters without the workers' representati-ves, whose actual influence would
thus be very small.
Trade union influence on the efficiency of firms can he exerted in a
different way and in other spheres. In addition to direct influence through
Enterprise Councils and other consultative bodies, one can mention trade
union influence on wages policy, vocational training and educational
activities. Wages policy, as we understand it, includes employment policy,
and any action taken to promote or prevent transfers of laibour between
different enterprises. It is an essential task for the trade union move-
ment to create the prerequisites for a mobile, dynamic labour market,
which, in turn, would further reasonable rationalization. This facilitates
also the transfer of manpower from unemployment to labour shortage
areas; thus increasing the freedom of the individual, and his ability to
find suitable, congenial wo11k.
F,inally, it should be mentioned that, in due course, the trade union
movement can he expected to extend its interests and activities into new
fields. It would appear reasonable to appoint - like the trade unions
of some other countries - rationalization experts for the ,purpose of
promoting rationalization measures in private enterprises, and of con-
tributing to a sounder application ,of scientific management methods.
The question of action against monopolistic methods ,in industry has also
awakened increasing interest. If these - with their negative effect on
pwductivity - cannot be effectively precluded, the case for nationaliza-
tion is strengthened.

Rationalization of Industrial Branch Structures

During recent years the Trade Union movement has devoted much
attention to the rationalization of entire industries; and approached the
Government on several occasions with requests that the question :be
investigated. One of the most remarkable of these requests was made hy
the Swedish Union of Distributive and Allied Workers regarding the
rationalization of distribution. An enquiry in this field has been started
in 1953. A number of industry investigations were carried out during the
1940's, e. g. in the Boot and Shoe Industry, the Electrfoal Industry and the
Oil Trade. The trade union movement has also taken up the question of
setting ·up Joint Industrial Councils, on which Government, employers,
employees and consumers would be represented, and which would ibe, as
it were, a superstructure of Enterprise Councils. Finally interest in the

31
rationalization of industry has been manifested by the expansion of trade
union research activities in this sphere.
As regards the latter question, a motion was put to Congress in 1946
proposing the setting up of a Labour Movement Research Institute
According to the motion, such a step would be justified by the need for
increased economic knowledge among trade unionists and trade union
officials both for the purpose of -drafting wages policy and for that of
fighting successfully the »post-war programme» battle, and resolving the
topical problem of industrial and economic democracy. The Research
Institute would, among others, »carry out a detailed .survey of Swedish
industry and commerce and their organizations, together with continuous
reports on their economy, financial soundness, production costs and ratio
of wages to profits.» The views of LO on the subject of trade union
cooperation in the rationalization of industry and commerce were further
stated in a letter to the Government in 1947: structural inquiries being
regarded first and foremost as an instrument for improving the eff,iciency
of the different spheres of the economy.
To date, the cooperation of the trade union movement in these different
rationalization steps has mainly been indirect: both by means of com-
ments upon various Government proposals, and by rousing a body of
opinion in favour of enterprise rationalization. On the other hand, it is
often difficult for the trade union movement to make any definite
structural rationalization proposal based upon the results of their own
enquiry, as this frequently requires particularly detailed knowledge of
technical and economic conditions in the indiviidual firms and trades. In
most inquiries, the question of costs is of paramount importance and,
consequently no adequate inquiry can he made without the cooperation
of the firms concerned. Such cooperation has been achieved with the
Cooperative Movement by setting up a joint KF-LO (Coop-TUC) Com-
mittee on questions of distribution for the purpose ,of discuss,ing and
proposing measures likely to improve the efficiency of distribution. To
date, the Committee has dealt with points of legisfation affecting the
possibility of rationalizing distributive trades, e. g. Swedish food legisla-
tion. The Committee has also discussed questions of competitfon, pricing
within distributive trades, and various aspects of costs and service in
retailing.
The best solutio!l would undoubtedly he for the Government to deal
centrally with investigations of so general a nature, thus precluding all
differences of interest and -divergences between different groups of em-

32
ployers. A wish to this effect was expressed in the letter to the Govern-
ment quoted above; v:z. »LO would consider it a lo•ss if the Structural
Inquiry Committees, now appointed by the Government, were to he entire-
ly dissolved once they have completed their task and made their recom-
mendations. Rationalization questions are essentially long-term problems,
which cannot be solved in their entirety by temporary committees of
inquiry. These problems are, to some extent, common to all structural
inquiries, and it would therefore seem desirable that these inquiries be
coordinated,»
In addition, cooperation regarding specific rationalization measures
should be initiated between the national trade unions and the firms con-
cerned, the need for rationalization being particularly great in firms that
find it difficult to pay a:s high wages as other firms in the same industry.
Many large and medium size enterprises employ specially trained engi-
neers and economists for the purpose of rationalizing production. As a
rule, such enterprises further progress in the field of technique and com-
merce, while many others lag ·behind. This results inevitably in great
differences of commercial efficiency between the various enterprises; and
this in turn delays wage improvements. In any event, the trade unions
are justified in uniting their wage claims with demands for rationaliza-
tion or the elimination of the least effective firms - similarly to what
has been done by the trade unions in a few foreign countries.
Discussions regarding Joint Industrial Councils for entire branches of
industry have clearly indicated that it is indeed difficult to bring about
cooperation between employers and employees in thi'S field. To ,date, the
employers have refused to set up such Councils on a voluntary basis,
and consequently the Government have contemplated their introduction
by legislation. This alternative would, howe,ver, inrvolve very consider-
able disadvantages; one of them being that the employers could effective-
ly sabotage the activities of Joint Industrial Councils, by submitting
insufficient or misleading information. The voluntary method should
therefore be preferred and, irrespective of whether voluntary J,oint In-
dustrial Councils can he set up or not, a State investigation body should
be appointed to make - in accordance with the desires expressed in the
LO letter - regular surveys and detailed analyses o.f financial strength,
costs, production trends and structure, competition, level of employment
etc.
The trade union movement's main instrument in its efforts to rationaliz-e
the economy of private enterprises and industries, is its wages ::md

3 - LO: Trade Unions. 33

employment policy. The general pace of wage increases, differentials
between differeY1t groups of employees, working hours and overtime,
r:wbility on the labour market, and the indiv:dual's reward according
to his work, all these are factors upon which the moverr::ent exercises de-
cisive influence.

Wages Policy and Rationalization

It is a generally accepted fact that the total real wage mcrcase m a

country c:i:,not, in the long run, differ appreciably from the increase of
production in industry as a whole. On the other hand, wages policy fixes
approximately the wage-earners' share of the national income, at the
~amc time cs the wage stn;cturc affects quite considerably the pace of
productivity ,increase. One can indeed increase the real wages of irid:-
vidual groups of workers r:10re rapidly than productivity can rise, but
this slows down the real income increase of other groups accordingly.
Wages policy can tht:s be used to level out wages; but if the wages of
all workers rit:e more rapidly than productivity increases, then prices
ar:: bound to rise. An inflationary price trend caused by too rapid wage
iEcreases should, if possible, be avoided, as it disrupts the economy, which
probably, in turn, hampers produc~ivity. The part played by wages p,olicy
i:1 this connect'on is dcJlt with in r,rcater de'.ail m another sect:on
(sr::: page 89).
Another important factor regarding productivity is wage differentials
hctwecn diffcrmt trades or firms and .between different categories of
perso:rncl or indi,viduals. The Swedish trade union movement has
ronc in for a »policy of solidarity», which actually amounts to a levelling
out of wages lbe'.we:::n different trades and ·industries. Under foll cmploy-
uent, large wage differentials arc likely to promote inflationary wage
inc:eases; and a wage policy of solidarity, by helping to stabilize prices,
also tends lo increase productivity. It can also increase the eff;ciency of
p1oduct:on and trade in other respects; since, under this policy, it is the
lowest paying trades and firms which arc forced to grant de largest wage
incre'.!scs, these firms and trades experionce, as a rule, a deterioration
in the relation bc,wcen prices, wages and costs, which makes it pay for
th£m to introduce lab-our saving devices. W age increases can be the signal
1

for the introduction of delayed technical improvements. If it proves im-

possible to rationalize sufficiently, then enterprises will be compelled in
due course to reduce production, unless Government subsidies are forth-

')'
,_; .I
coming. A wages policy of solidarity reduces the risk of »wage-dumping»
which tends to preserve non-rational production methods and concerns.
Wage pressure exerted on low-wage enterprises may therefore speed up
their rationalization and/ or the transfer of manpower from inefficient
to efficient firms; pwvided, of course, the most remunerative concerns
also pay the highest wages, and are the most effective ones from a gen-
eral economic point of view.
The guestion of weighting wage differentials between different cate-
gories and wages for different jobs, becomes particularly acute under full
employment. Firms complain that bottlenecks appear in certain key jobs
owing to shortage of skilled manpower. It is probable that the relation
existing between the rates paid for different jobs plays an important part
in solving this problem. The effective levelling out of the wages paid by
various firms and industries to workers doing similar jobs, tends to
reduce considerably the workers' psychological resistance to greater wage
differentials in favour ,of workers doing more highly qualified jobs. Suit-
ably weighted rates for different jobs also reduce the risk of badly
balanced recruitment, the main purpose of differentials being precisely to
counteract the drift of manpower from essential to less important jobs.
Higher wages for more highly skilled jobs ha•ve another favourable effect
on productiv,ity, inasmuch as they promote interest in vocational training
and refr2[1her courses, an essential condition being, of course, that promo-
tion opporttmities are open to anyone with the necessary qualifications.
An evaluation of the relative »wage value» of different jobs must natu-
rally be used in all wage negotiations. The more systematic this evalua-
tion is, the better; the actual method of evaluation being adapted to the
spcc:al requirements of each particular field of negotiations.
When wage-fixing is described as an instrument for p:-omoting pro-
ductivity, one usually has in mind piece rates and bonuses which are
regarded as a direct incentive to greater efforts on the workers' part. In
Sweden, more than in many other countries, payment by n:sult is applied
i,!1 the form of piece rates; nor would there appear to he any reason to
counteract the present trend towards more and more piece work in in-
dustry, as piece work is an incentive of the greatest importance, particu-
larly in a country with small wage differentials. One cannot, however,
disregard the experience gained in other countries, which points in an,
other direction, viz. to incite workers to greater individual efforts iby
increasing differentials according to their ability and diligence and offer
them better promotion opportunities than is usually the case in Sweden.

35
 This, however, raises the question as to what further incentives are
available without runniing the risk of wearing out manpower by unduly
speeding up work. It is, naturally, out ,of the question in a democratic
community to resort to penal laws in order to reduce absenteeism, as is
being practised in the so-called People's Democracies. On the other hand,
it >is reasonable that wag2-fixing policies and promotion opportunities be
arranged in such a way that the efforts, ability and diligence of the
individual be adequately rewarded. This is, in point of fact, an essential
problem under full employment when the almost total elimination of the
unemployment threat is alleged to have resulted in decreased interest
in vocational training and less discipline at the ,place of work.
These productivity hampering factors are examined in the next chapter,
on the basis of the experience provided by full employment in this
country.

36
 The Labour Market under Full Employment
Whatever the ·definition of full employment may be - Beveridge's
»more vacant jobs than unemployed men», or a certain minimum rate of
1
memployment, say 3 per cent. -- either of them are true of the Swedish
lab11our market in postwar years, though hardly of any earlier period.
Exp•erience derived from an economy with full employment is therefore
limite~d. These years of full employment must also be seen in the light
of speciml circumstances such as the economic and psychological after-•
effects, rif the war, the conversion to peace economy, the scarcity of goods,
and oth .11er factors which all characterize a period that cannot be described
as »normal». Factors arising from special postwar difficulties cannot
po~sibly be separated from those connected with more normal trends of
full employment, and this ma.lees any analysis a particularly arduous
task. In addition, the incomplete and inadequate statistical source mate-
rial available invites caution.
Experiences made in Sweden and elsewhere have shown that full em-
ployment, let alone »over-full» employment, creates a set of disturbing
phenomena in the labour market: excessive labour turnover, increa'Sed
absenteeism, a higher rate •of accidents, and less occupational training.
Thus an increased rate of employment may be assumed to result in a
progres,sively declining rate of increase in productivity until a •point is
reached where any additional demand for labo,ur must be feared to lead
to an actual decline in the national income. The two ·definitions of full
employment mentioned above, may thus be complemented by a third
proposition - one that defines full employment as the optimal rate of
employment from the point of view of production. It would certainly he
interesting to find out whether or not Swedish labo,ur market trends
really have reached or passed that point in the postwar period; hut the
special nature of postwar conditions makes it •difficult or impossible to
dissect and analyse per se the effect of the rate of employment on the
development of productivity.

37
 One of the first things one might expect to End in a study of the con-
nection between the rate of employment and productivity disturbances
are ,statistics illustrating postwar employment trends. Actual Swedish
employment statistics cannot, however, be used with much profit for this
purpose because their source material represents too large a proportion
of major enterprises and excludes new firms. Unemployment figures, on
the other hand, have grown so small in recent years that changes in
labour market trends are no longer clearly reflected by the;r fluctuatio1's.
The trade union figures regarding more or less permanently unemployed
persons no doubt include, .at least to-day, a large proportion of not fully
able-bodied workers who will always remain outside the labour market.
In part, present unemployment is normal turnover unemployment. Thi;;
debilitates the use of unemployment figures for measuring employment,
for tt.;rnover unemployment may be assumed to increaise in periods of
inordinately high employment. Another set of statistical data, which h0:s
earlier been used as an indicator of labour market trends, are reports
from the employers indicating their demand for and shortage of labour.
However, the opinions expressed in these reports often suffer from a
strong personal bias. Also, shortage of ·labour may sometimes easily
assume ·unduly large proportions in these statistics, as ,several enterprises
may be compcteing for one and the same order which labour shortage
prevents them from carrying out. In cases like this, the actual dcmar:d
for -labour is smaller than the »statistical» one. Finally, there are the
statistics based on employment exchange returns regarding vacancies,
applicants, and vacancies filled. In spite of its obvious shortcomings, this
material offers an approximate picture of labour market fluctuations.

Excessive Labour Turnover

It is a fairly common m;sconception that excessive labour turnover is

a special postwar phenomenon. Statistics compiled continuously since
1917 on workers voluntarily leaving their jobs in the Swedish engineering
industry, show that there was·a higher labour turnover during and immedi-
ately after World War I than during and immediately after the last war.
In fact, lahuur turnover was lower during the postwar boom 1946---48
than it had been in the period 1918-20. There is good reaison to assume
that these statistics for the engineering industry reflect industrial trends
as a whole.

38
 The figures covering the engineering industry reveal a high degree of
c:uscept:bility to the ups and downs of the economic si'.ucitio:1. J\ftcr
having dropped to an entirely negligible level during the bad dcpressio:1
of the 1930's, labour turnover i1:creascd in proportion with the general
rccovc~y, and reached a peak during the »boom» years. If these statistics
from the engineering industry were to cover d:schargcs as well, thcs2
fluctuations would of course be less violent. Lay-offs and discharges have
no doubt an opposite influence on labour turnover - wi'.h peak figurrn
in the depth of deprcssio:1, m~d extremely low figures at the height of
prosperity. It r:.1t:st be regretted that no such statistics have ·been compiled
over any long period.
Another weakness inqerent in statistics and in much of the thinking on
labour turnover is the fact that so heterogeneous a notion as »turnover»
i,s seldom divided into the diverse elements of which it is composed. At
the bottom layer, there is that »biological» mobility of labour which is
accounted for by older year classes leaving and younger ones entering
the labour market. The annual rate of this mob:Jity, something like 2
per cent., is fairly stable. The next layer of mobility consists of those
who leave or re-enter the labour market for reasons other than age.
ATI'erican investigations, which .are, of course, not directly applicable to
Swedish conditions, have shown that these gross change:; in the labour
force are extremely large. They embrace young people who take employ-
ment in the intervals between training periods, housewives who enter the
labour m:rn\et on a temporary basis, seasonal workers, caimal labour,
p::,:-sioncrs, and ,other who re-enter the labour force only for a shorter
pc::iod of ti,mc. Perioc1 s of boom, with acute shortage of labour and
~casonal pc:ks of industry and trade, arc likely to attract these compara-
tively unstable groups to the labour fo::cc m:d will thus raise the rate of
labour turnover.
These two categories of labour mobility - the one just mentioned, and
the »biological» turnover -- both refer to a circulation from gainful
employment to a non-occupational status, or vice versa. Important though
their influence on statistics may be, the kind of Jabour turnover that has
most attracted general attention is a different one - the shifting from
one job to another. Two classes of labour mobihy, cn!irely different in
character, must be distinguished here by w.ay of sub-division - mobility
between various workplaces, and mobility between various sectors of
industry. These two kinds of mob:lity do E'Ot normally show in statistic3

J9
and it cannot therefore be decided whether they show a parallel or
opposite development. There are reasons suggesting the latter. One of
them is that occupational specialization has been pushed very far,
although it mus_t be remembered that mechanization has so equalized job
performances in many industries as to facilitate movements from one
industry to another. More importance must be attached to the higher
general standards of to-d.::y, which have raised the value of personal
status, including the right to do the work onc knows and likes. The in-
1

creasing number of state-subsidized homes owned by workers is another

and more concrete reason militating against movmpents from one industry
to another. Further, the steadily progressing levelling of wage rates tends
to diminish the incentive for occupational changes, although several
investigations seem to suggest that even earlier, wage differentials have
played only a secondary part in this connection. Another factor counter-
acting occupational mobility is housing shortage; and in the organiza-
6onal and administrative fields certain barriers may be found in the
expansion -of unemployment insurance funds and the introduction of
compulsory employment exchange for building workers.
On the other hand, better communications, intensified employment ex-
change activities, and more lenient requirements for recruitment and
training in the individual occupations may all have combined to facilitate
movements from one occupation •to another. Without engaging in compre-
hensive research work, no answer can be given to the question, as to
which of the two trends has actually been the predominant one. For the
rest, the movements of labour from one industry -or occupation to another
have attracted far less attention than the mobility of labour within the,se
groups, and the extraordinary proportions this mobility has assumed in
recent years.
While little or nothing is known about earlier developments of the
rnrious categories of labour mobility that make up the total labour turn-
over, their present composition can be roughly assessed. The total labour
turnover in Swedish industry, both the voluntary and the involuntary
one, averaged ·approximately 50 per cent. in each of the pa·st few yearn.
The largest portion of this figure, 30 to 35 per cent., in all probability
stands for labour mobility within one industry and one locality. Another
5 per cent. may be assumed to cover movements from one locality to an-
other, yet within the same industry. An additional 5 to 10 per cent. refers
to labour moving from one industry or occupation to another, and the
rest is made up by workers joining or leaving the labour force.

40
 We shall here confine ourselves to the problems posed by labour turn-
over, as between the individual places of work, while labour circulation
from one industry to another can hardly cons,titute an element of dis-
organization in a full-employment society whose need for adaptability
may require an even larger circulation of t;his kind.
Official statistics and the material compiled by the employers in the
c:1gineering industry are far too ·summary to show what influence the
labour turnover wi,thin individual groups may have on productivity. More
concrete data can be found in the membership statistics of LO, the sta-
tistics of tche unemployment funds, a Gallup poll on labour mobility. a
special investigation by the labour-management Committee on Women's
Wages and, more important still, a series of field studies ·of labour turn-
over in a number of large industrial establishments. Some of the more
important results of these studies will be discussed below. But since they
reflect primarily the trends in large establi,shments, it may be mentioned
right away that both the turnover figures of the Social Board and a
Gallup poll taken in the autumn of 1950, strongly suggest that labour
turnover is largest in enterprises employing less than 10 workers. Sta-
tistics do not, therefore, confirm the common view which tends to
aswciate excessive turnover with the big firms.
Age is, of course, by far the most important factor for the extent of
labour turnover. All firms and groups of firms covered by the above
mentioned field studies, reported a steep decline of turnover in propor-
tion with increasing age (turnover being defined as the relation exi,sting
in each age-group between the number of workers leaving and all work-
ers employed). At the age of 30, turnover is already half of what it was
at 20, and at the age of 40, the curve is substantially lower than at 30.
So dominant is the influence of age that the differences in the turnover
rates of certain labour categories - male and female, married and single,
skilled and unskilled, etc. - are lagely explained by the different age
structure of these groups.
Sex is another factor of importance. Women show a higher turnover
rate up to the age of 40. After that age their turnover i,s at first equal to
men's and later even somewhat lower. But these trends must be seen
against the backgrund of the :marital status. Turnover is considerably
greater for unmarried than for married men, whereas the opposite is the
case for women. The widespread view that women's turnover is generally
larger than men's is certainly correct in so far as married women are
concerned; but it must be remembered that unmarried women move less

41
than unmarried men. It is the married men, however, who form the hard
core of stability in all age groups. These conclusions arc based on the
reports froon only a few industrial establishments.
Occupational skill is another factor of some importance, if data from
one major workshop can be regarded as representative. In that establish-
ment, the turnover rate of the skilled workers of all ages was below that
of the unskilled workern during the two years reviewed (1947 and 194,9).
All avaifable statistics seem to justify the conclusion that in periods of
high employment, the turnover of labour heavily gravitates t,owards cer-
tain categories of labour -- the younger workers, the unmarried, the un-
skilled, and, among the married ones, the female workers. But these
figures merely indicate the relation between the number of leavers and
1

the total number of wo11kcrs employed in each of these catgories. Statistics

do not, therefore, indicate whether and to what extent there is a particu-
larly unstable class of wonkers within each of these individual groups.
A turnover rate of 50 per cent., for instance, may mean that half the
personnel left the enterprise; but it may also mean that one-tenth of the
personnel has changed Eve times. The intensity of the turnover within
individual groups can be ascertained ,only by combining the number of
leavers with the percentage of workers who did not change employment
during the relevant period. In fact, the material published by •the above
mentioned labour-management committee on women's wages shows on
closer examination that a minor stratum of workers forms the centre of
gravity of the total labour turnover. A turnover of, say 50 per cent.,
may thus mean that about 70 per cent. of all workers - apparently with
the stress on the married and the older ones - kept their jobs, while the
coming and going of the rest was all the livelier.
To assesc the influence of labour turnover on productivity is an ex-
tremely hazardous •undertaking. Needless to say, a higher turnover is
bound to cause losses in production, greater wastage, extra costs for the
training of newcomers, time losses through job-changing, etc. But it is
sometimes forgotten that labour mobility has also its positive sides.
It must he remembered that the choice of an occupation is more often
than not a matter of accident. Comparatively few people find their first
jobs through systematic vocational guidance. Consequently, there is
much need for readjustment, and this need can be satisfied only when
there are a good many employment opportunities - a situation which is
typical of periods of full employment. If the result of readjus,rncnt is a
more congenial job, productivity need not necessarily suffer - not in

42
the long run at least. In the absence of comprehensive soc~ologica] re-
search, this is no more than an assumption; hut it would surely be the
wrong approach to rely only on the slide rule and to multiply, mechan-
ically, each change of a job by a certain coefficient for loss in time and
pwductivity in an attempt to figure out the total loss to national produc-
tion. As things are, it is frankly impossible to decide whether the higher
labour turnover of the past few years has at all impaired productivity.
Increased labour turnover, it is commonly held, impairs productivity
at least indirectly by raising the frequency rate of accidents and industrial
fires. One of the chief reasons for this, the argument runs, is the lack of
experience during short-term employment. While there is little or nothing
to substantiate this thesis with regard to the higher rate of industrial fires
reported in recent years, the connection between a high rate of labour
turnover and the frequency rate of accidents is somewhat clearer.
The frequency rate of accidents reported per worker has been moving
upward for a long time (excepting 1944). This may be attributable to a
number of reasons other than higher labour turnover, e. g., more
comprehensive provisions for workmen's compensation, the increasinr;
number of minor accidents reported, and the higher incidence of injuries
on the wav to or from work. Here again, an exhaustive answer can be
given only on the basis of the material supplied by individual establish-
ments. The enterprises under review reported the highest rate of accidents
for the initial months of employment. In the years reviewed (1947---49),
20 to 25 per cent. of all accidents occurred during the first five months
of the workers' employment in a firm. The accident rate steeply declined
thereafter, to resume its upward trend for workers employed for a long
time. If this material can be considered representative - which is very
doubtful - it certainly suggests that increased labour turnover, with the
shorter periods of employment it implies, tends to raise the frequency
rate of accidents.

Increased Absenteeism

A high rate of absenteeism probably affects production more strongly

than a high rate of labour turnover. Excessive labour turnover can -do no
more harm than cause brief work interruptions between two employments
and some inconvenience to management in replacing the leavers; but
absenteeism disrupts operations and makes necessary an irksom~ reshuf-
fling of personnel. Unfortunately, there arc no statistics on abscn:eeism

4•.J')
over a long period of time. However, the unions affiliated to LO have
long been compiling statistics ion absence due to illness ( during 3 days
or more). This material, it is true, covers only a certain part of total
absenteeism, but it may well give a rough idea of long-term trends.
According to these union statistics absence ·because of illness was in the
postwar years about 50 per cent. above the average level in the 1930's.
Figures varied in accordance with the varying rate of employment: thero
was a mar,ked decline during the heavy depression in the early 1930's;
a mild upward trend until 1942; and thereafter a steep rise to the record
level of postwar. From 1947 onwards, an improved balance on the labour
market also brought a lower incidence of sick-leave.
It is tempting to conclude from these parallel trends that greater em-
ployment ,opportunities impair working discipline and raise the rate O'i
absence from wo11k which is not really caused •by sickness. This conclusion
i•s even more tempting when considering that increases in absenteeism
have been particularly pronounced for women and workers under 20.
But one is better advised to be cautious. For, an investigation on seasonal
fluctuations has shown with all desirable clarity that the short-term trends
in sick-leave correspond, not to changes in the labour market, but to
climatically conditioned changes in general health. Thus, spring and
autumn are peal periods, while the curve is lowest from June to August.
But is one really to explain the sustained increase in absenteeism by a
constant decline in health standards? Two interpretations would seem to
present themselves. One of them would be that »fuller» employment
raises the sick-leave rate, and with it the percentage of cases which are
not really caused· by illness, while the perceintage of absence because of
genuine illness is still large enough to account for the natural seasonal
variations. But another interpretation would be that fuller employment
or better employment opportunities enable actually sick workers to stay
at home whenever they are sick. The two interpretations open entirely
different perspectives of productivity, and it is therefore most important
to know which of them is the correct one. If a higher employment rate
increases the rate of pretended illness, production is bound to suffer. But
if better employment opportunities enable workers to stay away from
work which they had been attending in spite of real illness, then the
effect on productivity must be seen in a different light.
The foregoing applies to 3 or more days' absence because of illness.
Statistics compiled since 1947 by the Social Board convey a different
picture for short-term absenteeism. These statistics show a remarkable

44
degree of absenteeism around week-ends, particularly for women. Reasons
of health cannot possibly account for this. However, a special investiga-
tion of the Women's Wages Committee covering four one-week periods in
1948 and 1949 has shown that this week-end absenteeism is by no means
always a result of laxity but is attributed at least in part to social con-
ditions. For instance, week-end absenteeism among married women is
twice as high as for unmarried women, and the rate is even higher for
married women with small children. Here, foll employment gives greater
scope to an understandable and socially justified development which must
needs conflict with managerial interests. The main reason for its disruptive
cffrct must be sought in production itself which has failed to adapt itself
to the special working conditions of marginal labour groups. In fact, full
omployment tends to carry into industry and into the community as a
whole those work problems which earlier confronted the individual and
the family unit.

Other Disturbing Factors

Statistics are even scarcer in this field than they were for the subjects
reviewed above. Nevertheless, a brief analysis of the remaining factors
commonly associated with the economic dislocation caused by full em-
ployment may be attempted here.
First, full employment is said to cause a drastic depopulation of the
basic industries. If shortage of labour is allowed to hamper production
in these key industries, the result will certainly be a disequilibrium in
the country's economic structure and, eventually, a decline both in pro-
ductivity and industrial progress. There is little evidence, however, that
the basic industries are necessarily the chief victims of full employment.
Shortage of labour caused by full employment now affects one and now
another group. For a number of years, shortage of labour was particu-
larly irksome in agriculture and forestry, in mining and in heavy in-
dustry. At times its emphasis seems to have sh~fted to service, notably
medical care, catering, and domestic work, and recently, l,abour supply
has eased in agriculture and mining. Labour, particularly newly re-
cruited, has so much greater freedom of choice in times of full employ-
ment that heavy, dirty or otherwise •inconvenient jobs will attract it only
when combined with good wages and other advantages. The problem has
actually far less to do with full employment than with the question of
fixing wages in proportion to the nature of the work concerned. Such

45
wage relations will be particularly effective if the present housing short-
age can he overcome and workers can move more freely.
Second, there is the ,:movement of labour from big establishments to
small enteprises and handicrafts, that has taken place during the postwar
boom. This is a more serious matter. Capital investment per worker is
generally larger in the big plants, and losses in manpower are liable to
reduce the margin of capital yield and, as a consequence, productivity
as a whole. When full employment is accompanied by a balanced labour
market, movements of this kind are fairly harmless. Also, statistics seem
to suggest that these movements ceased in 1948 and 1949, actually to take
the opposite direction. The fact remains, however, that periods of ex-
cessive labour turnover and an illlf!ationary disequilibrium in the national
economy tend to favour small enterprises in the general scramble for
labour, and that productivity may suffer as a result.
Third, there is the thesis that Yocational training is liable to suffer
in times of foll employment. There is little or no statistical evidence of
this. In point of fact, the number of trainees steadily increases every year.
To all appearance, the hottleneck of vocational training is due to the
shortage of premises and teachers rather than to reluctance on the part
of the workers. The percentage of skilled workers in such trades as the
engineering industry has not declined since prewar, although apprentice
training now accounts for a smaller proportion of occupational qualifica-
tions. The patent scarcity of skilled workers is presumably the result of
the quick expansion of indus'.ries where demand is partioularly great for
mechanics, special operatives. and other qualified labour. If this assump-
tion is correct, it may be safe to s'.ly that ful! employment tends to raise
the demand for skilled labour by speeding up industrial expansion. But
there is little evidence for the thesis that labour nowadays should be more
reluctant than before to undergo vocational training.

Summary

For the trade union movement it is a matter •of the first importance to
know whether and to what extent full employment hampers production.
Full employment of all those who are willing to enter the labour market
is one of the principal targets of the Trade Union movement's economic
policy. The individual worker will no doubt welcome ,a labour market
where workers of all k;nds are in pe11mancnt demand, for this will give
him more freedom of choice, an almost absolute security against unem-
ployment, and a better bargaining position.
These adv,antages must be set off against the negative effcc:s that over-
full employment may have on productivity. A higher standard of living
chiefly depends on favourable productivity trends, and it is therefore
also in the interest of the unions that the labour market should not be
allowed to lose so much of its balance as to nullify the benefits that a
higher employment rate may offer to the workers.
In estimating the factors bearing on labour market distmbances, it is
necessary to distinguish between state of »full employment» with the
labour market in balance, and »over-fulb employment where that balance
ha:; been lost.
Even in the first case, labour turnover and absenteeism will rise
appreciably above the prewar level. But much of this increase is caused
either by the influx of new and partly less productive labour or, equally
important, by readjustments of labour which the increase in employment
opportunities has made poss;ble. Employers have generally taken a nega-
tive attitude toward this development. As American investigations haH:
chown, social psychology explains a good many of these reactions, and
matters can be improved by labour-management collaboration and a
better coordination of production. In other words, the »disturbing»
factors in question arc neither a manifestation of inexorable economic
laws nor are they beyond control. To avoid them by abandoning a policy
of full employment would be to throw out the baby with the bath. Labour
is better advised to maintain the target of full employment and to try to
limit wbat negative influence it has on productivity.
On the other hand, if balanced full employment is allowed to assume
the proportions of »over-full» employment, the factors miEtating against
productivity will grow so strongly that no de.vice short of general meas-
ures will help to counteract them. It will be the subject of another chapter
dealin{l: with the wage policy of the unions and its background, to show
what economic policy is required for creating a balance that best satisfies
the needs of the country and of the labour market alike.

47
Wage Developments in the Full Employment Period
E_"<pcricnce gained during the 1940's is of considerable importance for
::i:i analysis of the implications of Full Employment for the trade\

tuions. Therefore relevant wage statistics have been studied and analysed
from various angles. Some of the results are repo·rted below, preceded by
a chronologica•l survey of wages ,policy and wage ci'evelopmen1s during
the poriod under review.
World War II broke out during a ,period of economic boom, hut un-
cnployment in the trade unions had nevertheless been 9 % as an
average over a period of twelve months, about half of this owing to
s8aso:1al unemployment. After the outbreak of war, unemployment figures
rose by approximately 2 % on account of employment diffiaulties, due
to productio:t readjustments ar:.d to the blockade of Sweden'6 western
approaches. In spite of mobilisation, unemployment •remained round
1-1-12 % during 1940 and 1941, but fell rapidly af•terwards, having
fallen by 1942 to 7,5 %- Since that date, full employmen, has prevailed
in the labour market, with the exception of (steadily declining) seasonal
unemp•loyment in the building trades. During the last three year,i
( 1948-50), unemployment has been below 3 70. (Since then even lower.)

Chronology of Wage Policies 1939-1950

Collective bargaining for the year 1940 was carried out almost as
usual and resulted in wage increases of 2 t·o 3 % in the manufacturing
industries. Wage developments during the following years were de'.er-
rnined almost exclusively by a series of (yearly) »index agreements»
abo,ut allowances related to the cost-of-living index. Up to the autumn
of 1942, the index allowance had risen to about 20 % of the 1939 leve,l,
while the cost-of-living index itself had risen 33 % ; at this time the
cost-of-living increase wa,s brought to a standstiH. For some low-paid

4 - LO: Trade Unions. 49

groups -- e. g. textile and metal workers on time work ( a,s distinguished
from piece rate workers) - numbering in all ,less than one hundred
thousand in the first years and twice as many in 1944 - some extra
increases even in base rates were obtained, averaging approximately 3 '%
each time, which increased the averaige level of industrial wage rates by
1 ½ % from 1940 to 194,3 arnd by almost a further 1 ½ % in 1944. In
addition to these increa,ses and the general index aMowances, a certain
amount of wage-drift 1) took place during those years, yet not exceeding
1 ½ per year. These figures refer to workers in the manufacturing in-
dustries.
Agricultural and forestry workers negotiwted higher incre:tses during
these years, and the great demand for manpower in :the fo,rrnts resulted
automatically in a further unofficial increase of wages for these groups.
The wa,ge increases of agricultural workers were and are stiU co-ordinated
1

with agricultural policy; prices and subsidies for farm produo:s are
fixed (in connection with the yearly »Agricultural Calculation») with
a view to giving the farmers the same percentage increae in earned
income as their wm,\ern compared with 1938/39. ~he necessity of secur-
ing s,upplies of food arnd fuel during the wartime blocka,de justified the
preferential treatment given to the'Se trades, which incidentiaHy agreed
with the principles of the wage policy of solidarity.:!) Agricultural and
forest ry wo,rkers were expr,e,ss.Jy excluded, as low-wage groups, from the
1

so-called wage freeze introduced in connection w,ith the price-freeze, in

the autumn of 1942.
Building worker.s, on the other hand, suffere,d a reduction fo basic
wages of approximately 5 % in connection with the corns,iderahle slow-
down of the building industry in 1940. This reduction was made on the
rccommendat,ion of a State Committee of Inquiry and was accompanied
by a Government undertaking to revive the huil,ding of dwelling-houses
and sp,read the building season over the whole year. Also index regula-
tions were less favourable to building workers than ,to other workers. The

1 ) This term covers any increase in hourly earnings ahove the agreed increase in

hourly rates, which actually takes place during an agreement period. It is absolutely
synonymous with the expression »wage slide», which has been used in other transla
tions, but has been found somewhat ambiguous.
2) This expression covers the principle of Swedish trade unionism, ,proclaimed in
the 30's and promoted by an amendment to statutes at the LO CongreGG of 1941, to
eliminate, as muc,h as possible, undue wage ,differences throughcut the labour market.

50
relative differential between the high wages of building workers and
thos,e of manufacturing industry workers was thus -diminished.
As stated aho1Ve, exceptions from the stabilisation agreement of 194,2
were made only in respecrt of a minor number of workers in 1943 and a
somewhat larger number in 1944. In August 1944, the General Council
of the Confederation of Trade Unions Issued a statement to the effect that
the improv:::,d supply situation should »make it possible rto continue
exempting the lowest paid ,groups from the gene,ral wage freeze». The
Natio:1al Unions were advised to ·pay great attention to women's wages
end •to wages in low cost-of-living zones, 1 ) because rthe price differential
between high and low zones had decreased and also because wage diffe-
rc:ntia1s between the zones hade been - even formerly - too large,
industrial wages in the countryside and ,in ,small towns being kept down
by the stronger competition from agricultural workers and the relative
surp.Jus of manpower in these regions. In addition, tihe Representative
Body o.f LO recommended that real wages he increased preferably by
reducing ,prices, cash earrnings remaining stationary. Nevertheless, collec-
tive bargaining for 1945 was general, inasmuch as nearly all unions were
involved and demanded general increases at least for time work. In
accordance with LO's recommendation, efforts were made to obtain, in
the first place, wage increases for the lowest paid groups in each branch
of industry. The increase obtained by industrial workers averaged 4 %,
and the wage drift did not reach 1 ';k. In the Engineering Industry,
agreement was reached after a strike which lasted five months; the in-
c:·ease obtained after the strike being rather lower than for other groups.
The statement issued by the Representative Body in the a:utumn of
1945 was similar to that of the prece,ding yar. After the price freeze was
introduced in 194,2, the Price Contro,l Board -- the statement observed
- had been able to turn down any applications for price increases base,d
upon increased wage costs. If a group of wo,rkers wished this principle to
he waived in a certain case in order to increase tihe possibilities of a
wage rise, this demand should he supported hy LO only if it concerned

1 ) This is a statistical and not a geographical concept. The cost o,f living of

every city and municipality in Sweden have been compared with that of Stockholm
a:id then grouped into five zones, the lowest one covering cost of living below 86 %
of the Stockholm level, w,hich occupies the cc:itre of the highest zone. (This state-
ment refers to the 1946 investigation of geographical cost-of-living: differences, which,
however, is heing: revised in 195.l)

51
a li0w-paid group; in general, collective bargaining sl:ould not he carried
out in such a way as to endanger the stability of prices. On this basis,
collective bargaining for 1946 pwved ,very rSimifar to that of 1945 as
regards both scope and results ( about 4 % in the manufacturing in-
dustries), although the stress was not laid so much this time on the low-
paid groups only, with the exception of spec:.al increases for women and
workers in the fow co:,t-of-living zones. The general improvement in the
economic situation resulted, however, in a wage-drift of 3 to 4 <Jr,, thus
making a to~al increase in hourly earnings of about 8 7<,.
By 1947, it appeared clearly that no general ,decline i:1 prices was to
be expected. At the same time, the supply situation continued to improve.
'Ilhus, the labour mar:ket situation was favourable: »It is one cif the funda-
mental principles of Trade Unionism that a favourabl,e economic situa-
tion, with a high level of employment could and should be exploited for
the pimipose of raising the wage level. These conditions are now forth
coming.» ('LO wage-policy recommendation issued by the Representative
Body in the autumn of 1946.)
Considerable wage claims were submitted, and general increases we,re
obtained this time without any »ceiling» for higher paid workers. The
decrease in wage differentials in favour of women and low cost-of-living
zones continued. In aU, the average wage level in ,manufacturing in-
du:stries was raised by 11 % (including a ,general increase .of 5 units on
the index allowance), wh.ich was granted from May, lsit, ,under an agrere-
ment between LO and the Employers' Federation, irrespective of any
change in the cost-of-living index as such. The wage drift averaged a
further 4, %- A markcrd inflationary situation ,had arisen, characterized
hy a heavy demand for manpower. The price level also began to move
upwards somewhat faster than in 1945 and 1946 in spite of the abolition
of purchase tax at the beginning av 1947, which shouid have reduced the
cost-of-living level by 2 %-
Before the 1948 negotiations started, the Government endeavoured to
bring about a general agreement to stabilize the le·vel of income and
prices, ,similar to that of 1942. For this purpose regulations we~e intro-
duced limiting, inter alia, the payment of dividends by joint-,stock com-
panies. The tax (State plus Municipal) on company profits was increased
from ~8 to 47 %- The Representative Body of LO expressed its desire
to hack any endeavours to check the inflationary tendenc:es; therefore it
recommended that »affiliated Unions should exercise rgreat re3traint in
their wage claims». They should, however, endeavour to obtain improve-

52
c::nts in rcspeot of overtime, shift .and other special types ,of work and,
be3ides, concentrate on the non-wage clauses of the agreements. It was
pointed out that »in many cases, Trade Union claims for wage increases
for the low paid groups coincide with the interests of <the community as
regards the increased production of essential goods» ( to attract workers
to basic industries as steel mills etc.) The Representative Body concluded
that the new ( 194-6) sciheme revising wst-of-living zones with less
difference between cheap and expensive zones should come into force
and negotiations regarding women's wages (equa,l pay for work of equal
value) be initiated with the Employers' Fedcrntion.
In spite of the recommendation of the RcpresentatiiVe Body,, wa,ge
demands proved fairly substantial, which no doub,t was partly due to
reports during ~he autumn of 1947, of a sensational 72 5b increase in com-
panies' taxable profits from 1945 to 1946, (this was, however, partly a
book-keeping e:x;pedient to take advantage of a change in the ta:x;ation
syc,tem), .and also to the rather substantial salary increases obtained
during the summer, particularly by provincial Civi,l Sc,rvants, whose
salaries ha-d for a long time been lagging behind those paid in the private
~ector of the labour market. In addition, the wage .drift had continued,
showing the workers that the employers were in a position to pay. Agreed
increases for 1948 averaged 4 % in manufacturing industries, mainly in
the fo~m of genernl increases, especially .Jarge in the low cost-of-living
zo:1cs, the wage drift averaged also 4, %- The agreed increases were in
g:::1eral somewhat higher than 4 % for other groups, who had, the preced-
ing year, obtained less than workers in the manufacturing industries.
Agricultural and forestry workers had, of course, all the time obtained
higher increases.
By the c:i.d of 1948, the wage level had thus risen by 30 % in three
years. In addition, General Children's Allowances and improved Old Age
Pensions were introduced as from Januari 1st, 1948. Such an increase in
both purchasing power and production cost level was incompatible with
price stability, and, in order to prevent an inflation benefiting private
profiteers, the Government reduced the public's purchasing pow:::r
by means of a number of excise taxes in the spring of 1942. In-
vestments were also cut down, ~hrough administrative controls, whic~
h.ad not been too efficiently used for this purpose during 194.S-47. It
was established that consumtion had increased faster than pmduction,
and that, although ,the situation had be2n met temporarily by using up
foreign ciurrency rcservrn, the restoration of the nation's economic

53
balance necessitated the slowing down of income rises, pending an i11-
crease of production.
After these 1948 experiences of the consequences of what appeared a~
too weak stabilization effort,, on the income side, the Government had
no great difficulty in persuading the public of the neoess;ty of a more
rigid ,stabiEsation for 1949. LO contributed to the general agreement to
sitop the income rise by recommending to its affiliated unions a general
piiolongation of all agreements. In spite of difficulties and justified
dissatisfaction in some quarters, the recommendation was followed all
along the line, after the Civil Serv,ants had set an ex,ample by ahE,ta1ining
as from July 1st, 1948, from a salary incriease of three percenit to which
they were entitled owing to the rise in the cost-of-living. 1ihere appears
to have been great sympathy in the Trade Union movement for this
stabil,isation policy. Members also riealised that new wage rises would
merely result in new price increases - most of what had been obtained
during the spring •of 1948 had already been ,swallowed up by simul-
taneous price increases. Besides, LO qualifiied its recommendation with
the condition that other groups should also contribute to sta:bilisatio:1,
e. g, that employers should be forced by price-contwl to meet cost in-
creases out of current profit margins.
Tihe stabilisation action proved successful and the inflation pressure
was visibly reduced in 1949. The wage-drift - which can be described
as a barometer of the inflation prnssure on the ·labour market - was,
however, as high as 3,5 %, this being, eota bene, the only kind of v:a3e
incriease that ,occured that year.
In goo,d time for 1950, pl,ans were made ,to continue the stabilisatio:1
of incomes. However, some doubts about the advisability of ,this policy
arose in connection with the devaluation of the Krona in September,
1949, owing to the resulting increase in the profas of the export indi:s-
tries, and the new subsidies - in principle an inflationary measure -
which devaluation made necessary in order to retain price stability ,n<l
thus render a second prolongation of agreements possible. Even irrespec-
tive of this, it was questionable whether certain evidently justified inter-
nal adjustments of wage relations should be prevented any longer. LO had
an inquiry made into various unions' claims for exemption from the wag~
freeze, but found that if the principle •of prolongat:on without exception
were not strictly adhered to, one would be faced with a general round
of collective bargaining (similar to the »soft» stabilisation of 1948)
which would jeopardize the whole po1icy of stabi.lisation. »In spite of

54,
doubts concerning subsidies», the Representative Body acceded to the
Goverment's desire that the prolongation of agreements be renewed, and
did not follow :the alternative line, viz. to increase both prices and wages,
avoiding subsidies.

Rates and Earings. The Wage Drift

The wage developments described above resulted, for male workers in

the manufa,c;turing industries, in an average increase of total hourly earn-
ings from Kr. 1.33 in 1939 to Kr. 2.72 in 1950, i. e. 139 ore, five of which
represent the increase (by one week) in 'E•tatutory annual ho1i<days, which
wrrs introduced in 1940. The remaining 134, ore divid8 as follows:

Cost of living allowance 25,7 ~f on 1938 wages ...... 33 ore

Other agreed increases 1 ) . . • . . • . . . . . . . • • . . . . • . . • . • 47 »
~',age-drift etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 ;>
Other causes 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 »

Thus wage-drifting actual.ly accounted for not less than 50 ore i. e.

more than one third of the total wage increase. This, ,of cour3e, .does not
mean ~hat the houl'ly earnings actually received in 1950 exceeded agreed
rates by 50 ore more than in 1939, as excess payments had, 1'ittle by little,
been included in the agred rates, wihereupon new over-payment had taken
place.
The existence ,of wag:::-drif,ting ca'1, of course, be partly explained by
the fact that such a phenomenon has always accompanied technical
progress, speed-up on piece work etc. The faster rate •of tihis drift, which
characterises the latter part of tl:e period under review, must, howe,ver,

1) Agreed increases are the increases in hourly earnings, estimated as a result of

a:1 agreement, ahove the level ohtaining at the time of the termination of the o!d
agreement. For instance, if all wages, both minimum rates and actual ·hourly and
riece rates, are increased by 10 %, this is, of course, regarded as a 10 % agreed
increase; if, however, this applied only up to a certain »ceiling:,>, the figure showing
agreed increases has been reduced accordingly after consulting with the experts of
the union concerned. Whenever the actual level of earnings .has increased more than
expected (i. e. i,f wo11kers even above the ceiling got 10 %), this part of the amount
of increase is given under wage-drift.
2 ) These include 2 ore for increased overtime work and 2 ore due to a greater

increase in the number of workers in hir:h-wage industries and high-cost-cf-living

55
be explained differently. ln tbeir answers to a questionnaire sent out
during the summer of 1949, some 500 local Trade Union bmnches and
workshop clubs ascribed it first and foremost to labour shortage, which
enabled the individual to make advantageous arrangements locally.
Further c:rnses adduced included the speeding up of work, anci technical
impron:ments. The tendency to do more piece-work is of minor im-
portance. 11he question as to whether the intensity of work rnally has
increased, compared with an earlier period, can, of course, never be
answered objecti,vely, except in special cas::cs, under oomplctcly un-
changed conditions. An argument against the ~apposition th1:t there h1::;
~c~ually been such an increase is that full employment reduces the necess-
i:y on t~e part of tb: worker to sl:ow good rcrnlts. An arg1:;1:cnt in fa.vo:.i,r
of i'. is that, under foll employment, the te;1,dency to keep down the speed
of work in order to avoid unemployment i:; ·consi.derably eEminatcd, as
is alsu the risk of the employer's reducing piece-rates. Even employers
admit that in many cases workers work nowadays more intensively than
before. for these reasons.

Wage Levelling in General

The abo.-e survey of the wages policy of the l 9L1,C':; and of its statisti-
cal result:; apply, for reasons of simplification, only to the manufacturing
industriu, with a few m;nor glances at other trade::;. The following table
registers wage developments in a number of important labour market
c2c~ors during the period 1939--1950. The table shows that a rather
considerable levelling-out process has taken place; high level groups
hwving received throughout lower increases than fow pai,d groups. 1)
'£'.bus, according to statistics compiled by the Royal Social Boai,d, wage
increases in the manufacturing industrie3 from 19.'39 to 1950 averaged
7i!_, % for foremen, 89 % for male clerks, and 103 % for womrn i:1
office work. During the same period, average hourly earnings for male
industrial wmkers rose by 105 % and for women by 129 %- Building
workers, who started off at a fairly high level, d:d not get more than a

1
) State:ne:ats to the contrary are cccc.c,:cnally m.:dc, by referring to increased
differe'.lces in kronor and ore. Such comparisons are unsound, 1!3 every ore has
decreased about half in value since 1939. Unless otherwise i!ldicated, ccmparisorn:;
l,ctwcen different groups arc here always hased on relative, percentage differenc~s
or changes.

56
 Wage Developments 1939-1952 for Certain Main Groups
(Royal Social Board Statistics)

Annual Salaries of Employees Earnings of workers

Year
.
Manufacturrng lndustnes . I: Manufacturing Industries . I Build-1 Agri- Iberinf;!
ing culture Lum-

Engi- I Fore- I C I erk s _ Men I Women Men I Men I Men

nccrs men Men !\\'omen Annual IHourly AnnuatjHourlylHourlyJAnnuall Daily

193!1 6,546 4,9t7 4,569 2,367 3,0!'i6 1,:l3 1,872 0,84 1,95 1,602 6,92
19,jO 11,035 8,665 8,63:.! 4,77:'i 6,16U 2, 72 4,143 1,92 3,47 4,638 17,76
l9,j2 14,748 12,072 11,73!1 6,672 8,710 3,84 5,800 2,69 4,76 6,507 32,00
1!139 100 100 100 100 100 100 100 100 100 100 100
l!J-lO 106 106 106 107 107 109 107 110 98 110 11:.!
1941 113 113 114 11-l 115 117 113 ll!J 102 124 130
1942 123 122 124 125 126 128 125 130 111 138 153

1943 130 126 13'.! 132 131 131 132 135 120 152 181
1944 130 130 134, 138 136 137 138 141 1:U 161 182
l!J-15 133 t:l4 140 144 140 143 146 150 127 184 181
19-16 139 1-l-l 151 153 152 153 159 163 143 206 l!J9

1947 1-18 155 164 174 172 175 184 192 156 225 230
l!J-l8 1,j9 161 175 186 188 190 206 213 167 268 252
1919 161 lfi8 182 19-l 194 196 214 221 172 278 271
1950 170 li4 18!J 203 202 205 221 229 178 290 257

1951 19-l 204 218 235 244 247 266 275 222 332 323
1952 225 244 257 282 285 289 310 320 244 406 460
<i,rel.1

78 % rise, but seasonal unemployment in their case was greatly reduced.

Agricultural and forestry workers, on the other hand, almost trebled their
very low pre-war ea:rnings; however, this exaggerates to some extent 1:lheir 1

gain in rela~ion to other workers, because the rise in their cost of living
ha5 been larger, too.
The wage survey given in this chapter is intended •to illustrate the
actual course of events, the different factors c111using wage increases,
changes in the relation between different wage level,s etc. The figures
quoted apply exclusively to nominal wages, as it is very difficult to give
any exact figures regarding real wages, ,i. e. nominal wages in relation
to prices. Fmm the summer of 1939, i. e. immediately before the outbreak
of war, to 1950, the cost-of-fo,ing. index computed by the Royal 'Social
Board (including taxes and social benefits) rose by 59 %- Formally,
this means a 29 % increase in ·real wages for .male industrial workers,
whose da:ily earnings rose by 105 % during the same period. (Method

57
of calculation: the figure 205 for wages exceeds by 29 % the figure
159 for costs.) The cost-rof-living has not, however, increased as much
for the urban »standard family» of two adults and two children on which
the index is based, as it has for single persons and childless, married
couples, heavier indirect taxes having been imposed upon so-called bache-
lors' goods, whi,le dil'ect taxati-on increases for families with chil,drcn
were balanced by children's allowances. In addition, the rise in tihe cost-
of-living has been greater in rural districts than in towns. It would thus
seem obvious that the average increase in real wages is smaller - for
some groups considerably smaller - than would appear from tihe figures
( 29 % etc.), calculated by means of the official cost-of- living index.

Wage Levelling in Manufacturing Industries

The above table indicates the general levelling tendency l!'s to wage and
salary i:1oomes. We also give a more detailed ;c11.:rvey and analys:s of the
kvelling developments in manufacturing ir.dustries, especially for male
wor~(e-rs.
A certain amourit of levelling between time and •piece wor'., earnings
has been recorded in the case of men -- not of women. In, a few trades
1

the percentage increase 9f piece work earnings has been higher than that
of time work earnings, but the opposite is vhe rule. At least the 'existing
sta~istics seem to show that the rather widespre::!d impression that workern
receiving time rates have been unfairly treated compared with .piee8
workers, is a fallacy. The greater increase of hourly earnfogs 'for time
work in relation to piece work was particularly marked in .s-awmills, and
in the textile and light chemical industries. On the other hand, the
o,pposite was the case ( i. e. greater incrcas~ in piece work earnings) in.
the building materials, clobhing1, and shoe industries. In the,metal indu-
stries, conditions varied from case to case.
On the average, earnings rose by 102 % on time work and by 96 %
on piece work .from 1939 to 1950, but in single cases the difference was
still greater. The lovelling process was also assisted by the fact that somo
time-workers increased their earnings by going over to piece. work.
Piece work, which accounted for 50,5 % of the total number of hours
wonked in 1939, totalled 59,2 % in 1950. As piec.e workers. e arn more
1

than time worke.:-s, this 9 % increase in the volume of piece work accounts
for approx:mately 5 ore of the total 134 ore increase· in aver,age hourly

58
earnings during the period. (This fact, plus the impact of increased holi-
days-with-,pay on total earnings per hour, explain why the average in-
crease of 105 % is greater than either of the two figures 96 and 102; '%.)
The increase in the volume of p:ece work was -particularly marked ,in
industries with relatively low wages, viz. 20 '% in textiles and wood-
working, 30-40 % in light chemical trades and over 40 % in the rubber
industry.
Wage d;fferentials between ~killed end unsldlled u;orkers have been
the object of mud1 discussion, but the~c arc no official ,s:ati3tics to show
differences within each trade. It would seem rcasonahlc to assume that
Lhcs:: were levelled out in the course of years by the wag·e•policy tendency
to favour low wage groups. It has frequently been ,s:-atcd, however, that
the shortage of skilled workers has given the latter good opportunities of
obtaining favourable conditior:s, irrespective of agreements. This iB
balanced, however, by the fact that the less skilled workers are younger
an<l therefore less tied to their jobs and consequently able to t:tl.e .fuHer
adv·antage of the employers' scn:mble for manpower. A sign indicating
a reducti'On of the differential is the fact that the increase in car~•ing:i
averaged 158 ;'c for juveniles (less than 19 years) and 129 % for women
(generally unskilled or semi-skilled) as compared with 105 % for men
and 92 % for working foremen. On the other hand comparisons, con-
cerning the engineering industry for the years 1944--1948, between the
earnings of skilled workers on the one hand and semi-skilled workers and
labourers on the other (men only) show that the difference between their
rc:,pective wages decreased only from 11 % in 1944 to 10 % in 1948.
It is dangerous to generalise on this point, but it would seem as though,
on the whole, the gap has been reduced also be~ween the wages of s~<illed
and unskilled workers.
The relation of wages as between firms of di/ ferent sizes has been
much discussed during the post-war period. Statistics do 1~ot support t~e
statements - frequently heard ,during recent years - that small firm::;
pay particularly high wages under the pressure of inflation. However,
the existing figures arc not very representative as regards >the smallrnt
groups. It is quite possible that the so-ca!le,d »cellar industries» (i. e.
firms set up to take advantage av transient business conditions and who
~,ometimes offer excess,ive !'ates to attract manpower) do not figure at
all in these statistics.
In the following table, the percentage increase in wages which took
plac~ between 1939 and 1949, is given for a number 'Of industries, the

59
firms of each industry being divide,d into fiYc groups according to tho
number of male workers employed. The table shows that there has been
a greater rise of earnings in smal 1 firms.

Number of Workers
Over Ge:1cral
Industry 1-10 11-50 51-200 201-500 500 average
Mining ................. 158 124 120 65 87
Iron and Steel and Copper 169 119 116 108 93 99
Engineering ............ 116 113 95 94 91 97
Timber ................. 109 115 114 102 116 103
Paper .................. 95 91 87 83 86 88
Graphical Industry ...... 98 77 77 84 61 82
Mills and Bakeries ...... 80 82 61 62 70

From the point of view of trade union wages policy, the most important
question is that of the di/f crences between the various indu,stries. Figures
s'.10wing the relative wage position for each group .of worker's in manu-
facturing industries in different years are shown in the table below. Tl:cy
arc put in the order they occured in 1950.
It is apparent that the dispersion has diminished considerahly. Before
t 11c war the highest group had 72 ¼ higher wages than the average; in
1950 this figure had gone down to 42 %- The lowest group in 1939 lay
19 % below the average, ,and the corresponding figure for 1950 was 15 %.
However, out of a total of 32 groups, 16 do not appear to follow
the general tendency to move towards the average. Among them, the
following lwd improved their relative position, ,although they had started
from a level situated near or above 100: mines in Central Sweden ( went
up from 103 to 117, i. c. + 14 %) ; rubber factories ( + 10 % ) ; hard-
ware ( + 4 %) ; ironworks ( + 1 %) ; iron and .steel goods ( + 1 %) ;
other engineering groups ( ir:cluding 6hipbuilding) remaining unchanged
above the average. (All figures quoted relate to 1950 as compared wit!:
1939. The l::ipp~nings 1950-53 are commented in the addendum to the
English P.dition. Sec below.)
At least as regards mines and ironworks, the cxplanat:on may be thct
the work is hard and difficult, and wages had to be increased still further
above the average in order to attract manpower. The case ,of the rubber
industry is a special one: the number of workers has doubled, so that
it could almost be described as a new industry, hardly comparable wit,h
the pre-war one; in addition much more piece woit( is dor:e. It seem'3

60
 Dlspersion of Wages According to Industry. Male \Vorkers in
Manufacturing Industries.
AvcragP hourly earnings, corrected for regional differences in cost-of-living. 1 )

Branch of Industry Position in relation to the average (JOO)

1939 1946 1948 1950 (1952)
Iron Ore Mines:
in Northern Sweden . . . . . . . . . . . . . . . . . . . . 172 140 143 142 141
in Central Sweden . . . . . . . . . . . . . . . . . . . . . 103 102 110 117 117
Graphical Industries . . . . . . . . . . . . . . . . . . . . . . 128 123 121 116 109
Rubbicr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 107 108 109 103
En'.:'.ineering and Shipbuilding . . . . . . . . . . . . 105 104 105 105 106
Hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 101 104 104 103
Iron, Steel and Copper . . . . . . . . . . . . . . . . . . . 102 103 102 103 107
Iron and Steel goods . . . . . . . . . . . . . . . . . . . . . 101 100 103 102 104
Coal M heJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 95 109 102 102
Electrical Engineering ......... _. . . . . . . . . 108 104 101 102 100
Colour, Oil a:1d Perfume . . . . . . . . . . . . . . . . . 99 100 104 102 98
Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 116 108 101 97
Cardboard and Paper goods . . . . . . . . . . . . . . 104 105 107 101 96
Bakeries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 106 104 100 92
Tanneries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 103 100 94
Boots and Shoes . . . . . . . . . . . . . . . . . . . . . . . . . 99 97 101 100 93
S,one Quarries etc. . . . . . . . . . . . . . . . . . . . . . . . 87 92 96 98 99
Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 100 97 96 90
China and Earthenware . . . . . . . . . . . . . . . . . . . 89 90 95 95 91
Building Materials . . . . . . . . . . . . . . . . . . . . . . . 92 99 97 94 97
Sbughterhouses and Can:-iing . . . . . . . . . . . . . . 109 102 96 94 91
Glass Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 89 96 94 93
Woodworking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 95 95 93 92
Pa.per Pulp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 94 96 93 98
Textiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 92 94 92 89
Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 85 89 92 91
Flour Mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 98 96 91 89
Paper Mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 90 93 91 100
Dairies, MargHine . . . . . . . . . . . . . . . . . . . . . . . 96 90 95 90 87
Breweries e:c. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 90 93 89 90

!Watches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 85 90 88 90
S,wmills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 85 86 85 91
Average for Al! Groups . . . . . . . . . . . . . . . . . . . 100 100 100 100 100

1) The original figures for each in\fustry are re-calculated with regard to the
industry's localization in districts with different costs-of-living; i g. the wages of a
firm situated in a municipality with the cost-of-living figure of 80 are increased by
25 % (100: 80) before being used in the calculation of the average level of earning□
for that branch of industry. Thus all figures are adjusted to the Stockholm cost-of-
living level (100). They are the:i compared with the average level for all i:idustric:i
(adjusted in the same way). An industry, where hourly earnings (adjusted) are 1 %
above this r:cnerc.l average is gfren the figure of 101 in the table.

61
rather su11prising that the different metal groups have remained, on the
whole, fairly stationary, although they are generally looked upon as
typical »wage-drift industries». Hardware rose somewhat, while electrical
engineering went down, mainly because of its sibuation in high co3t-of-
living districts where wages harve risen relatively less. Besides, the ,statis-
tics contain sources of errors sufficient to account for variations of 2 or
3 % both regarding the present position and changes since 1939.
In addition, the rapidly expanding metal indu,stry employs now far
more semi-skilled young workers than prnviol'sly, and ~his helps to
reduce the statistical level of wages. If this misleading factor wer,e elimi-
nated, figures for metal industry earnings would problably also have
shown an upward trend.
Groups that started below or near the average and, in spite of this,
fell still further are flour mills ( - 15 %) ; brewc~ies ( - 14 % ) ; pulp
factoric-3 (-- 7 %) ; paper mills ( - 7 %) ; margarine factories
( - G %) ; sugar mills ( - 3 %) ; match factories ( - 3 %) ; gai,ment
factories ( - 1 %) . Slaughter-houses that startad at 109 fel,] to 94, i. e.
a 14 % decrease.
The food industry is heavily represented among the branches showing
dscreases irrespective of their starting points. It is often alleged that this
is due to the fact that workers on time work (predominent in these in-
dus,tries) have not been ahle to .get any increases by wage-drifting. It
{ias been shown above, 1 ) however, that time work earnings in general
rose even during the wage freeze and, on the whole, increased more than
piece rates during 1!he period under review. A contributory cause to the
relative decline may he that price contrnl was particularly strict as
regards the food industry; but this was also the case in the textile, gar-
ment, shoe and leather industries without preventing wages, from rising
very considerably in the textile industry and holding their position in the
o~her ones. Besides, wages in the food industry account for only a very
rmall portion of sale prices. On the other hand, profits in the food in-
dustries have been steadily falling since pre-war, when they were ,among
the highest in Swedish industry.
Wage developments for these groups may per,haps he interpreted as
follows: before World War II, the economic position was favourable for
both employers and workers in these tariff-protected home market in-

1 ) More in the Swedish edition, some detailed statistics being omitted in the

English translation.

62
dustries, and wages were high in relation to the nature and contents of
the work. As price control kept prices down, the labour market condi-
tions couLd not ( as opposed to other price-controUed industries) press
wages upwards in the same way as in industries where wages were lower,
not only statistically but also in relation to the nature of the work:
the result being a relative decrease. This hypothesis is c:onfirmed by the
fact that the amount of decrease in the ·different groups is directly related
to the level at which it started: sugar mills, starting at 95, fell by 3 '%
only, whereas tobacco, starting at 123 fell by a foll 18 %- A further
cause i,s that these industries are generally located in high cost-of-living
districts, where wage increases have generally been lower.
A rather heavy fall below the average was also recorded by the paper
and pul,p industries as a result of wartime export difficulties. An im-
provement was noted in 1947-1948, followed by another regress in
1949; the exceptional Korea boom restored both industries to the general
wage average in 1951.
The tendency to reduce wage gaps by gravitating towards the average,
is displayed most typically by North Swedish Mines (172 in 1939, 142
in 1950), the graphical industries ( 128 to 116) and, inversely, by ~he
textile industry (81 to 92). Sawmills, on the other hand, had not, by 1950,
increased by more than 2 % from their bottom level of 83.
In Norrland i:mn-ore (export) mines, profits have not been limited by
price control, and most of the work is on ·piccerates. Nervertheless, the
relative wage position fell by 17 %- In the graphical industry the effect
of price control has varied, and time work predominates: relative de-
crease 9 %- The textile industry, •on the other hand, has been effecti,vely
subjected to price control, which, however, did not prevent wages - and
even profits, owing to technical improvements - from increasing con-
siderably; some of the increase is due to the extension of piece-work in
this branch.

Summary

An explanation, based on the facts cited above, of the developmeht of

mubual wage relations in industry during the 1940's would appear to be
the following.
FuJ.l employment has forced enterprises where wages were low -
particularly in relation to the nature and contents ,of the work - to grant

63
high wage increases. Conversely, wherever wages were relatively high
without being justified by special requirements placed -on labour (high
qualifications, hard -or dangerous working conditions etc.), the demand
for manpower could be met in spite of more modest wage increases; this
situation hampered the wage drift and reduced the ohances ,of getting
wage increases by ordinary bargaining in industries with a wage posi-
tion hefore the war, which could be considered high in relation to other
groups ( with both the statistical wage level and the contents of the work
taken into consideration).
These factors have helped especially to reduce the gap between urban
and rural wages. Agriculture and ,forestry were favoured owing to
special wartime requirements and obtained large wage increase:;, partly
as a result of ,deliberate Go,vernment policy; and, by competition, this
also affected favourably wages in rural industries in so far as it enabled
the Trade Union movement to enforce their justified -desire to .reduce
wage differences between ~he cost-of-living ,district:s, these differences
having formerly been greater than actual cost-of living differences. It also
contributed to a levelling-out between various groups in the manufactur-
ing industries, as low-wage branches ,of industry were mainly situated in
:mral districts. Similarly, the low volume of building, due to the war,
reduced ma11Jpower competition and consequently kept down wage in-
creases in cities and towns.
The developments ,of relative wages are not, however, exclusively the
results of an automatic proces,s brought about by full employment. On
the contrary, a remarkable fact is that a large amount of the levelling
proce:;s to,o,'.c place during the war, i. e. before .full employment had
reached its post-war record level. In the :manufacturing industries a cer-
tain increase in wage differences even took place in 1948-50 i. e. during
a verv marked period of »over-full» employment combined with the
»wage freeze». During the eadier part of the decade, the Trade Union
movement had supported and utilized the tender.cy to reduce wage gaps,
a tcndP-ncy created hy wartime labour market conditions. The conclusion
would seem justified that the Trade Union movement's ability to in-
flueace a desirable wage development ( concerning the relative wage
position of different groups, as well as the general trend of real income)
is at its best in a society of well-balanced full employment.
explosion with new distorting and inflationary effects. Laibour felt itself
to be placed on the loosing side for the year, having heen kept on a
constant level, whereas the real national income had increased con-
siderably, both owing to rising productiv,ity at home and to improved
terms of trade, which had increased the pro.fits of the export industries
and of forest-owning farmers enormously, in spite of some fiscal counter-
measures. Psychologically, it had also become impossible to go any
further without an index clause in agreements, because of the unhappy
surprises of 1951. In December, 1951, the LO executive demanded a new
general index agreement from the Employers' Confederation .(SAF), in
order to guarantee the stability of real wages during 1952 after the new
agreements had been concluded. They explained to the employers that,
unless such a security clause were forthcoming, the wage claims from
the various groups would be very large.
The Employers' Confederation answered that, ,in principle, they were
opposed to index escalators in peacetime, and that they doubted LO's
power to keep the wage claims of the individual unions within reasonable
limits, even if an index guarantee were granted. Their counter-proposal
was, therefore, that all wage agreements within their jurisdiction he
centralized into one general agreement, containing the index clause and
increasing basic wage rates. For LO, this seemed to be running too fast
towards centralization. (A slogan was coined: »If you 'run faster than
light can travel, you'll run into a black-out».) LO explained that this was
precisely what they could not persuade the unions to accept. The compro-
mise outcome was a somewhat elastic formula giving some room for
bargaining between the various workers' and employers' organizations.
The Government (.in the presentation of the 1952/53 budget, as well as
in earlier discussions) issued a recommendation to the effect that the
increase in money earnings should he kept under 5 %, as this appeared
to be the margin available for a general increase of incomes, according
to the National Economic Survey for 1952. Because .of wage drifting,
this meant only 3 % on rates. LO stated that this was impossible: such
a wage policy did not agree with the situation on the labour market; both
industrial profits and the demand for manpower, and the recent price
increases had created a situation in which such low wage claims were
out of the question.
The new central agreement gave a general wage increase of 8 % for
men and 10 1~ for women ( or 25 ore if that were more), calculated on
the average level of earnings for each whole contracting group of male or

67
finar.cial support in the event of a strike - w:hich LO has the right to
do according to its statutes. On t!he other hand, there were groups with
lower wages, where the LO action was met by great approbation. This
was the case e. g. of the textile workers, who felt that they would have
obtained much lower increases if they had had to fight on their own, in
the depressed state of their industry. Here, instead, intense opposition
was displayed by the employers against the decision of the Employers'
Confederation.
In connection with the negotiations between LO and SAF, it was
stressed that LO does not aim at such a high degree of centralization of
wage fixing for the future. It lifts the burden •of democratic responsibility
from the shoulders of the various unions and their conferences of local
leaders - and of course from their members, who under this s,ysterm
have no opportunity of voting for or against the acceptance of a proposed
agrement. They can ~herefore stress their misgivings without being faced
with the risk of having to take the consequences thereof in the form of a
strike. It is also clear bhat, very often, they must he right in their
criticism, because no central, schematic agreement can cater for all the
different conditions in different areas or industries.
The purport of the cost-of-living index clause of the central agreement
was that, iif prices rose by 6 % or more, workers would be entitled to
reopen negotiations and demand a 3 % wage increase for a 6 % price
increase; 4 % for 7 % etc., etc. The explanation of this 3 '% gap is that
a 3 % price increase was anticipated when the agreement was signed and
covered by the general increase of 8 %- This 3 % price increase, com-
puted by a joint group of experts from the two contracting parties, was
believed to take place, as a result of the wage increa,ses themselves, be-
cause there were many cases in which these increases could not be taken
out of profit margins or made up for by improved efficiency. It was
recognized as sensible not to ask for a double compensation for this price
boost.
The inevitability of some llCW price increases was due, in particular,
to the fact that agricultural workers were to be given ( under the lag
clause» of the central agreement) a rather large wage rise for 1952;
tJhis aJffected food prices to a considerable extent, because (according to
a decision of Parliament) farmers always are to be given the same
income development as their workers.
The earnings of industrial workers (inclusive of wage drift) rose, on

69
some employment difficulties are bound to occur las at that time
in some branches of the engineering industry, or earlier in textiles
etc.), hut these should not be remedied by a general increase in tho
monetary demand (»purchasing power») for goods and manpower; this
would only restore the internal inflationaary pressure and create diffi-
culties for the balance of foreign trade. Local unemployment should,
instead, he relieved by assisting the tramifer of labour to other jobs,
and by local measures aimed at creating new employment on the very
points were private enterprise under the circumstances could not itself
secure full employment, because of poor profit prospects.
This policy of the Socialist-Agrarian Government was approved by the
unions. In fact, it is a policy on the lines recommended, in principle,
in the concluding chapters of this report.
The attainment of a non-inflationary balance of the national economy
in 1952, created a situation on the labour market in which nominal wage
increases were not as strongly stimulated as earlier. The wage drift did
indeed slow down. The workers noticed that their employers were not
making money as easily as before without too much regard for efficiency
and economy in production. In the wage policy recommendation issued
by the LO Representative Body in Septembm, 1952, it was stated that
the situation did not allow of any major wage increases for 1953. Instead
of demanding general increases, the unions had better concentrate on
improvements for special cases and groups, as women workers, shift
workers, etc. One should also attempt to raise the level of minimum wage
rates towards that of actual earnings, thus reducing the gap created by the
wage-drift.
This whole recommendation was in accordance with the situation
on the labour market and was therefore (,unlike the »strong restraint»
recommendation for 1948 and the Government's advice of a rather low
increase for 1952) generally followed by the unions. It was felt that one
should not increase export difficulties and import competition by in-
creasing again Swedish labour costs, which had increased considerably
more than in most other countries during the last few years. One should,
on the contrary, promote any chances of decreasing the co·st-of-Eving. The
latter had been stabilized since the spring of 1952, and the Price Control
authorities believed that some prices at least could be reduced, i.f costs
did not go up again.
The employers in some cases, especially those connected with foreign
trade, demanded wage reductions. This was, of course, strongly opposed

71
 The Programme also points out that some of the special factors which
;:,ccounted for the country's comparatively strong economic expansion
during the inter-war years will either lose much of their earlier signi-
ficance or disappear altogether. There will be a smaller supply of raw
material,s. The stagnation in population trends will damp down the im•
!mlse the economy has earlier received from a growing population. At
the same time, private monopoly may be encouraged in its efforts to
protect vested interests and to hinder the establi&hment of new firms and
the introduction of new production methods. The shift in age distribu-
tion of the population towards a higher average age is bound to reduce
the flexibility -of the labour market and of the economy as a whole. This
all combines to a picture of a ,society where the Tisk of economic
d;sturbances has increased - where, in other words, the sector most
3ensitive to cyclical fluctuations is steadily growing - whi,le an aging
population has impaired at least one of the conditions for quick economic
adaptation. Labour's Postwar Programme proposed to solve this dilemma
in three ways, roughly as follow:
( 1) The community must make greater and more deliberate efforts
than before to seeure and maintain a -demand sufficient for a s~eadily
increasing fl_ow of production. Taxation and social policy are to bring
about a distribution of incomes which counteracts private capitalism's
tendency toward excessive saving, under-consumption and hence unem-
ployment.
(2) Investments, particularly building, must be controlled. This will
help to iron out the seasonal influences of the year and, in addition,
make possible a ,distribution of investment activity hy individua,l a·reas
and industries, which is designad to counteract cyclical fluctuatior.s and
to stimulate industrial expansion where employment policy so requires.
This can he achieved partly by giving pU!hlic investments an inverse pI10-
portion to pri,vate investments, prone as the latter are lo respond to
inevitable disturbances; and, partly, by co-ordinating also private invest-
ments, in a general way, under the leadership of a p•ublic agency. In-
creased Government influence on credit policy is another necessary
instrument. A great part of the public influence on investments will take
the sharpe of subsidies stimulating desirable projects such as house-build-
mg and agricultural improvements.
(3) The greater r,igidity of the labour market resulting from changes
in population trends must he offset by new or reinforced promoting of

75
la:bour mobility, such as an expanded labour exchange, vocational train-
ing, ,re-training, and removal grants.
It has frequently been alleged that the Post-War Programme was based
on a fundamentaHy wrong ,diagnosis of post-war economic trends: there
was no post-war depression; on the contrary, insted of combat,ing un-
employment, we had to struggle against inflation. - It should, however,
be recalled that the first of the 27 points of the programme dealt precisely
with the prevention of inflation, the possibility of which was anticipated.
It should be added that the authors of the post-war programme did not
regard the struggle against unemployment as a mere question of measures
to be taken to counteract already existing unemployment, but rather as a
policy aimed at forestalling unemployment by means of measures Likely
to promote the redistribution of income and to increase purchasing power.
This policy - which somewhat overrated Sweden's resources shortly after
the war -- was carried out to such an extent that the most immediate risk
became that of an inflation, but this provides no refutation of its basic
principle, viz. that ,full employment can be achived by measures aimed at
increasing purchasing power, thanks to an appropriate social policy; and
by encouraging investments by a cheap-money policy and by suboidising
housing.
Post-war developments in USA and a number of European countries,
characterized at times by rather considerable unemployment, show that a
world boom does not necessarily guarantee a high level of employment
in each individual country. On the other hand, ,it may be justifiahle to
amplify the basic theoretical lines, perhaps not so much those of the
progmmme itself as the popular conception thereof. The programme
should not be regai,ded as simply stating that a depressi,on tendency need
only be met by a sufficient enlargement of state expenditure - possih!y
combined with a tax reduction -- in order to maintain the level of em-
ployment. It is by no means certain that such a possibility exists as it did
during the 1930's. It is possible, even probable, that future employment
difficulties arising from an international depression or any obher external
cause, will have to be combated with far more exacting methods than
when one enjoyed the support of a rising trend in the world economic
situation.
The great importance of the post-war programme - and the propa-
ganda displayed in connection therewith - is due to the fact that full
employment was made the pi,vot of economic policy, and that public

76
opm10n was made to regard the maintenance of full employment as a
basic duty of the community.
It is, of cou:rse, obvious that variat10ns in the ,demand for Swedish
goods abroad can have inevitable ,reperoussions on employment at home.
Furthermore, it is clear that full employment does not mean that every
worker will be continuously employed in the same occupation, on the
same spot. On the other hand, full employment must mean that anyone
who loses his job can be assured of getting without much delay a new job
suited to his strenght and ability.
The problem how to pursue a trade union policy furthering a high
level of employment is not indeed a novelty, the debate about the
influence of wages on employment being as old as the trade unions
themselves. The problem must, however, be posed in a new way, now that
the trade union movement can rely on the fact that full employment is
regarded as one of the chief aims of the nation's economic policy.
The present ,discussion on wages policy pre-supposes therefore that the
Government agrees to the principle of full employment. A change of
government would not in itself result in the trade union movement
abandoning its struggle for fair wages and a rationa,l wages policy, but
it might mean, if a bourgeois government came to power, that the
movement would become less interested in sh9uldering the politica,l
burden attached to unpopular anti-inflationary measures. In such a situa-
tion, the attitude of the movement would be conditional on the nature of
the policy carried out by the Government. It can be assumed that even a
bourgeois regime would, for reasons of self-preservation, endeavour to
avoid unemployment and clashes with the trade unions. The ability of
the latter in such a ,political situation to uphold the interests of the work-
ing class depends to a high degree upon the ability of the trade union
organizations to stand ·united and to co-ordinate their action. Bearing in
mind the fact that, in a democratic community, a political change of
regime is always theoretically possible, it is essential that the trade union
movement should retain its independence and work in such a way as to
give its members cause to regard it as the obvious defender of their own
interests. But, apart fram that, a trade union movement independent of
the State has an essential task to fulfil in the community, even if the
latter is increasingly developing towar,ds socialism, for even then there
should be bodies capable of defending different interests within the
framework of democracy, lest the entire community should be overrun
by centralized bureaucracy. Uncontrolled bureaucracy can easily develop

77
into a ruling class, which regards power 1as a means of promoting its own
interes,ts. The history of dictatorships shows abundantly how such a con-
centrated exercise of power can he camouflaged behind a lot of talk about
»the working class», the »people's community» or the »fatherland», while
the workers, the entire people and the country are being turned into
obedient tools used only in the interests of those who have succeeded in
seizzing power. The labour movement has endeavoured to turn the Govern-
ment into an instrument for the promotion of the economic interests of
the broad masses, from having been formerly the protector of the free-
dom of action of those with strong financial backing. The economic
democracy thus achieved should be defended and extended with the co-
operation of independent and strong trade union organizations. This,
however, should not prevent the trade union movement from re-consider-
ing .its activities and goals with regard to the changed circumstances
brought about by full employment.

Significance and Prospects of Full Employment

The problem which full employment sets before the democratic com-
munity is to maintain economic stability, w,ithout compul,sion towards the
individual, in spite of the inflationary tendencies involved by full em-
ployment. Divergences may occur between the principle of 1personal
freedom and that of full employment. It would be easy to guarantee any
degree of employment if the community could compel the individual to
carry out work fixed by the State for wages also fixed by the State. On
the other hand, it would be entirely meaningsless to attempt to maintain
a principle of full employment, under w.hich the individual could de-
mand all the assistance intended for temporary released labour while
refusing to accept any suitable work offered to him. One cannot main-
tain a policy of employment arid an unemployment insurance which offer
the individual a guarantee that he will never be obliged to change jobs
or places of work. While full personal freedom of action is maintained,
the behaviour of the individual must be brought into hanmony with the
interests of the community, viz. that ~II manpower be placed in the most
producti,ve occupations. A basic democratic principle is that this should
not be effected by compulsory ,direction of labour, but by predominantly
positive incenti,ves, with the exception of the withdrawal of community
assistance ( unemployment benefits) from those who attempt to evade
their elementary civic duty to be prepared to accept suitable work.

78
 It is obvious that a wage policy taking advantage of all the opportun-
iities of increasing nominal wages, offered by frull employment, would
soon render full employment impracticable. This explains why the trade
union movement in the State-controlled full employment systems of the
1930's (Soviet and Germany) were incorporated into the planned
economy of the State and thus prevented from utilizing a,vailahle oppor-
tunities to increase wages above the limits :fixed by the State. Moreover,
to prevent individual wage increases, or »wage drifting» due to the .Jarge
demand for manpower, the personal freedom of action of the individual
worker was curtailed; in order to prevent him from obtaining a wage
rise under threat to quit, he w,as not allowed to temninate his employ-
ment without permission. Workers' passports were introduced to control
the observance of this rule, breaches being treated as punishable offences.
In a democracy, plenty of scope must be given to personal freedom in
the necessary compromises between the interests of the individual and
those of the community. Full employment in itself means a considerable
increase in the freedom of the indi,vidual, whose ability to choose his
occupation and place of work is enlarged. There is no question of his
having to pay for this increased amount of freedom hy limitations in
other respects, provided one does not regard as a limitation of freedom
the self-discipline which trade union organizations must observe under
full employment. Measures taken by the community must amount to
exerting, through its economic policy, such influence on the indivi,duals
that their personal behaviour on the labour market agrees with the man-
power requirements of industry and commerce. Previously, it was unem-
ployment which guaranteed that the demand .for labour was met adequate-
ly. Nowadays, the problem is to achieve the same result with a higher
level of employment, without resort:ng either to unemployment or to
administrative compulsion.
As regards employers, full employment must necessarily pre-suppose
some degrees of intervention on the part of the community, limiting the
liberty of action of the individual employer, e. g. monopoly control and
some sort of regulation of investments. This cannot be considered un-
democratic, for as little as the employer guarantees ,permanent employ-
ment to his personnel on the jobs which suit them best, as little can the
community guarantee to employers any freedom other than that which
employees have, viz. to give up their occupation and look for another
one. This does not mean that the community's influence on the employers'
behaviour must be of the type we \:now from war and post-war years. On

79
the contrary, it would appear at present as though, if only for wage and
price-policy reasons, the maintenance of stable full employment must be
achieved by methods which include a relaxation of present direct ad-
ministrative controls and the application of more general brakes on the
inflationary tendencies ( as discussed more fully below).
In a democratic community, where indi,vidual -liberty is enjoyed, a
state of full employment can be achieved by either of the two following
methods: the one is that the community maintains a general inflationary
pressure which is prevented -- by means of investment control, price
control, import control, and a restrictive wages policy - from resulting
in steady price increases and a deterioration of the value of money. 'I1he
other method is to keep the national economic balance - i. e. the pur-
chasing power in relation to the supply of goods - at a lower level in
order to make these restrictive (negative) controls unneccessary; but in
that case, private enterprise does not automatically absorb a]] available
manpower and it then becomes incumbent upon the community to provide
employment, by suitable measures, on points where private enterprise
does not find it profitable to hire labour. There are, of course, various
forms of compromise between, on the one hand, an open inflation with
more or less effective restrictive measures ,at the most exposed points,
and, on the other hand, an equally apparent depression with more or le~s
effective efforts to create employment as unemployment appears. One
must clearly realize that it is impossible to maintain the exact national
economic balance required by full employment merely by means of gen-
er,al methods of monetary or financial policy. The demand for goods and
labour is bound to be uneven in relation to supply, and even when there
is a general demand surplus, unemployment tendencies will inevitably
occur in some sectors of the economy. Conversely, in the event of a
general demand deficit, bottlenecks are bound to occur, resulting in a
shortage of certain special goods and manpower, and subsequent price
and wage increases in these particular spheres. Whether the first or the
second alternative is applied, with a view to combining full employment
with a stable value of money, complications and difficulties are in-
evitable.
In view of this, a continuous, mild inflation might perhaps appear as
the simplest way of maintaining full employment. It is necessary to
explain why such a method cannot be recommended. The reason is not
that a deterioration of the ,value of money will necessarily affect wage-
earners more severely than other groups. If the position were as clear

80
 By rejecting a method which would result in a continuous price m-
crease (and consequently also the wage increase policy which would
render price increases inevitable), one has not, ipso facto, dismissed the
possibility; of maintaining full employment by constant inflationary
pressure checked and suppressed by various administrative controls.
These might be made so effective as to prevent a general price increase,
thus avoiding the negative repercussions of ·such an increase on saving
and economic progress. From certain points of view, such a .policy might
be advantageous, the purchasing power being maintained by various
available methods at such a high level that the demand for labour would
be more than 100 % ; to quote Beveridge's definition of full employment,
one would have »more jobs than men». Good marketing conditions for
all types of goods then cause private enterprise to attempt to make more
investments than is warranted by the supply of saved-capital, raw mate-
rials and ,manpower. The community can thus choose and grant permits
only for the most desirable of these investments. The situation is similar
as regards wages. Price control can hold price increases at bay without
pressing profit margins so hard that it no longer pays to engage all man-
power available. Profits are generally good, and trade union organiza-
tions can pick out the most justified wage increases, provided no general
rise is allowed, so as not to jeopardize price stability.
This description of an economic policy of the ty,pe »general stimulus
through monetary measures but restrictive control by administrative
measures» - the method of suppressed inflation - shows immediately
why such a policy is either impossible, or, at least, undesirable as a long-
term policy for full employment. If the public control system were water-
tight and complete both as regards investments and prices, and if wage-
fixing could be carried out rationally in accordance with central plans,
then such a system might well operate according to the above design.
In actual practice, neither investment control nor price control can he
onehundred percent effective. They will necessarily be most effective
against thos~ industries which are, as a rule, the most valuable. Invest-
ment control will prove restrictive towards the building of large in-
dustrial undertakings, dwelling houses and State investments, while minor
investments with or without connection with already existing firms will
profit by the restrictions on the controllable part of the economic system.
The same applies to price control, which is effective mainly as regards
standard goods, usually mass-produced by highly efficient firms, while
the persons and firms supplying uncontrollable goods and services are

83
indirectly favoured, a state of affairs which is hardly likely to promote
total productivity in industry. Similar arguments apply to wages: the
earnings of some wage earners can he effectivly controlled by central
authorities but on large sectors of the labour market nothing can prevent
wage drifting when there is an inflationary pressure, and - sooner or
later - this will render a planned wage policy impossible.
A system of administrative controls intended to check an inflationary
pressure creating full employment, could be operated rationally and
efficiently over a relatively short period of time, as during and after the
war. This does not, however, justify the conclusion that it could he used
permanently without ,detrimental effects. These would, in due course,
assume such proportions that either full employment itself would be de-
stroyed by inevitable disturbances in economic life, or public control
would grow to such an extent that democracy and freedom for the
individual worker on the labour market (i. e. matters of fundamental im-
portance) would be suppressed.
Although to a large extent being of the »suppressed inflation» type,
economic policy in our country has therefore aimed - with fiscal policy
as a main instrument - at a more »natural» balance between the supply
and demand for goods and manpower than that which has been achieved
by restrictions on (predominantly) housing and State investments and
by all the other restrictive regulations.
The conclusion of all this and of all the well-known arguments which
expose the detrimental effects of a continuous deterioration of the value
of money, is that the working classes have every reason to avoid a wages
policy which would give rise to a continuous price increase. This also
means that the traditional wages policy pursued hefore the war, inde-
pendently of LO, by the different national unions in accordance with
their own particular interests, cannot be a suitable policy when full
employment enables the workers to obtain regularly larger increases in
nominal wages than is warranted by the increase in productivity. In the
long run, such wage increases would prove detrimental to the entire work-
ing class, in spite of the fact that in each individual case they would
appear to benefit the groups concerned.
In other words, the increased attention paid to more general points of
view, which has developed during the last decade under the leadership of
the central body of the trade union movement, is not to he regarded as
an accidental, transient departure from the traditional line in wages
policy.

84
 This does not necessarily mean that the methods applied during this
period to uphold the joint interest in economic stability against indi-
vidual groups' shortsighted interest in the largest possible nominal wage
increases ( the centralized restraint on wages during the war, and the
prolongation of all agreements in 194.9 and 1950), are suitable as a long-
term solution. Both the restrictive index agreement of the war years and
the general prolongation of agreements mentioned above, were due to the
special situation obtaining at a time when such measur•es had more or
less to be improvised.
The fear of inflationary consequenses of full employment have some-
times given rise in public discussions to far-reaching conclusions concern-
ing the necessity for the same centralization o.f wage-fixing in Sweden as
in some other countries, possibly in the form of State control of the wage-
mar:ket. These extreme alternatives are submitted to a critical examina-
tion in the following section.

Wage Restraint a Basis for Stability?

One type of wage policy which theoretically could reconcile full em-
ployment with a stable value of money, could be headlined »The Wage
Restraint Policy». Policy-making would' then have to be so centralized
that the leading body of the trade union movement, ,LO, would always be
in a position to decide the average size of nominal wage increases. A sug-
gestion occasionally encountered in economic literature is that money
earnings should be kept at a constant level and that prodt:ctivity increas-
es should be followed by price reductions, which would mean an improve-
ment in real earnings both for wage-earners and for others. How ,difficult
it would be to apply such a system during full employment while re-
taining the trade unions' freedom vis-a-vis the State, does not require
much explanation. Another, less ambitious but more noteworthy, sugges-
tion has also been put forth, viz. that the trade union movement should
lay the foundations of national economic stability by adapting wage in-
creases to the annual increase in production, i. e. irrespective of the
actual labour manket situation (more jobs than men, etc.) and of any
inflation pressure coming from other quarters. This suggestion is often
combined with the demand that the Confederation of Trade Unions
should be given sufficient power over affiliated unions to decide how the
margin available for en improvement of the standard of living is to
be distributed among the different groups of wage-earners.

85
 The persons who hold this view -- perhaps most clearly expressed in
William Beveridge's famous book »Full Employment in a Free Society»
- have not, however, taken the trouble of considering to what extent
such demands placed on the trade union movement can be reconciled
with the traditions, organization, and duties of the movement. B:::·veridge
indicates two ways of solving the problem. On the one hand, the supreme
trade union body should co-ordinate the wage claims made by the various
unions, so that they might be considered with due regard to the economic
situation as a whole. Beveridge expresses the hope that the British tradP
union movement will prove capa:ble of devising methods for such a
co-ordination. Equally vague is his second recommendation, to the effect
that wages should not be settled merely by a tug-of-war between the par-
ties concerned, but also by »reason», all relevant facts being given due
consideration. In practice, this would seem to lead to a system of volun-
tary arbitration.
The self-assumed contribution on the part of the trade unions which
this system pre-supposes, has been an essential feature in many countries'
post-war economic policy. The results - even in Beveridge's own country
- have not been exclusively favourable, in spite of the fact that »wage-
frcezes» have hen generally regarded as exceptional measures taken in
exceptional circumstances. The difficulties attached to such a policy
would appear still more vividly if - as assumed by Beveridge and others
with him - restraint in trade union wages policy were to become a
permanent feature of a policy aiming at a long-term stabilization of full
employment. These difficulties can be outlined in the two followin1:;
points:
a) The structure of the Swedish wage system is such that centrally
imposed restraint in wage claims would not prevent w·_ges from rising
in respect of large groups, provided the labour market was favourable.
The so-called wage-drift, i. e. wage increases obtained individually or
locally in addition to agreed rates, has been dealt with in the preceding
chapter. Wage drifting tends to increase together with restraint regarding
agreed wages; and as wage-drifting is partly due to the nature of the
wage system, different in ·different industries, wage developments during
a period of restraint can prove very uneven and create wage relations
which are undesirable both from the point of view of the trade unions
and from that of the national economy.
b) The decisive argument against a wage policy of the type practised
in 1940-44 and 1948-50, if regarded as a long-term solution of the

86
present problem, lies, however, on the ideological plane. During the past
decades, the trade union movement owed its strength to the fact that
members could, to 'a large extent, identify their interests with the policy
pursued by, the unions. Permanent restraint on the part of the trade
unions would render such identification increasingly difficult, even if
understanding could he facilitated by unremitting information activity.
Yet, irrespective of the members' appreciation of the policy of their
unions, the acceptance of the »permanent-restraint-line» would basically
alter the ,duties of trade union organizations; from having been organiza-
tions to defend the economic interests of a specific group, they would be
changed into bodies for the purpose of adapting wages policy to the
general economic policy. If the individual trade union branches were
deprived of their present main task of getting increased wages for their
members, there is reason to doubt whether they would survive.
Trade unionists have, as a rule, fully reaEzed the necessity of the wage
freeze policy, as an essential feature of non-recurrent joint action aimed
at stopping an acute inflation. In the long run, however, they are bound
to find it meaningsless to observe restraint as regards wages, if the em•
ployers continue nevertheless to press the wage level upwards by com-
peting for manpower. A wages policy which is believed to haive been
dictated by interests other than tra:de union ones, will inevitably prove
disastrous, in the long run, to trade union solidarity. The greatest danger
is that members may lose confidence in their leaders, partly or altogether.
In addition there is the risk of discord arising between the different
unions, and of a weakening of the authority of the central confederation.
If considerable wage-,drifting occurs <luring a period of wage-freeze or
restraint in wage claims, this has a threefold effect: members consider
that the ,organization is not properly looking after their interests; distrust
arises ,between the groups enjoying wage-drifting and those whose wage
system prevents them from getting it. Finally, the authority of the Con-
federation of Trade Unions is reduced bo~h vis-a-vis the national unions
and vis-a-vis the community, as it has shown itself incapable of »man-
aging» its wages policy. In the long run, the strain may ,become ,over-
whelming and undermine the position of the trade union movement.
Bearing this in mind, the trade union movement should make it perfectly
clear that it cannot and should not accept any such unconditionaf re-
sponsibility for the preservation of national economic stability. We shall
now:consider whether the community (the State) should, instead, accept
formal responsibility for the wages policy.

87
 Wage-fixing a Task for the State?

There are few countries where the principle of State non-intervention

in the affairs of the trade unions is as deep-rnoted as in Sweden. In no
other country have so many del:ibemte and successful efforts been made
~o secure free negotiations hetween the parties on the :labour market,
and thus uphold the principle of trnde union freedom. This does not
mean, however, that opportunities for some amount of State direction of
the wages policy have been lacking.
Whenever this matter has been brought up, the trade union movement
has mainta:ined the fundamental principle of trade union freedom from
State intervention. The statement made by the Representative Body oif
LO in April, 1945, in connection with the strike in the engineering
industry, clearly expresses this point of v,iew. It states that the settlement
by the State of Iabour market wages disputes is, in principle, incom-
patible with free trade unions and with the ,desirable principles of trade
un:ion wages policy. The discussion on the same subject, which took,
place in the Representative Body three yeal's later, should not be regar,ded
as a departure from the former line, but sho,uld rather be interpreted as
indicating that one did not absolutely reject the idea of the State fixing
wages in exceptional circumstances.
The ,arguments contained in the statement of 1945, are predominantly
of a technical nature: a State wage-fixing machinery cannot operate as
smoothly and efficiently as collecti,ve bargaining. In addition, fears were
expressed concerning the unfavourable consequences for the trade unions
Clf the introduction of ,such a system. »For the trade unions, it would
mean that, from having been independent, militant organizations, they
would be turned into technical negotiation bodies without any right of
decision or responsibility for the wages policy. The intrnduction of such
a system would cause members' interest in their organizations to flag.
The knowledge that the organization was no longer in a position to make
the final decision, would necessarily weaken the esprit ,de corps and
feeling of moral solidarity which have hen, and still are, the cohesive
strength of the trade union movement. This would ohviously spell disaster
to the movement's future ability to defend its members' economic interests
and fulfil its other tasks.»
It can thus be stated that the trade union movement rejects, as a rule,
the intervention of the State in matters of wage policy, both for practical

88
reas,ons and with a view to ensuring the continued existence of trade
union organizations.
From the precedinig statements it might seem tempting to draw the
conclusion that full employment is incompatible with any possible form
of wages ·policy acceptable to the trade union movement. It should, ,how-
ever, be borne in mind that so far we have only discussed the adaptation
of wages policy to an employment policy in which the responsibility for
economic stability has been directly or indirectly forced upon the trade
union movement because the balance of the national economy has been
maintained far too near an inflation. Such a problem is, in point of fact,
insoluble. Past experience of full employment cannot, however, be
adduced in a discussion of principles regarding the po,ssibility of pursu-
ing a policy of full employment without sacrificing trade union freedom.
If the community accepts responsibility for the maintenance of economic
stability, the antagonism between full employment policy and trade union
wage policy disappears. Yet, ilf the dilemma is to be solved at ,all, co-
ordination will have to be established between, on the one hand, an
economic policy which tackles the problem of employment without foist-
ing the responsibility for economic stability upon the trade unions; and,
on the other hand, a rational and well-planned wages policy. We shall
now discuss :in greater detail the formulation of a policy of full employ-
ment, reconcilable with economic stability without placing demands on
the trade union movement which the latter could not meet.

Co-ordination of Economic Policy and Wages Policy

The problems facing trade union policy in a community enjoying full

employment can be summarized as the necessity of finding a) a full
employment policy which does not threaten the existence of free labour
market organizations; and b) a wages policy which .does not jeopardize
full employment by maintaining ,a permanent inflati•on tendency. To put
it differently, it is up to economic policy to carry out the programme
of full employment while retaining a system under which wage-fixing
takes place by collective agreement between free organizations without
any State intervention in the form of compulsory arbitration or wage
legislation. The trade union organiz;ations must again co-ordinate their
efforts to avoid a race between the different groups of wage-earners or
between these and the other groups •of society, as this is not only

89
meaningless and harmful from the point of view of the entire working
class, but also constitutes a direct threat to full employment and causes
disturbances in pro.duct:ion which reduce its efficiency.
The point of view which is to be expounded in the following section
can be presented as follows: Since the problem of balancing the national
economy cannot, in the long run, be solved by means of regulations of
the present type (i. e. number of negative controls, which have a greatly
varying effecti,veness and therefore a distorting effect on production),
one shoul,d remove the prospects private enterprise has of making
exaggerated profits, by means of a deliberate monetary, fiscal, and wage
policy. But, as private enterpr:ise cannot under such circumstances be
expected to succeed in maintaining full employment everywhere, the corn•
munity will have to see to this, ,by ,suitable assistance measures, without
bringing the national economic balance under inflation pressure again.
An economic policy of this type would not undermine the organiz,ation
and work of the trade union movement. This does not mean, however,
that trade union activities can, in future, be run on purely tmditional
lines. Even a more evenly balanced employment policy places great
demands on wages policy. The first dt:mand is that of co-ordination. It
has previously been said that the centralization of wages policy does not,
in the long run, constitute a protection against inflation, if the national
economy is not balanced. Conversely, it can be said that the balancing
of the national economy does not constitute any guarantee for continued
stability, if the trade unions pursue a wages policy without regard to its
effects on the national economy as a whole. The policy of full employment
must operate with great precision, as relatively small disturbances can
have consequences difficult to control. It is, therefore, essential that
wages policy should be co-ordinated with the general economic policy,
and ~hat the trade union movement as a whole should, to a greater extent
than hitherto, accept a certain degree of responsibility for the unions'
wage policies.
Apart from the task of avoiding to endanger economic stability, wages
policy should also aim at bringing about a fairer and more suitable
weighting of wage relations between the different groups of wage-earners.
By fulfilling the latter task, the trade union movement also facilitates the
solution of the first problem. In both cases, it is not so much a question
of increasing centralization by amending the statutes of LO as of authori•
tative guidance and information, and of allocating economic resources.

90
 The trade union movement has a right to demand an economic policy
which leaves the trade unions in undisturbed possession of their present
role ·on the labour market and in society. On the other hand, it would be
a delusion to believe that the trade union movement can ignore, in its
wage policy, an economic policy which endeavours to balance the national
economy. Increased co-ordination and deliberate planning of wages
policy form an essential condition for the security full employment offers
to the citizens.
The gradual, inevitable adaptation of wages developments to the increase
in productivity cannot be guaranteed -- ,only rendered possible - by an
economic policy of the type we have in mind here. It also requires a cer-
tain amount of regard on the part of the different groups of wage-earners
to the common desire for the maintenance of full employment and stable
prices. This aim can be promoted by giving the central body of ~he trade
union movement more leading and co-'Ordinating influence on wages
policy.
The instrument to be used with a view to achieving ,a better balance
in the national economy, is, in the first place, the State budget. By in-
creasing or reducing the State revenue above or below current Government
expenditure, the relation between purchasing power and supply of goods
can be influenced. It cannot at this stage be definitely stated whether, in
future, budget surpluses or budget deficits will, as a rule, be the best
promoters of national economic balance. This depends, inter alia, on
private saving, economic trends and fluctuations abroad, and the results
these may have on the estimates of :future prospects by the individual
firms. It also depends on the extent to which other methods can be used,
e. g. credit policy and other more or less general measures intended to
encourage or discourage investments. Here, it is essent:al to stress that
it is possible. in principle, to influence the balance of the national eco-
nomv either in one direction or in the other, with the budget as a main
instrument, thus doing away with most of the restrictive system of de-
tailed controls. Fwm the point of view of wages policy, such a main
line would appear particularly desirable. Under the general inflationary
pressure of the years 1947-50, price stability could be achieved only by
means of a general wage restraint policy, in the form of a prolongation
of current agreements. Such a measure is permissible in special ciroum-
stances, but as a long-term policy, it is neither possible nor desirable.
The high degree of centralization it requires has already been rejected
in a former section of this chapter, both on organization and psycholo-

91
g:cal grounds. To this should be added that the level of profits promoted
by sucih a policy, renders wage stability illusory in practice, even if
agreements are prolonged, as competition for manpower, combined with a
high level of profits, tends to press wages upwards, irrespective of the
content of the agreements. But if wages policy works along the same
lines as the wage drift which is already proceeding, the total inflationary
effect will be further strengthened. One cannot expect wage-drifting and
agreed increases to replace each other: to a great extent, it will be a
case of the one being an addition to the other.
The better balanced purchasing power which economic policy must
aim at, even for other reasons, must also imply that the profits made by
firms will not allow for much wage-drifting, which would require an
undue and unbearable degree of self-restraint on the part of trade unions
lest the total of increases through regular agreements and irregular drift.
ing should mean too rapid an increase to be compatible with a stable
price level. As already indicated, general price control cannot, in the
long run, be used as a satisfactory method for limiting profits in industry
and commerce, as its effectiveness is far too uneven, which gives it a
distorting effect on production and wages. What must be done, is to
maintain such a general level of purchasing power as does not allow of
large profit margins or - to put it differently - which does not allow
wage increases to he foisted into prices.
Here we are faced with a dilemma which must be overcome: to main-
tain full employment, profit prospects must be sufficiently good to
incite industry to engage all available manpower; to maintain stability,
these high profits must be reduced, but then they do not any longer
automatically ensure full employment.
This dilemma can only he solved by public mesurns, aimed at re-
moving the »islands» of unemployment which will form locally if the
level of purchasing power and of profits are reduced by a rigorous bud-
get policy. Further, these measures must be financed in i way which does
not create a new inflation pressure.
The condition for stable full employment is, therefore, that pro.fit
prospects should not he too good for indivi,dual firms, as this leads to
inflationary wage and price increases. Any measures aiming at preserv-
ing the level of employment wherever it may be threatened, should he
applied as locally as possible as opposed to any general increase of

92
effective demand, which only could restore the inflationary pressure
again. On this basis they should, on the one hand consist in public
works, subsidies to individual firms and the placing of State orders with
firms and in localities, where, otherwise, unemploymet would arise. On
the other hand they should consist in encouraging the voluntary transfer
of labour to firms. trades and localities, where the prospects of expansion
are fabourable. Much greater importance than hitherto should he attached
to incentives to labour to transfer to places where it is most needed. To
combat the inflationary tendencies of full employment, the speedy over-
coming of bottlenecks is as important a factor as a general limitation of
the general level of purchasing power.
An indispensable condition for the following discussion on the wage
problems of the trade union movement under full employment, is that
the Government should pursue an economic policy, on the lines described
above, which would not force wages into inflationary trends. We have
attempted to demonstrate tihat this amounts to full employment main-
tained without allowing profits * to become so high as to cause an infla-
tionary competition for manpower (nor, of course, for materials, i. e.
work carried out elsewhere) ; and that this, in turn, means that the State
should follow a tax policy aimed at keeping purchasing power within non.
in/lationary bounds and should partly use the revenue therefrom to
finance comprehensive schemes aimed at removing any incipient unem-
ployment, either by directly creating wo, k for the unemployed, ior by
encouraging their trans/er to desirable occupations. If, on the other hand,
the purchasing power were kept high enough to secure full employment
automatically everywhere, this would mean inflationary overstrains in
many sectors of the economy and necessitate restrictive (negative, distort-
_ing) regulations, and repeated demands on the trade unions to exercise
an impossible degree of self-restraint.
Not until the pre-conditions of a stable, non-inflationary full employ-
ment policy are fulfilled, will the trade union movement be in a position
to influence wage developments to such an extent that wage policy dis-
sussions will fill a useful purpose by supplying guidance for practical
long-term action.

* We mean here profits before taxes. The profit reduction mentioned here
cannot be achieved hy increased direct taxation, as this acts in an inflationary way
by encouraging any expenditure which can be deducted from income tax returns.

93
 Wages Policy of Solidarity

As already stated it is manifest that even if one removes, by the methods

indicated above, the spontaneous inflationary tendency of full employ-
ment, the various wage-earner organizations may well pursue wage policies
which are untenable in the long run. The mere fact that these organisa-
tions are not directly forced into an inflationary race, does not offer any
assurance that they are not actually doing so all the same. The fact that
an economiP atmosphere is created where it is possible to evoh-e by
reasoning a wage increase rate which agrees, in the long run, with the
increase in productivity -- once the profits' share of the national in-
come have been pressed down as far as is at all compatible with full
employment - merely indicates that a condiJion for a stable wage trend
has been created. It remains now to make sure that such a norm is
observed.
A further condition for this would seem to be that the relation existing
between wages in different trades should not create any feelings among
some groups of workers that they are being unfairly treated. In case some
groups try to obtain higher increases than what is generally regarded as
the permissible maximum during a certain period, a competition can be
expected to start between the different groups as to who will get the
biggest increase. Even if the representatives of all groups are aware of
the und::sirable consequences of such a race, inability to agree to a
joint policy may render it inevitable. During the past ten years, the
increases obtained by different groups have varied considerably, and
many of those who got the lowest increases consider they are therefore
overdue for particularly large ones. Other groups, who obtained large
increases consider that they are entitled to further increases in relation
to the average, as they still are a good way down the scale. In this way,
practically everybody can make out that he is entitled to larger increases
than anybody else, something which, deplorably enough, cannot possibly
be realized. From the point of view of general solidarity, priority should
obviously be given to those who, despite recent large increases, are still
too far below the average, while highly-paid groups should not he given
priority on account of a lower rate of increase. »High» and »low» in this
connection need not necessarily refer only to the amount of wages paid.
The nature and contents of the work should also be taken into considera-
tion. Thus, a group receiving relatively high rates expressed i~ kronor
and ore, can be fairly described as »low-paid», if its work requires

94
considerable trammg or involves the risk of accidents, insecurity of
tenure, seasonal unemployment etc.
We have stated above that increased central influence on wage develop-
ments must be anticipated, if the necessary coordination between wage
and productivity increases is to be achieved. It has also been demonstrated
that no centralization of wages policy will succeed in achieving this co-
ordination, if full employment is maintained by means of basically infla-
tionary methods.
Those who ultimately bear the responsibility for such central influence
- be it strong or weak - cannot, however, avoid the question of com-
paring wages between the different groups. The question arises now as to
whether this weighting is to be effected according to the principle of wage
solidarity ( with differentials according to the degres of difficulty of the
work, etc.), or whether it should be based on the current profit position
of the respective industries. The choice of the latter line would mean that
very uneven increases could be carried out, thereby condoned and
supported by the central wage policy bodies, the largest increases being
granted not for reasons of justice but for reasons of expedience. On simi-
lar grounds, a central wage policy body could encourage members, even
relatively highly-paid ones with regard to the nature of their work, to
demand further increases from employers with good profits and a great
demand for labour and at the same time discourage poorer groups from
similar demands. There are, indeed, arguments in favour of such a policy,
as it would give the workers as a total their share of productivity im-
provements more rapidly than by joint requests, following a general
increase of productivity in the nation's industry as a whole. It can also
be argued that expanding industries require a higher wage level, even if
this is not justified by the nature of the work, in order to attract man-
power.
Against this, one must point out that it would be impracticable to
increase and reduce wages according to the continual fluctuations of the
demand for manpower of the various industries, so that sometimes one
industry and sometimes another would appear to be paying high wages
and thus capable of attracting manpower. Assuming one has a well-
balanced position, in which the wages of different groups are suitably
weighted according to the contents of their work, the wage increase
offered to one group will have to be considerably higher than that offered
to the others in order to bring about the desired transfer of labour in a
way which differs notably from other metods (see below). Some differ-

95
ences in actual wage trends according to the profit and employment posi-
tion of the industry are inevitable, irrespective of the provisions of collec-
tive agreements. But deliberately to go in for different rates of wage
increases according to industry - after having established wage relations
which seem well-,weighted in relation to the nature of the work - would
hardly be in keeping with the desire for stability in wage developments.
If certain groups of workers attempt to increase their wages considerably
more rapidly than the general increase in productivity ( and without the
justification of being a low-paid group), then it is almost inevitable that
the other groups, for mere reasons of justice, will feel justified in follow-
ing suit. This is possible during full employment, at least for the workers
whose employers are able to foist wage increases into prices and whose
wage-paing capacity is considerable for this very reason. But a general
full employment policy will make it possible for practically all groups
to do so, sooner or later. Thus, a marked lack of uniformity in wage de-
-
velopments tends to lead to a general rate of increase in wages, exceeding
what the increase in productivity would warrant, and consequently to
destroy the price stability.
The very desire of attaching wage developments to productivity in-
creases would therefore seem to lead to the conclusion that, when co-ordi-
nating the wage policies of the different unions, in order to prevent a
race, detrimental to all groups, between different wages, and also between
wages and prices, one must aim at some sort of equal pay for equal work
principle. Work of a similar nature should, to the greatest possible extent,
cost the same for all employers. This is what we mean when proclaiming
the principle that the weighting of wages between different types of wor,'.(
should be effected with regard to the nature of the work, i. e. work con-
tents, work risks, the qualifications required from the workers, etc., and
not with regard to the various profitableness of firms and industries.
In addition to the motives adduced above, it can be added that if, in
view of the economic position of their industry, a certain group of workers
accept wages which are lower than those normally paid for work of the
same nature, this means that this particular group of workers are actually
s_ubsidizing their industry by abstaining from the wages such an industry
should normally have to pay. Subsidies to unprofitable industries should, /

in principle, be avoided, and these industries should, instead, be made to

increase their efficiency. If, however, subsidies are justified for national
defence reasons (blockade risk, etc.), they should be paid by the State, not
by the workers in the form of wages below normal. In practice, it cannot

96
be avoided that the workers share, to some extent, the economic fate of
their industry, but this cannot be made a norm for wages policy.
We have attempted to indicate the general course an influential central
body can be expected to follow in its efforts to influence the unions' wages
policy. It remains, of course, to be seen to what extent these principles
can be applied in practice. Much depends on the general economic situ•
ation. The principle of wage solidarity - which agrees with the principle
of differentials according to the nature of the work, but opposes wage-
fixing according to the industry's economic strength and the strength or
weakness of the organizations concerned - can be more easily followed
if the community facilitates the transfer of manpower from unprofitable
industries and increases their economic strengtht by rationalization and,
if necessary, by subsidies; or reduces profit margins ( »economic
strength», »wage-paying capacity») where monopolies or the indispens-
ability of the goods produced makes it easy to pass off wage increases on
the consumer.
Previously, the practical significance of the expression »wages policy
of solidarity» was relatively clear. Wage differences between different
industries were so great that practically every reduction of wage gaps
could be regarded as just and reasonable. The great levelling out of wages
which has taken place during and since the war, has brought the question
into a different position. Nowadays, it can hardly be adduced, without a
closer examination of the question, that the difference in wages between,
say, the textile industry and ironworks, which fell £ram 21 to 11 %
between 1939 and 1950, must still be regarded as an improper weighting
of wages, if due regard is paid to such factors as the percentage of highly.
skilled workers, heavy work, accident risks, etc. Before the war, it was
much easier to state that the difference was too great.
When deciding which of two groups should enjoy the support of LO
to obtain a wage increase above normal, two methods are possible, in
principle. One is to carry out a detailed and systematic job evaluation,
taking into account all the factors contained in the overhead expression
»nature of work», which should affect wages in one job in relation to
the other. The second method is to judge this question according to each
industry's ability to recruit and retain manpower.
Neither of these methods is perfect. Even a well done job evaluation
is bound to contain elements of arbitrariness. The ability of an industry
to recruit and retain manpower is frequently accidental. This does not
indicate that a wage policy of solidarity is something impracticable or

7- LO: Trade Unions. 97

 unreasonable but merely that it should be realized that it will never be
possible to evolve a cut-and-dried system; also is should be borne in mind
that conditions and contents of the work may be changing in different
ways within different industries.
The introduction in Sweden of a general system of job evaluation as
between jobs in different industries similar to that practised in the Dutch
trade union movement, would not appear possible for psychological rea-
sons. On the other hand, the Swedish trade unions do not adhere so
strictly to traditional »wage differentials» as seems to be the case in the
British trade union movement, where highly paid groups have frequently
claimed it their right to retain wage differences in their favour by getting
the same increases as lower paid groups. In Sweden the propriety and
necessity of a reduction of wage gaps has been rather generally realized
and admitted. The amendment to the statutes of LO in 1941 was expressly
intended to make it possible for LO to support the low-paid groups more
efficiently.
In so far as the recent equalisation of wages has been carried out by
deliberate trade union policy, it has obviously been based on some primi-
tive form of job evaluation. When, for instance, the wages of agricultural
and textile workers were stated to be too low, this did not only mean that
they were lower than those paid to metal workers, miners or building
workers - an indisputable fact borne out by statistics - but also that
the difference in wages was greater than was justified by differences in
the nature of the work.
Whenever a union has accepted different wages for different groups
of members, this has not exclusively been due to different possibilities
of obtaining the increases desired. The union has also considered that
certain differences were justified with regard to qualifications and other
factors; and has, in point of fact, practised comparative job evaluation.
The latter was unsystematic and arrived at by instinct, and was highly
dependent on the subjective judgment of those who made the decision.
Different shades of systematization are possible, and, should LO exercise
in future more influence on collective bargaining, the unions can be
expected to demand that the evaluation of »proper» differences between
the wages of different groups be based on something more solid than
the subjective judgment of the LO secretariat and its representatives at
negotiations. It is hoped that every individual union making a claim will
provide LO with the most accurate data illustrating working conditions
in its trade.

98
 This forces the trade union movement almost automatically into a more
thorough evaluation of the nature of the work in the various industries.
Experience will show how far it need proceed in this direction. The most
reliable, long-term testimony of the accuracy of weighting of wages
between different groups, is that workers transfer indifferently in either
direction. On the other hand, any shortage of labour in an industry or
trade, evidently not due to special causes preventing the recruitment of
labour or a recent increase in the demand for man-power, generally indi-
cates that the wage level is too low.
In a preceding section, we have assumed that the long-term aim of
centralized influence in wages policy should be to bring average wage
developments into harmony with average productivity developments,
( after having secured for the workers an increased share of the national
income), without deteriorating the value of money. To summarize, we
can state that the maintenance of full employment is a necessary con-
dition for the trade union movement's ability to carry through the largest
possible wage increase; that, at the same time, the retention of low profit
margins is a necessary condition for the rate of wage increase to be
sufficiently slow not to cause a steady rise in prices; that this condition
should be fulfilled by the community which should maintain both full
employment by suitable, local action on the labour market and a general
purchasing power level compatible with national economic balance with-
out inflationary pressure and restrictive controls. A further condition for
the necessary stability in wage developments is that trade union activities
be, at least to some extent, co-,ordinated under the following motto: Wages
policy of solidarity, taking into account the different nature of work in
different industries and trades.

LO's Powers with Regard to Wages Policy

Under current statutes, LO has quite considerable powers to influence
a wage policy of the type mentioned above in a system of full employ-
ment. It is laid down in Statutes that:
LO has to exercise the central leadership of the efforts of the trade
union movement to defend the interests of employees on the labour market
and in industry and commerce; and to encourage the pursuance of the
activities of the affiliated unions along uniform lines and in solidarity,
while paying due regard to joint interests, to the rights of the individual,
and the legitimate claims of the community.

99
 The LO Secretariat supervises the policies of the affiliated unions, and
endeavours to have them planned and carried out in a uniform way.
It also considers and settles disputes arising between the unions and
encourages solid and trustful co-operation among them.
It is incumbent upon the unions to keep the Secretariat informed of
any major wage claims or labour disputes, irrespective of whether they
have resulted in strikes or not.
In questions of principle of major significance, or in questions of major
practical importance, the unions are obliged to consult the Secretariat.
If several affiliated unions, with members in the same industry or trade,
intend to start a wage claim on behalf of these members - as also if an
employer initiates negotiations under similar conditions - the unions
concerned shall co-operate, under the leadership of the Secretariat, and
agree as to the claims to be submitted.
The Secretariat may, if it wishes, send one or several representatives
to attend the unions' wage negotiations, and to submit proposals for a
settlement, either during the negotiations, or to the union concerned.
No union may take strike action (including sympathy action) involving
more than 3 per cent. of its total membership, without the sanction of the
Secretariat; nor even any action comprising less than 3 per cent. of its
membership, if such a strike can be expected to result in a lockout
against more than 3 per cent. of the members of the union, or against
members of other affiliated unions.* ·
Finally, if a proposal to settle a dispute, submitted by the Secretariat
has been rejected by the union concerned, the Representative Body of LO
may decide to withdraw the economic subsidies which regularly are given
to any union involved in a dispute (12 Kronor a week per member).

Thus, under present statutes, LO is already entitled and obliged to

supervise and encourage the co-ordination of the wage policies of national
unions. LO can - as indicated above - bring pressure to bear in differ-
ent ways. For strikes comprising more than 3 per cent. of the union's
membership - in some cases even for smaller strikes - the sanction of
the Secretariat is required, hut cannot be refused, unless the strike can be

* At the 1951 Congress, statutes were, amended to the effect that LO permission
is now required even for a strike, involving less than 3 per cent. of a union's member-
ship, if such action can be expected to result in lay-offs affecting a considerable
number of non-strikers in that or other unions.

100
expected to cause »considerable inconvenience» beyond the field covered
by the union concerned; failure to apply for statutory sanction entailing
the automatic loss of LO strike-pay contributions. The Secretariat's per-
mission is also required for blockades or boycotts in connection with a
strike requiring sanction or with a lockout, concerning which LO makes
strike-pay contributions. Furthermore, the Representative Body can decide
to withdraw strike-pay contributions to unions who reject proposals
made by the Secretariat to settle disputes in which strike action has been
taken, if the strike has, or can be expected to have repercussions outside
the union's area. No obligation on the part of the union to accept such
proposals is laid down in LO statutes, which means that no union can
be expelled from LO for rejecting them. On the other hand, expulsion can
result from failure to apply for permission to take strike action, or
deliberate disregard of other obligations laid down in the statutes.
In a comment to Statutes, LO's lawyer Arnold Solven states that
strike sanction can be refused and strike-pay contributions withheld
even in cases where the dispute, without having any direct or in-
direct repercussions on other unions, can be expected to impair
the trade union movement's joint interests and the general interests of
the community. This »political justification» of the increased powers over
trade union action, given to LO in 1941, is said to have aimed at equip-
0

ping LO leaders with full powers to represent and uphold the interests of
the entire movement, while observing its responsibility towards the com-
munity, and thus ward off any legislative encroachments upon trade union
freedom. The justification in question, it is said, refers to strike action
as such, not to its wage-policy purpose. »But», the comment continues,
»even if essential importance is attached to this point of view, one cannot
ignore the fact that centralization, even in these regulations, was regarded
by the Committee of Fifteen and by Congress as a link in the wage policy
of solidarity. This means that LO leaders can base their decision to refuse
a strike or withhold strike-pay contributions on both political and wage-
policy grounds; as they are also able to use their extended powers to
control trade union policy from these two points of view».
With this interpretation of regulations, one can obviously describe as
»serious inconvenience» any wage claims exceeding the limits of a cen-
trally recommended, co-ordinated policy and thereby seriously threatening
full employment and price stability.
Naturally these statutory powers of LO to bring pressure to bear on
unions for wage-policy purposes, should be used as an absolutely last

101
resort. Experience confirms that co-ordination is indeed possible without
using these methods of pressure. It is characteristic that the methods used
by LO during the 1940's to convince the unions to accept a joint wage-
policy line, were not threats of withholding strike-pay contributions, but
moral arguments to the effect that unless a joint line were accepted, all
other unions as well as other groups of the Community would be released
from the obligation to prolong wage agreements and stabilize incomes,,
and those who had refused to cooperate would be held morally respons-
ible for the resultant failure of the stabilization programme.
On the basis of this experience - even bearing in mind the particularly
favourable psychological conditions obtaining at the time - one should
be able to anticipate a rather permanent co-ordinated policy, guaranteed
by the unions' solidarity and self-discipline, and LO's authority. This
authority would obviously he strenghtened by re-organizing more effec-
tively LO's activities, and improving its surveys of production, price and
wage developments and other economic factors, both in general, and in
the individual trades.
In view of the possibilities afforded by current statutes for the co-ordi-
nation of wages policy, the introduction of further statutory clauses to
this effect might appear superfluous. The following proposals, however,
involve arrangements which are of such importance that it would perhaps
be advisable to make them statutory.*

Proposals Regarding Future Wage-policy Activities

The most practical way of giving LO a better general survey of the

general situation and the knowledge required for the purpose of judging
the prospects of wage-policy, would appear_ to be to instruct a body spe-
cially appointed by the Secretariat to study and follow these questions
more systematically than has hitherto been possible. Such a body would
require the assistance of a research department, better equipped than the
present one. The main duties of the wage-policy body, »Wage Policy
Council» are outlined above. They can be defined mote precisely as
follows:

* The Secretariat did not propose any such amendments of statutes to Congress,
1951; and a motion to this effect was rejected by Congress, This did not mean any
disagreement with the principles set forth in this Report, only another judgment as
to the necessity of statutory rules,

102
 It is assumed that the Representative Body of LO will continue to meet
during the autumn, as it has done since 1939, to deal with the Secretariat's
recommendations to be issued to national unions for the impending collec-
tive bargaining. The recommendations will be prepared by the Wage
Policy Council and, being based on a comprehensive investigation, they
will be formulated and explained in greater detail than previous ones.
The investigation will include preliminary discussions at a meeting of the
Representative Body or a conference of unions presidents held during
the spring. Before this, the Wage Policy Council will have surveyed the
results of recent collective bargaining, the economic situation and future
prospects. After the preliminary discussions, the Council will contact the
executives of the national unions concerned, individually or in groups,
in order to be informed of their experiences and desires; and to find
out on what conditions they are prepared to back general guidance lines
for the next collective negotiations.
On the basis of this, the Council will prepare and submit to the Secre-
tariat draft recommendations to be issued by the Representative Body.
The executives of the various unions will prepare wage claims based on
these recommendations; and submit them for approval to their own Wage
Conferences or similar meetings, which should be attended by representa-
tives of LO. The approved wage claims will then be sent to the Wage
Policy Council. Should any major differences of opinion arise, the claims
may be made the object of discussions in the Council or in the Secretariat,
at the meeting. Final decision regarding the contents of the claims
submitted to the employers, still rests, however, with the union executive.
The Wage Policy Council will make a general, detailed survey of the
wage claims of the different unions, to which will be attached. a statement
as to whether the claims are compatible with the recommendations issued
by the Representative Body.
By carefully studying wage statistics ( which are to be considerably
improved during the next few years), the Council sho uld be able to
1

obtain a clearer picture than hitherto of actual wage relations and of the
prospects of wage policy. Further, a more sy,stematic evaluation of what
is called the nature of work will be necessary, so that the wages of the
different groups can he compared with the demands placed upon the
workers. Since it is not practical to apply a purely mechanical form of
job evaluation, based on the allocation of points for various factors, the
Council will have to endeavour e. g. by discussing with the officials
of the different unions, to acquire a better knowledge of the nature of

103
industrial processes, demands for skill, industrial hazards etc. Endeavours
to create a better basis for the evaluation of the wages of different
groups, may make it necessary to establish to what extent wage differ-
ences exist for jobs -of a similar nature or a similar degree of skill between
different industries. If no special reasons can be found, one may assume
that wage differences between such groups are unjustified and caused by
factors other than the rational weighting of wages, e. g. the varying
economic strenght of the dilfiferent industries, more or less combined with
their ability to foist wage increases into prices. To establish such wage
differences would appear to be the least complicated question: the object
of this being to bring wage statistics on to a comparable basis. A more
complicated question is that of the propriety of wage differences between
groups with very dissimilar degrees of skill and types of work. The weight-
ing between different groups within the same industry is, indeed, in the
first place the duty of the union covering that particular industry, but
LO cannot avoid defining its position (e. g. to sanction or refuse a
union's claim for strike consent) even in cases when the question arises
of supporting the claims of groups whose work is of such a nature that
a comparison with work in other industries is mainly a matter of sub-
jective j,udgment. Under full employment, however, consi,derable assist-
ance in this connection can ibe derived from a study of the actual labour
market situation. Recruitment difficulties and depopulation tendencies
in certain trades indicate that the wage level is low in relation to the
nature of the work, even if it would appear to be high in money terms.
A study of the labour market situation from this angle is therefore one
of the permanent duties of the Research ,Department.
The t,ask of the Wage Policy Council is thus to prnpare the Secre-
tariat's ,decisions and the co-operation of LO representatives in the
negotiations of the different unions, functions which must he based to
a high degree on personal judgment and coIJ1fidence, combined with
economic and statistical information.
It is proposed that the Wage Policy Council be appointed by the LO
Secretariat.
The duties of the Research Department in this connection can be out-
lined ·as follows:
1) To study constantly and compile wage statistics with a view to
obtaining adequate wage comparisons between the different groups.
2) To follow the labour market situation and draw from it possible
conclusions regarding the weighting •of wage relations.

104
 3) To collect as much as possible comparable data regarding the nature
of work and the demands (skill, hazards, strains and stresses) placed
upon the workers.
4) To study and compile statistics and other ,data concerning profits
and economic prospects in different indutries; monopolies, etc.
5) To study the general economic situation and State economic policy
and prepare, if necessary, pro-posals regarding the latter.
6) To study the wage claims submitted by the national unions with a
view to establishing their actual significance and possible repercussions.
7) To study, for the same purpose, the agreements already concluded.
This programme cannot obviously be introduced immediately nor
carried out at short notice. Furthermore, its realization rests on the
assumption that the respective unions will carry out similar investiga-
tions in their own industries, if required; and that these will he co-ordi-
nated by the Research Department of LO. The Metal Industry Workers
Unions and the Building Workers have already set up their own research
departments to perform researoh, i. a. of the type mentioned above.
 Postscript
The Fourteenth Congress of the Swedish Confederation of Trade
Unions, held in Stockholm 8th--15th September, 1951, dealt with a
number of motions, mainly from local union branches, on wage policy
questions. Demands made in these motions incl udeid the following points:
1. The collective bargaining activities of affiliated National Unions
should be co-ordinated and planned, so as to achieve an equalization
of wages, due regard being paid, however, to the nature of the work
and the efforts required.
2. A clause should be added to § 5 of LO statutes to the effect that the
Representative Body shouid meet not later than in August every year
to issue detailed: recommendations regarding collective bargaining
due to begin round the end of the year.
3. A new clause should be added to § 11 of LO statutes, under which
National Unions would be obliged to subm:t for approval by the LO
Secretariat any proposed alterations regarding agreements covering
more than 3 per cent. of their members, before submitting these de-
mands to the employers. Should the Secretariat consider that a pro-
posal disagreed with the LO recommendations, the Union concerned
would have to amend it accordingly.
4. For similar reasons all negotiations should be carried out simul-
taneously.
5. LO should arrange for wages to be tied in some way to the cost-of-
living index .
•
6. LO should inquire into and negotiate with the Employers' Confedera-
tion for the setting up of a Wages Equalization Fund, to which re-
munerative concerns should contribute at a rate fixed in connection
with wage agreements, and from which assis;ance could be granted to
less remunerative firms to enable them to increase the wages of their
personnel.

107
7. LO should make an inquiry with a view to establishing what forms
of job evaluation are suitable both for manual and salaried workers
and for employers.
8. Steps should be taken to speed up the conclusion of agreements by
starting negotiations earlier in relation to terminal ·dates, increasing
the number of conciliators or any other appropriate measures. In the
event of delayed agreements, increases should always he pai1d retro-
spectively as from the date of expiration of the old agreement.

In its comments on these motions, the Secretariat referred to the in-

quiry made by the Organization Committee 1and the proposed setting up
of a Wage Policy Council, and stated that in order to maintain full em-
ployment and stabilize the value of money, the Government should have
to concentrate its economic policy upon the essential conditions for stabil-
ity, as regards the level of both prices and employment. The Trade Union
movement's contribution to such a national economic development could
be effective only if the central authorities of LO were given more in-
fluence on wages policy. In order to retain the best •possible standard of
wages, combined with a stable value of money, wage increases should
not outstrip the results of improved production; and furthermore, wages
policy shoul,d ,aim at retaining only such wage differentials as are
compatible with a policy of solidarity.
Unlike some of the proposers of motions, the Secretariat did not
belive that statutory amendments would be necessary in order to arrange
the co-ordination of wages policy, and justified its standpoint by the fol-
lowing statement:
»In future, the stress should be laid on the moral authority of LO, as
it was done ,during and after the war in the stabilization actions - so
trying for certain groups of workers - which were carried out to prevent
inflation.
This authority must he based on the ability of the central governing
body of the Trade Union movement to survey the general situation; and
on the fact that it represents the joint interests ,of the entire movement.
Its pur,pose is to persuade individual Unions to co-operate voluntarily in•
appreciation of these joint interests and the necessity for solidarity.»
This would he promoted by the appointment of •a Wage Policy Council
using the services of an enlarged Research .Department within LO. Such a
scheme coul,d he carried out within the framework of LO's present
statutes. Regarding motions calling for a more efficient wages policy,

108
the Secretariat submitted a resolution to the effect that Congress should
recommend that the wage policy activities of LO be improved along the
main lines proposed by the Organization Committee (i. e. this Report).
A differing proposal was made to the effect that the creation of a
Wage Policy Council should be left open to the next Secretariat. The
,president of LO declared that such a decision by the Congress would
mean a reduction of the authority of LO to pursue a centralized influence
on wages policy and should, therefore, be rejected. Following this
opinion, the Congress adopted the Secretariat's resolution by a large
majority.
On May 5th, 1952, the Secretariat appointed the Wage Policy Council,
the setting up of which had been sanctioned by Congress in 1951. The
Council consists of the Vice Chairman of LO, the Head of ·the Research
Department and one more official of LO, and of two more members
from unions affiliated with LO. The duties of the Council are »to prepare
recommendations for coming negotiations; to analyze the results of agree-
ments during the agreements period; to keep itself informed of the
claims of the different groups of workers; to compile wages statistics;
and to prepare LO's assistance to individual unions in wage negotiations.»
The Council can thus be described as the Secretariat's drafting body on
wage policy questions.

109
 Table of Contents
Preface ................................................................ . 5
Background ............................................................ . 7
The Trade Union Movement and the Commu:Jity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Labour Market Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Discussions about Wage Legislation ..................................... , 12
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Trade Union Movement and Industrial Rationalization . . . . . . . . . . . . . . . . . . 19
Different Ways of Increasing Industrial Efficiency . . . . . . . . . . . . . . . . . . . . . . . . 24
Rationalization of Private Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Rationalization of Industrial Branch Structures . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Wages Policy and Rationalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
The Labour Market under Full Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Excessive Labour Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Increased Absenteeism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Other Disturbing Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Summary .............................................................. 46
Wage Develo,pments in the Full Employment Period . . . . . . . . . . . . . . . . . . . . . . . . 49
Chronology of Wage Policies 1939-1950 . . .. . .. . .. .. .. .. . . . . . .. . . . . . .. . . 49
Rates and Earnings. The Wage Drift .. . . . . . . . . .. .. .. .. . .. . . . . . . .. . . . .. . . 55
Wage Levelling in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Wage Levelling in Manu~acturing Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Summary .............................................................. 63
Wages Policy and Developments 1950-----53 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
'Dhe Wages Policy of the Trade Union Movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Labour's Postwar Programme: How to Prevent a Crisis . . . . . . . . . . . . . . . . . . . . 74
Significance and Prospects of Full Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Wage Restraint a Basis for Stability'? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Wage-fixing a Task for the State? . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 88
Co-ordination of Economic Policy and Wages Policy . . . . . . . . . . . . . . . . . . . . . . 89
Wages Policy of Solidarity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
LO's Powers with Regard to Wages Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Proposals Regarding Future Wage-policy Activities ........................ 102
Postscript . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
\