Introduction.

The history of employer-employee relationships is witness of the surpluses and weaknesses to

which human institutions and organizations are prone. Industrialization of societies pioneers key changes
in how work was organized, administered, and accomplished. Guilds or associations of persons in the
same trade gave way to labor unions that turned into collective bargaining agents on behalf of the
employees. Relationships involving trade union and employers have ranged from adversarial to
collaborative.

Module 2

Objective

At the end of this module, students are expected to:

1. Define the guild system.

2. Discuss the domestic system.
3. Contrast guild system from domestic system.
4. Recall the industrial revolution.
5. Explain the factory system and its societal effects.
6. Enumerate the major characteristics of an employer-employee relationship.
7. Identify reasons for complexities in an employer-employee relationship.

THE GUILD SYSTEM AND DOMESTIC SYSTEM

During the 14th and 15th centuries, guilds were started which were associations of craftsmen
within the craft. The guild system stretched from Germany to the Nordic countries throughout the 15 th
century.

All occupational groups had their own respective guild. The welders belonged to the welders’
guild, the blacksmiths to the blacksmiths’ guild and so on. The guilds determine whether a journeyman
would become a master. In order to be allowed to work as a master, the Town Council had to accept him
as a citizen of the town. A citizen was a contribution to the town, as he paid tax the guilds made certain
that there were less number of masters and that there would be work for all.

The guilds had a community task as well. They took care of sick members, granted education for
fatherless children and assisted widows who were not able to sustain themselves. If a widow knew the
craft, she has the right to take over her husband’s business. In the middle Ages, this was the single
opportunity for a women to become economically self-sufficient.
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The fundamental medieval manufacturing organization was the traditional shop-a master and
wife, a couple of employees, and the couple of children studying the trade. The master procured his raw
materials, manufactured his product, and sold it retail. The shop was habitation, dormitory, workshop,
warehouse, and retail store. The masters of a given trade in a specific place are united into a guild. The
guild served many functions:

1. Economic
a. Set quality standards
b. Prices to be paid for materials and labor and to be asked for finished products
c. Set production quotas
d. Stood surety for loans to fellow members
e. Pooled capital
2. Educational
a. Maintained educational standards
b. Inspected working conditions
c. Examined candidates for journey-man and master
3. Fraternal
a. Maintained burial fund
b. Cared for widows and orphans of members
c. Honored the patron saint
d. Provided representation on the town council
e. Bailed fellow-guildsmen from jail
4. Civic
a. Served in town militia
b. Provided local fire defense
c. Maintained a section of the town hall
d. Took turns at guard duty
e. Supported local magistrates
f. Served in local courts
g. Contributed to the town treasury
h. Participated in local festivals
i. Maintained charitable institutions
j. Hospitals
k. Infirmaries
l. Leper hospital
m. Charity cemeteries
n. Poor relief
o. Care for the aged
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p. Orphanages

The guild system became less competitive and tailored to a growing economy. After 1250,
economic expansion sluggish and the guilds had to confront new conditions. The responses of the
masters of many guilds were to:

1. Restrict admission to master’s status

2. Reduce labor costs by cutting salaries of journeymen and extend the years of apprenticeship
3. Lower working condition
4. Reduce civil contributions and charity
5. Lower purchase price for raw materials
6. Take over work of smaller guilds
7. Switch to lower quality, lower cost products
8. Establish monopoly areas

These steps were inadequate in the long run. The guild system was extended to be cooperative
rather than competitive. Any longing for efficiency and profit was balanced by the recognition of the goal
of a steady economy and interest for the common welfare. A noteworthy part of the profits of the guilds
was diverted to granting social services.

THE INDUSTRIAL REVOLUTION

The Industrial Revolution was the shift to new manufacturing processes in the period from
about 1760 to sometime between 1820 and 1840. This shift integrated going from hand production
methods to machines, new chemical manufacturing and iron production processes, enhanced efficiency
of water power, the growing use of steam power, and the development of machine tools. It also included
the adjustment from wood and other bio-fuels to coal. Textiles were the leading industry of the Industrial
Revolution in terms of employment, value of output and capital invested; the textile industry was also the
original to use modern production methods.

The Industrial Revolution marks a most important turning point in history; nearly each aspect of
daily life was influenced in some way. Particularly, average income and population began to display
unparalleled sustained growth. Some economist say that the major impact of the Industrial Revolution
was that the standard of living for the general population began to boost constantly for the first time in
history, although others have said that it did not begin to significantly perk up until the late 19 th and 20th
centuries.

The Factory System

The factory system is a method of manufacturing first adopted in England at the beginning of the
Industrial Revolution in the 1750s and later spread abroad. Historically, it was also known as the
workshop system and the domestic system.
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The main characteristics of the factory system is the use of machinery, originally powered by
water or steam and later by electricity. Other characteristics of the system mostly derive from the use of
machinery or economies of scale, such as the use of unskilled labor, division of labor, the centralization of
factories, and standardization of interchangeable parts.

The merchants would concentrate equipment in a warehouse or factory, acquire raw materials
from their own farms or through agents, hire workers for wages only, ignore any production quotas, and
compete rather than co-operate. This system was used primarily for manufacture consisting of several
steps or dealing with heavy materials. It ultimately developed into the factory system characteristics of
the Industrial Era and which is still common in the post-Industrial age.

The manufacturing guilds fought the development of these proto-capitalist systems, but were
defeated by an alliance of the merchants’ and the other great guilds (professional groups such as
doctors, druggist, lawyers, gold-and silver-smiths). Although there were class wars in many towns, the
artisan guilds were unable to compete economically and so finally disappeared. Many guilds persisted for
a long time, however, especially those in retail and small-scale service and repair. It was only with the
appearance of shopping centers and supermarkets after World War II that butchers and bakers lost their
professional status, while such groups as plumbers have managed to keep that status.