Z'iviVL INTERNATIONAL LABOUR OFFICE WORKERS' MANAGEMENT IN YUGOSLAVIA GENEVA 1962 STUDIES AND REPORTS New Series, No. 64 PRINTED BY " L A TRIBUNE DE GENÈVE", GENEVA (SWITZERLAND) PREFACE The study of different systems of labour-management relations has always been prominent among the activities of the International Labour Office. Between the two World Wars the Office issued a number of comprehensive reports in the form of comparative or single-country studies on freedom of association, collective agreements, conciliation and arbitration machinery, co-operation between public authorities and employers' and workers' organisations, and labour courts, as well as studies describing the experience of individual enterprises which were of interest from the standpoint of labour relations. In all of these, the Office tried to ascertain the social facts, whatever the political or ideological background of the institutions it was analysing, and based itself on the principle that each system must be studied with due regard to its basic ideas and concepts. In 1957, the Office accepted a suggestion from the Government of the Federal People's Republic of Yugoslavia that it should make a study of the system of " workers' (self-) management " whereby undertakings in the public sector of the economy—which since the post-war nationalisations embraces the whole economy with the exception of agriculture and part of the handicrafts sector—are administered by their own staffs. Following the Government's invitation, officials of the I.L.O. visited Yugoslavia in the autumn of 1957, November 1959 and April 1960. After making contact with the main federal departments and agencies concerned in one way or another with industry and its self-management machinery, namely the State Secretariats for Labour and Economic Affairs, the Planning and Statistical Institutes, the Supreme Court for Economic Affairs, the National Bank, the Investment Bank, the Secretariats of the Central Council of Trade Unions and the Federal Chamber of Industry, and various local authorities, trade union organisations and associations of enterprises, they had an opportunity of seeing how workers' management operated in practice in a number of concerns. In all, about 20 undertakings were visited. The visits usually involved talks with leading figures in the plant (the chairmen of the workers' council, the board of management or some of their subcommittees, the director, departmental heads, etc.) followed in some instances by further talks with trade union officials or various workers picked out during the iv WORKERS' MANAGEMENT IN YUGOSLAVIA tour. In some cases, the I.L.O. officials also attended meetings of a board of management, workers' council or the entire personnel. These factory tours were too short, however, to enable them to meet large numbers of workers. The talks were in no way interviews based on detailed questionnaires of the kind used in sociological surveys, but they did give the Office representatives an idea of the extent to which the principles and practice of workers' management had actually been grasped by the individuals they met. The officials who went on these missions were given every facility in making their inquiries, especially in the choice of undertakings and plants visited, and they felt free at all times to ask any questions they liked or to request information about any aspect of industrial life, including matters that are normally regarded as coming under the heading of " business secrets ". Their task was greatly simplified by the fact that before the visit or on arrival they were often given very full background material on the undertaking they had asked to see. In their contacts—whether with officials, university teachers, trade unionists, members of management or manual workers—the members of the mission invariably encountered trust and confidence. The Yugoslav authorities and everybody else they met gave them the warmest of welcomes and made every effort to provide the information they asked for. Sincere thanks are due to all those who—often at great inconvenience —helped towards the completion of this study. The present study, although partly based on material collected on the spot during the missions to Yugoslavia, is not a direct report by the officials on what they saw and heard there. It is, in the main, the result of a detailed analysis of a mass of material (legislation, reference works, statistics, etc.) available in the International Labour Office.1 In agreeing to undertake the study, the Office set itself the aim, in accordance with its function as a centre of information, of providing a general picture of a particular system of management which does not appear to have previously been thoroughly examined. The present volume describes the aims of the system and its machinery, and analyses what appear to be its main characteristics and results, drawing upon Yugoslav sources and using the terminology current in the country. There has been no attempt to make a critical or comparative evaluation of the system as a whole; it is left to the reader to form his own opinion on the basis of the material given in the study. When in draft, the study was sent for observations to the Yugoslav authorities. These submitted a number of comments, which were taken 1 A bibliographical appendix gives an indication of the extent of this material. PREFACE V into account in a number of cases in the preparation of the final text. Thereafter, the study was considerably redrafted and shortened. While the Office thus had the benefit of the help of the Yugoslav authorities in the collection and interpretation of the material, the study is published, like all other studies issued by the I.L.O., under the sole responsibility of the Office. As the original draft was completed in the second quarter of 1960, the study does not reflect later developments which may have involved more or less substantial changes in some of the provisions governing economic undertakings. Thus the system of labour remuneration and income distribution, discussed in Chapter X, was no doubt affected by a thoroughgoing overhaul of the tax structure, which had the effect, in most cases, of providing a measure of tax relief for undertakings; further, the freedom enjoyed by the latter in regard to the fixing of rates of remuneration and income distribution was considerably enlarged. At the same time, a policy of administrative decentralisation was actively pursued. These various changes were to be sanctioned by a new Constitution, a draft for which was drawn up in 1961. However, the new situation gave rise to abuses which did not escape the notice of the authorities responsible for economic policy. As a result, stronger technical and economic controls were reintroduced in some instances. Only after the constitutional text now under discussion has been finalised will it be possible to see exactly how problems arising out of the developments described above have been met, or what the effect has been both on the over-all political and administrative pattern and on the degree of autonomy enjoyed by territorial units and undertakings. TABLE OF CONTENTS Pago PREFACE Ill INTRODUCTION 1 PART I The Background to Workers' Management IS CHAPTER I: The Human Setting and Material Resources The Yugoslav Peoples Today Physical Characteristics and Natural Wealth Economic Development CHAPTER II : The Institutional Framework Administrative Structure Local Government : Commune and District The Federated Republics and the Federal State Judicial Structure Political Organisations The Communist League The Socialist Alliance Economic and Social System Economic Structure Social Policy Occupational and Economic Organisations 15 15 17 18 22 23 23 27 28 31 31 34 35 35 40 42 PARTII The Undertaking and Its Organs of Management 55 CHAPTER III : Legal Status of the Undertaking Foundation of Undertakings Amalgamation and Subdivision Liquidation Financial Reorganisation and Operation by Receiver Special Categories of Undertakings Size of Undertaking and Its Work Force 56 58 60 60 62 63 65 CHAPTER IV: The Collective 67 Composition Functions Rights of Members of Collectives CHAPTER V: Elected Management Bodies : The Workers' Council and the Board of Management The Workers' Council Composition Election Workers'Councils at the Department Level Committees of the Workers' Councils 67 68 73 74 74 75 76 81 83 vra WORKERS' MANAGEMENT IN YUGOSLAVIA Page The Board of Management Composition Election Committees of the Board of Management Boards of Management at Department Level Rights, Obligations and Liability of Members of the Management Bodies Job Security and Labour Discipline Status in the Undertaking and Special Allowances Rights and Obligations of Members Liability of Members Recall and Dissolution of Management Bodies Recall Dissolution Methods of Work Sittings of the Workers' Council Sittings of the Board of Management The Chairmen of the Workers' Council and the Board of Management CHAPTER VI: The Technical Director Selection, Appointment and Dismissal Open Competition Appointment Dismissal Appeals Relations between the Director and the Management Bodies of the Undertaking The Director as Head of the Undertaking The Director as an Employee Practical Effect of Workers' Management on the Director's Position . . 84 85 86 87 88 88 88 89 90 90 91 91 91 93 94 98 99 100 101 101 102 103 104 104 107 108 109 PART m Workers'Management in Practice 119 CHAPTER VII: Regulatory Powers and General Policy Decisions By-Laws and Rules of the Undertaking The By-Laws Rules on Labour Relations Rules on Remuneration "Tariff Rules" Rules for Special Schemes Practical Application Other Rules Adopted within the Undertaking . General Policy Decisions The Undertaking's Annual Plan Approval of Periodic Management Reports Other General Decisions CHAPTER VIII: Economic Functions Administration of the Assets of the Undertaking Fixed Capital Working Capital The Reserve Fund Welfare Assets Holding Account 121 121 121 121 126 126 135 136 140 140 140 145 148 152 152 153 154 156 156 157 CONTENTS IX Page Transfers from One Fund to Another Assessment of the Initial and Current Value of the Various Funds . . Short- and Long-Term Loans; Investments Internal Organisation of the Undertaking Commercial Activities Organisation of Production, Modernisation, Mechanisation Productivity and Pace of Work CHAPTER IX: Labour Relations in the Undertaking Establishment and Termination of Work Relationship Recruitment Procedure Termination of Relationship Assignment, Transfer and Promotion Job Evaluation and Classification Training Apprenticeship Training on the Job for Adults Scholarships and Outside Training Practical Training for Workers' Management Labour Discipline and Workers' Liability Appeals, Grievance Procedure and Strikes Personnel Administration and Methods of Communication CHAPTER X : Distribution of the Undertaking's Income and the Remuneration of Labour The Process of Allocating the Undertaking's Income and Distributing Remuneration General First Phase of the Process : Gross Income, Deduction of Operating Costs Second Phase: Contributions to the Community and Allocation of Net Income Tax on the Undertaking's Income Allocation of Tax Revenue to Public Budgets and Investment Funds Sharing by Undertakings in Higher Output and Productivity (Income Tax Rebate) Distribution of the Net Income Third Phase: Distribution of Remuneration among the Workers . . . Priority of Different Elements of the Remuneration Special Arrangements for Distributing Remuneration Secondary or Related Financial Records Approval of the Accounts within the Undertaking and External Supervision The Process of Deciding Income Distribution Control of Operating Expenses . . Distribution of the Net Income " Social Control " by the Commune The Collectives and Net Income Distribution Decisions on Individual Incomes Financial Inspection and Audit Practical Effects of Income Distribution under Workers* Management. . Over-all Effects on Production, Employment and Productivity . . . . Distribution of the National Income and Productive Resources . . . Workers' Personal Incomes and Real Earnings The Distribution System and the Workers' Management Bodies . . . CHAPTER XI: Conditions of Work and Welfare Facilities Hours of Work and Recreation Daily and Weekly Hours; Breaks; Timetables 157 158 158 163 166 171 174 179 180 181 183 185 186 189 189 190 191 192 194 198 200 204 206 206 208 211 211 212 213 213 218 220 222 230 232 232 235 237 238 240 241 242 243 243 245 248 252 253 254 255 X WORKERS' MANAGEMENT IN YUGOSLAVIA Page Shorter Working Day Overtime Weekly Rest and Public Holidays Annual Holidays and Supplementary Leave Check on Hours Actually Worked Safety, Health and Medical Services Safety and Health Medical Services Housing, Recreational Facilities, Canteens, Miscellaneous Services and Benefits Housing Holiday Camps and Recreational Facilities Canteens and Other Services Miscellaneous Benefits CHAPTER XII: General Problems, Supervision and Penalties General Problems Methods of Supervision Internal Supervision Administrative Supervision " Social Control " by Authorities and Organisations Penalties SUMMARY 256 256 257 257 259 261 261 262 264 267 269 271 272 276 276 280 281 282 285 290 293 APPENDICES I. Statistical Tables II. Bibliography 299 311 LIST OF TABLES TABLES IN THE TEXT OF THE STUDY I. II. III. IV. Length of Service and Changes of Director in Serbian Undertakings . . Extracts from the Remuneration Schedule of a Large Undertaking for 1959 Financing and Investment in 508 Industrial Undertakings Summary of Operating Accounts and Distribution of the Income of an Industrial Undertaking V. Supplementary Analysis of Workers' Personal Incomes VI. Expenditure by Welfare Funds in 1958 and 1959 in 399 Undertakings . . 110 130 162 209 232 266 TABLES IN APPENDIX I A. Main Ethnic Groups and Percentage of Illiterates B. Yugoslav Population and Other Basic Data by Principal Administrative Divisions C. Index of Industrial Production D. Economic Undertakings by Number of Persons Employed and Branch of Activity, 31 March 1959 E. Collectives and Workers' Councils, 1952-58 F. Distribution of Incomes of Undertakings, 1953-59 G. Principal Items in the Over-all Balance Sheet for Undertakings in the Workers' Management Sector, 1953-59 299 300 301 302 303 305 306 CONTENTS XI Page H. Distribution of the Total Income of Industrial Undertakings (including Mines), 1956-59 J. Net Personal Income (Remuneration) of Workers in the Workers' Management Sector and in Some Economic Branches, 1955-59 K. Financial Returns for Work in Industry in 2,464 Undertakings in 1958 L. Production Cost and Consumer Price Indices 307 308 309 310 LIST OF FIGURES 1. Political and Administrative Organisation of the Country 2. Structure of Communes 3. Relationship between the Management Bodies and the Executive Bodies of Undertakings 4. Distribution of the Total Income of Undertakings 5. Workers' Personal Incomes in Industrial Occupations, 1957-60 (Monthly Averages) 6. Workers' Personal Income in Non-Industrial Occupations, 1957-60 (Monthly Averages) Sketch Map of the Federal People's Republic of Yugoslavia 22 24 66 208 250 251 16 INTRODUCTION The year 1950 marked a turning point in the recent history of Yugoslavia. On 27 June of that year the basic law on workers' management was passed 1 and this was the starting point of a long series of reforms designed to transform the country's political, economic and social structure. The adoption of the Act by the National Assembly was described by the President of the Republic as " a historic act of greater significance than the immediate post-war nationalisation measures ",2 In the view of the Head of the Yugoslav State, the transfer of the means of production to state ownership could not in itself achieve the aim of " the factories to the workers " because this watchword " is in no way an abstract principle " but implies " a long-range programme to develop Socialist relations in production, in terms of both the property relationship and the workers' rights and duties ".2 The decision to introduce workers' management was not, however, taken in a void. The Act of 27 June 1950 merely gave official blessing to a number of rapidly developing experiments in workers' management which had already been going on for some time. In deciding to extend these experiments to the whole country, the Yugoslav authorities demonstrated their determination to break with the system of running the economy by administrative fiat which had been in operation during the immediate post-war years. The drive for nationalisation of the means of production, which by 1948 had taken in the whole of the economy with the exception of handicrafts and agriculture, had led to the creation of a highly centralised administrative machine with a strict chain of command running down from the central Government to individual factory managements. At each level, power was concentrated in the hands of a single operational chief. At that time, the Government and the economic ministries were responsible for running 1 The principle of workers' management was laid down as follows in section 1 of the Act: " Manufacturing, mining, communications, transport, trading, agricultural, forestry, municipal and other public undertakings shall, as the property of the whole nation, be administered in the name of the community by their work collectives as part of the said economic plan and on the basis of the rights and duties established by law. " The collectives shall carry out their administration through the workers' councils and boards of management of the undertakings..." (I.L.O. : Legislative Series, 1950— Yug. 2). 2 Cf. Sorba (Belgrade), 27 June 1950. 2 WORKERS' MANAGEMENT IN YUGOSLAVIA the whole of the economy in accordance with a plan whereby the State laid down the production schedules of each undertaking. They allocated raw materials and finished products, fixed prices and wages, directed manpower and assumed full responsibility for the financial results of each publicly owned undertaking, both profits and losses being absorbed by the state budget. In the general view of the Yugoslav leaders, this centralised planning and administration of the economy was the only possible method in the conditions that existed at the time. But it had a number of drawbacks which became increasingly serious as time went on. The proliferation of bureaucratic machinery, the lack of balance in the production and distribution of goods owing to the lack of economic incentives and the need for growing reliance on administrative measures and penalties aroused particular concern. Moreover, the system gave production workers little chance of expressing their views in the face of the planning directives and the authority of the single " operational chief " who alone had power to interpret and enforce them.1 AIMS AND MAIN FEATURES OF WORKERS' MANAGEMENT The aims and chief features of this system of " workers' management " or " self-management ", as described in the Yugoslav literature on the subject, might be summarised as follows : 1. Workers' management in no way impairs the principle of public ownership of the means of production. The ownership of undertakings has not been transferred to the workers, but only the right of managing and sharing in the income of the undertaking. 2. Workers' management entails, on the other hand, a complete break with the system of centralised management of the economy. Whereas formerly all power was concentrated at the top of the pyramid, workers' management operates from the bottom upwards with the aim of decentralising by allowing problems to be solved by those most closely concerned either in individual undertakings or in other local communities. 3. In the undertakings themselves, the central purpose of workers' management is the abolition of wage earning and of any distinction between those who direct production and decide on the distribution of 1 Cf. Radivoj UVALIC: "The Management of Economic Undertakings by the Workers in Yugoslavia ", in International Labour Review (Geneva, I.L.O.), Vol. LXIX, No. 3, Mar. 1954, pp. 235-254. According to E. Kardelj, Vice-Chairman of the Federal Executive Council, " the idea of a ' common interest ' was almost exclusively political rather than economic in the minds of the working class " {Questions actuelles du socialisme (Paris, Yugoslav Information Agency), No. 16, Jan.-Feb. 1953, p. 4). INTRODUCTION 3 profits and those who supply their labour. The status of workers in Yugoslav industry is to be changed from that of " wage earners " to that of " free producers ", i.e. members of an autonomous working body which is responsible for managing the undertaking and sharing out the earnings. In other words, the mere fact of working in an undertaking, irrespective of the nature of the job, is automatically to confer a right to a share in its management. 4. This right is to be exercised collectively through various elected bodies. All the workers in the undertaking jointly form the " work collective ". This elects the " workers' council " which is responsible for settling general pob'cy, e.g. production, investment, prices, the distribution of income, industrial relations, etc. The workers' council in turn elects a " board of management " from among the workers in the undertaking; this is an executive body, three-quarters of whose members must be workers directly engaged in production. The managing director sits on this board but may not act as chairman. He is responsible to the workers' management bodies. 5. In taking over the management of an undertaking the personnel is also to take over the benefits and the risks. As workers, the members have an incentive to achieve the best possible working conditions and rates of pay. As managers, they must be responsible for the decisions themselves. Their entitlement to allocate the earnings is regarded not only as a logical consequence of this managerial right but as the key to the efficiency of their management. It is in fact the driving force behind the whole system. The better the undertaking's earnings, the greater the share available for distribution. But if the workers do not produce enough to pay for the welfare measures they have decided on, or if through bad management the undertaking runs into financial trouble, their own pay packets will be directly affected. Apart from the fact that there is a statutory minimum rate of pay, they are to be in much the same position as workers who have set up on their own account and have the responsibility of running a business on top of the job they did before. 6. Thus, it is within each collective that the fundamental choices must be made and the contradictions or conflicts between the common interest and individual interest overcome. Providing this is achieved, the part played by the economic authorities at higher levels is drastically reduced. Any direct interference in the running of an undertaking is contrary to the spirit of the system. At the same time, the system is intended to allow the collective to make full use of its assets and adapt operations to local conditions and consumer needs, so as to be as productive as possible from the standpoint of society at large. Workers' 4 WORKERS' MANAGEMENT IN YUGOSLAVIA management is regarded as superseding both state economic administration and private enterprise; it is intended to become the principal stimulus for the spontaneous growth of economic activity in an economy which nevertheless remains based on public ownership. 7. Apart from enabling each collective to obtain the best conditions of work compatible with the resources of the undertaking, workers' management is to bring about a complete change in relations between the members of the collective, i.e. hierarchical and disciplinary relations are to give way to " comradely relations " 1 founded on a community of aims and interests. 8. The powers of management and initiative which are vested in the collective can only be exercised under a system recognising freedom to produce and exchange goods and services. The restoration of competition or (to use the term normally employed in Yugoslavia) of " the free play of economic laws " is thus a condition as well as a result of workers' management. 9. The independence granted to the bodies representing the workers in undertakings as regards the organisation of production and the allocation of income is not, however, to be unlimited. Society remains responsible for the well-being of the population as a whole and for developing the nation's productive powers; the public authorities must therefore retain the right to create the legal framework for all economic activity, lay down general development plans and (where necessary) take action to eliminate distortions or stamp out abuses. 10. In the formulation of such measures, the collectives are to participate through their representatives on the " producers' councils ", set up at each administrative level (commune, district, federated republic, Federal Republic) parallel with the people's chambers. These councils have a majority of members elected by production workers, and participate in all decisions on economic and social policy on an equal footing with the people's chambers. 11. Workers' management of undertakings is merely one of the forms of " social self-government " based on the participation of those occupied in a particular activity; self-management is also to be applied in such sectors as hospital services, schools, social security, housing, theatres, etc. In the eyes of its designers, workers' management is thus not simply a form of machinery—such as workers' councils and boards of 1 1.L.O. Labour-Management Relations Series (mimeographed), No. 5, " Workers' Management and Labour Relations in Yugoslavia ", Record of an informal discusión held on 16 June 1958 in connection with the 42nd Session of the International Labour Conference (Geneva, 1958). INTRODUCTION 5 management—to ensure that undertakings are run on behalf of the collectives which they represent, but it is also (and above all) the mainspring of a far-reaching scheme to transform the whole of the country's political, economic and social structure. Administrative and economic decentralisation based on the individual undertaking and the commune is perhaps the most striking feature of this change. 12. The system of " self-management " operates within the framework of the political regime of the Federal People's Republic of Yugoslavia, based on a single-party system. It has actually become an integral part of the Republic's political structure since the right of workers' management has been formally incorporated into the Constitution. Hence the foundations of the system cannot be challenged. 13. However, the system of workers' management is not to be imprisoned in any hard-and-fast doctrinal formula. In the view of the Yugoslav leaders— . . . Socialist relationships can come solely as the product of a conscious and elemental economic, social and other activity and practice of working men who are striving, creating, reasoning and building in the conditions of social ownership of the instruments of production ; . . . The theoretical thought of socialism also can develop but from this practice.1 The Yugoslav system of workers' management is thus characterised by constant evolution, and, in order to understand how it operates at the present time, it will be useful to examine the main stages in its development. EVOLUTION OF WORKERS' MANAGEMENT Workers' management in its current operation is the outcome of more than a decade of reform and experiment. On the passing of the basic law in 1950, workers' management was introduced into all undertakings in a very wide segment of the economy. But the organs of workers' management could often in practice only act in an advisory capacity because at the time industry was still subject to the centralised machinery for planning and managing the economy. Within each undertaking the " director " (over whose appointment the workers' bodies had at first only very limited influence) retained his powers as " operational chief ", which enabled him to hold up any decisions by the workers' council that he considered to be at variance with the current plan. 1 £. KARDEU : " Socialist Democracy in Yugoslav Practice ", in Annals of Collective Economy (Geneva, International Centre for Research and Information on Collective Economy), Vol. XXVI, 1955, p. 15. 2 6 WORKERS' MANAGEMENT IN YUGOSLAVIA However, the dismantling of the central administrative machinery went ahead very quickly, and as a result of successive reorganisations over 200 ministries or other high-level economic administrative agencies were abolished. Controls on prices, raw materials and the distribution of goods were gradually lifted and the direction of manpower ended in early 1952. A new enactment on economic planning which came into force at the same time abolished all direct links between the economic activity of enterprises and the plans laid down by the higher authorities (although the latter retained wide powers as regards general economic policy). Also at this time, the first experiments were made in relating remuneration to the financial performance of each individual undertaking. Thus, workers' management began to take practical shape. In order to survive, each undertaking had to tackle the problems of competition in a market from which virtually all administrative restraints had been removed. Workers' management can really be said to have begun at this time, when it became a fact to be reckoned with by the directing staff of each undertaking. In November 1952, the Sixth Congress of the Yugoslav Communist Party formally endorsed the principle. The general resolution passed by the Congress, after stating that— The active, conscious and direct participation of the workers in the management of the economy is not only the best safeguard of Socialist development and Socialist democracy, but is also the most effective way of combating bureaucratic vestiges and tendencies at the centre and in the regions, urged that " the rights of direct producers should be further enlarged ". Having become a key concept in the country's whole political life, workers' management was recognised by the new constitutional provisions of 13 January 1953 as a fundamental right of the citizen and also as the underlying principle of the structure of public life.1 After this recognition, the system was worked out in firmer detail. Two ordinances were issued on 18 December 1953 laying down a number 'The Constitutional Law of 1953 lays down the following principles on this subject: " Art. 4. Social ownership of the means of production, self-government by the producers in the economy, and self-government by the working people in the municipality, town and district constitute the basis of the social and political organisation of the country. " Self-government by the working people in the fields of education, culture and social services is guaranteed. " Self-government by the producers and by the working people is exercised in conformity with general social interests which are expressed in law and in other decisions of the representative bodies of the working people—the people's assemblies and the people's committees." " Art. 6. Self-government by the producers in the economy consists particularly in— " the right of the working collectives to manage their economic units directly INTRODUCTION 7 of basic principles regarding the organisation and running of individual undertakings. A definite procedure was announced for the establishment of new enterprises. For the first time clear and precise rules were laid down for such matters as the splitting up or merger of existing undertakings, receivership orfinancialreorganisation of undertakings operating at a loss and, despite subsequent changes, these regulations still govern the status of the autonomous undertaking in Yugoslav industry. From this time also dates the principle that directors must be appointed by open competition by joint committees comprising representatives of the workers' council of the undertaking concerned and of the commune. These ordinances of 18 December 1953 also established the general framework for workers' management bodies, which were thereafter to operate entirely under their own rules. At the same time regulations were issued prescribing the procedure for managing various sections of the assets of each undertaking and for sharing out its income. However, severe restrictions were imposed at this time on the system of remuneration, so that no matter how good the operating results, the workers could only look forward to very small increases in earnings. These financial regulations thus greatly curtailed the " economic basis " of workers' management and as a result its incentive for the great bulk of workers. The regulations also had the drawback that they were insufficiently permanent—during the five years 1953-57, experiments were made with almost as many " sharing schemes " and systems of remuneration. In other respects, however, workers' management developed rapidly; The system was extended to a number of new industries, and was adapted to the special conditions found in commerce, handicrafts, railways, telecommunications, etc. Enterprises began to form area or industry and through workers' councils, assemblies of agricultural co-operatives and other representative bodies which they themselves elect and recall; " the right of the producers to be elected to the representative bodies of the economic units; " the right of the economic unit to fix independently its economic plans; the right of the economic unit upon the fulfilling of its obligations to the social community to dispose independently of the income of the unit, and in this the economic unit is guaranteed a minimum provided for by the law; the right of the economic unit to fix within the limits of its income the earnings of its workers, and in this the workers in economic enterprises are guaranteed by law minimum earnings from the resources of the social community; " the right of the producers to determine, through their representatives in the councils of producers, the amount of material funds to be set aside for meeting social requirements and to decide on the utilisation of these funds; " the producers exercise the rights of self-government on the basis of the Constitution and the laws and within the framework of the economic plans; " the working collectives acquire their self-governing rights by the very act of founding an economic unit." 8 WORKERS' MANAGEMENT IN YUGOSLAVIA associations for non-operational purposes, which gradually took over— mutatis mutandis—the representative and technical functions normally performed by employers' organisations. The work of overhauling the structure of the economy was pushed on. The State Bank was decentralised, a chain of municipal banks was formed, specialised investment institutions were set up, the system of bidding for the allocation of funds or foreign exchange was changed, the credit and tax systems were reformed, partly at least with the aim of giving the collectives a direct incentive to make the best use of the assets under their control and to enable the local authorities (districts and communes) to benefit from the earnings of undertakings within their area as part of the extension of their supervisory powers in the economic and social fields. The most striking feature of the developments that occurred between 1953 and 1957 was the reform of the structure of the State in accordance with the new Constitution. From the standpoint of workers' management, the main measures were the establishment of " producers' councils " to give the Yugoslav system an element of representation based not on political viewpoints but on the shared interests of the various collectives 1 ; the granting of a large measure of administrative autonomy to the communes, enabling them to settle the great bulk of public and economic matters at a level as near as possible to the individual undertaking, with regular direct participation by the latter's representatives; and a reform of the judiciary to strengthen law enforcement both in public and administrative law and in economic matters now governed by freedom of contract. Naturally, the introduction of these reforms came up against a variety of obstacles, such as the lack of resources, the shortage of qualified supervisors, survivals of the bureaucratic and authoritarian habits of the earlier period, lack of balance as between different parts of the economic system, etc. Nevertheless, the measures taken during this period were important in that the broad guiding principles for the future development of the whole system of workers' management based on the commune and the independent undertaking finally emerged. Although by and large the Yugoslav economy had hardly emerged from a universal shortage of goods and services, a certain margin was by now available for a policy of raising living standards. This policy was defined in a resolution of the National Assembly dated 18 October 1957 which, after noting that " the lag in personal consumption compared with other forms of consumption is handicapping the country's general economic development ", laid down the principle that " personal 1 See E. KARDELJ, op. cit., p. 29. INTRODUCTION 9 consumption must henceforth increase at a faster rate in step once more with the rise in the national income 'V The new policy of giving priority to consumption led to an overhaul of the economic plans, the size and allocation of budgetary credits and appropriations, and the tax system itself. From the standpoint of workers' management the most striking step was the introduction of the entirely new principle of freedom for the collective in each undertaking to share out the whole of its net income. During the same year the First National Congress of Workers' Councils was held in Belgrade (June 1957) where it was attended by more than 1,700 delegates from undertakings all over the country. This Congress showed that constant experiment was going on in Yugoslav industry under workers' management. The overwhelming majority of the workers' delegates concentrated on technical and down-to-earth problems, rather than on questions of doctrine, and called for greater independence for their undertakings and an increase in the powers of workers' councils and other organs of self-management not only in individual undertakings but also in the shaping of economic policy in the communes and at the higher levels. It also became clear that in many undertakings the workers' councils had, in practice, overstepped their strict legal powers in many ways without any harmful effects either for their undertakings or for the economy at large. On the contrary, the results seemed to show that wider powers for the workers' councils were advisable even from a strictly economic point of view. Moreover—short of making sweeping changes in the whole system—the new policy of giving priority to personal consumption and a more rapid rise in living standards could only be achieved through the individual undertaking. This point was particularly emphasised by the head of the Yugoslav State, who in concluding his speech to the Congress said that it was impossible " to go on appealing to the workers to produce more if at the same time they cannot see the results of their own efforts in the shape of higher earnings and better living standards ".2 In December 1957 the Federal Assembly passed a number of fundamental enactments on the management of industry, which gave effect to suggestions contained in the resolutions of the Congress of Workers' Councils, namely an Act on the administration of the resources of economic organisations, two tax enactments introducing a permanent system of taxation on the gross incomes of undertakings and workers' personal incomes, and a basic law on labour relations in undertakings. 1 Sluibeni list Federatane Narodne Republike Jugoslavie (Official gazette of the Federal People's Republic of Yugoslavia), No. 45 of 1957. 2 Cf. Industry and Labour (Geneva, I. L.O.), Vol. XVIII, No. 9,1 Nov. 1957, p. 339 10 WORKERS' MANAGEMENT IN YUGOSLAVIA Another Act passed at the same time regulated a number of outstanding questions affecting the right of undertakings to form associations. Yet another Act enlarged the powers of the communes and gave the workers' councils parity on the joint committees authorised to appoint and dismiss directors of undertakings. These enactments, which came into force in the early part of 1958, can be regarded as marking the end of the transitional period characterised by the frequent issue of government decrees and ordinances changing one or another aspect of the system. The foregoing brief description of the aims and development of the Yugoslav system of workers' management clearly shows that it is an original experiment. After nearly ten years of operation in a federated State comprising regions and industries at all stages of development, it is the primary concern of all who are engaged in Yugoslav political, economic and social life. The attention it has aroused abroad is also significant. Many who are interested in industrial relations and economic development, especially in nationalised economies or the public sectors of mixed economies, have followed its development with attention. Such a system may raise a whole series of questions1 : How in practice is the independence of undertakings in fixing their production programmes reconciled with the fact that they remain an integral part of the public sector of the economy, which is subject to annual as well as longterm development plans ? To what extent is free competition combined with planning? How can the director and technical executives have the authority needed to perform their duties if the last word lies with bodies representing the workers ? How can management be entrusted to a body of workers when many of them may not have the background needed to tackle and solve the difficult problems involved in the running of a factory? Does not the system of workers' councils in fact involve the creation of a new class of " workers' management technicians " sitting on the representative bodies who are bound gradually to lose touch with the workers themselves ? Do these bodies in fact act in accordance with the wishes of the majority of the workers they represent or are they simply docile instruments in the hands of the director or authorities outside the undertaking (e.g., trade union or political bodies) ? How is a system based on decentralisation of industrial management and on local initiative reconciled with a single-party political structure? Does not 1 Mr. A. DELEON, Secretary of the Central Council of the Yugoslav Confederation of Trade Unions, in fact published a book in 1956 entitled 33 Questions and 33 Answers on Workers' Self-Government in Yugoslavia (Belgrade, Jugoslavia, 1956). INTRODUCTION 11 the system of remuneration in accordance with the undertaking's earnings lead to undue differences between workers of the same grade depending on the plant in which they work ? As there are no " employers" in the usual sense of the term, what part is played by trade unions under this new system of labour relations ? These are some of the questions that may be asked. As indicated earlier, the present study was not undertaken with a view to providing an answer to all these questions, particularly since for some of them any such aim would involve an evaluation of highly variable factual situations so that no generally valid answer could be given. The aim of the study, rather, is to give a full and exact description of the legislation, institutions and administrative practice relating to the Yugoslav system of self-management of undertakings though, as the system is of course still evolving, the information may in some particulars have been outstripped by developments. It would be quite another—and far more difficult—task to evaluate the effects on the Yugoslav economy, to study workers' attitudes in different undertakings and industries towards the system and the way it works, or to analyse the relationship between the country's political machinery and the management of the economy. Vital as these questions would be in a critical evaluation of the system as a whole, they lie outside the scope of this study. The following pages may, however, provide a useful beginning for the fuller inquiries needed to obtain a comprehensive picture of the operation of the workers' management system. PARTI THE BACKGROUND TO WORKERS' MANAGEMENT CHAPTER 1 THE HUMAN SETTING AND MATERIAL RESOURCES As a multi-national and geographically heterogeneous State, Yugoslavia is a land of great contrasts. Few countries contain within their frontiers such widely differing regions, or peoples who are so deeply attached to their past and their traditions. Some of these peoples have long since reached a stage of economic and cultural development comparable with that of the western European countries, while others, until quite r;cently, were still very backward. Nevertheless, it is hard to draw a clear line between the communities that make up the population of Yugoslavia, because the special character of each is the outcome of a whole series of overlapping historical, political, religious, cultural, linguistic and economic factors. THE YUGOSLAV PEOPLES TODAY The Slav peoples who make up the great bulk of the 18 million inhabitants of Yugoslavia today belong to five main ethnic groups—Serbs, Croats, Slovenes, Macedonians and Montenegrins, who, since the war, have formed an equal number of autonomous republics. A sixth republic has been set up in the central area of Bosnia-Herzegovina, where the Serbian and Croatian peoples are intermingled and where about half the 2 million Serbo-Croat-speaking Yugoslav Moslems live; these Moslems cannot be included in either of the other two ethnic groups and are usually classified as " Yugoslavs of indeterminate nationality ". In addition to the five Yugoslav nationalities, the country comprises about ten national minorities, which enjoy a degree of cultural autonomy (schools, press, etc.), while the largest of them are also allowed a certain amount of administrative autonomy. For instance, Albanians form the majority of the population in the autonomous region of Kosovo-Metohija (Kosmet) in southern Serbia; national minorities—mainly Hungarians— also account for nearly half the population of the autonomous province of Vojvodina in northern Serbia. The social and cultural differences between the Yugoslav peoples are still extremely marked despite the great progress that has been made. In 1953, although the percentage of illiterates had fallen by over 50 per 16 WORKERS' MANAGEMENT IN YUGOSLAVIA cent, since 1921, it still varied from 2.5 to 63.3 per cent, depending on the ethnic group. There are also wide differences in social and economic conditions (level of employment, income per head, consumption of electricity, etc.) between the country's main administrative divisions.1 The figures indicate a degree of social and economic diversity which elsewhere is only found on a continental scale. Despite recent progress which has tended to blur regional differences, the peoples of the southern part of the country are in much the same position as in countries which are still at the earliest stage of industrialisation. At the other extreme, Slovenia, with Croatia lagging some way behind, is much closer to the European average. Serbia itself is sometimes akin to one group and $ometimes to the other, with very marked regional differences. There is nothing hard-and-fast about this state of affairs. The population is increasing rapidly by European standards 2 and the social and occupational pattern is changing at the same time. Before the war the proportion of the active population in agriculture was 79 per cent.3; according to the 1953 census it was only 66 per cent, in that year and it was expected that by 1961 it would have fallen to 47 per cent., so that the majority of the active population would be employed outside agriculture. The growth of other sections of the economy appears to have been spectacular. For example, merely during the years 1952 to 1957 the average index of employment in industry rose from 70 to 107 (1956 = 100), or over 50 per cent. A slower but nevertheless substantial increase occurred in the economy as a whole (publicly owned undertakings) where the number of workers rose from 1.41 million in 1952 to 1.96 million in 1957 (annual averages), i.e. some 39 per cent.4 The Yugoslav peoples are thus experiencing a period of rapid transition. From the standpoint of workers' management, the main fact to be borne in mind is that the overwhelming majority of Yugoslav workers are of peasant stock and most of them have probably only left the land since the war. Two other factors should be mentioned here. In the first place, the peasant class in Yugoslavia has traditionally been made up of smallholders; wage-earning employment was quite limited in the countryside, as were large estates.5 Secondly, in most parts of the 1 The principal statistical tables are grouped in Appendix I. Between 1947 and 1957 there was an increase of 2.4 million, i.e. about 16 per cent. 3 1.L.O.: Year Book of Labour Statistics, 1940, p. 15. 4 According to the social insurance statistics, the total number of workers in the public sector (including administration) had reached 2.77 million by the end of 1957. There were some 60,000 wage earners in the private sector. 6 In 1931 only 9.7 per cent, of all farm land belonged to holdings of more than 50 hectares (125 acres) and farm labourers only accounted for 9 per cent, of the active agricultural population. 2 Austria & *•••••«****»*», Hungary >..-###^ Bulgaria SKETCH MAP OF THE FEDERAL PEOPLE'S REPUBLIC OF YUGOSLAVIA **•, i THE HUMAN SETTING AND MATERIAL RESOURCES 17 country, and especially in the south and east, for a long time rural life retained many of the features of the old peasant communities. Yugoslav workers who leave the land to take jobs in an " economic undertaking " thus come from a social environment where the " direct producer " —a worker and at the same time a businessman running the family holding—predominates, and they have a deep-rooted habit of community and family solidarity. PHYSICAL CHARACTERISTICS AND NATURAL WEALTH Yugoslavia is situated in the north-west and centre of the Balkan Peninsula, covering 96,000 square miles, or an area slightly less than half that of France, and is divided into a number of quite distinct geographical regions. In the north-west it borders on the Alpine zone of Slovenia, while in the south it comes into the subtropical zone. Between these two extremes the country is divided into two more or less equal parts.. One of them—the south-west—which is by far the poorest, comprises large mountain areas (the Dinaric Alps) and the narrow coastal strip along the Adriatic; the other—the north and centre—consists of fairly fertile plains and lower mountain ranges. Generally speaking, mountains dominate the country, covering about 60 per cent, of its total area. This makes communications between one region and another exceptionally difficult. Arable land accounts for little more than a quarter of the total area and there are few places where large-scale cultivation is possible. Farming in Yugoslavia is also seriously handicapped by climatic conditions, especially the years of drought which frequently endanger the harvest. Forestry is a major asset to the country's economy and timber is exported on a large scale. The mountain areas could also provide the country with its main source of energy since Yugoslavia, with a water power potential estimated at 66,000 million kWh, is second only to Norway among European countries. In spite of progress in the utilisation of this source of energy (4,100 million kWh in 1959 compared with 600 million in 1939 and 1,000 million in 1949), its development has barely begun. Similarly, the country has practically untapped resources of mineral oil and gas which could meet a large part of its needs. Coal reserves are also very large and the current output of the mines virtually meets national demands. The natural riches most exploited on a large scale are the deposits of mineral ores, especially non-ferrous metals. Yugoslavia is one of the leading European producers of copper, lead, zinc and chrome. Supplies of iron ore are sufficient to allow the development of a national iron 18 WORKERS' MANAGEMENT IN YUGOSLAVIA and steel industry, while the ample bauxite deposits supply a large surplus for export. The country's natural wealth has, however, by no means been fully explored and many of the known deposits have not yet been tapped. ECONOMIC DEVELOPMENT Not only did Yugoslavia possess very little industry before 1939, but it was also one of the European countries which suffered most in the war. A great part of its productive capacity was destroyed, while damage to property, transport and communications was on an equally large scale. For many years, therefore, reconstruction took up a large share of the nation's energies and held up the process of economic development in the true sense. Today, despite the progress of recent years, Yugoslavia is still a fairly poor country, but economically it is now developing rapidly though unevenly as between one region and industry and another. Agriculture The predominance of agriculture and the limited resources at its disposal are still the governing factor in the general economic position. Recent efforts to expand output through specialised co-operatives and a more generous policy regarding credits and the supply of industrial products are only now beginning to bear fruit. Output has undoubtedly been diversified to some extent and industrial crops such as oil seeds and sugar beet have shown a marked increase. The volume of cereal and animal products only rose very slowly until 1957 but the 1957, 1959 and 1960 harvests exceeded the most optimistic forecasts. On the whole, the contribution of Yugoslav agriculture to the country's economic development—whether as a source of raw materials or of investment capital—though essential, is still somewhat limited and any further increase will entail a substantial rise in investment. Industry The drive for economic development since the war has concentrated on industry. In the early stages, the policy of industrialisation had to cope with an acute shortage of productive capacity and a seriously unbalanced economy. Experience in the running of modern industry was almost entirely lacking. The average concern before the war tended to be a handicraft business. In 1937 there were only 38 factories with an " employment capacity " of more than 1,000 (and only two of these had a THE HUMAN SETTING AND MATERIAL RESOURCES 19 capacity of more than 3,000) whereas there were 2,115 concerns with an employment capacity of less than 50. Firms of any size, particularly in mining and basic industry, were usually operated by foreign companies whose share holdings accounted on the average for 50 per cent, of the capital of the whole of Yugoslav industry and for 61 per cent, in textiles, 74 per cent, in paper, 98 per cent, in the mining industries and 91 per cent, in metallurgy.1 Industry as a whole largely relied on foreign countries for machinery and equipment and also for thefinalprocessing of the product. Most of the output of the mines was exported in the form of ores or unprocessed materials and only a tiny proportion was absorbed by local industry. Moreover, this industry was largely concentrated in the north and north-west (Slovenia, Croatia and northern Serbia) whereas it was virtually non-existent in the south. Accordingly, the industrial development policy laid down under the first Five-Year Plan in 1947 was given ambitious targets. Over-all industrial production was to increase at an unprecedented rate (some 38 per cent, per year) to reach five times the pre-war average in five years. At the same time the main effort was to be concentrated on the basic (capital goods) industries whose share in total output was to rise from 43 to 57 per cent. But new investment was to be allocated in such a way as to iron out most of the regional inequalities in the distribution of industry. Finally, despite the very high level of investment, the volume of consumption was also to expand. Although this programme could not be accomplished by the target date, the expansion in the volume of gross output during the early years of the Plan was substantial. But from 1949 onwards the breach in economic and commercial relations with the countries of central and eastern Europe led to a marked slackening in the pace of economic development. The entire investment and production programme had to be recast to take account of the new situation, and progress was not really resumed until 1954-55. While the targets of the first Five-Year Plan were thus only achieved after some delay, the policy it inaugurated has provided the impetus for the industrial development of Yugoslavia. A comparison of the recent level of industrial production with the 1939 figures2 gives some idea of the ground covered, despite five years of relative stagnation.3 1 Cf. Dj. MnjEViá and others: Razvojprivrednogsistema FNRJÇThe Development of the Economic System of Yugoslavia) (Belgrade, 1954), p. 17. 2 See Appendix I, Table C. 8 Since 1945, Yugoslavia has at various times received large-scale economic aid from other countries and international organisations. This aid contributed, during the post-war years, towards restarting the economy and launching a number of major development projects in basic industries and, subsequently, towards maintaining the level of economic activity and completing certain key projects or investment schemes. 20 WORKERS' MANAGEMENT IN YUGOSLAVIA Thus new plants predominate in most industries and in many areas. Not only are the workers new but also the premises (often very up-todate), techniques, equipment and machinery. Many of them have not yet reached their full production rates or capacity. All of them are faced with technical, financial and commercial problems posed by new production capacity. The very rapid rate of growth and the largescale influx of peasants cause particularly acute problems in areas having no industrial tradition of any kind. Despite these growing-pains the country now has an industrial base on which it can build up a more balanced economy. Even in the less developed areas the first steps towards industrialisation have been taken. The wider range of machinery and technical equipment now being produced meets the most urgent needs of the new undertakings and enables an increasing share of the country's wealth to be converted into finished products. Many bottlenecks in the supply of coal, generators and other types of electrical equipment which had hitherto restricted economic growth have virtually been eliminated, while others are no longer anything like as acute (electric power and transport). The 1957-61 economic plan no longer gave absolute priority to industrial development. This is to continue at a fairly high rate (11 per cent, per year) but without much exceeding the rate of growth planned for the economy as a whole (9.5 per cent.). The level of investment in industry is in fact to remain fairly stable, while the sums allocated to other sections of the economy are to be sharply increased. This relative stabilisation of the pace of industrial development coupled with the elimination of the main causes of unbalance and bottlenecks is to lead to a higher rate of increase in productivity (between 6 and 7 per cent. per year) and more efficient use of existing capacity. Other Sections of the Economy Compared with industry, the other sections of the Yugoslav economy have previously grown on a relatively modest scale but under the current Plan they are due to expand much more quickly. Only transport, and especially the railways, have hitherto been allocated any really large sums for investment. But even in this case funds have mainly been earmarked for reconstruction and re-equipment, leaving the railways to cope with far more traffic with much the same equipment as they had before the war. Road transport (which hardly existed pre-war) is confined to a very small network of practicable roads but in any case there are nothing like enough vehicles to meet the need. Private cars are still very much the exception. Despite the short distances, THE HUMAN SETTING AND MATERIAL RESOURCES 21 civil aviation is the main way of getting about quickly from one part of the country to another. Generally speaking, the creation of a modern transport system is one of the most urgent tasks facing the country and will continue to swallow a very high percentage of investment capital for some time to come. For the other sections of the Yugoslav economy, the 1957-61 FiveYear Plan was only the beginning of a new policy of development. The volume of investment allocated to building, commerce, hotels and handicrafts was virtually twice the pre-1957 amount. On the whole, however, the standard of equipment in these occupations is well below that of industry and falls short of the need. The Plan also called for a fairly substantial increase in investment in social services (education, public health, social security and housing). The foregoing account makes it clear that from all viewpoints— language, tradition, natural wealth, level of economic development or living conditions—the human and physical environment in which workers' management operates differs widely from one region and enterprise to another. The system of self-management has a very special significance in Yugoslavia because of this extreme diversity of peoples and regions, which could be a latent source of tension and internal conflict. Being based on the undertaking as an independent unit, it implies sufficient decentralisation in its operation to be able to adjust continually to the special conditions of each undertaking. But on the other hand, by making workers in all parts of the country tackle the same problems within a common framework of principles and ideology, it is regarded as a powerful unifying force. This explains why it has been defined as " the only workable way of treating the country's economy as a whole and of combating regional particularism "-1 1 3 From a resolution of the Sixth Congress of the Communist League. CHAPTER II THE INSTITUTIONAL FRAMEWORK The political and institutional structure of post-war Yugoslavia is entirely new. The breach with the pre-war period was made by an Act of 1 February 1945 which swept away all the legislation in force before 1940. The Federated People's Republic proclaimed by the Constitution of 31 January 1946 conferred legal status on the "people's committees" which " had been set up during the struggle for national liberation and represented the principal achievement of that struggle".1 The constitutional and political structure of post-war Yugoslavia thus has its direct origin in the institutions born of the resistance movement under the influence and political direction of the Communist-led Partisan movement. The " unity of the people's power " exercised through a hierarchy of councils or assemblies running from the local commune up to the federal government, the federated structure of the State composed of " sovereign peoples equal under law ", and the system of a single party assuming responsibility for the management of public affairs—these basic principles existed in practice even before the new State was formally constituted. This was the context in which, from 1945 onwards, the political, economic and social institutions of the early post-war years were rapidly erected. A strict chain of command from the top downwards, concentration of power in the hands of the executive, and centralised planning and administration of the whole of the country's economy were its salient features. A strong reaction set in against " bureaucratic centralism " in all quarters 2, especially among the leaders of the Government and party, who from 1949 onwards began to cast around for a new approach. The theoretical and doctrinal discussions were as searching as the answers were novel. The fundamental enactment of 1950 dealing with workers' management made the first major change in the 1946 constitutional structure. 1 Art. 6 of the 1946 Constitution. - The drawbacks of this system were referred to earlier (see p. 2). FIGURE 1. POLITICAL AND ADMINISTRATIVE ORGANISATION OF THE COUNTRY Number ofinstitutions ' (March 1958): Main Highest organ 3: levels of government '' Executive organs of the assemblies: Chairman' FEDERAL A S S E M B L Y FEDERAL REPUBLIC Federal chamber Federal executive council Producers' council Committees Organs of the State x 6 Republic executive councils FEDERATED REPUBLICS Committees 91 DISTRICTS Special councils: economics, finance, labour, etc. COMMUNES Special councils: economics, finance, labour, etc. Administrative bodies: Secretariats of State Secretariats of the Federal Executive Council Federal inspectorates Planning Office Internationartrade commission Various specialised institutions Republic secretariats Planning offices Republic inspectorates Specialised institutions Secretary Specialised secretariats Planning bureau, Inspectorates, etc. Number of officials employed (March 1958): 5,986 9,887! 17,761 Organs of local self-government 1,105 Meetings of electors 1 Since March 1958 the number of districts and communes has been reduced, particularly in the republic of Serbia. • The republic of Serbia also includes one autonomous province (Vojvodina) and one autonomous region (Kosovo-Metohija). On the other hand, districts have been eliminated in the republic of Montenegro and in the autonomous region of Kosovo-Metohija ; the powers formerly exercised Secretary Specialised secretariats or bureaux Inspectorates 51,445 Collectives of undertakings by the district authorities are now shared between those of the republic (or autonomous region) and those of the communes. * Members of the people's chambers are elected by the direct vote of all citizens; moreover, in the Federal Chamber 70 deputies are elected by the republic assemblies and constitute the " Council of Nationalities "; members of the producers' council are elected within undertakings or farm co-operatives by direct or indirect vote (as indicated by the arrows). * The President of the Republic is automatically Chairman of the Federal Executive Council. * Including 867 officials from the province of Vojvodina and the autonomous region of Kosovo-Metohija. THE INSTITUTIONAL FRAMEWORK 23 This was then completely overhauled in the early part of 1953, and work on the new institutions went ahead energetically until 1958. These structural reforms, many of which were the direct outcome of the introduction of workers' management, have affected all sides of the country's political, economic and social Ufe. Apart from a few exceptions, the legislation introduced before 1950 has been almost entirely superseded by new standards ; an account will be given here only of those aspects which have an essential bearing on how workers' management in industry actually operates. Administrative Structure The administrative structure of Yugoslavia is based on four types of territorial unit: (a) the federal State; (b) the federated republic; (c) the district ; and (d) the commune. 1 Only the federal State and the federated republics are defined as " organs of the State ", the communes and districts being regarded as self-governing groupings of citizens to which political and economic functions are entrusted. Both the central and the local authorities are bodies with a dual structure. At every level they are composed of two elected chambers which respectively represent " citizens " and " producers " (those employed in directly productive sections of the economy), thus combining political with industrial representation. The following account of the administrative system begins with the local authorities, which are most directly involved in the running of industry and the problems of workers' management. LOCAL GOVERNMENT: COMMUNE AND DISTRICT The public body closest to the undertaking is the commune, which nowadays is a sizable unit both in terms of average area (some 77 square miles) and population (about 15,000).2 Under the Act of 20 June 1955, it is the unit of local political self-government by the working people and forms the basic social and economic community. It has very wide powers and is independent in budgeting matters, making its own economic development plans and operating its own investment fund. The second tier of the structure of local self-government is made up of districts. The district is a group of communes with certain statutory 1 See Figure 1. The number of communes has been reduced gradually by more than two-thirds since 1955 in order to create economically and administratively self-sufficient units. 2 24 WORKERS' MANAGEMENT IN YUGOSLAVIA powers. It represents a wider political and economic community and also has a good deal of financial and administrative independence.1 The supreme body in both the commune and the district is the people's committee, a representative body which has both regulatory and executive powers, Composition and Functions of People's Committees In each commune the people's committee 2 is composed of two chambers, each consisting of 15 to 50 members depending on the size of the commune. These are the " people's chamber ", which is elected direct by all citizens, and the " producers' council " 3 , in the elections for which only workers in directly productive sections of the economy are allowed to vote. These workers form two " colleges "—industry, commerce and handicrafts on the one hand 4 and agriculture on the other. Each college elects a certain number of councillors in proportion to its " contribution to the social product " or the relative value of the total output of each branch. Seats allocated to each electoral college are then distributed among different undertakings or agricultural bodies in proportion to the number of workers entitled to vote. Each undertaking elects one or more councillors depending on the number of workers ; sometimes a number of small undertakings form a single constituency for this purpose. Only workers belonging to the undertaking in question (or trade union leaders even if they do not work there) can be elected to the producers' council. The people's committees no longer possess a standing executive committee and settle all important business at plenary sessions of the people's chamber and the producers' council. Routine business is normally handled by a number of special " councils " comprising members designated by the people's committee partly from its own membership and partly from citizens with qualifications and special knowledge appropriate to the council's work. Each people's committee also has an administrative secretariat divided where necessary into a number of departments and staffed by permanent officials appointed by open competition. 1 The number of districts has also been reduced by over two-thirds. Figure 2 shows the internal structure of a commune. 8 At the district level the producers' councils are elected by indirect suffrage by the members of the producers' councils in the communes. The district people's chamber is appointed in the same way as the commune people's chamber. 4 This group also includes mining, building, transport, communications, forestry and municipal services. 2 FIGURE 2. STRUCTURE OF COMMUNES 1 THE ELECTORATE The producers Undertakings under workers management ! • Agriculture Undertakings; farm co-operatives ' Organs of workers' management Local committees and offices Magistrate Committees of the -i people's chamber i i i k - _ • _ • _ • _ _ • . . . . _ _ _ _ _ — _ — -i Committees of the producers' council Subcommittees of the people's committee PEOPLE'S COMMITTEE Specialised councils General affairs I Public health Social assistance and security Economic affairs Municipal services Education and culture Labour Administration of the commune 3 Secretary General affairs and budget Health service and welfare Building and housing office Economic affairs, public services and works Education and culture Labour relations and remuneration •-1 1 Health inspectorate 4 Market inspectorate' Building inspectorate 4 Financial , , inspectorate Labour inspectorate i 1. 1 The same diagram applies more or less to districts, except that members of the producers* council are elected by all the commune producers' councils of the district. * Collectives of undertakings under workers'_ management, members of farm co-operatives or associations of producers in the private sector. » Only the main councils and admin- istrations dealing with general matters or those directly related to undertakings are indicated in the diagram. * Although they arc actually a part of the communal administration, inspectorates work in rather close collaboration with inspectorates at higher levels. * Attached to the National Bank since 1 January 1960. 26 WORKERS' MANAGEMENT IN YUGOSLAVIA of undertakings occupy the majority of the seats on most of these councils (in the 1957 elections this applied in 63 out of the 97 districts).1 Citizens and producers take part in the work of various agencies of the communes on a very large scale. In 1957, in addition to the 68,933 members of the commune people's committees and the 11,769 members of the districts people's committees, there were 52,935 members of special councils and some 15,000 members of various bodies advising the people's committees. In order to associate the greatest possible number of workers with the management of their affairs and to combat bureaucratic tendencies, the Yugoslav practice is to have a rapid turnover of members of the local self-government bodies. Thus, at the 1957 elections, only one-third of the outgoing members of producers' councils were re-elected. Sometimes, in undertakings of any size, a large number of workers are or have been directly associated in the administration of the commune as well as serving on the management bodies of their own undertaking. Apart from its general administration of local affairs, the commune has an increasing economic role to perform. Its own economic interest is closely bound up with the prosperity of the undertakings within its area, since they supply it with the bulk of its income. The commune is called upon to assist in solving many of the problems of undertakings, not only as far as public services such as transport, town planning and housing are concerned, but also as regards economic and financial matters, for instance development schemes, direct loans, the guaranteeing of bank loans, and so forth. Having the new responsibilities of the commune in mind, E. Kardelj wrote that under Yugoslav conditions it represented— . . . the most suitable form for the direct linking of the collective social interests to the individual interests of the working man. The very same working man who decides in the factory the question of wages and social standard of the individual is also enabled to participate in the decisions within the system of the commune on the other social needs of the community in which he lives, on the further development of the productive forces to raise the commune's revenue, on the financing of sanitary improvements and other questions. All these are problems which affect the individual just as directly as the matter of his own earnings. Every economically unwarranted increase of individual consumption always will result in the lowering of material investments into other sectors of the social standard and in the development of the productive forces . . . This collective interest of the commune which is very 1 In this connection, E. Kardelj, Deputy Chairman of the Federal Executive Council,has stated that the producers' councils are making for "increasing elimination of the need for administrative interference by the State in [social] relationships. The significance of the role of the councils of producers then springs from the fact that already today—the numerical inferiority of the working class notwithstanding—it confers a leading position on the working class within the whole social system, and then in a democratic manner which rules out the possibilities that, under the guise of THE INSTITUTIONAL FRAMEWORK 25 Members of the public also participate in commune affairs through various local committees or bureaux, referendums, and above all electors' meetings. The latter, which are in no way confined to election time, are held from time to time to hear progress reports from their representatives. The commune likewise comprises a number of agencies for " social selfgovernment ", such as tenants' associations, education and public health bodies as well as public services in which management by the commune is combined with workers' management. The number, description and functions of these bodies vary in accordance with the organisation of each commune and depend on local conditions and needs.1 Practical Effects of the Commune System Although the present system of local self-government bodies only dates back to 1955 and the process of administrative decentralisation is not yet complete, the commune system has nevertheless already had a number of indirect effects on the position of the individual undertaking and the operation of its workers' management machinery. As the administration of public affairs is to a large extent conducted at the level of the commune, there are closer links between it and individual undertakings. Most problems, or differences between undertakings and public bodies, are now settled at the commune level. The extent of the decentralisation carried out since the 1955 reforms can be gauged by the distribution of officiais between the different territorial units. Some districts or big industrial communes have administrative staffs as large as, or greater than, those of the corresponding federal or republic departments. Since executive power is exercised direct by elected local authorities containing representatives of undertakings, the central administrations are prohibited from intervening in the running of undertakings, apart from certain temporary measures in cases of emergency. Within the local authorities, an undertaking can also count on the support and understanding of the producers' representatives appointed by the collectives of the undertakings in the area. The producers' councils play a decisive part in this system. Their powers cover all economic, financial and social matters affecting undertakings, and under the electoral system now in force the representatives 1 Each commune or district decides for itself the internal structure of its agencies and services as well as their composition, powers, etc. For details of the experiment which served as a model—the commune and district of Kranj (Slovenia)—see E. KARDELJ: " The New Organisation of Municipalities and Districts", in New Yugoslav Law (Belgrade, Union of Jurists' Associations of Yugoslavia), Vol. VI, No. 3, July-Sep. 1955. THE INSTITUTIONAL FRAMEWORK 27 close to the concepts of any individual working man is therefore becoming the most important corrective of blind pressures for increased individual income, which otherwise might imperil the entire system of social selfgovernment.1 THE FEDERATED REPUBLICS AND THE FEDERAL STATE The organisation of the State itself is also in two tiers—the federated republics and the Federal State. In both cases all legislative and executive power resides under the Constitution with their assemblies, namely the assemblies of the republics and the Federal Assembly. Structure and Operation Like the people's committees in the communes and districts, the assemblies of the republics and the Federal Assembly each have two chambers (the people's chamber and the producers' council), one of which is elected by direct ballot by all citizens, while the other consists only of " direct producers " (or trade union leaders) designated by the district or commune producers' councils. Despite the growing importance of these assemblies, which are now performing legislative functions, the key body at the federal level and in the republics is the executive council, to which each assembly delegates its governmental and executive functions and which has very wide regulatory powers, in addition to appointing the heads of various departments, such as the secretaries of State. The Federal Executive Council also includes the chairmen of all the executive councils of the federated republics. Each executive council appoints a number of special committees and councils from among its own members to despatch routine business.2 At each level the organs of the State are assisted by specialised departments staffed by career civil servants (secretariat, inspectorates, etc.3). Yugoslav legislation is designed to ensure that civil servants are highly qualified and to secure them against arbitrary action by the executive. A number of reforms have been introduced with this in mind under the new civil service regulations, including selection of the dictatorship of the proletariat, the various bureaucratic tendencies might win a victory over none other than the proletariat itself and its own authority " (" Socialist Democracy in Yugoslav Practice ", in Annals of Collective Economy (Geneva, International Centre for Research and Information on Collective Economy), Vol. XXVI, 1955, p. 29). 1 " Socialist Democracy in Yugoslav Practice ", op. cit., p. 31. 2 In the republics the sections of the public immediately concerned are directly represented on some councils (health, education, etc.). 3 For some time it has, however, been the practice to allow the heads of the secretariats of an executive council to be chosen from its members. 28 WORKERS' MANAGEMENT IN YUGOSLAVIA candidates on merit by open competition, appointment for life, a joint procedure for disciplinary action and recourse to the courts in the event of a breach of the civil service regulations. As far as workers' management is concerned, these administrative departments operate rather as research and advisory bodies than as administering bodies. Functions of the Central Authorities The functions which are wholly or partly reserved to the federal authorities and the republics are confined to a few matters that must be dealt with centrally and do not directly affect the management of industry, namely foreign affairs, customs, defence, the security of the State and the maintenance of law and order. For other matters, the distribution of powers is mainly based on a definition of the types of decision reserved to the federal authorities and the republics, rather than on an allocation of subject matter to the different levels. The duties of the federal authorities and the republics are almost exclusively legislative and regulatory. The principal task of the federal authorities is to establish (with the direct assistance of those concerned) a legislative framework to ensure that undertakings and their workers' management machinery can function normally. The federal authorities or the republics do not, as a rule, interfere in the operation of this legislation except to quash, where necessary, any illegal actions committed by the local authorities. Judicial Structure The introduction of an economic and social system based on workers' management has entailed far-reaching reforms in the law and in the organisation and powers of the courts.1 An analysis of these reforms would go beyond the scope of this study.2 A reference should be made, however, to the main features of the legal system and the part it plays in workers' management. The present organisation of the Yugoslav courts dates back to 1955. It is based on the principle of a unified and independent judiciary. Normally the ordinary courts are empowered to deal with both criminal 1 See, particularly, A. RANKOVIÓ: " Report to the Fourth Plenum of the Central Committee (June 1951) ", in New Yugoslav Law, op. cit., Vol. II, No. 4, Oct.-Dec. 1951 ; see also M. PUADE in an article on the penal and judicial system of Yugoslavia (ibid., Vol. IV, Nos. 3-4, July-Dec. 1953). 2 The reader who is interested will find very detailed material in New Yugoslav Law. The main publications in Serbo-Croat are listed in the bibliography (Appendix II). THE INSTITUTIONAL FRAMEWORK 29 and civil disputes involving citizens (including disputes arising out of labour relations). Since 1952, the higher courts (the supreme courts of the federated republics and the Federal Supreme Court) have also dealt with administrative cases. There are special courts which handle disputes involving enterprises under workers' management. These are known as the economic courts * and their powers extend to all aspects of economic and commercial relations between undertakings and between the latter and the public authorities. They also maintain registers of undertakings, direct winding-up procedures and administer criminal justice in the case of undertakings which have infringed the economic regulations.2 Uniformity of practice is ensured in the last resort by the Federal Supreme Court, which supervises the administration of the law by all the courts throughout the country. Judges are required in the exercise of their functions to be guided " by the law as it stands and by their own conscience ". The preservation of the Socialist order in the Yugoslav Federal People's Republic is not included among the criteria on which judges must base their verdicts, but it remains one of their general duties, just likefidelityto the legal and constitutional order and impartiality (which are included in the oath taken on appointment).3 They are called upon to enforce regulations (such as the ordinances of the executive councils and the by-laws of communes or undertakings), and are also responsible for ensuring that these are lawful and for declaring them null and void if they are not based on a law or do not conform to its provisions.4 Thus, in a system characterised by a high degree of administrative and economic decentralisation, the courts have an important part to play in enforcing the law and maintaining a uniform legal and economic system throughout the country. 1 In 1958 there were 31 regional economic courts, seven republic economic courts and one Federal Economic Court. 2 There is also a third class of courts—military tribunals. It should be added that the jurisdiction of the economic courts does not extend to disputes between undertakings working for national defence (see below, p. 64) which are subject to an administrative court known as " military arbitration tribunal ". 3 According to M. PIJADE (op. cit., pp. 7-8)—" We insist that the courts should, at all times, observe the law and remain independent, but their independence vis-à-vis the organs of state power and local personalities and politicians and their strict observance of the law in no way means that the courts can function as if they were outside the Socialist order or as if their principal task were not to preserve that order. A judge must never overlook this need any more than he must neglect the protection of the rights and liberties of citizens." 4 The courts do, however, lack the power to declare laws passed by the Federation or the republics to be unconstitutional. The establishment of a Constitutional Court has been under consideration for some time. 30 WORKERS' MANAGEMENT IN YUGOSLAVIA The contents of the country's legislation have also been given a general overhaul.1 The reform of criminal law carried out from 1951 onwards to make allowance for the changed circumstances was followed in 1960 by a general revision of the provisions dealing with offences against the national economy which might be committed by undertakings and organs of workers' management. Section 213 of the new Code, defining the criminal liability of directors of undertakings who " in breach of the regulations in force or decisions by organs of workers' management or in any other way display gross negligence in the conduct of business, the organisation of labour and the production or use of public property " not only makes it necessary that the director must have been aware of the loss that the undertaking was liable to incur as a result of his action, but also that there should actually have been a loss of not less than a prescribed minimum or that the undertaking should have been wound up as a result. The criminal law also comprises two key provisions which both safeguard and control the Yugoslav system, including the system of workers' management. One of them (section 118 of the Code) makes, amongst other things, an act (in writing, speech, etc.) punishable if it is calculated to bring about changes in the social or state order by recourse to violence or anti-constitutional means, to undermine the brotherhood and unity of the Yugoslav peoples, to advocate resistance to any decisions by the representative bodies and their executive organs which are important for the preservation and development of Socialist social relationships, or with malicious intent to spread misleading information about social and political conditions within the country. The other (section 119) stipulates that any propaganda or other activity or, indeed, any private insult intended to cause or foster ethnic, racial or religious hatred or strife is an offence against the people and the State and that prosecution is automatic. The system of workers' management2 thus receives special legal protection which ensures that its fundamental principles remain undisturbed. The greater degree of independence granted to undertakings under the workers' management system has also given rise to the concept of the criminal liability of an undertaking. Proceedings can be taken in the economic courts in the event of " economic offences " committed by organs of workers' management, i.e. violations of the regulations 1 The reforms affecting the legal status of undertakings, financial and economic legislation, labour law, etc., will be examined in greater detail in other chapters. 2 The right of workers' management is guaranteed by articles 4 and 6, already referred to, of the constitutional law of 1953. Violations of this right constitute a special offence under the penal law of Yugoslavia. THE INSTITUTIONAL FRAMEWORK 31 dealing with industrial organisation, financial management, etc., described in this study. Where appropriate, the undertaking and the senior staff responsible may be convicted, although only financial penalties (fines) can be inflicted. The judicial reforms have had a great deal of influence on the development of workers' management in industry. Recourse to the courts is extremely widespread. Every year the economic courts settle several hundred thousand commercial disputes between undertakings. Similarly, appeals to the labour courts are also quite common. The supreme courts, for their part, deal with administrative disputes at the rate of about 25,000 cases a year (some half of which are concerned with social security). Case law has done much to clarify economic relationships and to strengthen the principles of workers' management, either directly in decisions on disputes involving undertakings or workers' management, or (above all) indirectly by ensuring respect for the law and trying to create the climate of legal security which is essential if independent economic institutions are to grow up. Many principles originally embodied in case law have since been incorporated in legislation. The supreme courts' rulings in administrative cases have made a particularly valuable contribution in this respect.1 Political Organisations The Yugoslav experiment cannot be considered in isolation from its political framework. The country's political life is based exclusively on two organisations having a common ideological basis—the Socialist Alliance of Working People and the Communist League. THE COMMUNIST LEAGUE The Communist League is a militant organisation which exercises very close control over the political and ideological orientation of public life. Nevertheless, since its political and economic programme is based on the autonomy of the commune, workers' management, and " social " or local self-government generally, its function " is not to exercise direct control over social, economic and pohtical life, but to bring its influence to bear in all bodies and institutions by means of its social and political exertions 1 It is interesting to note that according to the information available, supreme court awards in favour of the plaintiff were against the official body involved in more than one-third (36.8 per cent.) of the 149,000 cases which came before these courts during the period 1952-57 (cf. Dr. M. PEROVIC: Problemi upramog spora (Belgrade, Savremena administracija), p. 58). 32 WORKERS' MANAGEMENT IN YUGOSLAVIA and, above all, by persuasion " * At the 1960 Congress of the Socialist Alliance the President of the Republic stated in his closing speech— .. . the task of the League, as one of the group members of the Alliance, is to give ideological guidance in the process of Socialist development ; in doing so, it is in the vanguard because of the nature of its responsibilities and obligations. But this does not confer any special prerogatives or privileges on the members of the League—their rights are the same as those of any other members of the Alliance.2 These principles apply equally, in the view of the Yugoslav leaders, to relations between the League and all other organisations and institutions, the communes, the organs of workers' management, etc. From the standpoint of workers' management, it is important to note that the top-level organs of the League no longer adopt (or discuss) the economic plans or standards to be carried out by its members or sections in individual undertakings. The programme and resolutions adopted by the League's congress and central committee only lay down very general principles in all these respects, which its members are of course expected to follow but which do not relieve them of the need to adjust policies to circumstances or to take decisions on their own initiative. In order to allow the new institutions to function on their own, the Yugoslav Communist League has also drastically overhauled its own structure and working methods. Under its rules, its activities are henceforth public and meetings of individual sections are open to workers who do not belong to the party. The staff of permanent officials has been cut down even more than that of the State.3 Its elected bodies 4 are thus to form the kingpin of the organisation. Under the League's rules its local and regional organisations must confine themselves to " political and ideological activities in all fields of social life, and in all social organisations, organs and institutions ". Individual members of the League " must rely on persuasion ". The League recruits a large percentage of its members in undertakings 5 and its programme lays special emphasis on " the improvement 1 From a resolution of the League's Sixth Congress (cf. Les nouvelles yougoslaves (Paris, Agence yougoslave d'information), Nos. 86-87,15 Nov. 1952). This Congress decided to replace the name " Communist Party " by " Communist League " to stress the new approach. 2 Cf. Borba, 23 Apr. 1960, p. 1. 3 The total staff on the League's payroll (including technical staff and auxiliary personnel) totalled 2,579 persons at the end of 1957, against 5,156 at the end of 1952, according to the report of the supervisory committee to the League's Seventh Congress; cf. VII Kongres Saveza Romanista Jugoslavie (Belgrade, 1958). 4 The present rules forbid co-opting to the executive organs of the League. 6 According to the progress report submitted to the League's Seventh Congress (April 1958), the League had 757,066 members at the end of 1957, of whom 243,819 were manual workers (i.e., 32.29 per cent.) and 244,592 were salaried workers (32.39 per cent.). THE INSTITUTIONAL FRAMEWORK 33 of their contribution in undertakings and on workers' councils in developing and strengthening workers' management ". Its sections are in fact often formed on a factory or workshop basis.1 The League's membership in undertakings varies a good deal from one area, undertaking and occupation to another. Many undertakings have a high percentage of workers belonging to the League; elsewhere— probably less commonly but not only in the smallest concerns—it has no members at all or only a few.2 The same applies to the composition of workers' councils and other organs of workers' management. Generally speaking, the members of the League are proportionately more numerous on these bodies, but even here there is no general rule.3 The actual influence and methods of operation of the League's sections also vary widely from one undertaking and area to another. The abuses and deviations of various kinds quoted in the League's reports in the press ranging from blatant interference in management to complete negligence of the ideological aspect out of excessive " respect for economic laws " testify to the great diversity of situations likely to be encountered. The progress report submitted to the Seventh Congress of the League quotes among many others " the habits acquired during the period of centralised economic administration which are still apparent in the resistance of some executives to the principles of workers' management—which they have not understood and have sometimes treated as a mere formality " ; some sections of the League, on the other hand, " thought only about the objective laws of the economy and failed to discuss economic problems or to combat negative developments in the management of industry ". The report blames equally the " survivals of the old idea that final decisions should lie with the Communists or the sections of the League " and the anarchistic tendencies or local particularist feelings which led some people to think that " they were not 1 Of its 26,809 sections in March 1958, there were 7,620 in undertakings; there were 370 factory committees in the big undertakings to co-ordinate the workshop sections. 2 According to a survey covering six districts in Croatia (Na$e teme (Zagreb, Central Committee of the Croatian Young People's League), 1958, No. 6, p. 806) the average percentage of League membership among manual and salaried workers ranged from 9 to 49 per cent, (the average percentage for all the undertakings in each district). In individual undertakings this percentage naturally varies even more widely. For example, according to details published by the weekly Komunist (7 July 1960, p. 5), there were in Slovenia 867 undertakings employing more than 20 workers, including some with a fairly large labour force, in which there was no section of the League at all. 3 Thus, according to a survey by the Zagreb Institute of Social Management, in a sample of 18 factories in the town with labour forces ranging from 200 to 1,500, between 5.3 and 15.3 per cent, of the workers belonged to the League, whereas on the workers' councils the proportions were between 8.3 and 65 per cent. (Zbornik radova, Vol. I, 1959, p. 173). 34 WORKERS' MANAGEMENT IN YUGOSLAVIA bound by the policies and decisions of their organisations and leaders of the League "-1 The Communist League also carries on a great deal of educational work among its members with an eye mainly to the needs of the system of local and enterprise self-government; the number of courses, seminars and schools organised by the League has grown considerably over the past few years. THE SOCIALIST ALLIANCE The Socialist Alliance of Working People is an ambitious attempt to associate all citizens in the working of public life.2 Among its group members it includes organisations such as the Communist League, the trade unions, the youth organisation, womens' and ex-servicemen's organisations 3, while the bulk of the membership is made up of individual citizens. When the Fifth Congress of the Alliance met in April 1960, it was announced that individual membership exceeded 6 million and therefore comprised the majority of the adult population. According to the new rules adopted by the Congress, admission is now normally open to any citizen who applies. The organisation of the Socialist Alliance is centred on the local commune and most of its operations are at this level. The principal task of its cells in the commune is to— . . . encourage initiative by its members and by other citizens in solving political, economic, social, cultural and other problems facing the local community; to this end they co-operate in every possible way with the people's committee of the commune, the organs of workers' management in undertakings, various social management bodies and other organisations and institutions and assist them in carrying out their duties.4 The Socialist Alliance must also " fight to strengthen direct democracy and Socialist social relationships " not only in the work of the commune councils but also in the other social self-government bodies such as municipal services, school boards, health services, housing, etc. 1 Cf. VHKongres Saveza Komunista Jugoslavie, op. cit., pp. 126, 128, 135 and 143. See also below, Ch. XII. 2 For a short account of the origins, activities and organisation of the Socialist Alliance see " Socialist Alliance of the Working People of Yugoslavia ", in Yugoslav Survey (Belgrade, Jugoslavia), Vol. I, No. 1, Apr. I960, pp. 21-24. 3 The new rules of the Alliance approved by its Fourth Congress (April 1960) confine group membership to "social and political mass organisations", largely because of the sharp increase in the number of voluntary organisations (cultural, sporting and other associations) which formerly joined the Socialist Alliance as well (by the end of 1959 there were in fact 111 social organisations belonging to the Alliance). 4 Cf. section 10 of the rules of the Socialist Alliance of Working People {Borba, 23 Apr. 1960, p. 6). THE INSTITUTIONAL FRAMEWORK 35 The local branches of the Alliance call open meetings of all citizens, hold public discussions on commune business and on the administration of municipal services, schools, housing, etc. At the higher levels the Alliance has organisations for each district and republic; its general congress and the committee of management elected by it are its supreme bodies at the federal level. Although the Socialist Alliance is mainly concerned with forms of social self-government other than the workers' management of undertakings, the part it plays in the latter is by no means negligible. In the first place it is an important link between the collectives and workers' management bodies on the one hand and various communal bodies and services on the other. The experience of workers' councils and the whole question of the management of industry are given full coverage in its press, so that the subject receives wide publicity among the working class and the nation as a whole. The Alliance's conferences and congresses usually discuss various aspects of the question as well. In fact, the whole system of workers' management and related questions (particularly the allocation of an undertaking's earnings and the remuneration of labour) formed one of the main topics of discussion at the Fifth Congress of the Socialist Alliance in April I960.1 Economic and Social System Workers' management in Yugoslavia operates in an economic and social setting based on public ownership of the means of production and the comprehensive planning of all economic and social life. The system has many distinctive features. ECONOMIC STRUCTURE Public ownership of the means of production covers the whole of industry, mining, building, wholesaling, retailing, transport and communications, hotels and restaurants, municipal services and cultural facilities (press, cinemas, etc.). In agriculture, however, it only extends to about 12 per cent, of the land and there are also some 200,000 selfemployed handicraft workers.2 Banking and insurance form an integral part of the public sector but are not regarded as productive activities.3 1 For the proceedings and decisions of this Congress see Borba, 17-23 Apr. 1960. Peasant holdings are limited to ten hectares (25 acres) and must be farmed by the owner himself or his family without any wage-earning help. Handicraft workers can employ up to five persons, but, in practice, wage-earning employment is rathet exceptional in this branch of the economy. 3 The same applies to administration, education, certain cultural activities, health services, and welfare organisations and institutions which are non-economic public services. 2 36 WORKERS' MANAGEMENT IN YUGOSLAVIA Planning Methods The whole of Yugoslav economic life is based on two fundamental principles, namely the planning of the whole of the country's economic and social development at all levels from the commune up to the Federation, and freedom to trade and produce for all undertakings and producers. However, while freedom to trade and produce is the guiding principle of everyday economic life underlying the whole system of workers' management 1 , it is in no way a hard-and-fast principle but is subject to the demands of a high rate of economic growth and satisfaction of the public's general needs. The relationship between a free market and planning under a system of workers' management was defined as follows in one of the reports submitted to the Congress of Workers' Councils in 1957: Under our system of self-management by the producers, it is for the market to tell the undertaking whether or not it has succeeded in obtaining social recognition for its labour. It is, however, in the nature of the laws of production for the market that they are an average result caused by the spontaneous adjustment of discrepancies. In practice these discrepancies must always be accepted and it is a mistake to look for uniform " justice " for everybody from the operation of the market. But the justice of the market is preferable to the "justice" of subjective administrative allocation: it increases the volume of output and improves the quality and variety of goods. Nevertheless, freedom for each undertaking on the market in no way means that it can act in isolation or arbitrarily, nor does society waive its right to direct production according to a plan in order to meet such needs as have arisen. Freedom for the undertaking consists in the statutory definition of its rights as regards production, trade and distribution, i.e. its right to produce on equal terms with every other undertaking and to increase its income in step with the rise in its productivity, i.e. its success on the market. But this market is subject to conscious social direction. Fundamentally, supply is regulated by such instruments of policy as credit, import and export regulations, etc., while demand depends on the distribution of the value of the social product between various forms of consumption. The more wisely these instruments are used, the easier it will be to ensure that the laws of the market operate in the way desired.2 1 According to K. Gligorov, the Federal Secretary for Economic Affairs, " the transfer of the management of undertakings to workers' councils . . . has turned the latter into independent agents on the market and made competition possible between undertakings with the aim of achieving the best economic results. As it developed, this new function performed by workers' councils and undertakings has enabled the market to play an essential part in the economic system during the transitional period. ... Just how important the existence of a market is to free independent undertakings would quickly be apparent if we imposed major restrictions on the market mechanism or fell back on administrative intervention. Any step of this kind would in fact be a curtailment of the rights and freedom of action of the workers' councils." (Cf. Zbornik o radnickom samoupravljanju (Belgrade, Rad, 1957), p. 17.) 2 R. DuGONié: " Les cadres économiques de l'autogestion des producteurs ", in Questions actuelles du socialisme, op. cit., Nos. 43-44, July-Oct. 1957, pp. 55 and 56. THE INSTITUTIONAL FRAMEWORK 37 Economic and social planning thus remains the underlying principle of all economic life. In Yugoslav conditions, its aims, methods and effects have a number of very distinctive features. The first characteristic of Yugoslav planning is that development plans exist at all levels—communes, districts, republics, autonomous regions and the Federation itself, all of which have annual as well as various long-term development plans.1 These plans are fairly independent of one another; those of the local authorities consist mainly of special projects which fit into . the general policy laid down in the plans of the republics and (above all) in the annual andfive-yearplans of the Federation. All these plans have two distinct functions. The first is to give an estimate (in the form of targets) of economic activity during the year ahead, taking into account the resources available, the extent of the need and the anticipated effect of financial and taxation policy, investment and any other measures with economic implications taken by the public authorities. These detailed targets in the social plans are thus only forecasts which do not commit either the authorities or the undertakings but do provide them with guidance in planning their own economic activities. The second function of these plans is to make the financial arrangements needed to achieve the set targets. In the case of the local authorities and the republics, which have fairly limited independence in taxation matters, the main purpose of the plans is to prescribe the use that they can make of their own income (which is far from being negligible) or of any grants-in-aid they may receive from bodies at a higher level. These plans are of course of major concern to individual undertakings, which can be directly affected by them, either as possible suppliers or contractors for local or regional development plans or as beneficiaries of the development policy in the district or region. The main interest, however, lies in the financial provisions which form the core of the federal economic plan. This fixes interest charges and depreciation rates for various sections of the economy, the general level of taxation and any special concessions (tax reliefs, etc.) for certain industries, the amount of investment to be financed by the Federation and the allocation of investment funds between various industries or branches of the economy. The same applies to the allocation of foreign currency, the financing of public and social services, vocational training policy, and so forth. In the special conditions existing in Yugoslavia, allotments of federal funds for regional economic development are parti1 On the plans of undertakings, which have no direct link with the development plans of public bodies, see below, pp. 140-145. 38 WORKERS' MANAGEMENT IN YUGOSLAVIA cularly important.1 Over the past few years the Federation has devised a special system of " reserves " (stockpiles of materials and unallocated funds) to enable a sustained rate of activity to be maintained even in industries and occupations which are particularly subject to seasonal fluctuations or which depend on international markets. As will be seen later, the financial provisions of the federal plan largely control the economic and social programmes of individual undertakings without there being a need for the authorities to intervene directly in their management. Subject to thesefinancialprovisions and in so far as their resources permit, it is up to undertakings to find the policy that suits their own interests best. If the discrepancy between the result achieved and the forecasts appears to conflict with the general interest, the authorities try to deal with the matter by adjusting their financial or taxation policy accordingly. Although there are no hard-and-fast rules, direct intervention is only contemplated in order to ward off an emergency which might disrupt the economy at large or an important section of it.2 The overriding aim of economic planning in Yugoslavia is to coordinate the different branches of the economy so as to ensure the maximum rate of growth compatible with the available resources, having regard to the most urgent needs.3 Special emphasis is placed on regional planning to help the more backward areas catch up, while at the same time maintaining steady over-all progress. The technical side of these economic plans is worked out by semiautonomous institutions and planning bureaux which exist in the districts and biggest communes as well as at the federal level and in the republics. The key political decisions—the level of investment and consumption, the concentration of development efforts on particular sections of the economy, and so on—are taken in the last resort by the people's committees, the assemblies of the republics and the Federal Assembly, 1 The republics of Macedonia and Montenegro, together with the autonomous region of Kosovo-Metohija are at present the main beneficiaries of economic aid from the Federation. 2 At the present time, for example, there are special regulations in force governing the allocation of certain ores (copper, etc.) which are in short supply because of increased capacity in the processing industries and because new deposits have not yet been opened up. Steps of this kind are, however, more common when international trade is involved (e.g., bans on the export of products in short supply, the liberalisation of imports to offset rises in prices, etc.). s In accordance with this policy, Yugoslavia continues to maintain an exceptionally high rate of capital accumulation with investment running at the rate of nearly 30 per cent, of the national income (with a slight tendency to fall in recent years). For a thorough analysis of the Yugoslav policy of economic expansion and its results in recent years, see Economic Bulletin for Europe, United Nations (Geneva), Vol. 10, No. 3, 1958, pp. 43-62. THE INSTITUTIONAL FRAMEWORK 39 which approve the plans for each yearly or five-yearly period and also pass general resolutions on future policy in particular fields.1 Apart from the general watch they maintain over the legality and regular development of economic activity, the role of the public authorities in the economy is thus confined to formulating over-all economic policy and devising financial instruments for achieving it. They also intervene by promoting economic development (for instance, by building new factories) where existing undertakings are not in a position to do so. Current activities, investment and economic expansion generally are, however, financed by independent agencies. The funds earmarked for these purposes under the plan are administered and allocated through the National Bank and the various special banks. The Banking System In addition to the National Bank, there are three main special banks in Yugoslavia : the Investment Bank, the International Commerce Bank and the Agricultural Credit Bank, each of which has its own special status, together with a large number of local banks and savings funds (communal banks, co-operative funds, etc.). All undertakings must have a current account with the National Bank or other approved bank and all their financial transactions must normally be done through it. In addition to acting as an issuing house, the National Bank has direct responsibility for financing current economic activities under the expansion programmes. The Investment Bank administers public funds earmarked for investment and allocates them (in accordance with the plans and regulations in force) between the projects submitted to it by undertakings, local authorities, or other bodies.2 To this end it holds periodic public adjudications to select the projects which fit in best with the general criteria of the economic plan and offer prospects of the highest returns. The International Commerce Bank is responsible for the current financing of international trade and it, too, often uses competitive methods of allocating the total foreign currency available between undertakings in different industries or branches of the economy. 1 Reference was made earlier to the resolution passed by the Federal Assembly on the expansion of personal consumption. Similar resolutions have been passed about other forms of consumption, investment, vocational training, etc. 2 Ultimate responsibility for the allocation of investment funds lies with the Board of Directors of the Bank which, under the legislation in force, must comprise a majority of members designated by the organisations representing the different branches of the economy (economic chambers, co-operative unions, etc.). The economic organisations are also represented on the boards of the other banks. 40 WORKERS' MANAGEMENT IN YUGOSLAVIA Although their legal status has not yet been finally settledx, the Yugoslav banks are autonomous institutions operating a public financial service with responsibility for collecting and allocating funds to carry out the production and development programmes drawn up by the authorities and the undertakings concerned. While applying standards and criteria laid down in the plans and other regulations, they enjoy a great deal of discretion in individual cases, their aim being to maintain a balance between income and commitments while trying to ensure the best return on each project they intend to finance. As public services, the banks neither make nor distribute any profits and so constitute a special branch of the economy outside the workers' management scheme.2 In banking, social management is secured by giving seats on the boards of banks to representatives of undertakings and other producers with an interest in the work of these institutions. SOCIAL POLICY The fundamental social aim of Yugoslav economic policy is to provide productive and remunerative work for everybody. Although the general level of employment is rising sharply in all sections of the economy 3, 2 or 3 million new jobs will have to be created to provide stable employment for the great mass of surplus rural workers who, especially in the poor southern part of the country, find it almost impossible to earn a living on the land.4 The rapid natural increase in the population —some 200,000 per year—emphasises the urgency of the employment problem. The five-year plan drafted for 1961-65 provides for the creation of nearly 1 million new jobs. It is easily imagined that such a large-scale influx of new workers, most of them unskilled, acts as a drag on the living standards of the active population and particularly of the workers in productive industry. 1 General legislation on the banks is in preparation. The reforms proposed include one which will relieve the National Bank of its duty of financing current economic activities and will hand them over to specialised banks or credit institutions set up for this purpose. 2 The same applies to institutions for various types of statutory or contractual insurance; these, however, only play a small part in the Yugoslav economy. While banking staffs have no share in either management or earnings, they are covered by the civil service regulations and have the same conditions of employment. In 1958 the Yugoslav banks employed some 33,000 persons. 3 There are now nearly 3 million workers as against 1.7 million in 1952. 4 As is pointed out in an F.A.O. report, " Yugoslavia had Tbefore the war] the highest peasant population density of any country in Europe " with 110 inhabitants per 100 hectares (250 acres) of arable land, and " the employment on an average of about 130,000 to 140,000 new workers per annum is required to avoid over-population of the countryside". See F.A.O. : Mediterranean Development Project (Roms, 1959), pp. 181 and 183. THE INSTITUTIONAL FRAMEWORK 41 Another feature of Yugoslav social policy is the very high level of various social security benefits, such as family allowances, free medical services and other fringe benefits. According to a comparative survey made by the International Labour Office, in 1955 the non-wage labour costs of undertakings amounted to nearly 90 per cent, of average earnings —of which about half were accounted for by social security benefits alone. In this respect Yugoslavia headed the list of the ten western and southern European countries covered by the survey.1 As regards living standards there has been a sharp rise during the past few years. National income (at constant prices) rose by 70 per cent. between 1953 and 1959. In the same period the total amount of wages and other personal income increased even more rapidly—by over 120 per cent, in money terms and almost 80 per cent, in real terms. Average wages rose somewhat less rapidly, as the increase in the total amount of wages and other personal income was partly due to the rapid increase in the number of wage earners and to rising incomes in agriculture. Nevertheless, wages grew not only in the 1953-56 period but also from 1956 to 1959, when prices were relatively stable. The average monthly wage of workers in industry and in mining, for example, increased from 10,320 dinars in 1956 to 14,830 dinars in 1959, i.e. by almost 44 per cent. in money terms and by 34 per cent, in real terms.2 Both general education and vocational training are entirely free of charge at all levels, and large numbers of students are awarded scholarships or other grants. Various cultural facilities, together with transport and other pubUc services, likewise receive substantial subsidies from various sources and their charges are well below cost. Furthermore, rent, which is generally a major item in the cost of living, was held down very close to the pre-war level until the end of 1959. Despite the recent reform in the rent legislation involving an increase of about 150 per cent. to bring rents up to an " economic level " 3 , they are still only a fairly minor item in the cost-of-living index. There is no system of allocation or administrative direction of labour, and each undertaking is free to pursue the policy that suits it best. In recruiting workers it has, however, to go through the local employment 1 Cf. I.L.O. : Labour Costs in European Industry, Studies and Reports, New Series, No. 52 (Geneva, 1959). Since 1955 there has been a tendency for social benefits and charges to decrease while remuneration in cash has increased. See below, Ch. XI. 2 See Appendix I, Table J for wages and Table L for cost-of-living index. 3 To offset this increase in rents and also in certain other items of personal consumption such as electricity, the prices of which had hitherto been kept well below cost, a general increase in incomes came into force in January 1960. For details of the new legislation on rent and accommodation, see Ch. XI. 42 WORKERS' MANAGEMENT IN YUGOSLAVIA office and give priority to applicants who are registered as job seekers.1 Workers, for their part, are entirely free to accept or turn down a particular job, but after six months have elapsed they may forfeit unemployment benefit if they do not accept a job which is offered to them, even if it does not correspond to their experience or qualifications. The employment offices are administered by the local authorities and representatives of the trade unions take part in their management. Yugoslav legislation grants the workers substantial safeguards where the protection of labour and statutory conditions of employment are concerned. Some of its provisions affecting such varied matters as security of employment and length of notice, annual and special holidays, the protection of women workers (maternity leave, part-time work, etc.), young workers and the disabled, vocational training, and so on, will be dealt with in Chapter IX. The enforcement of social policy is the responsibility of the labour services which comprise specialised secretariats attached to the executive councils and people's committees. It is their duty, in close co-operation with the trade unions, to keep a watch on trends in employment, conditions of work and remuneration, vocational training, etc., to put forward draft regulations or other measures and programmes and to ensure compliance. In the latter task they are helped by an autonomous labour inspection service. Workers' management is becoming more and more the hub of social policy in undertakings. On the one hand, workers' councils and other self-management bodies now enjoy considerable autonomy in employment policy and in the development and adaptation of the different welfare services to meet the special conditions in each undertaking. On the other hand, the increasingly active development of the workers' management bodies has made it possible for a much larger number of workers to take an active share in administration; in addition, very many undertakings have introduced certain decentralised methods enabling the workers to be directly associated with the decisions which concern them. OCCUPATIONAL AND ECONOMIC ORGANISATIONS Under the Yugoslav economic and social system, there are two classes of representative organisations whose activities are directly connected with workers' management, namely (a) trade unions or other associations of the workers in an undertaking, industry or occupation, 1 The number of job seekers has increased in step with the number of workers in employment; in 1959 there were nearly 162,000 registered unemployed as against 115,000 in 1957 and 82,000 in 1953. " Temporarily unemployed " workers, i.e. those THE INSTITUTIONAL FRAMEWORK 43 and (b) economic associations formed by undertakings in a particular industry or branch of the economy. The legal status, role and functions of these organisations differ very widely. Sometimes they operate as " partners in the industry " representing the interests of their members, and sometimes as organs of " social self-government " at levels above the individual enterprise. In both cases, however, they form a vital cog in the machinery of workers' management. Workers' Organisations The workers' organisations are subject to the general regulations applicable to voluntary associations1, including the constitutional provisions guaranteeing freedom of association 2 and the 1946 Associations Act which provides for a registration procedure with the local authorities (at present the district people's committees). An organisation may be refused registration or forbidden to function if its aims or activities—or those of its founders or leaders—are directed against the constitutional order or are calculated to cause racial or religious discord.3 However, according to a ruling of the Supreme Court of Serbia on 3 November 1956, an organisation of a trade union character cannot be refused registration at the discretion of the authorities or simply because it would be inappropriate, e.g. if there are already other workers' organisations in existence which represent the same aims.4 In actual fact, the Yugoslav trade union movement has, since the war, formed a unified organisation closely linked with the political and economic regime. Consequently, registration or, for that matter, any other administrative formality, is waived in the case of the " unified trade unions " established in 1945 (now forming the Confederation of who have had to leave their jobs through no fault of their own, remain entitled to all employee benefits (sickness insurance, family allowances, etc.) and normally draw an allowance equal to 50 per cent, of their earnings. 1 The Freedom of Association and Protection of the Right to Organise Convention, 1948, and the Right to Organise and Collective Bargaining Convention, 1949, were ratified by Yugoslavia in July 1958. The reports of the Yugoslav Government on the application of these Conventions will come before the International Labour Conference for the first time in 1962. s Arts. 20 to 27 of the 1946 Constitution and art. 5 of the Constitutional Law of 1953. 3 That is, broadly speaking, the same kind of activities as are covered by the clauses of the Criminal Code referred to earlier (cf. p. 30 above). 4 Zbirka sudskih odluka (law reports) (Belgrade, Sluzbeni list FNRJ), 1956, Case No. 851, p. 319. In the same ruling the Court also rejected the argument that there was no need to register the association represented by its founders " because there was some doubt as to the ability of some of them to be the founders of an association ". In the Court's view, disqualification would have had to be proven and stated in the decision so as to enable the individuals concerned to fight it in the appropriate courts. 44 WORKERS' MANAGEMENT IN YUGOSLAVIA Yugoslav Trade Unions) or the groups belonging to them. These unions are clearly the most important of the existing workers' " social organisations ". Whenever Yugoslav legislation refers to trade unions, it in fact only means organisations belonging to the Confederation of Yugoslav Trade Unions.1 The structure of the Confederation of Yugoslav Trade Unions is both industrial and territorial. At the base there are trade union branches in all undertakings and also in some areas; each factory or local branch belongs to the appropriate union for that particular industry or section of the economy. In the republics, districts and some of the big communes there are also joint trade union councils. The Central Council of Trade Unions (at the federal level) at present comprises the 14 industrial unions belonging to the Confederation. At every tier of the trade union organisation from the undertaking up to the central headquarters, there is a members' assembly or a delegate conference (or congress) which meets periodically to elect the trade union committee or council. The latter handles the day-to-day business of the union and elects some of its own members to form its executive committee, one of them being appointed chairman. According to the progress reports submitted to the Federal Trade Union Congress in 19592, there were 21,031 trade union branches in 1958. Nearly 2 million, or 72.7 per cent, of the total number of workers, belonged to them (as against 1.4 million, or 60.5 per cent., in 1955). The number of permanent officials was 565 in 1958, of whom 41 were on the headquarters staff, 142 in the republics, 174 in the districts, 175 in the communes and 33 in various undertakings3 ; all trade union activities, states the report, were, however, organised in such a way as to depend on the support of large numbers of active union members. Between 1955 and 1958, the latter's contributions totalled 5,927 million dinars, of which 285 million went to the Central Council of Trade Unions.4 1 However, workers in a number of specialised occupations, both non-manual and manual (footplate staff, pattern makers, mechanics, etc.) belong to associations, some of which have formed national federations which do not belong to the Confederation of Trade Unions. Although they do not call themselves trade unions, these organisations do in fact take an active part in all matters affecting their members' status and training. * Cf. Cetvrti Kongres Saveza Sindikata Jugoslavie (Report and Proceedings of the Fourth Trade Union Congress) (Belgrade, Rad, 1959). In 1959, there were 2.2 million members of the Confederation of Trade Unions and 22,122 sections. 3 These figures show that there are very few full-time officials in the bigger undertakings or in most communes, while each district on the average has only one or two permanent officials. 4 Over this same four-year period the Council also drew a subsidy of 100 million dinars from the federal Government and received 112 million dinars from the sales of its publishing house. The above figures did not include subsidies from local authorities or individual undertakings. THE INSTITUTIONAL FRAMEWORK 45 The Yugoslav trade unions played a key part until 1950 in " mobilising the working masses " to achieve the economic and social aims of the state plans. They also assumed a number of major administrative responsibilities, such as manpower direction and labour inspection. While membership was still voluntary, it brought with it a number of substantial material benefits so that almost all the wage earners belonged to them. On the other hand, the running of the unions depended mainly on the staff of salaried officials, who in 1950 numbered nearly 3.500.1 The transfer of undertakings to their " work collectives " immediately raised the question of the part that should be played by the unions under the changed circumstances. The workers were to be henceforth responsible for settling working conditions or production matters within their own undertakings in accordance with their resources and needs. This meant that the unions' administrative responsibilities and the material benefits they could provide for their members were now something of an anachronism, and they were speedily dropped. The number of permanent officials was cut to a minimum in the early years of the experiment, and the membership also showed a marked decrease.2 The Yugoslav unions have nevertheless secured an important role under the new system. In his report to the Fourth Congress of Yugoslav Trade Unions (April 1959), the Chairman of the Central Council of Trade Unions stated that— . . . organised in the Confederation of Trade Unions, the Yugoslav working class is struggling to expand the productive capacity of our society, to strengthen socialist democracy and management by the producers in order to eliminate the last traces of master-servant relationships and to build up Socialist social relationships . . . . The unions are increasingly becoming the political basis for workers' management. They do not need to perform a protective role in the classic meaning of the term because there is no wage-earning relationship vis-à-vis private capitalists or the State as a public capitalist. This does not mean, however, that the unions have no need to take part in decisions affecting the conditions and rights of workers and employees or to prevent their interests from being ignored or to combat arbitrary and bureaucratic behaviour, violations of individual rights or sub-standard living and working conditions.3 The unions' practical activities under workers' management fall into several parts. In the first place, the unions continue to be responsible for representing the workers' joint interests within undertakings and also in dealings with local or higher authorities. They are intended to provide 1 Cf. the article by D. STAMENKOVIÓ in Naia stvarnost (Belgrade, " Kultura "), Vol. XI, No. 10, Oct. 1957, p. 337. 2 The number of salaried trade union officials fell to a low point of about 300, while the number of unionised workers was only 60 per cent, of the total. 8 Cf. Industry and Labour (Geneva, I.L.O.), Vol. XXII, No. 7, 1 Oct. 1959, p. 269. 46 WORKERS' MANAGEMENT IN YUGOSLAVIA a forum where the workers can air their views without their policy being directly affected by administrative responsibilities or management considerations. They are regarded as an essential channel of communication between the workers and the public authorities and vice versa. The high-level trade union organs often approach workers' management bodies in undertakings either direct or through their trade union branches. Reconciling the interests of different groups, classes or collectives of workers is regarded as one of their main tasks. This means that the unions are directly involved at all levels in a variety of measures or schemes affecting the workers, for instance welfare plans or legislation, remuneration systems or labour protection. They can also negotiate agreements on an industry or nation-wide basis, with associations or other organisations of undertakings, regarding such matters as working conditions or pay scales. Lastly, they appoint the workers' representatives to various institutions administering social security schemes, bodies representing consumers, etc. Trade union leaders are also eligible (and are often elected) to represent undertakings on producers' councils at all levels. This latter function is of special importance because it gives union leaders an opportunity of taking a first-hand part in decisions affecting undertakings in their industry or branch of the economy. The Yugoslav trade unions also have special responsibility for the efficient operation of workers' management. With this aim, the union branches in undertakings call meetings of the workers, select candidates for workers' councils and may also organise referendums or propose the dismissal of the workers' council or some of its members, etc. At a higher level, the unions collect material on the operation of workers' management and in co-operation with other institutions explore ways and means of making it more efficient. In 1957 the Central Council of Trade Unions organised the first National Congress of Workers' Councils and was instructed by it to ensure that its resolutions were put into effect. All these trade union activities form the basis of the educational work to which the Yugoslav leaders attach special importance. The fact that hundreds of thousands of workers take a direct part in the proceedings of the organs of workers' management, the producers' councils and other social self-government bodies is regarded as an outstanding opportunity for mass training and working-class advancement. But if this participation is to bear full fruit, there must be large-scale training in management and technical subjects for the workers concerned. This education goes on simultaneously at different levels, and is one of the unions' prime tasks. From 1953 onwards they promoted, and helped to manage and finance, THE INSTITUTIONAL FRAMEWORK 47 a number of " workers' universities ", which now exist in all towns of any size and give adult workers an opportunity of taking training in aspects of management as well as in general and technical subjects. The direct economic and social training work of the unions is also of some importance. 1 In addition, the unions hold many conferences, public discussions, forums, clubs, etc., and issue a number of periodicals 2 , together with other publications, most of which deal with various aspects of workers' management. For some time past, the higher bodies of the trade union movement have been engaged in social research (for example, by setting up research institutes, organising sociological surveys, etc.). Economic and Technical Organisations The introduction of workers' management has led to the formation of many associations representing undertakings in given industries or sections of the economy, with the aim of filling the gap caused by the abolition of government departments and central economic agencies, and permitting formulation of the joint views and interests of the autonomous undertakings. After an experimental period when undertakings were practically left to their own devices, a basis for their economic representation under the system of workers' management was provided by an ordinance issued at the end of 1953 and full legal status granted under a general Act of December 1957 on association and collaboration in the economy. This legislation (which was further overhauled in June 1960) provides for two main types of representative organisations : economic chambers and associations of undertakings. 3 Economic Chambers. The economic chambers are established by law and comprise all undertakings in a particular branch of the economy, either federally or 1 According to the progress report submitted to the Fourth National Trade Union Congress, the unions in 1957 organised 1,310 courses and seminars on economic and social subjects, which were attended by 41,000 persons; the workers' universities organised 851 courses, which were attended by 42,000 workers, of whom 30,000 were members of workers' councils. 2 In 1958,29 reviews and periodicals were being published by different unions or in different areas (i.e., for workers speaking languages other than Serbo-Croat). 3 Undertakings in some sections of the economy for which full-scale decentralisation of management would not be suitable (e.g., railways, the post office and electricity supply) form compulsory " communities " which combine representative and managerial functions (see also below, Ch. III). In addition, all undertakings may associate freely to achieve an economically lawful purpose in " business associations " (see below, Ch. VIII.) 48 WORKERS' MANAGEMENT IN YUGOSLAVIA in any one of the territorial units.1 Each chamber has its own general assembly composed of delegates from undertakings, who elect the committee of management and its chairman together with a secretariat and a number of specialised sections and committees. At the present time, the executive bodies of the chambers only contain representatives designated by the workers' councils of the member undertakings.2 Their income is derived from dues paid by the affiliated undertakings, as fixed by the general assembly each year. The task of the economic chambers is to promote the interests and operations of their affiliated undertakings.3 They are consulted in the formulation of development plans and other measures with economic implications and may make proposals in this connection. In addition they may be assigned by law some of the functions of the state organs " insofar as these functions are social in character ". The law lays down that these chambers shall be autonomous in the performance of all their functions. Apart from their representative functions, the chambers can also wield a certain influence over their affiliated undertakings by means of recommendations and (where specifically allowed by law) by binding decisions. They also have power to define the customary practices in their particular section of the economy.4 Lastly, they also appoint a " court of honour " with power to settle internal disputes and to examine accusations of unfair practices against member undertakings.5 The chamber may not, however, take any step calculated to curtail the independence of undertakings, discriminate against one of them or limit the autonomy of their management bodies. Any decisions taken by a 1 Thus the Federal Chamber of Industry and Transport, the Federal Chamber of Building and the Federal Chamber of External Trade each comprise all Yugoslav undertakings in these three branches. In agriculture and forestry, there is a chamber in each republic, while commercial, handicraft and hotel undertakings belong to district chambers which are grouped together to form associations in the republics and at the federal level. 2 Until 1960 the committees of management of these economic chambers contained some members—not more than a quarter—appointed by the appropriate producers' councils from among representatives of other organisations or institutions with an interest in the particular industry concerned. 3 Among the main subjects for which they are responsible, the Act mentions modernisation and rationalisation, more efficient organisation of production and labour, the development and efficient use of productive capacity, co-operation between undertakings and specialisation, supply and marketing, the development of methods of remuneration, vocational training, etc. The special activities and purposes of each chamber are defined in its own rules. * These practices apply also to commercial relationships between different sections of the economy, but can in this case always be waived by agreement between the parties. 6 The court of honour of a chamber can normally only inflict moral penalties, which consist mainly in publicising the details of the case and the chamber's conclusions. THE INSTITUTIONAL FRAMEWORK 49 chamber in breach of the law can be contested in the Federal Economic Court, which may rescind them. Unions or Associations of Undertakings. Since 1953, Yugoslav legislation has allowed most undertakings to form unions or associations for their particular industry or section of the economy. Under the 1957 Act these associations could be formed by not less than a quarter of the undertakings in the following branches : industry and mining, building, agriculture and forestry, and transport. They were required by the Act to affiliate to the chamber for their branch of the economy. Their membership grew swiftly during the early years and by 1958 they covered almost all the undertakings in these branches. The amending Act of June 1960 made membership compulsory for all undertakings, and the associations were incorporated in the system of economic chambers as the representative groups for particular sections of industry, transport and building. The status and functions of these associations thus do not differ in any fundamental way from those of the economic chambers, although the Act makes it clear that the latter are somewhat more technical in character.1 Like the chambers, the associations may not themselves engage directly in any economic activity (production, trade, etc.). The economic chambers and associations do, however, engage in a wide variety of other activities. The annual congresses of the federal chambers are attended by a large number of leading executives in the branch of the economy concerned. Their proceedings are usually widely publicised, especially since the appropriate members of the Government usually make a point of attending and giving a general description of future policy and the main reforms in preparation. The committees of management and the many technical sections and panels 2 of the economic chambers and associations of undertakings meet very often to decide their policy towards current problems and to make recommendations to the appropriate official bodies or to their member undertakings. The authority of these organisations within the economy depends largely on the value of the technical help they are in a position to give their member undertakings in one field or another, such as production techniques, systems of remuneration, finance and accountancy methods, etc. Apart from the voluntary assistance they receive from experts in industry, the chambers and associations also employ large permanent 1 The Act mentions technological questions, the co-ordination of investment programmes, studies of the market and business trends, costing, job analysis, etc. a For industry and mining alone, 259 technical committees and panels had been set up in 1958 by the 25 associations of undertakings in existence at the federal level. 50 WORKERS' MANAGEMENT IN YUGOSLAVIA staffs. In 1958 these staffs totalled 6,524, including 5,735 officials and salaried employees of whom about 1,000 had had a university or full secondary education.1 Despite the restrictions on the level of dues from affiliated undertakings2, they have fairly sizable incomes.3 In the technical sphere these organisations are not alone, since specialised management institutions have been set up under the auspices of various official or non-official bodies (such as the productivity and executive training institutes, university chairs of management, associations of economists and various other organisations) which have made a notable contribution to the system of workers' management and each of which influences a fairly wide circle of collaborators and executives. Their impact often extends beyond the restricted world of senior technical and administrative staff and also reaches the elected heads of workers' councils, thereby continuing the educational influence of the workers' universities and trade unions. Recent legislation on study and research institutions also authorises undertakings to set up bodies of this kind on their own initiative and at their own expense or to associate for this purpose if they think it advisable. * * As can be seen from this brief survey, the introduction of workers' management of the economy has led to a complete overhaul of the institutional structure. Entirely new machinery has been created to give undertakings a voice in decisions affecting them so as to safeguard their independence and establish a framework for co-operation between them and for the regulation of their mutual relations. The entire structure of the State and the legal system have also been reformed to allow a thoroughgoing decentralisation to take place down to the commune and the autonomous undertaking. New methods of planning at the top have been introduced with the same aim in view, based mainly onfinancialcontrols and designed to secure a high rate of development without interfering in the running of individual undertakings. The functions and working methods of the State and local authorities and all other social and political bodies have also been altered to meet the needs of the new system. Respect for the independence of each under1 Thus in the size and qualifications of their permanent staff they far outranked all the other political or social organisations in the country, whose staffs in 1958 totalled 5,996 persons, including 4,984 officials and office workers, of whom 242 had had a university or full secondary education. 2 See below, Ch. X. 8 In 1958, the 25 associations of industrial undertakings had an income of 700 million dinars and their expenditure amounted to nearly 550 million. Cf. Buten (organ of the Federal Chamber of Industry), No. 36, Oct. 1959, p. 4. THE INSTITUTIONAL FRAMEWORK 51 taking or local community subject to the provisions of the law is the guiding principle of the whole policy. Education in the widest sense of the term thus becomes particularly important in the work of all these institutions. They have, of course, a number of important supervisory functions to carry out 1 and are required to safeguard the basis of the system and guide its future development, but for practical purposes in the undertakings and collectives their main duty is to promote independent initiative by producers and the population at large. According to the Chairman of the Central Council of Yugoslav Trade Unions— We show our concern for the workers' interests and wishes not so much by representing them as by educating them and helping them to settle their problems themselves at first hand, to share in the management of undertakings, the regulation of internal relationships within each collective, the administration of communal business, the work of various organs of their commune, especially the producers' councils, the work of various other special councils and committees, the work of committees of housing estates and apartment houses, electors' meetings, conferences of the Socialist Alliance, school boards, the management of social insurance schemes, health institutions and organisations, etc. Thus, special importance attaches to activities designed to help the working class to take the right decisions and to make the2 most efficient use of the social and political machinery placed at its disposal. 1 2 Cf. in particular Ch. XII. Cf. A. S. VuKMANOVió: Rapport général au IVme Congrès de la Confédération des syndicats de Yougoslavie, Belgrade, 23 Apr. 1959. PART II THE UNDERTAKING AND ITS ORGANS OF MANAGEMENT THE UNDERTAKING AND ITS ORGANS OF MANAGEMENT In the Yugoslav view, workers' management can only become fully effective if undertakings are free from interference not only in their day-to-day running but also as regards their continued existence. The workers in an undertaking would be unlikely to take a real interest in managing it if an outside body could at any time order it to be wound up or merged with another, or could upset its plans by withdrawing part of its capital or income or changing its personnel. Since the 1946 legislation on state enterprises had given the public authorities discretionary powers in all these fields, the introduction of the workers' management system involved a far-reaching reform of the legal status of enterprises. After an outline in Chapter III of the present legal status of Yugoslav undertakings, the remainder of this Part is devoted to a general description of the workers' management machinery. Chapters IV and V indicate the composition and functions of the " collective " and the different elected managing bodies in each undertaking. Chapter VI deals with the functions of the director and other technical executives. This account will be limited to the static framework, since the actual operation can only be described in relation to the different management functions considered in Part III. CHAPTER III LEGAL STATUS OF THE UNDERTAKING The independent undertaking administered in accordance with the principles of workers' management is the basic organisational unit in the whole of the socialised sector of the Yugoslav economy. Thus, the Yugoslav system contains only one type of undertaking, which is found in every form of economic activity, whether production, commerce or services, and irrespective of the scale of operations.1 All undertakings without distinction have the same status and are in principle equal before the law.2 The autonomy of the Yugoslav undertaking automatically devolves on its " work collective " 3 but it is the undertaking itself which possesses all the rights that go with incorporated status and not its organs of management, which always act on its behalf. An undertaking's liberty of contract is virtually unlimited. A government department can no longer impose contracts on it under the plan or for any other reason, though an undertaking is still subject to the general regulations concerning expropriation in the public interest. Similarly, restrictions on an undertaking's capacity to institute proceedings in the civil and administrative courts or to take part in criminal proceedings have been removed. Undertakings are also entitled, within the limits indicated in Chapters II and VIII, to form associations for economic purposes or to protect and represent their joint interests. They can also set up independent services, workshops or even other undertakings. Legally speaking, an undertaking is made up of two distinct entities— firstly, the collective, and secondly, its assets, comprising the total property and funds at its disposal. 1 With the exception, however, of the banking system, farm production co-operatives and certain multi-purpose institutions (e.g., research institutions with farms or workshops attached, the main purpose of which is not economic). ' Former state monopolies and estates, public agencies, etc., have been converted into independent undertakings subject to workers' management. The distinction between undertakings run by the federal authorities, the republics, etc., has also been abolished. Henceforth the communes are normally the only authorities with powers over all undertakings in their areas. 8 See art. 6 of the Constitutional Law of 1953. LEGAL STATUS OF THE UNDERTAKING 57 The status assigned to the collective is that of a community of workers developing the undertaking's assets by their personal work, who are entitled to manage the undertaking and to apportion the results of their management. The collective recruits its own members and it may also dismiss them provided it abides by the legal procedure designed to safeguard their rights. Membership is the automatic result ofjoining the undertaking, and a worker can leave at any time.1 Members are not required to contribute any capital nor are they entitled to withdraw any shares when they leave. Neither the undertaking nor the collective owns the undertaking's assets : regardless of source, these assets are legally " social property ". The collective is simply entitled to manage the assets, and Yugoslav legislation treats this right of management in the same way as a usufruct, comprising full possession and enjoyment of the assets, but not the right to consume them or divert them from their economic purpose.2 The collective is therefore said to have a " real and inalienable right " in the undertaking's property and funds, but it is required to administer them " with due care " and above all to maintain their total value.3 The system in principle sets no restriction on the right of the collective to dispose of an undertaking's net earnings as it wishes. Provided that the prescribed procedures are complied with and tax or other liabilities (for example, interest charges) have been met and the necessary statutory allocations made to the reserve and depreciation funds, the net results can be distributed by the collective among its members in the form of remuneration, used for welfare purposes or allocated to the undertaking's own resources.4 The undertaking's assets are divided into four groups, each with its own special purpose and rules, namely fixed capital, working capital, reserves, and welfare assets. The 1957 Act on the administration of these resources stipulated that an undertaking might not " be deprived of its resources by any organ of the State ". It also stipulated that " the fact of contributing to the funds of an undertaking for any reason shall not confer a right to decide the allocation of its revenue or any 1 For further details, see Chs. IV and IX. According to E. Kardelj, state ownership of the means of production "is becoming increasingly social in the true sense of the word, i.e. the common property of all and everyone, and hence the negation of any property "; cf. " Les tâches fondamentales dans l'édification des rapports socialistes ", in Revue de la politique internationale (Belgrade, Union des journalistes de Yougoslavie), Nos. 242-243, 1-16 May 1960, p. 9. » For further details see Ch. VIII. 4 See Ch. X. 2 58 WORKERS' MANAGEMENT IN YUGOSLAVIA of the prerogatives of management ". Finally, it abolished the obligation to obtain prior permission for the sale of capital assets. The actual existence of an undertaking is not tied to any particular premises or installations but only to the total of its various assets expressed in monetary terms. This does not mean that the country's economy is carved up between an unchanging number of undertakings. In any market economy, there must be possibilities for the formation of new concerns, for amalgamation or subdivision, and for the dissolution of enterprises no longer economically warranted or inefficiently managed. The procedures for these purposes have been adapted to the system of workers' management and are designed to safeguard the rights of each collective. FOUNDATION OF UNDERTAKINGS At the first stage of the foundation of an undertaking the collective does not yet exist and the initiative must come from outside. This is no longer vested in government economic agencies but belongs to the executive bodies at all levels, to economic and social institutions and even to private groups of citizens. The public bodies with power to establish undertakings are the Federal Executive Council, the executive councils of the republics and the people's committees of the districts and communes. Undertakings, co-operatives and other economic organisations, together with social bodies such as trade unions or tenants' associations, also have power to found new undertakings. Noncommercial undertakings may be founded by groups of citizens, subject to the approval of the commune people's committee, which may not, however, withhold permission if the project is economically justified. Once the undertaking has been founded and the collective has come into being, the " founder "—whether a body or a group of individuals— no longer has any special rights apart from an entitlement to the refund (plus the legal rate of interest) of the sums advanced to the undertaking. Unless otherwise stated by law, supervisory powers are vested in the local commune whether it founded the enterprise or not. In practice the communes or districts generally take the initiative in founding new undertakings while the federal authorities or the republics only do so in the case of particularly large projects. Normally undertakings are founded in accordance with the requirements of the plan. They are usually financed by advances from public investment funds or by bank loans. The law requires the founder of an undertaking to provide it with all the resources needed for effective operation. It specifies the procedure for calculating this initial endowment or advance, and LEGAL STATUS OF THE UNDERTAKING 59 disputes over the amount can be taken to the administrative courts.1 Generally speaking, the establishment of an undertaking falls into two separate stages, of " foundation " followed by the preparatory work and " constitution " of the undertaking when it is ready to go into operation.2 The preparatory work on the establishment of an undertaking cannot begin until notice of its foundation has been filed with an economic court. During the preparatory stages the undertaking is still not a legal entity and a director acts on its behalf in accordance with the " founder's" instructions. If the preparatory work goes on for a long time a workers' council may be elected, but its decisions are subject to approval by the director. As soon as the preparatory work is complete the undertaking must be " constituted " and it is the duty of the acting director to set the necessary procedure in motion. If he fails to do so, it is up to the collective to take the necessary action, the first step being to notify the people's committee of the commune.3 The latter must give its consent if the technical, safety and health arrangements are satisfactory. The undertaking becomes a legal entity once it is constituted. Constitution, including registration as an undertaking, marks the actual start of workers' management, i.e. the appropriate bodies are elected and adopt the undertaking's by-laws and its regulations regarding remuneration. The management of the undertaking is then handed over to the collective.4 As these procedures were introduced, they automatically became applicable in existing undertakings, for most of which official constitution took place in 1954.5 In Yugoslav practice, therefore, it has been impossible for undertakings to remain entirely outside the system, and a minimum of activity by the workers' management bodies is ensured by the fact that certain managerial functions are assigned to them exclusively. As will be seen in Part III, these functions are fairly numerous. 1 The supreme courts have already heard a number of disputes of this kind (cf., for example, Zbirka sudskih odluka, 1959, Vol. 1, Cases Nos. 89 and 90). 2 These two stages may coincide in the case of small handicraft, commercial, etc., undertakings, for which large-scale preparatory work is unnecessary. 3 On this point, as in other matters connected with the status of the undertaking, the Federal Supreme Court has explicitly authorised the collective (or workers' council, even if dissolved) to take its case to any administrative or judicial court. 4 This transfer of the powers of management is often commemorated by special plaques in undertakings stating the date on which they were handed over to workers' management. 6 As was stated in the Introduction, the present system of independent undertakings dates back to the passing of two ordinances on 18 December 1953. 60 WORKERS' MANAGEMENT IN YUGOSLAVIA AMALGAMATION AND SUBDIVISION An undertaking can neither be split up nor merged with another except by decision of its workers' council or collective. There are no special restrictions on the subdivision of undertakings, but mergers may be forbidden by the authorities if they might create a monopoly.1 Yugoslav legislation also authorises the collective of certain types of establishment or workshop to claim internal autonomy or to become entirely independent. Normally, any establishment or workshop forming an economic unit capable of operating on its own is entitled, if the workers concerned so desire, to become an independent establishment with its own organs of management and financial autonomy, or else an undertaking in its own right. This does not apply in all cases (shops opened by industrial undertakings to sell their own products are not allowed to do so) and a good deal depends on approval by the commune in which the undertaking is located. The main problem which appears to have cropped up in practice is that of mergers which are imposed (or pushed through by illegal pressures) by local authorities anxious to find a cheap way of straightening out the finances of an undertaking that is in difficulties by amalgamating it with one that is prosperous. Cases of this kind have led the Federal Economic Court to lay down the principle that the wishes of the collective are decisive in any matters affecting the status of their undertaking.2 LIQUIDATION Under Yugoslav law the grounds for liquidation of an undertaking are inefficiency or illegal activities. As this is the final sanction under the system of workers' management and terminates the existence of the undertaking and its collective, it can only take place in the circumstances, and in accordance with the procedure, laid down by law. Since the collective merely administers public property, it is not itself entitled to decide to go into liquidation. As a general rule, an undertaking can only be wound up if it can no longer meet its financial obligations, in which case any creditor can make the necessary application to the economic court.3 The court, 1 Naturally, the subdivision or merger of undertakings is subject to the procedure described above for the establishment of a new undertaking in so far as it is applicable. 2 In a decision of 11 November 1957, the Federal Court upheld the right of a workers' council to reverse its earlier decision and refuse a merger as long as the appropriate procedure had not been set in motion in the registration tribunal. In another case it upheld the appeal of a workers' council which had been dissolved (illegally) by the commune authorities in order to force a merger on the undertaking. 3 The collective of an insolvent undertaking may also ask the court to start the winding-up procedure. LEGAL STATUS OF THE UNDERTAKING 61 after an inquiry by a specially appointed panel of experts, then commences the liquidation procedure and appoints a receiver. Notice of each liquidation is inserted in the official gazette (Sluzbeni list) of the Federation. From the date on which this notice is published, the undertaking ceases to exist from the standpoint of workers' management and the receiver takes over. His main task is to realise the assets of the undertaking and share them out among the creditors. A court order for liquidation does not necessarily involve any liability for the members of the collective, but the director and executive personnel may be liable under civil law for unwarranted expenditure (especially the remuneration of the workers at higher rates than the guaranteed minimum) deliberately incurred to the detriment of the creditors during the three months preceding the date on which liquidation commenced. By decision of the court, the director and members of the managing bodies of an insolvent undertaking may be debarred for a specified period from managerial functions in any other undertaking. Yugoslav legislation also provides for two special cases in which liquidation does not require the prior approval of the courts. The people's committee of a commune may, by decision of both chambers, order the liquidation of an undertaking which, although technically solvent, is not earning sufficient income to meet its tax obligations and other " recurring social contributions " and at the same time to pay its workers the guaranteed minimum income.1 In such cases the commune must advance the necessary funds and can only relieve itself of this obligation by winding up the undertaking. Liquidation without a court order may also take place if the people's committee or any other appropriate organ of the State " orders the closing of the undertaking in pursuance of a legal provision specifically authorising such sanction ". This possibility only exists at the moment for certain malpractices in the management of commercial or handicraft undertakings, and appears to have little significance as far as the larger undertakings are concerned. The legal grounds for liquidation of an undertaking are well defined and orders are open to appeal in the courts. As one author has put it, Yugoslav legislation " eliminates any arbitrary element in decisions 1 This type of liquidation thus calls for a fairly unusual combination of circumstances. The undertaking's assets must still exceed its liabilities, since otherwise judicial liquidation would take place automatically. But its net operating income must also be insufficient to provide the workers with the statutory guaranteed minimum income, and at the same time it must not have any reserves or any other funds on which it is legally entitled to draw to restore the situation. In addition, the commune itself must be unable to advance the necessary money or must consider that it can make better use of its resources in other ways. 62 WORKERS' MANAGEMENT IN YUGOSLAVIA affecting the existence of an undertaking so as to safeguard the managerial rights of the workers in each individual undertaking, and as a result workers' management in general ". Though over-all statistics are not available, it appears that judicial liquidation of insolvent enterprises has been occurring, though not on a large scale. During the period 1954-57, quite a large number of uneconomic undertakings which had been needed when the economy was being run from the centre (e.g., compulsory purchasing agencies for farm products, eggs, leather, etc.) were wound up. In the main these were very small concerns (stores, workshops, etc.) which were not paying their way and were often immediately reopened in a different form or for another purpose. The city council of Belgrade reported that in 1956 it had closed down several dozen undertakings of this kind, many of which only employed one worker or only a few. Among the " undertakings " wound up there were some 20 firms of accountants. The larger undertakings to be liquidated have included several building concerns, which until 1957 went through quite a difficult time; a number of commercial enterprises (particularly in wholesaling) also went bankrupt. In the same way as for mergers, there have also been cases of illegal liquidation by order of communes. But these are stated to have been " absolutely exceptional " and to have only affected " very small undertakings, handicraft workshops, shops, etc.".1 FINANCIAL REORGANISATION AND OPERATION BY RECEIVER Under current legislation, the liquidation of an insolvent or unsound undertaking can be avoided if the deficit is taken over by an outside body (the Federal Executive Council, the executive council of a republic, a people's committee, a higher economic organisation, a trade union, etc.) which has an interest in keeping it going.2 When taking over the deficit, the body in question may, if it thinks fit, place the undertaking in the hands of a public receiver to straighten out its finances, who then exercises full managerial powers.3 Generally 1 Cf. N. BALOG, writing in Nova administracija (Belgrade), Vol. VII, No. 2, Mar.Apr. 1959, p. 150. 2 The law also provides for the possibility of a settlement inter se accepted in court by an authorised majority of the creditors, whereby they waive their right to part of the debt so as to enable the undertaking to regain good financial standing. 3 If the deficit is taken over by an economic or social organisation, the receiver is appointed at the request of the organisation by the people's committee of the commune. LEGAL STATUS OF THE UNDERTAKING 63 speaking, administration by receiver is imposed on an undertaking when its workers' management bodies are held to be responsible for the deficit. The appointment of a receiver automatically involves the dissolution of all organs of management within the undertaking and the temporary suspension of its own internal autonomy. This emergency form of management can only be imposed on an undertaking, however, for a limited period not exceeding one year, at the expiry of which its management once more reverts to the collective. The procedure of operation by receiver, which is designed to keep an undertaking going and to ensure that the funds it has been provided with are efficiently used1, is at present the only case in which an undertaking in full operation can be placed under the control of a public authority for a time. The receiver is bound by all the regulations governing the undertaking's management, especially as regards working conditions and remuneration.2 In practice the procedure appears to have been employed only in a limited number of cases. As for the liquidation of undertakings, there are not any detailed figures of the actual number of undertakings so administered. SPECIAL CATEGORIES OF UNDERTAKINGS The general legal provisions described above apply in principle to all undertakings throughout the country. Every Yugoslav undertaking is regarded to some extent as a permanent, independent foundation established on behalf of those who at one and the same time manage it and develop its assets by their productive labour. In practice, as well as in law, the status of each undertaking is, however, influenced by a number of special factors, such as its field of activity, the size of its labour force, and its importance to the economy. A very brief account will now be given of the main classes of undertakings. Yugoslav undertakings are usually classified in accordance with their main purpose, i.e. the economic branch to which they belong. The main classifications are (a) industry and mining (with subdivisions for various individual industries); (b) building; (c) wholesaling, retailing, international trade and hotels ; (d) handicrafts; (e) agriculture; (f) forestry; 1 Under the 1957 Act on the administration of assets by undertakings, a commune may order an undertaking to be operated by a receiver in the event of serious irregularities in the management of its assets or income. a An undertaking operated by a receiver cannot, among other things, introduce new scales of pay until a new workers' council has been elected. Cf. Socijalna politika (Belgrade), 9th Year, No. 10, Oct. 1959, p. 62. 64 WORKERS' MANAGEMENT IN YUGOSLAVIA (g) transport and communications ; (h) municipal services ; and (i) cultural activities.1 The system of independent undertakings and workers' management is only fully applicable in branches where there is real freedom to trade and produce. Special arrangements are therefore made in some sections of the economy : (i) Undertakings producing and distributing electric power are compulsorily grouped into six " communities "—one in each republic—which in turn compose a federal community of the electricity industry. This structure derives from the industry's position as a de facto monopoly charging a uniform tariff, and the need for close co-operation and cost equalisation between one power station and another, but does not eliminate their internal autonomy. Each group is also administered by the elected representatives of the individual collectives which belong to it. (ii) Undertakings working for national defence are subject to special regulation which in some respects places them under the control of the Federal Secretariat for Defence, especially as regards production programmes, the appointment of directors and prior approval for certain important decisions. Generally speaking, the communes and districts have no power over undertakings of this kind.2 (iii) The management of undertakings engaged in internal trade 3 may be subject to certain restrictions in the interests of consumers. For example, an ordinance on trading operations issued in 1955 authorised the people's committees of the communes to set up councils of representatives of the consumers for certain commercial undertakings or types of undertaking, to keep a general watch on management. Since 1955, several thousands of these consumers' councils have been formed, but they do not as yet appear to have had a marked influence on management in this section of the economy.4 (iv) The position of the railways and the post office undertakings is generally similar to that of the production and distribution " com1 Most of these branches also include a number of subgroups. These undertakings are not included in the general statistics relating to Yugoslav undertakings. According to an official statement they are being " gradually incorporated in the country's general economic system " (cf. Proceedings of the discussions on the national defence budget in the budgetary committee of the General Assembly, Borba, 9 Dec. 1958). s No reference is made here to the regulations affecting wholesaling or international trade, which are extremely complex and of only minor interest from the standpoint of workers' management. 4 By the end of 1958 there were 1,901 consumers' councils in Yugoslavia. Their geographical distribution is extremely uneven. For example, of two industrial towns in Slovenia, one (Kranj) had 245 while the other (Maribor) had only five. The whole question of the powers of these councils has not yet been finally settled. Cf. Privredni pregled (Economic survey) (Belgrade), 27 Aug. 1959, p. 2. 2 LEGAL STATUS OF THE UNDERTAKING 65 munities " in the electricity industry. The directors-general of the railways and of the postal services are appointed directly by the Federal Executive Council. (v) Municipal undertakings and services are largely under the control of the commune authorities. Their right to dispose of the assets is greatly restricted. The law makes it clear that a commune must compensate these undertakings for the special services which they may be required to render the community. (vi) Undertakings engaged in cultural activities are subject to special regulations in so far as their operations have a commercial basis. 1 At the present time these regulations mainly apply to newspaper publishing, printing houses and the production, distribution and projection of films. In all these cases, workers' management bodies are assisted by a council appointed by the body which founded the undertaking, with technical (i.e., artistic, scientific, etc.) responsibility for the programme. 2 Though the special position of undertakings in the above branches of the Yugoslav economy modifies the scope of workers' management in the undertakings concerned, internal autonomy is as a rule maintained, and the collectives and their elected organs are in a stronger position to bargain with higher authority than if its managers were entirely dependent on the same authority. SIZE OF UNDERTAKING AND ITS WORK FORCE Though the status of an undertaking is not as a rule affected either by its economic importance or by the size of its labour force, Yugoslav law excepts one group: the very small handicraft, commercial and catering concerns employing only a handful of workers (not exceeding 30), which may be set up as " shops " or " workshops ".3 Small concerns of this kind are subject to regulations drawn up by the local commune and accepted by the workers. They must confine their activities to the commune itself and can have only one point of sale. Their internal organisation, accounts and the way they distribute their income are greatly simplified. The collective may, for example, elect 1 An " undertaking " is not deemed to exist where a service is provided free of charge (e.g., education) or where a direct regular subsidy is received (e.g., theatres). In such cases other forms of " social self-management " are employed. 2 Thus, under the enactment regulating publishing houses, the annual programme of publications is approved by the workers' council on the recommendation of the publications board, which is appointed by the founder or founders of the undertaking; possible differences are settled by arbitration (cf. Sluzbeni list, No. 44, 1959, Text No. 719). 3 A concern which elects a workers' council, i.e. one whose work force exceeds 30, must be constituted as an " undertaking ". 66 WORKERS' MANAGEMENT IN YUGOSLAVIA the " workshop manager " from among its members, subject to the approval of the commune. The commune may hand a very small concern over to one or more workers in return for a fixed rental. In such cases, the public property which constitutes the " business " is leased out by the commune through public auction to one or more private workers who operate it at their own risk. This form of enterprise is now widespread in the small handicraft trades and small-scale catering. In handicrafts alone, there were 2,925 of these leased businesses in 1958, or some 58 per cent, of the total number in this branch (individual craftsmen not included).1 The size of the undertaking naturally has practical implications, not only as regards its possibilities in the market and dealings with banks, etc. but also in the number of its representatives on the local councils and at higher levels. Exceptionally big undertakings are usually given more careful attention and supervision by higher authority. Similarly, the total number of workers will have a decisive effect on the internal structure of the undertaking and its organs of management. The law itself only distinguishes between undertakings with fewer than 30 workers, where the collective is directly responsible for management, and those with a labour force exceeding this number, which elect a workers' council. In point of fact, however, workers' management in the very big undertakings is far more diversified because of the complexity of the problems that have to be tackled. Table D in Appendix I gives a breakdown of Yugoslav undertakings according to the branch of the economy to which they belong and the size of their labour force. The small undertakings are by far the most numerous. Those employing between seven and 29 workers account for more than a third of the total but have only 6 per cent, of the volume of employment. On the other hand, the 1,524 undertakings (973 of them industrial) with more than 250 workers only represent some 6 per cent, of the total number of undertakings covered, but account for the majority of the workers in the socialised sector of the economy. This study deals mainly with the undertakings of the latter type. 1 Ekonomska Politika (Belgrade), 6 Dec. 1958, p. 1129. FIGURE 3. RELATIONSHIP BETWEEN THE MANAGEMENT BODIES AND THE EXECUTIVE BODIES OF UNDERTAKINGS WORKERS' MANAGEMENT BODIES (formulation of policy) DIRECTING S T A F F (execution of policy) Committees of the Board of Management BOARD OF MANAGEMENT (Director) Executive staff: Heads of departments and autonomous units WORKERS' COUNCIL Committees of workers' council: Production and organisation Financial and economic affairs Recruitment and discharge Discipline Departmental workers' councils Committees: Production A Production Welfare Production B Finance Complaints and petitions Production C Personnel Auxiliary services Safety and hygiene I Supervisory staff Construction Sales Administration, etc. Committees: Personnel Economic affairs Meetings oí department collectives Referendum COLLECTIVE (as managerial authority) Meetings of collective COLLECTIVE (as production personnel) 68 WORKERS' MANAGEMENT IN YUGOSLAVIA director. On joining the undertaking each worker automatically becomes a member of the collective and is entitled to exercise the rights which this entails. He loses them at the time he leaves. As soon as an enterprise is constituted, its initial personnel become responsible as a collective. Thereafter, the composition of the collective is determined by its personnel policy, i.e. mainly by the choices made when workers are recruited or leave. The law specifically forbids the collective to relinquish any of its prerogatives in this respect to the director or his subordinates.1 When electing the management bodies, the collective comprises only those who are entitled to vote, namely Yugoslav citizens who have reached the age of 18 and enjoy full civil rights. Apprentices, as a special group, are excluded, as are employees or experts engaged for temporary or part-time work.2 In practice, the respective figures for the number of voters and the number of members of collectives agree quite closely. According to the 1957 electoral statistics for undertakings employing more than 30 persons 3 , out of 1,430,341 workers actually employed only 34,340 (or some 2.5 per cent.) were not registered as voters. FUNCTIONS The collective is not, strictly speaking, an organ of management, except in small undertakings employing less than 30 workers where the entire collective forms the workers' council; if there are fewer than seven workers, all members sit on the board of management as well. In medium and large undertakings the collective would, it is felt, be too large, diverse and unstable to be able to manage the undertaking itself.4 Proposals for introducing this form of " direct democracy " have hitherto been rejected as premature. 5 The work collective therefore 1 For a detailed analysis of recruitment and dismissal procedures, see Ch. IX. For example, part-time accountants, auditors, consulting engineers, who are not entitled to remuneration but are paid agreed fees and are not subject to certain disciplinary rules, etc. The 1957 Labour Relations Act placed strict limits on the employment of this class of worker (referred to in Yugoslav terminology as " honorary employees "). 3 Some of this difference can probably be attributed to job changes during the election period. 4 Some Yugoslav writers (and recent practice) do not, however, exclude the possibility of direct policy making by the collective. Art. 6 of the 1953 Constitutional Law provides that the collectives shall administer undertakings " directly " or through workers' councils and that the right of self-management belongs " to the collective " by virtue of the establishment of an undertaking. 8 5 Cf., for example, P. KOVAÓ and A. VESELINOVIÓ: " Le caractère démocratique de la gestion ouvrière", in Questions actuelles du socialisme, Nos. 31-32, July-Oct. 1955, pp. 65-82. CHAPTER IV THE COLLECTIVE In the system of workers' management the internal structure of an undertaking is intended to meet two requirements: firstly, to enable the workers who form the collective to exercise their managerial rights in policy matters, either directly or through their representative bodies; secondly, to ensure that this policy can properly be carried out by management bodies having the authority and stability they need to perform their duties. To achieve this double purpose, the internal structure of a Yugoslav undertaking is based on the separation of policy management from the technical and executive side. Thus, there are two channels: (a) an upward channel consisting of the organs of management, based on the collective and containing two elected bodies (the workers' council and the board of management) and an individual executive agent (the director of the undertaking) ; and (b) a downward channel consisting of the executive organs headed by the director of the undertaking, who is in charge of the heads of all the departments, the middle and lower-level supervisors and all other workers in the undertaking. This and the following two chapters will deal with the status and role (in both law and practice) of these managerial and executive bodies in a Yugoslav undertaking, the structure of which is shown in a simplified form in Figure 3. While the main functional links between the collective and the different organs of the undertaking are shown, together with the " vertical " links, the figure cannot show the part played within the undertaking by the social organisations, particularly the trade unions, not does it indicate the statutory supervisory powers of the local authorities and other public bodies which were referred to in Chapter II over the various organs of the undertaking.1 COMPOSITION The collective, in which managerial rights are vested, comprises all the workers who normally serve in the undertaking, including the 1 See also Ch. XU. THE COLLECTIVE 69 normally manages the undertaking through the workers' council, which it elects at the beginning of each year and can, if necessary, dismiss between two elections.1 This council is responsible to the collective and must give an account of its management. The collective does not simply act as a body of electors, although this is its main function.2 In both law and practice, there are a number of ways in which the community—or its individual members—can bring direct influence to bear on the way in which the undertaking is managed. Generally speaking, the law allows all members of the collective to submit proposals or suggestions to the elected organs of management. They can attend meetings of the workers' council and speak if they wish. In some cases prior consultation with the collective is compulsory; for instance, all draft internal rules drawn up by the board of management must be submitted to it for comments and suggestions. Whenever the board of management submits to the workers' council a draft which has been revised as a result of a consultation of this kind, it is usually required to inform it at the same time of any proposals from members of the collective which it may have turned down. The Labour Relations Act of 12 December 1957 empowers the collective to initiate amendments to the rules of the undertaking for such matters as recruitment, dismissal and discipline. Under this Act, the workers' council is bound to consider any proposed amendment to the rules put forward by not less than a third of the members of the collective. These provisions appear to be widely observed in practice. In all the undertakings visited by the Office mission, meetings of the workers' council were said to be regularly attended by workers who were not themselves members, although the number who did so varied a good deal. Sometimes there were more such workers present than members of the council. At one undertaking visited it was reported that the biggest hall in the district was hired for the end-of-year meetings. " Nonmembers " appeared sometimes to take an active part in the discussions. In several large undertakings visited in November 1959, it was reported that hundreds of proposals had been put forward by workers concerning new factory rules, especially those dealing with remuneration which were then under consideration; amendments to the rules had been widely discussed and in some cases full accounts appeared in factory magazines. Other forms of direct participation by the collective have grown in practice out of workers' management. The most important that should 1 For an analysis of the electoral procedure, see Ch. V. It should be added that in addition to the workers' council, the collective also elects representatives on the producers' council of the commune. 2 6 70 WORKERS' MANAGEMENT I N YUGOSLAVIA be mentioned here are meetings of the collective and the holding of referenda. Meetings The practice of holding a meeting of the collective to give an account of the way the undertaking is being managed has become a major feature of workers' management in most undertakings of any size. In the big concerns these meetings are often held also in each department or workshop.1 According to a survey made by the Federal Statistical Institute, 31,137 meetings of collectives of the whole undertaking or of separate establishments were held in 1956 in undertakings employing more than 30 workers (11,946 of them in industrial undertakings), or an average of five meetings for each of the 6,093 undertakings (2,148 of them in industry) covered by the survey.2 These meetings vary a great deal in character from one undertaking to another. They are called at the request of either the workers' council itself or the trade union committee in the undertaking.3 The technical directing staff is associated with the holding of the meetings to an extent depending upon their purpose.4 In some cases the meetings are occasional, for information or for consultation on urgent or unusual problems. Usually, however, they tend to be periodical, especially in large undertakings with a number of specialised workshops or departments, and in this case the rules often lay down a detailed procedure governing relations between the workers' council and the collective, together with the method of calling meetings and the subjects that can be placed before them. Generally speaking, the workers' council is required to report back to the collective from time to time, and at all events when its term of office expires. In large undertakings a typed or printed report is then distributed to all the workers. As they have no legal status, these meetings are generally only considered as advisory, and their resolutions as simple recommendations 1 The collective also assembles as an " electors' meeting " to hear how its representatives on the producers' councils have carried out their mandate. 2 Statisticki Bilten (Belgrade, Federal Statistical Institute), No. 77, June 1957. 3 Of the 31,137 meetings of workers' communities held in 1956, 13,204 were called by workers' councils and 17,933 by trade union committees. * These meetings are distinct from the " production consultations " or " production meetings " which were current practice in Yugoslavia even before workers' management was introduced. As a Yugoslav writer points out, " these production meetings are called by the head of a department or workshop to discuss with his subordinates any production problems he may be facing, whereas at the meetings of the collective the discussion should deal with the work of the organs of management. However, this distinction is not always closely observed in practice." (Cf. Z. VIDAKOVIÓ, in Nova administracija (Belgrade), Vol. V, No. 3, May-June 1957, p. 277.) THE COLLECTIVE 71 to the elected organs of management. But it is widely felt that they should be formally recognised by law as a permanent part of the workers' management machinery. According to proposals on the subject, which were endorsed by the Congress of Workers' Councils in 1957— Workers' councils should be required to call meetings of the collectives to discuss the performance of undertakings and to examine major problems of organisation and management; thus an undertaking's annual plan should not be passed until it has first been discussed by a meeting of the collective. While the resolutions should still be considered as proposals to the workers' council, it should be compulsory for the council to discuss them and to give a decision.1 In practice, these principles seem to be generally applied in undertakings. To quote a Yugoslav writer, " it has become an unwritten law throughout the country that a workers' council must make a report to the collective on its stewardship ". 2 The commonest matters dealt with at the meetings, apart from the undertaking's production and finance plans, are the annual or periodical reports of the workers' council (and sometimes also of the director) on its administration, the undertaking's balance sheet and profit-and-loss account, expansion schemes and proposed technical changes. Discussions at workshop meetings give an opportunity of dealing with such matters as problems caused by individual operations or machines, co-operation with other workshops or departments, etc.3 In large undertakings it is usually found that the best results are obtained by meetings of this kind, where the attendance is limited to not more than 150 or 200 and the similarity of jobs and production problems makes a natural starting point for discussions on technical, economic and financial issues affecting the undertaking as a whole.4 The content and standard of these discussions clearly depend on a number of factors, such as the quality of the written or verbal reports presented, any 1 Report by M. KrziSnik to the Committee on the organisation and methods of workers' councils, in Kongres Radnickih Saveta Jugoslavie (Proceedings of the Congress), (Belgrade, Rad, 1957), p. 476. See also Z. VIDAKOVIC, loe. cit., who urges that the meetings should be given even wider powers. a 3 Cf. Z. VIDAKOVIC, op. cit., p. 279. Meetings of collectives are normally open to representatives of the commune, social organisations, etc., who can put forward their own suggestions. Thus at one annual meeting, the delegate of the trade union council of a republic outlined to the workers draft legislation prepared by his union which was designed to introduce periodical election of directors of undertakings. 4 Cf. Z. VIDAKOVIC;, op. cit., pp. 276-277. Recently, with the introduction of decentralised methods of management and remuneration, there seems to have been a growing trend in some undertakings to give these workshop meetings some managerial responsibility for the organisation of production and the distribution (within the workshop or working group) of the remuneration funds. In such cases all the members of the collective are entitled to a voice in any group decisions affecting them and to share in the results of their production efforts, the intermediate part played by representative bodies and the technical management being correspondingly curtailed. 72 WORKERS' MANAGEMENT IN YUGOSLAVIA financial or legal obstacles likely to rule out some requests or suggestions, the readiness shown in the past by the directing staff to take action, the standard of education and skill of the members of the collective, etc. Consultation by Referendum To enable the collective to be consulted directly on major issues, referenda among the elector-members have been held since about 1953, especially in undertakings of some size. In 1956, the federal survey found that 161 referenda had been held, 74 of them in industry.1 Of the issues submitted to referendum, remuneration and the way in which the undertaking's net income is disposed of appear to be by far the commonest.2 After some initial hesitation, the use of this procedure, for which there is no provision in legislation, is now accepted as lawful. It is, in fact, one of the practices recommended in the reports and conclusions of the National Congress of Workers' Councils. The decision to hold a referendum can be taken in each case by the workers' council, while the rules of the undertaking may also provide for a compulsory or voluntary referendum to be held in certain specified cases.3 1 Out of 109 workers questioned during an investigation made in 13 undertakings in the Belgrade area by a team of professors and students from the Faculty of Law of Belgrade University, 28 stated that one referendum or more had been held in their undertakings (five replies were vague and 76 were in the negative); the issues submitted to referendum included: levels of remuneration, the opening of a branch, distribution of profits, the dismissal of the director, the allocation of funds which could not be used for remuneration, and the building of a rest home. Of the 109 persons in this group (all of whom were workers without any position on a management body), 61 said they were in favour of making referenda compulsory. In one of the undertakings visited by the Office mission, a referendum had been held to settle a dispute between the workers' council and the director, who wanted part of the profits to be ploughed back instead of being distributed to the workers. In this particular instance, the workers' council won its case. 2 See also, in Zbornik radova (Collection of reports of the Social Management Institute, Zagreb), 1959, Vol. I, pp. 132 ff., an article by I. PERIC on referenda and workers' meetings. According to this survey, 366 referenda were held in 104 undertakings in Croatia (out of a sample of 432 undertakings) between 1956 and 1958. The author states, however, that only a few of these consultations were by secret ballot, in most cases workers giving their decision by show of hands. 3 The following—taken from the by-laws of one of the industrial concerns visited by the Office mission—is a referendum clause which, although not typical, is in a sense the average of the systems embodied in the regulations supplied to the Office by various Yugoslav undertakings: " Article 21. Questions submitted to the workers' council shall be settled by referendum among the members of the collective in the following cases: (1) when the workers' council itself so decides; (2) when no majority decision has been taken by the workers' council on a particular issue; (3) when not less than a third of the members of the collective makes a written application to this effect; and (4) when the executive committee of the undertaking's trade union branch so decides. " The executive committee of the trade union branch shall call the collective THE COLLECTIVE 73 As for the legal effects of a referendum, the position does not seem to be absolutely clear. According to some, the workers' council is bound by the expressed will of the majority, while others hold that the council cannot divest itself of its prerogatives and that the referendum is, therefore, only advisory in character in the same way as the recommendations of meetings of the collective. There can be no doubt, however, that the former opinion is more widely held in undertakings. RIGHTS OF MEMBERS OF COLLECTIVES The rights of a collective are shared by each individual worker. On joining the undertaking, he acquires the right to take part in the election of the workers' council and to stand for election, to attend meetings of the council and the collective, etc. In addition, his labour entitles him to a share in the undertaking's income. The remuneration to which he is entitled in return for his labour is thus not a fixed wage, but depends partly on his own efforts and partly on the joint production and management of all the workers in the undertaking. Together with other members of the collective, he shares both the responsibilities and the risks.1 He is regarded simultaneously as a worker contributing his production efforts on the job and a member of the collective entitled to a share in the rights of management and the financial results. together for the referendum and shall inform it of the decision or request on which it is asked to give an opinion. " A request for the holding of a referendum must be submitted within eight days of the meeting of the workers' council; the referendum must be held within 15 days of the date on which the application was submitted. " Article 22. The referendum shall be by secret ballot, using ballot slips. The questions on which the referendum is being held shall be stated on each slip. Each member of the collective who is entitled to vote in the elections for the workers' council shall have one vote. " The decision shall be by a majority vote. The decision shall only be valid if not less than half the members of the collective take part in the vote. If the necessary majority is not achieved, the proposal shall be deemed to be rejected." 1 These are essentially of an economic character, i.e. any fall in the undertaking's earnings caused by low production or bad management is normally bound to have an effect on the inccme of each member of the collective. Moreover, an undertaking in difficulties may be forced to declare some of its workers redundant, or even to go into liquidation, so that some members of the collective, or perhaps all of them, may lose their jobs and in some cases be left unemployed. CHAPTER V ELECTED MANAGEMENT BODIES: THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT Any undertaking with 30 or more workers has two elected bodies acting on behalf of the collective: the workers' council, which the collective elects directly, and the board of management, which is elected by the workers' council. In undertakings with fewer than 30 workers the workers' council consists of the whole work collective, which directly elects the board of management. In large undertakings, on the other hand, management bodies may also be set up at the department or workshop level. The workers' council and the board of management may also set up specialised committees, and in certain cases the establishment of such committees may be compulsory. The workers' management structure of an undertaking of any size is therefore relatively complex. This chapter will first describe the workers' councils and the boards of management separately. The rights and obligations of members of the management bodies and the removal or dissolution of the management bodies before their term of office expires will then be discussed, and in conclusion some information will be given on their operation and methods of work. THE WORKERS' COUNCIL The workers' council is a deliberative body, which determines the over-all activities of the undertaking and its general policy; all fundamental decisions concerning the undertaking he within its terms of reference. Its main functions are those of a legislative assembly: election and removal of members of its executive committee (the board of management of the undertaking) and examination of its periodical reports; duties in relation to the appointment or dismissal of the director; adoption of the by-laws and rules of the undertaking, its financial and production plans, its programme of investment and its balance sheet and accounts. The workers' council is required to rule on a large number of particular questions reserved to it by law, such as any change in the purpose of the undertaking, its merger with another, the estab- THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 75 lishment of new departments or branches, a reduction or increase in working capital, the use to be made of the undertaking's net income, the sale or purchase of plant. Since 1 January 1958 it has also been responsible for the undertaking's personnel policy. In addition, it gives the final decision on individual disputes. Except in cases for which its intervention is required by law, the workers' council may delegate its powers for a particular matter or series of matters to another organ in the undertaking. On the other hand, it is normally free to deal with any matter affecting the management of the undertaking, even if this is usually the responsibility of another organ of the undertaking. It is understood, however, that only in exceptional circumstances should it deal with the details of matters that come within the competence of the board of management or of the technical directorate of the undertaking.1 Composition According to the law, a workers' council has from 15 to 120 members, the exact number being laid down in the by-laws of the undertaking in accordance with its size and structure.2 In 1958 there were 135,625 workers' council members in 6,618 undertakings (with 30 workers or more) giving an average of about 20 members per workers' council.3 The law further stipulates that the composition of a workers' council should reflect the numerical ratio between production workers 4 and other 1 No attempt will be made here to list the powers expressly reserved for workers' councils under the legislation now in force. While the basic law of 1950 had defined the powers of workers' councils in seven paragraphs, the list of their statutory powers became steadily longer as other legislation governing the management of undertakings was adopted. The rules of one of the undertakings visited by the mission dated back to 1954 and listed almost 100 specific powers of the workers' council. The Acts of December 1957 on labour relations and on management of the undertakings' funds each contain over a score of references to the powers reserved for workers' councils. The powers of the various organs of workers' management will be considered in detail in Chs. VII to XI. 2 At the first elections to workers' councils in 1950 the number of members to be elected was decided by the local commune. The same procedure is still followed in newly established undertakings. Elsewhere, the outgoing workers' council decides how many members are to be elected unless the by-laws of the undertaking lay down a specific figure. 8 The average number of members of workers' councils has tended to fall since 1950. In 1956 there were only 21 workers' councils with over 75 members, and an overwhelming majority of the councils (87.9 per cent.) had only from 15 to 30 members. A resolution of the Congress of Workers' Councils stated that it was essential to check this unjustified trend, especially in large undertakings. In fact the average size of the workers' councils seems to have become stable since 1957. In the undertakings visited by the mission the councils generally had from 30 to 75 members. See Table E in Appendix I. 4 These are not exclusively manual workers but comprise all those who work in the productive departments of the undertaking, including the supervisory staff, while workers in non-productive departments are excluded even if they do manual work. 76 WORKERS' MANAGEMENT IN YUGOSLAVIA workers of the undertaking. According to the statistics available the proportion of production workers has been about 75 per cent, of the total membership of workers' councils. Neither the director of the undertaking nor the other members of the senior executive staff may be members of the workers' council. Election The workers' councils are elected at the beginning of each year after the balance sheet has been approved and the undertaking's accounts closed.1 An election period isfixedeach year by order and each outgoing workers' council must fix an election date for its undertaking within those limits. Elections arising out of the dissolution or recall of the council may be held at any time of the year. The same applies to the first elections in newly established undertakings. As a rule, the entire collective forms a single electoral body. Since 1956, however, it has been permissible for the election to be held on a department basis. In such a case the personnel of each department elects its representatives on the workers' council separately and the seats to be filled are distributed in proportion to the number of workers in each department. At present, elections in large undertakings are usually organised in this way. In 1950 works trade union committees were given statutory responsibility for organising the first elections. Since 1952, however, this is a function of the outgoing council, or, failing that 2 , of the local commune. The outgoing workers' council must fix the date for the elections at least a fortnight in advance. At the same time, or within three days at the latest, it must appoint two committees : an election committee and an electoral roll committee. The former consists offivemembers selected from among the workers in the undertaking. Neither the chairman of the outgoing council nor members of the board of management of the undertaking—nor, for that matter, any of the candidates—may serve on the election committee, the composition of which must be submitted for approval to the district 1 The first elections took place in the second half of 1950, and there were no elections in 1951. In 1955 there were no elections either, because the term of office of existing members was extended by law. In 1959 a special Act allowed existing workers' councils to decide in each case whether it was desirable to elect a new workers' council for that particular year. Elections were held in all undertakings in May 1960. A resolution adopted by the Congress of Workers' Councils recommended that the legislation in force should be amended to extend the normal term of members of a workers' council to two years. 2 For example, in newly established undertakings or when the outgoing workers' council was dissolved, or if the outgoing council fails to take the necessary steps to organise the elections. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 77 court, which will also rule on any appeals from those concerned. The election committee approves the electoral roll and gives rulings on any appeals ; it receives and approves the lists of candidates, appoints the place of voting and the scrutineers and proclaims the results of the elections. The committee which is responsible for preparing the electoral roll consists of three members appointed in the same way as those of the election committee. Electoral Roll and Eligibility. All members of the collective who have voting rights must be included in the roll unless they leave the undertaking before the election is held. All the voters are also eligible for election except the director of the undertaking and other persons performing directorial functions.1 Nominations. Lists of candidates may be submitted by the trade union organisation within the undertaking or by groups of workers. If the undertaking has fewer than 500 workers, the list must be supported by the signatures of at least one-tenth of all eligible workers in the undertaking, with a minimum of five signatures in undertakings with fewer than 50 workers. In undertakings with more than 500 workers each list must be supported by not less than 50 signatures. The list must contain at least as many candidates' names as there are posts to be filled.2 Each list must be submitted to the election committee at least seven days before the elections are held. If the list is not in accordance with the provisions in force, the committee must return it to the proposers for amendment and, failing this, may declare it inadmissible. An appeal from such a decision by the committee lies to the district court, whose decision is final.3 1 According to the official interpretation this rule covers not only the specialised directing staff—the chief engineer and his assistants, the sales and purchasing manager, the heads of the personnel and accounting departments, etc.—but also heads of departments and workshops; cf. opinion No. 286, dated 2 February 1952, of the former Council on Legislation and for the Building of the Popular Power of the Federal Government. 2 This applies to the first list of nominations submitted. In the case of further lists submitted, where there are a smaller number of names, the number of signatures required is reduced by half. In each list the ratio of production workers to other workers in the undertaking must be respected. 3 The time limit for the correction of a list, its rejection, an appeal to the court, and the court's decision is 24 hours in each case. 78 WORKERS' MANAGEMENT IN YUGOSLAVIA The list or lists declared to be valid must be published by the election committee at least five days before the ballot. Voting. Voting takes place by secret ballot at premises and under the supervision of returning officers appointed by the election committee; one representative of each list is also allowed to follow the election in each place of voting. The first elections to workers' councils were held on the list system, so that only candidates on the list that had received the largest number of votes were elected. There was a separate ballot paper for each list. Under the provisions now in force, the worker votes for individuals : a single ballot paper is prepared containing the names of all the candidates in the order in which the lists were received; each voter marks his ballot paper opposite the names of the various candidates he selects 1, and is not required to express a preference for any one of the lists presented. Each voter must normally vote in person; postal voting is allowed only for small groups of workers who are temporarily detached from the undertaking. The law provides that the ballot papers are to be completed in a polling booth and folded before they are put in a ballot box. After polling, the votes are counted separately for each candidate. Those who obtain the largest number of votes are declared by the election committee to have been elected, and the results must be communicated immediately to the collective and the commune. All candidates and all persons who have signed a list of nominations, as well as the trade union and the competent authorities, are legally entitled to appeal to the courts against the conduct of an election. A petition for the annulment of an election must be submitted to the district court within three days and, if the petition is allowed, new elections must be held within the next fortnight. Election Practice. In practice it is unusual for lists to be submitted except by the trade union organisation. According to the official statistics, other lists seem to be submitted in only from 2 to 5 per cent, of undertakings, and the proportion of candidates elected from such lists is generally less than 1 He is normally expected to vote for as many candidates as there are seats to be filled. If he votes for more, the ballot paper remains valid but the votes are counted only up to the number of seats to be filled, in the order in which the candidates are listed on the ballot paper. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 79 3 per cent.1 However, the percentage varies from one area to another. In 1958 it was 10 per cent, (for the lists) and 6.5 per cent, (for the candidates) in the more developed regions such as Slovenia, while it was practically nil in other regions.2 Since 98 per cent, of the members of workers' councils are elected on the basis of trade union lists—or " basic lists " according to the terminology used in recent statistics—these quasi-official lists are of prime importance in practice. While they are formally submitted on behalf of the trade union organisation, they are prepared in accordance with a procedure that is intended to enable the collective to make its views known at the nomination stage. A list of candidates adopted by the trade union branch within the undertaking is normally submitted for approval to a meeting of the collective, which is known in this case as the voters' assembly.3 These meetings are often organised separately for each department or workshop. The voters may propose withdrawal of certain names and the addition of other names to the list. These meetings are said to involve much discussion and to lead not infrequently to considerable changes in the list.4 In addition, the lists submitted to the voters generally include a larger number of names than there are seats to be filled. This was so in all the undertakings visited by the Office mission, and the practice was apparently based on a rule which, though unwritten, was nevertheless considered as binding in the undertakings visited. The members of the collective therefore have an element of choice through exclusion of names even if voting is on a single list of candidates. In the undertakings where the electoral returns were examined by the mission, the number of votes received by the candidates varied very 1 For example, in 1956, in the 5,989 undertakings covered by the census, 6,864 lists were submitted—including 6,599 by the trade union groups within these undertakings and 255 " other lists " (4 per cent.). Of the 124,204 successful candidates, 121,648 (98 per cent.) were on trade union lists. It is to be noted that in 610 cases the union itself had put forward two lists. In 1958, the statistics mention, for 6,618 undertakings, 6,963 " basic lists " and 380 " other lists " (5.5 per cent.) with 3,220 candidates (2 per cent.) elected from the latter (see Table E). 2 Apart from the returns of the Federal Statistical Institute, which cover these lists, there has been no special study or discussion of workers' councils elected from other than trade union or basic lists. The Office mission did not make a closer study of this aspect of electoral procedure. 3 This practice follows the pattern of the procedure laid down by law with regard to political elections (people's chamber and producers' council in the commune, etc.). * A draft law on the management of undertakings provides that the right of initiative for the nomination of candidates should be vested directly in the voters' meeting without passing through the intervening " trade union " stage. Such a system seems to have been applied already in various undertakings since the 1957 elections. The lists are then known as " basic lists " and not as " trade union lists ". 80 WORKERS' MANAGEMENT IN YUGOSLAVIA considerably, sometimes in the proportion of one to three. In certain cases, for instance, the trend of voting seemed to have gone against the supervisory staff, whereas elsewhere the foremen had a clear lead. In one case not a single woman on the list was elected. In another, the candidate who headed the list and was chairman of the outgoing workers' council barely obtained enough votes for re-election. Turnover in the membership of workers' councils is rapid. Although there are no statutory limitations on re-election of outgoing council members, only some two out of five of the outgoing members are on average re-elected at each election. The representation of semi-skilled and unskilled workers in the membership of Yugoslav workers' councils is by no means negligible, although somewhat smaller in relation to their number than for workers in higher grades of skill. As a general rule, the leaders of trade union branches in the undertakings do not seem to have their names put forward as candidates, and it is very unusual for them to become chairmen of workers' councils1; it appears that the reason for this is to preserve a separation between management and trade union functions for individuals. The same remark also applies in principle to other public duties, such as membership of producers' councils. It is not claimed that these few general remarks on the recruitment and composition of workers' councils cover the subject fully. Since they generally relate to national averages, there may be many cases in which they do not apply. Workers' councils on which highly skilled workers are in the majority, or on which a small group of leaders monopolises the most important posts for years on end, are at times cited in Yugoslavia as examples of abuses in this field. Nevertheless it would seem that, on the whole, practice in this respect corresponds to the intention of the Yugoslav legislation that—since all cannot play a direct part in management—the largest possible number of workers should participate irrespective of their grades and duties, and that no particular group or category of workers should monopolise management functions. It was recently estimated that 800,000 workers had at some stage or other been members of a workers' council. On the other hand, methods allowing direct participation—either by the whole collective or by a part of it in smaller units—are now generally preferred in Yugoslavia with a view 1 At least this seemed to be the case in the undertakings visited. Similarly, a recent survey by the Zagreb Institute of Social Management pointed to a comparatively high rate of turnover of holders of posts of chairmen of workers' councils, boards of management and trade union committees, and suggested that it was unusual for the latter post to be combined with chairmanship of one of the two management bodies. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 81 to eliminating, or at least narrowing the gap between rank-and-file workers and management. It is felt that the representative bodies are, in fact, not always capable of bridging this gap, particularly in large undertakings. Workers' Councils at the Department Level Workers' councils at the department level are one example of this trend. They allow a much greater number of individuals to play a direct part in the proceedings of workers' management bodies, and they facilitate the discussion of practical problems at the workplace with the representatives of each work group. Each undertaking with several workshops or departments may now provide in its by-laws for the constitution of workers' councils at the department or workshop level. Councils at department level are usually set up in establishments located away from the headquarters of the undertaking \ but they also exist in many other undertakings of some size. They can be classified in two main categories according to whether they are advisory in character or whether they enjoy some measure of autonomy in management. In most undertakings advisory councils at department level correspond to the divisions of the undertaking for voting purposes and include the members of the central council who have been elected in the department or section concerned. In such cases the councils are in fact department committees that report to the workers' council of the undertaking and submit proposals on behalf of the department they represent. However, it is generally held that councils at department level are unlikely to develop satisfactorily as long as they have no economic responsibilities of their own.2 Attempts are therefore being made, in undertakings where the conditions are suitable, to decentralise financial and accounting procedures so that councils at department level can be given actual powers of management. Self-financing departments enjoy certain statutory privileges, particularly with regard to the distribution of income and the adoption of separate rules with regard to remuneration. Councils at 1 Under section 65 of the ordinance of 1953 on the constitution of undertakings, the work collective in an establishment away from the main plant was entitled to have its own management bodies. This provision, however, was repealed in 1955, and the establishment of management bodies at the department level is now a matter for each undertaking to decide. 2 Cf. statement by M. Kriisnik, reporter of the Committee on Organisational Questions of the National Congress of Workers' Councils, in Kongres Radnickih Saveta Jugoslavie (Belgrade, Rad, 1957), p. 469. 82 WORKERS' MANAGEMENT IN YUGOSLAVIA department level in all cases perform their autonomous functions under the supervision of the central workers' council.1 1 The following passage on councils at department level, taken from a brief article on workers' management in a large electrical engineering factory which employs about 4,000 persons, and in which there are 11 councils at department level, gives a concrete example of the arrangements that may be made: " Councils at department level were introduced in 1955 so as to allow as many members of the work collective as possible to take part in the management of the undertaking. These councils have changed the nature of workers' management by strengthening its links with the collective. The councils discuss and decide on all issues affecting their departments (or sectors), it being understood, however, that their decisions must not oppose the directives and decisions of central management bodies, or the technical and organisational rules of the undertaking. This does not mean, however, that the councils at department level have not, through their criticisms and proposals, influenced many decisions of the workers' council and the rules of the undertaking.... " . . . The powers of councils at department level in this undertaking may be brought under the following three headings: " (i) the councils at department level are empowered to discuss and take decisions concerning the implementation of monthly production plans, approval of the monthly manpower and plant utilisation programme, utilisation of the depreciation fund, measures to increase production and the productivity of labour, occupational safety and health measures, and the safeguarding and efficient use of assets (production plant, etc.) of the department; " (ii) the councils at department level are empowered to put forward opinions and proposals on all matters affecting their department (or sector) that are on the agenda of the workers' council or the board of management, including— (a) the basic plan of work for the department and everything connected with it; (b) the workers' claims concerning pay scales; (c) appointments to executive posts in the department and any changes in their occupancy; (d) changes affecting the organisation of the department; (e) changes affecting job classification; (f) the sale or disposal of capital goods (machinery, etc.) used by the department ; (g) the paid holidays programme; (h) proposals for the transfer of production to another department, etc. ; " (iii) the central workers' council must submit to the councils at department level, for discussion and the delivery of a preliminary opinion— (a) draft rules of the undertaking; (b) draft scales of pay; (c) the undertaking's plan of operations; (d) proposals for a merger of the undertaking; (e) rules concerning workers' councils at department level, their standing orders, etc. " The decisions of workers' councils at department level must be applied by the department head. If there is any difference of opinion between the department head and the council, the issue is settled by the board of management of the undertaking and, on appeal, by the workers' council." (Cf. Stjepan NOVAK, in NaSe Teme (Zagreb), No. 2, 1957, pp. 194-195.) " The undertaking concerned subsequently introduced a new system of remuneration under which funds that are allocated to the various departments and workers' councils at the department level play a most important role (cf. Borba, 8 June 1958, p. 5: round-table discussion on the system of remuneration). For details concerning decentralised systems of remuneration, see Ch. X. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 83 Committees of the Workers' Councils In view of the varied and complex nature of the problems with which they have to deal, especially in undertakings of some size, workers' councils have, with time, found it necessary to set up specialised committees. At least at first, this did not occur without a certain amount of hesitation, partly because there was no relevant statutory provision— whereas the right of the board of management to set up committees had been mentioned specifically—and partly because it was feared that the very existence of such committees might undermine the authority of the councils. However, in 1956 committees of workers' councils already existed in practically all large and medium-sized undertakings1, and there seems to be no doubt that this practice is still gaining ground and that objections concerning its legality or desirability have now finally been ruled out.2 The workers' council is responsible for defining the status and powers of such committees. In some undertakings standing rules for the committees of the workers' council have been adopted. It is generally laid down that the chairman of each committee should be a member of the workers' council, whereas the other members may be chosen from among other workers in the undertaking. Standing committees are generally set up at one of the first sittings of the workers' council after its election and their period of office expires at the same time as that of the council. A council may, of course, set up other standing or special committees whenever there is a need for them. Heads of departments and other officials in positions of authority must normally assist the committees in their work and provide them with the reports or information they request. The number and nature of the committees naturally vary from one undertaking to another. The questions that are more commonly assigned to specialised committees include complaints, labour relations, labour discipline, supervisory staff, financial matters, production and management plans, investment, productivity and savings, remuneration (sometimes divided up among several committees—basic rates, norms, incentive payments, etc.), health and safety. Committees may also be set up for certain divisions of the undertaking: for example, in a coal mine there may be not only technical committees but also a committee for coal extraction, one for development, one for the office and one for 1 According to the federal census, standing committees of workers' councils were to be found in 1956 in 2,610 undertakings (including 1,272 industrial undertakings). There were a total of 8,157 such committees, including 4,762 in industrial undertakings. 2 A new law in preparation on the organisation of undertakings is expected to recognise formally the right of workers' councils to set up committees. 84 WORKERS' MANAGEMENT IN YUGOSLAVIA surface operations. Moreover, in certain cases the workers' council may be required or authorised to set up a committee under a specific statutory provision. Since the adoption of the Labour Relations Act of 1957, which endorsed the practice of many undertakings in this respect, a council is entitled to empower a committee to take on and discharge individual workers; it must also set up a disciplinary committee and a committee to determine what jobs are to be prohibited for women and young persons.1 The committees are always under the supervision of the council, either because they simply submit reports or proposals to it or because their decisions are subject to review by the council at the request of any of its members or as a result of an appeal by the person concerned.2 The results achieved by these committees have won general approval in Yugoslavia on the ground that they have enabled the number of persons with a direct share in the management of the undertaking to be increased, and that they have provided the only means whereby the council, particularly if it is a large body, can give detailed consideration to various lengthy or complex documents such as pay scales or the financial reports of the undertaking, or settle issues involving personal or technical factors after due examination. It is sometimes argued that these committees enable the directing staff of the undertaking to exercise undue influence on the decisions of the council. More often, however, criticisms concern practices whereby some committees in fact encroach on the functions of the heads of the various technical departments of the undertaking, and thus tend to transform the committee into a collective directing body. This last tendency seems, nevertheless, to be in line with recent legislation giving some of these committees executive functions in certain specified fields. THE BOARD OF MANAGEMENT The board of management is the permanent executive organ of the workers' council. It is responsible for the management of the under1 All the committees mentioned in this paragraph are hardly likely to be found in a single undertaking. The functions of a number of them are often entrusted to a committee with wider powers, while certain matters may be settled directly by the council itself. In most of the undertakings visited by the mission there were from eight to ten committees. In one case the committees had founded a new advisory body, the assembly of committee chairmen, who consulted the chairmen of workers' councils at department level at regular intervals in order to co-ordinate their work and to reach an understanding on the submission of reports to the plenary session of the central workers' council. 2 Only the committee on labour discipline, which is required to give decisions on any serious breaches of discipline, has a special status. Its composition, powers and methods of operation (disciplinary procedure) are laid down by law. See also below, Ch. IX. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 85 taking in accordance with the policy laid down by the council, and it bears general responsibility for the efficient running of the undertaking. Its various functions can be grouped under three main headings 1 : (a) the board presents reports to the workers' council on the management of the undertaking and prepares proposals on matters that lie within the competence of the council (for example, draft annual plan of the undertaking, draft rules of the undertaking, proposals concerning the purchase or sale of capital goods, the investment plan, etc.) ; (b) in execution of the general policy laid down by the workers' council, the board has duties specified in the legislation and in the by-laws of the undertaking (fixing of production targets under the plan; appointments to managerial posts within the undertaking; use of certain of the undertaking's funds; decision in the first instance on appeals by workers of the undertaking, etc.) ; it takes the necessary measures to put the decisions of the workers' council into effect and may in general consider any questions concerning the day-to-day management of the undertaking; (c) the board supervises the work of the director of the undertaking and his subordinates, and, whenever the post is vacant, directs the undertaking until it hands it over to his successor. Composition In accordance with its executive character, the board of management is a small body of three to 11 members. As in the case of the workers' council, the law allows each undertaking to fix the number of members of its board of management within these limits. In undertakings of some size the number of members of the board is generally near the statutory maximum.2 The director of the undertaking is an ex officio member of the board. At least three-quarters of the members of the board must, by law, be manual workers directly engaged in production or, if the undertaking is not engaged in a productive activity, workers (whether manual or non-manual) engaged in the undertaking's essential economic activity; 1 As in the case of the workers' council, the specific duties assigned to the board of management by various laws and regulations are too numerous to be listed here and it is impossible to study the extent of these powers separately. Further reference will therefore be made to them in the following chapters on the work of the management bodies. 2 In the 6,092 undertakings with more than 30 workers, there were, in 1956, 2,174 boards with three to five members, 2,967 with six to eight and 951 with nine to 11. 7 86 WORKERS' MANAGEMENT FN YUGOSLAVIA moreover, not more than one-third of the members of the board may have been members of the board during the previous term, and none of them may be re-elected for a third consecutive period of office. Although they may not be elected to the workers' council, members of the undertaking's directing staff may be members of the board of management if the quota reserved for non-manual workers allows this. Election The board of management is elected by the workers' council at the first sitting after the latter's own election.1 For this purpose the workers' council appoints a committee of three members to supervise the election and announce the results. Electoral Roll and Eligibility. All the members of the workers' council attending the sitting have the right to vote. All members of the work collective having voting rights are eligible, whether they are members of the workers' council or not, except the chairman of the workers' council, the director of the undertaking, the chief accountant, the members of the election committee and any person declared ineligible because he has been involved in the liquidation of an insolvent undertaking. Persons who have been members of the board of management during the two preceding terms of office are also ineligible. Nominations. Under the regulations in force, nominations are to be put forward during the sitting either orally or in writing. Each member of the workers' council may submit the names of as many candidates as there are seats to be filled and a substitute must also be nominated for each candidate. On the basis of the nominations received, the election committee prepares a single list in which production workers are shown separately from the others. If the proportion between the two groups is not in accordance with the statutory requirements, the committee calls on the council to make further nominations in order to supplement the list. As in the case of the workers' council, there is no precise limit on the number of candidates whose names may be included in the list. 1 The board of management therefore holds office for one year. In 1959 new boards of management were elected even in undertakings where the term of office of workers' councils had been extended for a further year. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 87 Voting. Voting is by ballot papers prepared by the election committee and distributed during the sitting to all members of the council, who indicate their preferences opposite the names of the candidates they select and place the papers in a ballot box. The candidates receiving the largest number of votes are declared elected in so far as this is possible within the statutory proportions to be observed in the composition of the board. 1 Candidates may challenge the results of an election in the courts. Election Practice. Since voting is on a single list without any sort of " label " 2 the results of elections to the boards of management do not afford much scope for general statistical analysis. It seems, however, that in most undertakings the number of nominations exceeds the number of seats to be filled. The ballot often reveals that the voters have a very marked preference for a particular candidate : this was particularly true in most of the undertakings visited by the Office mission, where there were generally big differences between the numbers of votes received by the various candidates. Nowhere was a candidate or group of candidates elected unanimously. Committees of the Board of Management The board of management's right to set up committees was expressly recognised under the basic Act of 1950. This provided that such committees, consisting of workers from within the undertaking, were to study particular questions and to make proposals on matters falling within the scope of the board. Thus, the committees set up by the board of management are essentially advisory bodies. In most cases committees are set up to prepare draft rules for the undertaking (labour relations, rates of remuneration, output standards), production plans, etc., or to make thorough studies of certain particular cases (for example, to ascertain liabilities and to assess the damage caused to the undertaking by a member of the work collective). The law specifically provides that the selection of candidates for appointment to directorial posts in the undertaking through open competition is to be carried out by a standing 1 For example, if only two non-manual workers may sit on the board of management but if three candidates from that group have obtained the necessary number of votes, the candidate who comes third will not be declared elected, and his place will be taken by the candidate who came next among the production workers. 2 This naturally does not prevent certain nominations from being put forward during the sitting on behalf of the trade union branch. 88 WORKERS' MANAGEMENT IN YUGOSLAVIA or other committee set up for the purpose by the board of management. In certain undertakings the board of management also has standing committees set up in accordance with the same principles as apply to committees of the workers' council. The composition and terms of reference of these committees are laid down in the rules of the undertaking or in a decision of the board of management itself. Boards of Management at Department Level In self-contained establishments of the undertaking, especially those away from its headquarters, a board of management may also be set up to act as the executive organ of the departmental workers' council and to deal with the ordinary affairs of the branch. Relations between the central organs of the undertaking and those of the branch are governed either by provisions in the rules of the undertaking or by a basic agreement with the branch. RIGHTS, OBLIGATIONS AND LIABILITY OF MEMBERS OF THE MANAGEMENT BODIES Job Security and Labour Discipline Under the basic Act of 1950 members of the board of management could be neither dismissed nor transferred without their consent to another job during their term of office. The same guarantee was extended to members of the workers' council by the Labour Relations Act of 1957.1 Moreover, members of these bodies are not subject to the ordinary disciplinary procedures applicable to other workers in the undertaking. The Act provides that no disciplinary action may be taken against members of the elected organs of the undertaking, except sanctions that result from disciplinary proceedings instituted by the workers' council before a tripartite arbitration commission set up for the purpose by the commune. This guarantee of security of tenure and the right to special disciplinary procedure applies to members only as long as they hold their seats. 1 Contrary to certain interpretations, in undertakings with fewer than 30 workers this guarantee is not considered to apply to members of the workers' council, which in such undertakings includes all the workers, but only to the elected members of the board of management (cf. Socijalna politika (Belgrade), 9th Year, No. 10, Oct. 1959, p. 68). THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 89 Status in the Undertaking and Special Allowances Members of the elected bodies are not entitled to any tangible advantages in relation to their functions. They must continue to do their usual work on the same terms as before, and they share in the earnings of the undertaking on the same footing as the other members of the community. Yugoslav legislation does not provide that certain members may be granted in advance a certain fixed amount of time off in order to discharge their duties. No special compensation is payable to members, other than the refund of any travelling expenses and compensation for loss of earnings resulting from attendance at meetings held during working hours. The duties of members of workers' management bodies are therefore unpaid, and members are usually expected to give up part of their leisure time.1 In practice, however, these principles have had to be modified somewhat. For example, it is always recognised that the members (especially the chairmen) of the workers' council and the board of management should not suffer loss of earnings because of consultations which must be carried out during working hours. In the largest undertakings the two chairmen or other members of workers' management bodies appear to devote a good part of their time to their functions. Irregular practices have also been reported. It was said, for instance, that certain undertakings decided to grant attendance allowances to the members of elected bodies and that about 7 million dinars were paid out for this purpose in 1956. This is an insignificant sum if the number of possible beneficiaries is borne in mind, but the abuses nevertheless caused sharp criticism.2 Favouritism in matters of promotion, housing, and so forth is sometimes also mentioned as one of the abuses which occur in certain undertakings where the work collective does not exercise a sufficiently close check ; special treatment is, however, explained and, within limits, approved by other sources because of the loss of earnings which those 1 In Yugoslav undertakings work generally starts at 6 a.m. and finishes at 2 p.m., which allows most of the meetings to be held in the afternoon, outside working hours (meetings of the board of management and of certain committees are often held during normal working hours). In fact, the directorial staff of the undertaking often devote much of their free time to the proceedings of the various bodies of the undertaking and commune. 2 About 55 per cent, of this sum was paid by undertakings in the republic of Slovenia. This is a region where the industrial tradition goes back furthest. On the other hand, attendance allowances remain practically unknown in the recently industrialised regions. Since attendance allowances of this kind are unauthorised they must not be included in the accounts as operating expenses, and can only be charged to the fund for the remuneration of the work collective, so that the workers of the undertaking have a material interest in opposing such practices. 90 WORKERS' MANAGEMENT IN YUGOSLAVIA active in the workers' management bodies are likely to incur, especially if they normally do piecework. Rights and Obligations of Members The functions of members of the elected bodies are normally limited to attending meetings, and as individuals they have no special authority outside the meetings of the workers' council or the board of management. However, the law grants any member of the board of management the right to demand that a meeting be called. In addition, an extraordinary sitting of the workers' council must be held if requested by not less than one-third of the council's members. Apart from the rights which are usually recognised as belonging to the members of an elected body, especially those of making proposals and participating in the discussion and the voting, the law grants each member of the workers' council the right to question the director and the members of the board of management, who must reply during the sitting of the council. A minority on the board of management is entitled to submit to the workers' council any issue on which it disagrees with the other members of the board. It is generally held that the members of the elected bodies must attend meetings. Unjustified absences are recorded in the minutes and seem to be the most common reason for initiating the recall procedure against a member. The law expressly states that members of the board of management are required to keep state secrets and to respect the confidential nature of information received by them in carrying out their official duties. Liability of Members The legislation does not deal systematically with the question of liability of members of the workers' management bodies. In principle, the director is held responsible for the undertaking, in both civil and criminal law. On the other hand, the law provides that in the performance of their official duties members of a board of management also assume the liabilities of public office, and may therefore have accessory liability for any breach of the law or for other irregularities connected with the management of the undertaking. The legal liability of members of the workers' council is no greater than that of ordinary citizens, except that the law provides for a special penalty to be imposed on members of the elected management bodies of an undertaking that becomes insolvent. Such persons may be declared ineligible for management functions in any undertaking in the country for a period of one to three years. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 91 In practice these provisions do not seem to have been applied extensively so far owing to the difficulty of determining how far individual members of the workers' council and the board of management are to be personally liable. In general, however, if there is no agreed decision the names of those who voted for or against a particular measure are recorded in the minutes as a matter of principle. In certain cases it is even specifically laid down that " votes against " must also be listed in the minutes of the meeting. As already stated, members of the elected bodies are also liable to disciplinary sanctions at the request of the workers' council, and like all elected persons they are responsible to those who elected them. RECALL AND DISSOLUTION OF MANAGEMENT BODIES Recall The law provides that the workers' council and the board of management may be recalled before the expiry of their appointed term if they lose the confidence of those who elected them; individual members of these bodies may also be recalled in the same way. In the absence of any specific statutory provision concerning the procedure, it is generally held that the election procedure also applies mutatis mutandis to recall, unless the rules of the undertaking contain special provisions on the subject, as they quite often do. It is understood, however, that a recall must be decided by a vote and be approved by a majority of the electorate.1 Dissolution Whereas the procedure of recall is intended to give effect to the principles of the collective or individual responsibility of members of workers' management bodies to those who elected them, the public authorities are legally entitled to dissolve workers' councils and boards of management in specific circumstances, namely if they have committed 1 The procedure of recall has been used, though infrequently. The information available shows that 998 members of workers' councils (or 0.8 per cent.) and 476 members of boards of management (1.2 per cent.) were recalled in 1956 in undertakings with 30 workers or more ; in 254 cases this was done on the proposal of a government department or agency and in 181 cases on the proposal of the director of the undertaking ; 542 members were recalled on the initiative of a workers' management body, 372 on the initiative of the collective and 124 at the request of a social organisation. Among the reasons given for these measures, about 20 per cent, came under the heading of negligence and about as many under that of economic offences. It seems that in an overwhelming majority of cases those recalled were individual members of the workers' council or the board of management. 92 WORKERS' MANAGEMENT IN YUGOSLAVIA a serious breach of the law or if dissolution is the only way of ensuring that the undertaking survives. Dissolution by order is therefore the ultimate penalty available to the authorities in their exercise of " social supervision " over the management of independent undertakings. However, dissolution may be ordered only in cases specifically provided for by law and in accordance with the prescribed procedure. A number of enactments concerning the management of undertakings provide for dissolution, in particular, in the following circumstances1 : (a) where the workers' council fails to adopt by-laws for the undertaking or to correct unlawful provisions in the by-laws; (b) where there have been serious irregularities in the administration of the funds, which have led or might lead to considerable losses, and it is impossible to put a stop to these irregularities through the other measures provided for by law (fine, blockage of accounts, etc.) 2 ; (c) where the undertaking receives a grant by a public authority, an organisation or another undertaking in order to avoid bankruptcy; (d) where the workers' council has voted for the removal of the director from his post and, in the opinion of the authorities, the request is unjustified and the dispute between the management bodies and the director is likely to jeopardise proper running of the undertaking; (e) management bodies may also be dissolved as a result of an unlawful conspiracy relating to prices or the sharing of markets, as well as for other similar practices intended to create a market monopoly or to obtain benefit from such a situation; the same applies to repeated infringements of the legislation governing trading activities.3 Dissolution is not, strictly speaking, an administrative sanction, because it is ordered not by the executive authorities but by legislative bodies, mainly the people's committee of the commune. For example, under the Act of 1957 concerning the administration of resources by undertakings, dissolution of management bodies for the reason mentioned in (b) above requires a joint decision of the two chambers of the people's committee of the commune. A similar pro1 This list does not include cases of automatic dissolution, for example after the merger or division of an undertaking, for which the prior approval of the workers' councils is necessary, or if the undertaking is declared bankrupt by the courts. 2 Dissolution may also be ordered as a penalty for serious non-compliance with the rules governing the administration of funds: for example, it may be ordered if the undertaking fails to submit its final annual accounts to the authorities within the prescribed time limit. 3 Special regulations for certain branches may provide that dissolution may also be ordered for other unlawful acts. For example, the legislation on the catering industry provides for dissolution in the event of repeated infringements of the provisions governing the operation of such undertakings. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 93 cedure is laid down for the other cases of dissolution. The management bodies of the undertaking may, however, appeal to the higher authorities (executive council or producers' council of the republic). There has not yet been any ruling on this matter by the Supreme Court. Dissolution has two main consequences: as already mentioned, members of management bodies lose their elective offices and, if the dissolution order is issued against an undertaking that has been adjudged bankrupt or if there were serious irregularities in its financial management, they may be declared ineligible for a period of one to three years for any management post in any undertaking in the country. As for the undertaking itself, it is deprived of its management bodies for a certain period.1 As a rule, these must be reconstituted almost immediately, following new elections held at a date to be fixed in the dissolution order.2 However, if dissolution is due to the undertaking's financial difficulties, and in particular if the undertaking continues to operate with funds provided by a third party (after " financial reorganisation "), the commune may temporarily suspend workers' management and place the undertaking under a legal administrator, who then takes over all the functions of the workers' management bodies and the director.3 His powers must, however, expire within one year, after which the management of the undertaking is once again transferred to its work collective.4 METHODS OF WORK Since they are elected bodies, the workers' council and the board of management can function only when in session. In principle their members have no special authority within the undertaking when the 1 The fact that the management bodies are dissolved does not mean that their functions devolve on the director of the undertaking. 2 Under the Act of 1957 on the administration of resources by undertakings, elections following the dissolution of the workers' council are to be held within two months. 8 The director of the undertaking is not dismissed automatically if the workers' management bodies are dissolved. According to the official interpretation, he may retain his post but will be under the orders of the administrator. The latter's powers do not include the rule-making functions normally exercised by the workers' council. 4 The documents available contain no detailed information (statistics, etc.) concerning cases in which the authorities have made use of their powers of dissolution. It seems that in most cases the dissolution order has been made in connection with the financial reorganisation of an undertaking or owing to serious irregularities in financial administration (more particularly in small undertakings). It also seems that there have been few cases in which a dissolution order has been made on account of a refusal of the undertaking to amend unlawful rules or following a dispute between the workers' council and the director. In one case dissolution was ordered on the initiative of the trade union against a workers* council elected on a non-trade union list, but the council members later received partial satisfaction after the case had been taken to the courts. 94 WORKERS' MANAGEMENT IN YUGOSLAVIA bodies are not meeting. However, owing to the existence of the committees already mentioned and the special status and powers of the chairmen of the two bodies, these fundamental rules of the 1950 legislation are no longer so absolute. Resolutions passed at sittings are nevertheless still the main way in which the bodies exercise their management functions, so that the method of putting these resolutions into effect is of prime importance. In this connection, Yugoslav legislation merely lays down a few fundamental principles and allows each undertaking to determine how its management bodies shall operate. Special rules (such as standing orders) have been adopted for this purpose in many undertakings. Sittings of the Workers' Council It is laid down by law that the workers' council must meet at least once every six weeks1, but the rules of the undertaking generally provide for more frequent sittings. Statistics show that in 1956 the national average was about 12 meetings a year or one a month but the number varies considerably from one undertaking to another and seems to have risen noticeably in recent years.2 Sittings of the workers' council are normally held outside working hours, although there is no statutory provision to prevent the council from meeting during the usual hours of work if required.3 The council is generally convened by its chairman and there is often a fixed day for ordinary sittings. In addition, an extraordinary sitting must be called at the request of the board of management, the union, one-third of the members of the council or the director of the undertaking. Meetings of the council are not open to the public, but members of the work collective have the right to attend. In practice, representatives of the union, other social organisations and the public authorities are also generally admitted. The director of the undertaking and the members of the board of management must attend the sittings of the council, which may also decide to meet in private if necessary. 1 According to the official interpretation of this rule, an exception may be made and meetings of the central workers' council may be held at less frequent intervals in undertakings having several branches that are located at a distance from the head office, each with its own workers' council. 2 In 1956 there were about 1,600 undertakings in which the workers' councils had held fewer than nine sittings, while almost 2,000 councils had held more than 12 and 255 more than 22. It should also be mentioned that in the undertakings visited in 1959 and 1960, meetings of the workers' council had become markedly more frequent, and that in several of them a fortnightly meeting was the rule. 3 According to thefiguresavailable on 6,093 undertakings with 30 or more workers, in 1956 workers' councils held 71,038 sittings, including 9,812 during working hours. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 95 Agenda. The council normally adopts its own agenda on the proposal of its chairman. Certain items are included as a matter of course, especially at the first sitting, when the council must appoint a credentials committee and approve its report, and elect a chairman and the board of management. The council must also take formal note of the report of the outgoing board of management on the operations of the undertaking and of the accounts for the previous financial year and give its approval, this being the basis on which it takes over the management of the undertaking for the coming financial year.1 Other items which are specifically provided for by law include questions put by members of the council to the director and the members of the board of management concerning their activities, which must be answered at the same sitting of the council, as well as the reports on the management of the undertaking which the board must submit periodically to the council. Apart from the report on the last financial year, accounts of this kind are generally submitted on a monthly or quarterly basis. They are distributed to all council members and circulated in the various workshops or departments. The fact that certain undertakings submit very comprehensive and detailed reports may be noted in this connection. This seems to indicate that considerations of business or manufacturing secrecy are given very little weight. The reports are so detailed that the workers' council is able to discuss and reach decisions on all aspects of the undertaking's policy with a number of clearly stated facts before it.2 The agenda for the various sittings of the workers' council must also include questions falling within its terms of reference under a statutory 1 It is thus possible, though very unusual, for the new council to refuse to assume its management duties. In one case, for example—noted in the minutes of a sitting— the workers' council refused to take over the management of the undertaking unless the competent authorities would grant an authorisation which the outgoing management had long been requesting, and which they considered to be essential to the continued operation of the undertaking. (The authorisation requested entailed the expenditure of a considerable amount of foreign currency for the purchase of equipment, licences, etc., and was in fact granted soon afterwards.) 2 On the question of how management bodies can check the accuracy of information supplied by the director, particularly information of a financial nature, it is generally accepted that, apart from checking up themselves, these bodies may make use of the services of an accounting agency or ask for a special audit by the appropriate auditing body. The principle of such external auditing of accounts may also be laid down in the by-laws of the undertaking. It should be noted, however, that the accounts of the undertaking are already under permanent audit by the tax authorities and that the management bodies consist of members of the personnel who maintain close contact with the heads of the departments responsible for drafting these reports, and with their staff (cf. B. PAJA, D. ALACEVIC and J. KOVACI¿: Radnicki savjet : upravni odbor (Workers' council and management committee) (Issue No. 4-5 of 1957 of Informatorov prirucnik za kadrove (Zagreb, Informator), and Z. VIDAKOVIC, in Nova administracija (Belgrade), Vol. V, No. 3, May-June 1957, pp. 276-286. 96 WORKERS' MANAGEMENT IN YUGOSLAVIA provision—the adoption of the plan, the allocation of the income of the undertaking, the adoption of scales of remuneration, etc.1 Discussions and Voting. The chairman of the workers' council directs the discussions and maintains order during the sittings. The law lays down that the council's decisions shall not be valid unless at least half the members are present and they are approved by a majority of the members attending. The rules of the undertaking, however, may provide for a special majority in specified cases (adoption of rules, change in the purpose of the undertaking, etc.). Voting is public unless the council decides otherwise. The council itself lays down the details of the procedure in its standing orders. Minutes of the discussions and decisions of the council are kept by the secretary of the workers' council and signed by its chairman. The names of those voting for or against a decision are noted when a vote is taken. The minutes are official documents, extracts of which have to be attached to important communications from the undertaking to the administrative authorities or the courts. 1 The results of a survey by the Federal Statistical Institute of the items on the agenda of the workers' councils in 1956 (undertakings with 30 or more workers) are given below as an example: Plans of the undertaking and final accounts for the financial year 16,807 Rules concerning remuneration scales 15,470 Reports of the board of management 20,134 Investment and reconstruction plans 15,212 Utilisation of the funds of the undertaking 12,404 Production costs, quality and marketing 20,286 Output norms, productivity and improvement of working methods . . . . 12,341 Labour relations 20,285 Occupational health and safety 10,953 Labour discipline 16,119 Social insurance 7,185 Vocational training 8,679 Distribution of income 9,002 Economic offences 4,941 Communal affairs 2,352 Other questions 21,887 These figures relate to about 6,000 undertakings covered by the census; the statistics of the Federal Institute also give a detailed breakdown of the items on the agenda of workers' councils according to the various industries or branches of the economy and according to the particular federated republic. Fifty-three members of elected management bodies in 13 Belgrade undertakings were asked to state what were the three most important questions dealt with by the workers' council or the board of management since their election. The University of Belgrade survey team received the following answers: scales of remuneration (15), organisation of work (8), management of the business (8), reconstruction (8), productivity (7), housing (6), quality (3), incentive payments (3), output norms (3), balance sheet (3), plan (2), reduction of operating costs (2) ; transport charges, safety and health, opening of a branch, selection of the chief of personnel (secretary), acquisition of capital goods, staff questions, etc. See the report on this inquiry by N. BALOG, in Nova administracija, op. cit., Vol. V, No. 3, May-June 1957, p. 306. THE WORKEPS' COUNCIL AND THE BOARD OF MANAGEMENT 97 In practice, cases occur in which the discussions of workers' councils lead to no formal decision, while in other instances decisions are taken by a unanimous or majority vote. The standard of the discussions, however, seems to have improved considerably over the years. As will be shown later in Part III, there is a steadily increasing number of questions which, under recent legislation, must be decided by the workers' council. If it fails to do so, the decisions of the undertaking are invalid and the council must then reconsider the matter. 1 This is an important stimulus for workers' management. The sharing of the net income of the undertaking as well as certain personnel matters may be cited as examples of the items on the agenda which cause particularly animated discussion. In one undertaking visited by the Office mission it was reported that the session of the council at which the final accounts for the financial year (including the use to which the net income was to be put) were approved normally lasted three days. In another undertaking a four-day session was necessary to reach a decision on the dismissal of an unpopular chief of personnel. In yet another undertaking a resolution that the director be removed from his post was passed after a long discussion, by a majority of only one vote. In general, however, especially when the council has already been able to establish its authority, business is dealt with much more quickly. Larger undertakings generally have a hall where the workers' council meets and a room for its secretariat. In certain cases an official of the undertaking is made available to the council on a permanent basis to do the administrative work and keep the records. The minutes which the mission was able to consult in various undertakings were in general extremely well kept; these documents, which were accompanied by the reports and plans submitted to the workers' councils, also showed that there had been a considerable increase in the volume of business dealt with by the workers' council over the last few years.2 1 The following example was noted in an undertaking visited by the Office mission. The Investment Bank received an application for a loan for an extensive expansion plan which had been submitted to it by the director in agreement with the workers' council. The Bank sent the application back to the undertaking and asked to see the extract from the minutes of the discussion in the workers' council. The council had, in fact, not really discussed the matter but merely approved the application to the Bank. It took the opportunity of holding a general discussion on investment policy and of making various changes to the plan in question. 2 The drafting of the minutes of workers' councils and boards of management has been dealt with in many workers' education manuals or seminars. These documents generally take the form of typewritten sheets bound into volumes running to hundreds and sometimes over a thousand pages every year. The rules on the maintenance of financial records and accounts also apply to these minutes. For example, it was reported that the director of one of the largest undertakings in the country had been dismissed on the proposal of the financial inspectorate for having had a (footnote continued overleaf) 98 WORKERS' MANAGEMENT IN YUGOSLAVIA Sittings of the Board of Management The law does not lay down a minimum frequency for the sittings of the board of management, but it is understood that it should meet more often than the workers' council. Weekly meetings seem to be the rule in the larger industrial undertakings, and according to some observers they are almost a daily occurrence.1 An extraordinary meeting must be convened by the chairman if it is requested by the director or any other member of the board. The few statutory provisions concerning the proceedings of the board are generally similar to those relating to workers' councils, except that its chairman cannot himself penalise indiscipline at meetings but must refer the matter to the workers' council. It is intended that they should be supplemented by internal rules. In general, however, sittings of the board of management are not open to other members of the work collective, although the chairman and other members of the workers' council are admitted. The agenda for each sitting is prepared by the chairman of the board, who consults the director. It will normally be much more varied than that of the workers' council since the board must also take decisions on many day-to-day or minor issues.2 As in the case of the workers' council, the proceedings of the board of management may in practice take a great variety of forms. Sometimes the board will confine itself to making a few comments on the director's reports and proposals, whereas at other times it becomes a real collective government of the undertaking. One of the commonest criticisms levelled is that, instead of the director, the various heads of departments sometimes report to the board and receive its instructions directly during the sittings or even outside them. Others consider that, although this practice tends to reduce the director to the role of a mere technician, it is not basically in contradiction with the spirit of workers' management. blank page introduced into the minutes of a sitting. Summaries of the proceedings or accounts of the decisions reached are usually published in the gazette or bulletin of each undertaking. 1 However, according to the 1956 survey, the national average was only about 17 meetings a year (about 20 in industrial undertakings). It seems that in small enterprises, especially non-industrial concerns, there is much less need for frequent and formal meetings of boards of management than in large industrial undertakings. Proposals to merge these boards with the workers' councils have often been made by spokesmen for non-industrial undertakings. 2 In a number of cases during visits by the mission the board of management had to deal with over a score of matters under the heading of " other business "—workers' requests and applications for grants by former members of the collective and by social organisations and institutions (trade unions, schools, etc.), authorisations for travel on business, purchase of office equipment, etc. THE WORKERS' COUNCIL AND THE BOARD OF MANAGEMENT 99 The Chairmen of the Workers' Council and the Board of Management The two chairmen, like the other members of the management bodies, have, in principle, no special powers in the undertaking except for calling meetings and fixing the agenda. Exceptions to this principle, however, are laid down by the law. For example, the chairman of the workers' council, together with the director and the chief accountant, must sign the documents relating to certain financial transactions, allocation of the earnings of the undertaking, etc. ; he also countersigns the books. Similarly, either of the two chairmen may be called upon to represent the undertaking or the body over which they preside before the administrative authorities or the courts, either in conjunction with the director, or independently in connection with a dispute with the director of the undertaking. Such cases, however, are exceptional. In normal circumstances the real authority of the chairmen lies in the fact that they are spokesmen for the collective. To ensure that the system works smoothly, the director and the senior executives must hold frequent consultations with the chairman of the board of management or with other influential members of the management bodies, such as committee chairmen. Apparently it is not unusual for the chairmen or other members of the elected bodies to be personally associated with approaches made by the director to the authorities, the banks or other official agencies. Practice in this respect seems to vary considerably from one industry or undertaking to another. CHAPTER VI THE TECHNICAL DIRECTOR Prior to the introduction of workers' management, while the 1946 State Undertakings Act was in force, the director of an undertaking represented the lowest echelon of the national economic hierarchy. He was a state official appointed and dismissed by his superiors, working under their orders, and answerable to them alone for his actions, and at the same time he embodied all authority within the undertaking. As the sole head of the enterprise, he was in fact " an agent of the State in the undertaking, through whom the State directly ran the whole economy V The transfer of the management of individual undertakings to their collectives entailed fundamental changes in the director's status and powers. The basic law of 1950 first of all laid down the principle that he was responsible to the board of management. The reforms in the economic structure and planning machinery later relieved him of any direct subordination to higher authority. At the end of 1953, the ordinance on the establishment of undertakings introduced a new procedure for the appointment and dismissal of directors, whereby they ceased to be state officials and became employees of their own undertakings. Under a number of enactments (and also in practice), various major restrictions were imposed on the director's ability to act independently, accompanied by a widening of the powers of the organs of workers' management. This development, which has perhaps still some way to go, aims at relieving him of his dependence on the public administrative machinery and making him a genuine executive with his own special status but at the same time directly answerable in the discharge of his duties to the collective and its elected organs. The director's present status is far from simple, and Yugoslav writers themselves are by no means unanimous about its exact definition. However, a number of characteristic features are clear: (a) he is the main executive agent in the system of workers' management, of which he forms a part; (b) he is responsible for organising the day-to-day work 1 Cf. V. JovANOViè, in Arhiv za pravne i drustvene nauke (Belgrade, Union of Jurists' Associations of Yugoslavia), Vol. XLIV, 1957, Nos. 2-3, 1957, p. 310. THE TECHNICAL DIRECTOR 101 of the undertaking, and as such is in charge of the whole personnel; (c) he is an employee of the undertaking, and as such his status and conditions of employment are subject to its rules and the decisions of its management bodies; (d) he has retained some of the powers and duties of public administration as the " guardian of legality " in the management of the undertaking, which is public property. These four aspects of the director's functions vary in importance. But in the view of most experts, his task as executive agent of the elected bodies overshadows the others. SELECTION, APPOINTMENT AND DISMISSAL The procedure for appointing directors has gone through several stages. Under the basic law of 1950 they were appointed by the board of management of the " industrial group " to which the undertaking had been assigned or, alternatively, by the " appropriate authority ". After the " industrial groups " were abolished, the general Act of 1952 on people's committees transferred this power to the district and commune people's committees. So far, there were no conditions governing either procedure or qualifications, and the organs of workers' management were not directly associated with the process. The foundation of the present system was laid at the end of 1953 by the ordinance of 18 December on the establishment of undertakings, which introduced the principle of appointment by open competition and selection committee, a third of the membership being representatives of the workers' council of the undertaking concerned, and the remainder being nominees of the public authorities and the occupational organisations (trade unions, economic chambers, or associations of undertakings). The system was subsequently modified several times under the Acts of 1955 and 1957 defining the powers of communes and districts, the second of which introduced the principle of parity as regards membership on the selection committees. Open Competition Under current regulations an open competition must be organised by the management bodies in the undertaking or by the commune whenever a post of director falls vacant. The commune is responsible for setting up a selection committee (known as the committee for appointment and dismissal of directors).1 Normally this committee is a joint body, half its members being appointed by the commune people's committee, while the other half are designated by the workers' council of 1 The commune people's committee may appoint representatives on each occasion or permanently for all competitions. 8 102 WORKERS' MANAGEMENT IN YUGOSLAVIA the undertaking in question. The district, republic or federal authorities may, however, retain the right to appoint a third of the members in the case of certain specified undertakings. In this case the undertaking and the commune each appoint only a third of the members.1 The competition and the qualifying conditions must be publicised by the selection committee through the most appropriate channels. An announcement is usually made in the daily newspapers or in the specialised press.2 As regards the qualifications and other conditions required of applicants, the committee must apply the rules of the undertaking in question and any statutory provisions that may be applicable. It cannot demand more or less. On receipt of the applications the committee chooses (if necessary by ballot) the candidate who appears most suitable for the post in question, and notifies his name to the authorities of the commune. It is not required to give reasons for its recommendation. Appointment The director is appointed, on the recommendation of the selection committee, by the people's committee of the commune at a joint session of the two chambers. If the people's committee feels loath to accept the selection committee's recommendation, or if the competition has been unsuccessful through lack of qualified applicants, the procedure is cancelled and a fresh competition must be held. If the people's committee once more rejects the selection committee's recommendation, the matter goes to the district people's committee (or, if appropriate, to the republic or federal authorities) for an appointment. On the other hand, if the competition is unsuccessful a second time due to lack of candidates, the selection committee can recommend the people's committee to appoint someone else who qualifies for the post.3 1 Cases of this kind appear to be fairly infrequent, but statistics are not available. Vacancies are very widely publicised. If one opens a Yugoslav newspaper or magazine, there is at least an even chance of finding one or more notices of vacancies for undertaking directors among the large numbers of other managerial vacancies. As many asfivenotices of this kind have been noted in the same issue of a local weekly. These notices usually specify the qualifications and experience of applicants as prescribed by the undertaking's rules, often giving an alternative, e.g. an engineering or economics degree with five years' experience, or technical school training with 12 years' experience, etc. On the other hand, it is usually stated that remuneration will be in accordance with the rules of the undertaking and sometimes (especially in the case of remote areas) that the undertaking will furnish the director with a house, car or other perquisite " to be settled by agreement " or " which may be allowed by special decision of the workers' council ". 8 A good many competitions appear to be unsuccessful through lack of candidates. A sample survey carried out in Serbia showed that this occurs in nearly a third of all the competitions held (see below, p. I l l , footnote 2.). 2 THE TECHNICAL DIRECTOR 103 Dismissal The director may be dismissed at the request of either the workers' council of the undertaking or one of the inspection services. In either case the dismissal is ordered by the people's committee of the commune on the recommendation of the joint committee on appointment and dismissal of directors mentioned earlier. If the people's committee of the commune rejects this recommendation, the matter is referred to higher authority (district people's committee or republic). The dismissal procedure may only be employed in cases specified by law. Under the 1953 decree on the establishment of undertakings, the workers' council can vote for a director's dismissal only in the following cases: (i) where he has not complied with or has infringed the law; (ii) where the undertaking is not in a position to meet its obligations towards the community (taxes, etc.); (iii) where it is established that the undertaking's income is lower than could reasonably be expected, or that the undertaking has incurred substantial losses due to the director's incompetence. Thus, the workers' council is entitled to demand the director's dismissal if he refuses to carry out its decisions (point (i) above) or if he shows incompetence or negligence in his conduct of business.1 The inspectorate (usually the financial inspectorate 2) can also request the dismissal of a director, but only in the cases mentioned in (i) and (ii) above, i.e.only if the law has been broken 8 or if the undertaking is unable to meet its tax liabilities. The undertaking's general performance (point (iii)) cannot be invoked by the inspectorate as a reason for dismissing the director. The committee on appointment and dismissal of directors considers in each case whether the reasons given for dismissal are sound and, if it decides in the affirmative, the decision of the commune people's committee is final. If a vote by a workers' council to dismiss a director is 1 Under the Labour Relations Act of 1957 the workers' council can also institute proceedings against the director of the undertaking in the disciplinary court of the commune, and in the event of a serious breach of discipline, this too may lead to his dismissal (see Ch. LX). 2 Action of this kind by the other inspectorates which have dealings with undertakings, e.g. the labour or the safety and health inspectorates, would appear to be less likely, although it can by no means be ruled out (see also Ch. XI). a Dismissal of the director under this heading is specifically prescribed in certain cases where the law also requires the organs of management to be dissolved, e.g. illegal use of funds, breach of the prohibition on price agreements and similar practices (thereby creating an illegal monopoly), or repeated breach of the regulations on commercial activities. 104 WORKERS' MANAGEMENT IN YUGOSLAVIA found to be unjustified, the elected management bodies may be dissolved and new elections held. If the new workers' council still calls for the director's dismissal, the people's committee of the commune must comply, unless it considers that the undertaking should be placed under legal administration, thereby entailing the temporary suspension of workers' management.1 Appeals There is no appeals procedure to enable individuals to contest the outcome of competitions or the appointments made as a result, but in the present state of Yugoslav law an appeal for cancellation on the ground of procedural shortcomings or a breach of the conditions of the competition would not appear to be out of order.2 On the other hand, in the event of a director's dismissal the law specifically allows the workers' council and the director to appeal to higher authority against the decision of the commune people's committee. Further, in a ruling on this matter, the Federal Court in 1957 established the principle of the receivability of an appeal to the courts in the event of a director's dismissal.3 In other words, it allowed the ordinary courts, when dealing with administrative disputes, to rescind any illegal decisions by the communes on this point. RELATIONS BETWEEN THE DIRECTOR AND THE MANAGEMENT BODIES OF THE UNDERTAKING The director of a Yugoslav undertaking fits into the system of workers' management in two ways. In the first place, he is an ex officio member of the board of management, with a vote like any of the other members.4 It has been found that in many undertakings the directors do not always attend meetings 1 In this case the director may remain at his post, but under the orders of the administrator. 1 An appeal of this kind is in fact specifically allowed in the case of competitions for the civil service and those held by undertakings for other managerial posts (cf. Ch. IX). 3 Interpretative opinion No. 15/57 dated 27 May 1957 of the Administrative Disputes Section of the Federal Court (cf. Zbirka sudskih odluka (Belgrade, Sluzbeni list FNRJ), 1957, Vol. II, Order No. XXV, p. 11). 4 He is, however, prohibited from holding the chairmanship of the board. On the other hand he may, like any other member of the board, raise in the workers' council any matters on which he disagrees with the majority of the board of management. THE TECHNICAL DIRECTOR 105 of the board of management, except when really important matters are being discussed, and that some of them are apt to leave as soon as the meeting gets down to individual cases, such as workers' grievances and requests. Opinions are divided as to the desirability of this practice.* The director must also attend meetings of the workers' council and answer any questions that may be put to him. In some undertakings the rules also require other members of the directing staff to do the same. In the second place, the director is the principal executive agent of the elected bodies. As mentioned earlier, it is part of his functions to give effect to the decisions of the workers' council and board of management, and he is answerable to them for the running of the undertaking. In fact, the law assigns the director a special position in the machinery of workers' management by giving him " immediate responsibility " for ensuring that legal provisions applicable to the undertaking are implemented. He consequently " has power to suspend any decision by an elected body which is at variance with the regulations in force and to call the attention of the said body to the illegality of the decision ". If, despite his objections, the workers' council or board of management insists on his carrying out the decision, he must notify the people's committee or inspection service. Should he fail to do so, he himself becomes answerable for any action he may take to implement the illegal decision. Unlike the basic law of 1950 under which the state organs gave a final decision in such cases, which superseded the decision of the management bodies of the undertaking, the present regulations (which date from the end of 1953)2 contain no general provision at all on this point. Each case is, therefore, settled on its merits, the authorities relying where necessary on such means of enforcement as are available in respect of a particular provision. The real scope of these provisions is not easy to assess. In theory they empower a director to force the organs of management to think things over and face up to their responsibilities, so that they act as a 1 Cf. Director u sistemu radnickog samoupravljanja (The director under workers' management), survey carried out by the Workers' Management Centre of the Serbian Council of Trade Unions (mimeographed document) (Belgrade, Feb. 1959). This document will be referred to hereafter as the " Management Survey in Serbia ". 2 S. 94 of the ordinance on the establishment of undertakings dated 18 December 1953. The basic law of June 1950 also provided for the suspension of any decisions by the board of management which were " contrary to the plans and orders of the appropriate organs of the State ". The reform of the whole structure which took place during the years 1950-53 explains why this clause has been dropped; under the present system the director supervises the decisions of the elected management bodies only from the point of view of legality and not of expediency. 106 WORKERS' MANAGEMENT IN YUGOSLAVIA brake on hasty behaviour and may save the undertaking from incurring possible fines or other penalties. On the other hand, a director could clearly not make use of this right without seriously straining relations between himself and the management bodies. The result, as a Yugoslav writer points out, is that there are few cases in which a decision by the organs of management has been formally suspended by a director. He adds that— a rapid survey carried out with the help of university students in a number of undertakings in Belgrade only brought one case of this kind to light . . . which goes to show that the organs of management are not exactly breaking the law for the sake of doing so; if, owing to ignorance of the law, they make a false step, the director as a 1rule has only to explain the position for them to go back on their decision. These conclusions tally with those of the Office mission. In only one of the undertakings visited had decisions of the management organs been formally suspended by the director. In this particular instance the previous factory director had made wide and, in the unanimous view of the present executives, unreasonable use of his power, which he interpreted as an unconditional right of veto. This attitude led to strained relations between him and the organs of management, and he finally had to leave and take another post. His place was taken by a technician with long service in industry, under whom the organs of management appear to have reasserted their authority in a spirit of close co-operation. Moreover, the standing orders of the workers' council now contain a clause which states that " the director shall have no right of veto during meetings of the management organs ". In any event it would be wrong to lay too much stress on this negative aspect of the director's power to suspend illegal decisions by elected bodies.2 In practice, the initiative in ensuring that the system is run properly and that the law is observed in the process must come in most cases from him. In the last resort, it is up to him and the departments under his control to see that the decisions required by law or efficient management are taken by the board or workers' council in good time. 1 Cf. V. JOVANOVIC, in Arhiv za pravne i druStvene nauke, op. cit., p. 313. The author adds that there are probably far more cases—some of them brought to light and some not—" where the law has been broken or evaded with the connivance and even at the instigation of the director or other officials in responsible posts in the undertaking ". See also " Management Survey in Serbia ", pp. 13-15. 2 As is pointed out by a Yugoslav writer, this power does not, for example, go beyond the provision of the Yugoslav Companies Act of 1936 under which the management of any company was forbidden to put illegal decisions of the shareholders' meeting into effect. Its chief purpose is to prevent tax evasion or an illegal reduction in the capital and, in the event of any malpractice, to make the responsibility clear so that a director cannot hide behind an illegal decision by an elected body. THE TECHNICAL DIRECTOR 107 THE DIRECTOR AS HEAD OF THE UNDERTAKING As the executive agent of the elected organs of management, the director is the technical and administrative head of the undertaking. Under the basic law of 1950 he is responsible for " organising the working process in the undertaking and directly supervising... operations of the undertaking ", and for representing " the undertaking before the public authorities and in legal relations with individuals and bodies corporate ". The 1950 Act left the director a great deal of discretion in dayto-day matters, especially as regards personnel policy. Unless stipulated by law, he had no need to obtain the prior consent of the elected bodies. This principle still applies, but subsequent legislation has sharply reduced the discretion allowed to him. Outside purely technical matters, including the allocation and distribution of routine work, the law now allows the director only a few prerogatives, such as the power to order overtime where necessary \ or to inflict minor disciplinary penalties. The undertaking's rules may grant him certain additional powers, such as the right to spend some of the undertaking's funds up to a specified amount. Nevertheless, he is in charge of the whole personnel of the undertaking, including its senior executive staff. He is in principle the only person empowered to give orders to his subordinates, whether in execution of decisions by the elected bodies or as part of his own prerogatives. In this he is usually assisted, in the large and medium undertakings, by a group (collegium) made up of the heads of the chief technical and administrative departments 2, and usually consisting of the production manager, the chief accountant, the chief of personnel and the commercial manager.3 It is considered in some quarters that this collegium should be abolished because of its " undemocratic character " and its threat to the " sovereignty of the workers' management bodies ", whenever—as may happen—it takes its own line on policy matters.4 1 Under a recent amendment this power has now been taken over by the workers' council. 2 The chief accountant occupies a special position among the members of this body. Since he is personally responsible for seeing that the accounts are properly maintained, he has the power to suspend any order of payment which infringes the regulations. He is appointed in open competition by the appropriate organs of the undertaking, with the approval of the economic council of the commune; he cannot be dismissed without the consent of this latter body (cf. Socijalna politika (Belgrade), Vol. IX, No. 10, Oct. 1959, p. 71). 3 For details of the structure and powers of management at this level, see Ch. IX. 4 Cf. an article by A. FRIMERMAN in Pregled (Sarajevo), Nos. 4-5, Apr.-May 1959, pp. 397-399. 108 WORKERS' MANAGEMENT IN YUGOSLAVIA Since 1954 all the executives of an undertaking have been appointed and dismissed not by the director but by the board of management, either through open competition or by selection from among the staff of the undertaking. 1 The director's authority over the executive personnel has been greatly curtailed as a result. The same applies to his right to represent the undertaking in relations with third parties, to conclude contracts in its behalf and to sue or be sued. For most important matters he must obtain the prior consent of the board of management or workers' council, and in some instances must also produce an extract from the minutes of their meetings as evidence of their approval. In some cases, for instance when proceedings are instituted against an undertaking, the board of management is the only representative recognised by the courts. In everyday commercial matters, however, the courts accept the director as the authorised agent of his undertaking, which is committed by his signature—at least vis-à-vis third parties acting in good faith.2 THE DIRECTOR AS AN EMPLOYEE While he is still appointed and dismissed under a special procedure in which the authorities participate, the director is in other respects only one of the members of the work collective or one of the employees of the undertaking. Being no longer a state official, his relations with the undertaking are based on its own by-laws and regulations, which define not only his powers and the qualifications he must possess on appointment but also his conditions of employment and remuneration as well as any other emoluments attached to his post (bonuses, travelling expenses, etc.). He shares in the results of the undertaking in the same way as the other workers, i.e. in proportion to his basic remuneration. The rules may provide that he shall also receive the bonuses normally payable only to workers paid by time worked. In disciplinary matters he comes under the workers' council in the same way as the elected members of the board of management.3 The labour relationship between the director and the undertaking begins when he takes up his duties, thereby accepting the conditions laid down in the undertaking's rules. He can only be relieved of his post 1 For this purpose the selection committee is solely composed of persons appointed by the board of management. The qualifications for these posts are laid down by the workers' council when it approves the undertaking's rules. Under the 1957 Labour Relations Act the workers' council has power to cancel (at the request of any person affected thereby) a competition in which irregularities have occurred, and to cancel the appointment as a result. 2 For further details, see Ch. VIII. » See Ch. IX. THE TECHNICAL DIRECTOR 109 through dismissal or disciplinary proceedings, but he himself may terminate his relations with the undertaking provided he gives the statutory period of notice. His dismissal as director does not necessarily entail termination of his labour relationship with the undertaking. If it wishes, the board of management may assign him other duties in the same undertaking ; failing this, the appropriate procedure and statutory notice must be observed. Thus it may happen that for some time there are two directors on the staff and payroll of the same undertaking, each drawing remuneration. 1 PRACTICAL EFFECT OF WORKERS' MANAGEMENT ON THE DIRECTOR'S POSITION Under the former system of centralised planning and control, the director's main task was to meet or exceed the production targets laid down for the undertaking by higher authority. As the executive agent of the State in his undertaking, he had little influence over the policy he was required to carry out; on the other hand, his authority within the undertaking was very wide, and he was not answerable to the workers' representatives. Hence the introduction of the new economic system based on independent undertakings and workers' management called for a good deal of adjustment on his part. On the one hand, he now had to sort out for himself a whole series of technical, administrative and financial problems which had hitherto been the responsibility of higher authority. On the other hand, his power within the undertaking dwindled quickly as the elected organs of management took over. Once the chain of command from above was broken he had to rely for his authority on his own personality and technical ability. The changeover to the new system seems to have been beyond many of the directors appointed before 1950. The Office mission gathered that the majority of them had to be superseded during the years 1950-53, before the introduction of the system of open competition described above, because the authorities at the time considered them unable to cope with the new conditions.2 The newcomers appointed by the central 1 Cf. Borba, 7 Aug. 1959, p. 5. In a recent decision the Supreme Court, however, came out against this practice in undertakings, and laid down the principle that the decision to dismiss a director automatically terminates the labour relationship between him and the undertaking. Nevertheless, the Court was not asked to give an opinion on the director's entitlement to remuneration during the period when he was under notice—an entitlement which is implicit in the 1957 Labour Relations Act. The director is also entitled to remuneration in the event of suspension for disciplinary reasons (cf. Socijalna politika Belgrade), Vol. IX, No. 10, Oct. 1959, p. 69). 2 It should be recalled that at this time workers' councils were already entitled to call for a director's dismissal but did not take any direct part in the actual appointment and dismissal procedure. WORKERS' MANAGEMENT IN YUGOSLAVIA 110 economic departments (which were then being wound up) were usually technicians with jobs in the undertakings themselves or in the higher economic administration. Since then, things seem to have become stabilised and in almost all the undertakings visited by the mission the directors had in fact been appointed during the three years following the handing over of management to the collectives (1951-53). The available statistics indicate that, in 1956, 563 directors relinquished their posts in the 6,000 undertakings employing 30 workers or more; of these, 61 resigned, leaving 502 (about 8 per cent.) who were dismissed in accordance with the prescribed procedure. In most of these cases (314) the dismissal procedure was initiated by a public authority; 111 directors were dismissed at the request of a workers' management body and 55 at the request of the collective, while in 20 cases the initiative was taken by a " political organisation ". (These last figures are clearly only a rough guide because in some cases the action taken by the authorities may simply have anticipated the resolution of the workers' council, or alternatively the latter may have taken the initiative on receipt of a report by the inspectorate revealing conduct detrimental to the underTABLE I. LENGTH OF SERVICE AND CHANGES OF DIRECTOR IN SERBIAN UNDERTAKINGS A. PERIOD SPENT AS DIRECTOR OF AN UNDERTAKING (APRIL 1957) Number of years Present appointment (per cent.) Total 1 (per cent.) 22.0 34.5 20.2 13.7 4.6 3.1 2.1 12.4 24.2 21.0 22.8 11.6 5.8 2.2 From 1 to 3 years 3 5 „ 5„ 8 , „ 8 „ 10 , B. UNDERTAKINGS ACCORDING TO CHANGES OF DIRECTOR (1955-56) Frequency Number of undertakings Percentage 1,546 873 411 176 98 58 314 44.5 25.1 11.8 5.1 2.8 1.7 9.2 3,476 100.0 One „ Two changes Three ,. Four „ Not known Total . . . Source: " Management Survey in Serbia ", Tables 10 and 13. 1 Including periods of previous service as directors of other undertakings. THE TECHNICAL DIRECTOR 111 taking, etc.) Among the grounds for dismissal, the Federal Statistical Institute notes 82 cases of " negligence or carelessness " and 59 cases of " economic offences ". Figures collected by the workers' management centre of the Serbian trade unions for the length of service of 3,476 undertaking directors in the republic tend to confirm the impression of stabilisation, though showing a somewhat higher turnover. This is no doubt due to the fact that the figures quoted in Table I reflect all types of changes, including those due to other reasons (sickness, death, voluntary departure to take up another post or elective appointment, etc.) and they also cover all directors and not just those of undertakings with more than 30 workers. In small factories or shops there may, of course, be a higher turnover of managerial staff because their technical specialisation is more limited and there is more opportunity for them in the bigger concerns. As is shown by Part B of the table, a small minority of undertakings {barely 10 per cent.) have had more than two changes of director. These, however, account for about 40 per cent, of all the changes during the period under review (1955-56). Moreover, even in the remaining 90 per cent, of undertakings, " stability of employment " of directors appears to have been relatively low (about 3 Vá years) in the period 1955-56.1 Although no more recent statistics are available, it would appear that this problem has been gradually overcome and that the number of revocations has fallen appreciably, particularly in the large undertakings. The system of competitive recruitment2 has also placed still more emphasis on the technical side of the director's work. Once undertakings had to define the qualifications and experience required, they were bound to set objective—and sometimes fairly high—standards which should automatically eliminate purely political appointments.3 The 1 It is hardly necessary to emphasise that these statistics can only be treated as an illustration, and no final conclusions can be drawn from them. Their main drawback is that they lump together the directors of small shops and big manufacturing concerns and give no breakdown by reason for departure. Moreover, they cover too short a period, comprising only the first three years of the new scheme. 2 In April 1957,1,480 directors of undertakings in the republic of Serbia had been appointed by public competition (42.6 per cent.) as against 1,883 appointed noncompetitively. No details were available in respect of 113 directors, or 3.2 per cent. of the total. The percentage of directors appointed by competition (42.6) was, however, markedly lower than the percentage of those appointed since the new procedure came into force (about 56 per cent.—see Table I). According to the workers' management centre, this difference shows that the competition procedure is not " fully used " and that it is quite often unsuccessful because of the lack of qualified candidates (cf. *' Management Survey in Serbia ", p. 42 and Table 12). 3 The political element, however, does not seem to have disappeared. According to the authors of the survey quoted above (loc. cit.) the fact that some competitions are not successful or that " only a few applications are received—whereas there is probably no lack of qualified candidates " is partly due to the fact that " political considerations come first and other factors are ignored . . . ". 112 WORKERS' MANAGEMENT IN YUGOSLAVIA publicity given to each competition also has a number of positive aspects, both for prospective applicants who can watch out for managerial vacancies, as well as for the selection committees, who have more and better qualified candidates to choose from. The appointment of directors is unlikely to be at all times and in all respects in accordance with the spirit of the regulations. For example, in the big undertakings, where the appointment of the director (or " directorgeneral ") is inevitably a matter of major public concern, the federal or republic authorities often have direct preliminary talks with delegations from the workers' councils concerned on the candidate or candidates who seem best suited, especially if they are not known to the council itself. Similarly, members of a workers' council will get into touch with the workers' management bodies of an undertaking employing the candidate or candidates. On the other hand, in smaller undertakings the workers will often have their own candidate and, to quote a senior official of a large town, the appointment procedure " often takes the form of collective negotiation between the undertaking and the local authority, with the latter trying with varying success to persuade the undertaking's representatives to accept the best-qualified applicant ". In any case, however, it is considered virtually impossible in presentday conditions to impose a candidate if the workers' management bodies of the undertaking are openly opposed to him. Summing up a large-scale inquiry into the organisation and work of producers' councils in 40 communes in Croatia—urban, rural and mixed—the Social Management Institute of Zagreb came to the following conclusions : The procedures for appointing undertaking directors also vary substantially depending on the degree of development of the commune. Usually, the more highly developed it is, the stricter and more involved the appointment procedure. In the less developed communes, on the other hand, the procedure is less complex and thorough and the chairman or the vice-chairman [of the commune] usually wields far more influence. As regards outside influence on the selection and appointment of the director, the situation varies. Sometimes there have been more attempts when certain material advantages went with the director's post . . . . Sometimes there will be more competition for the management of a large well-established factory than for a small, struggling undertaking. On the other hand, there may be more outside attempts to influence the choice of director for a station buffet than for a big undertaking. As regards relations between the representatives of communes and of work collectives on these selection committees, it has been found that differences of opinion and even open conflicts are fairly common. These differences of opinion are due to the fact that the work collectives (or their representatives) do not in their choice of applicants use the same standards of judgment as the representatives of the people's committee. The main concern of the former is whether or not a candidate is likely to promote their collective interests in a constructive sense, i.e. they are looking for a man capable of creating THE TECHNICAL DIRECTOR 113 conditions in which collective labour can develop successfully. In some cases they also wonder whether the applicant will be able to safeguard the personal economic interests of their members. The commune representatives, on the other hand, are much more concerned with the general political qualifications of applicants.1 The influence that the authorities still have on the selection of directors under the present procedure is often looked upon as an anomaly and a possible cause of strained relations within the undertaking which may make it difficult for a director to settle down in his new surroundings.2 Not surprisingly, there are many who argue that the director should be appointed direct by the workers' council (subject perhaps to approval by the commune). 3 Some of the legislative proposals now under discussion would even entail the periodical election of directors whose term of office would normally be the same as that of the workers' councils. In this case the authorities would simply confine themselves to checking that candidates actually possessed the qualifications and experience prescribed by the undertaking's rules. The influence of the workers' management bodies on the choice of the director, whether decisive or simply advisory, may in any event be regarded as an established fact. In undertakings where the question had arisen or which were visited at a time when the director's post was vacant, the workers' management bodies appeared to be taking a very close interest in the process. Nor is the influence of the collective and workers' council negligible when it comes to dismissing the director; in several cases it has been the decisive factor.4 As his duties involve constant contact with the members of the workers' management bodies and of the whole collective—both at meetings and at other times—the director has little option but to adapt his behaviour to the workers' ideas on human relations and to use his 1 Institut za druätveno upravlanje u Zagrebu: Zbornik radova (Social Management Institute of Zagreb, Proceedings), Vol. II (Zagreb, Dec. 1959), pp. 41-42. 2 Cf. Arhiv zapravne i drustrene nauke, op. cit., p. 314 (conclusions of an investigation into labour relations in undertakings carried out by a working party of the convening committee of the Congress of Workers' Councils). 3 The director of at least one of the undertakings visited by the Office mission had in fact been appointed in this way. The workers' council at a plenary sitting heard the candidate recommended by the board of management make a speech outlining his programme and then elected him and submitted its decision to the commune for approval. 4 There are no statistics to show how many dismissal motions voted by workers' management bodies have been turned down by the authorities. Nevertheless, those in industry with whom the mission was able to discuss this subject generally considered that dismissal was settled when a resolution was passed by a workers' council and that approval by the commune was then more or less automatic. In at least two of the undertakings visited by the mission the director had had to resign as a result of a dispute with the workers' council, although the latter had not in fact formally called for his removal. 114 WORKERS' MANAGEMENT I N YUGOSLAVIA authority only as far as they are willing to allow—a degree that varies according to circumstances. He must also constantly make allowance for the susceptibilities of his workers' council and board of management, which are often quite unlike those of senior civil servants or the managing boards of joint-stock companies. To illustrate this point, it is worth quoting two actual cases in which a formal vote took place calling for dismissal of the director.1 The first example, which is taken from a press account2, concerns a road transport concern which ran into serious difficulties and the director of which appeared to enjoy the backing of higher authority. A petition to the latter by about 40 members of the collective alleged that the director was " high-handed, did not respect the workers' management bodies and their decisions, had been imposed on the undertaking and worked 'hand-in-glove' with the chairman of the commune people's committee (his brother-in-law), took arbitrary decisions concerning the dismissal of workers and the utilisation of vehicles, and when travelling on business made a detour through a certain seaside resort, etc.". As this petition had no effect, the workers' council decided at a later meeting to add the " director's dismissal " to its agenda. Although—according to the newspaper's account—the main allegations were admitted to be groundless and were dropped, the dismissal motion was nevertheless carried by a majority of one vote. When questioned by a journalist, who for his part strongly disapproved of the decision, the director expressed the view that at all events it was best for him to leave; while denying individual allegations, he admitted to a number of mistakes such as having " dismissed S, a young orphaned mechanic without any relatives, which caused an outcry ".3 In another case which was described to the mission by the present management of the undertaking, the director had been a technician and former civil servant with a fine record and 30 years' experience, for whom, allegedly, managing an undertaking was " like operating a marshalling yard " ; he was mainly concerned to make sure that it was run according to the rules and a series of diagrams and charts which he had worked out laying down all phases of the production process down to the last detail. He had some success in this, but proved hopelessly indecisive and hesitant when it came to departing from routine and taking risks. The general feeling in the undertaking, which was only founded 1 The differences between undertakings as regards operating conditions, financial circumstances and human background are such that no example of this kind can in any way be regarded as typical. 'Borba, 13 Dec. 1957, p. 2. 8 It will be recalled that until the end of 1957 individual dismissals were still a matter for the director alone. THE TECHNICAL DIRECTOR 115 in 1947, was that it needed a more dynamic individual in charge who would get the most out of its production capacity and launch an expansion programme to meet the demands of the market. After a period of hesitation, the workers' council (on which the younger generation were now in the majority) finally passed a dismissal motion despite the fact that the undertaking was doing well financially. The changeover took place without any trouble, and the former director was superseded by a young technician from inside the undertaking. The system of workers' management has also had rather far-reaching effects on the working conditions, and especially the remuneration, of directors. The workers' management bodies now settle these in the same way as they settle the remuneration of everybody else in the undertaking.1 Initially, this led to some levelling of remuneration.2 Although these cuts have been partly restored over the years, the rates of remuneration for directors are still anything but lavish. Even in the biggest undertakings, the highest rate is somewhere near 80,000 dinars a month, and the average in big and medium-sized concerns normally varies between 30,000 and 60,000. Within these limits, there are also quite marked differences as between one undertaking and another, and between scales in the same undertaking at different times.3 The bonus schemes, which were mainly designed for executives and were introduced in many undertakings from 1954 onwards, were generally abandoned in 1958, and now the directors usually share in the undertakings' earnings in the same way as the other members of the collective. Despite the lack of any accurate comparative data, there can be little doubt that workers' management in practice has led to a strong egalitarian attitude towards the remuneration of directors, and of executives in general. The same appears to be true of the other perquisites and emoluments such as per diem allowances, fares while travelling on business, entertainment, etc., which are regulated with growing strictness and often require the approval (sometimes beforehand) of the workers' management bodies. Thus directorship of an undertaking has lost some of the material and political attractions and prestige it once had. This has presumably helped technicians to rise to managerial posts, but as early as 1957 it was reported that some undertakings—especially in remote regions— 1 For an analysis of the procedures for settling remuneration systems and rates, see particularly Ch. X. 2 The case was quoted of a colliery director who was earning 20 per cent, less than underground miners. It was estimated that, in general, during the years 1952-54 the salaries of directors averaged 20,000 dinars a month, i.e. little more than double the average wage in industry. 8 For a specimen scale in a big undertaking see Table II, p. 130. 116 WORKERS' MANAGEMENT IN YUGOSLAVIA occasionally had difficulty in finding highly qualified technicians and had to offer them special inducements x to be able to compete with other undertakings or with research and advanced education institutions. The result is that many undertakings finance large-scale training schemes for students and their own staff, including in many cases the existing directors. From the standpoint of labour relations, another striking effect of workers' management has no doubt been the publicity now given to the remuneration of executives, including directors. Since the terms of their remuneration are laid down in the undertaking's rules, which are approved and from time to time revised by the elected bodies, full details are available to all the members of the collective. Another point which should be recalled is that the remuneration of executives does not diverge very sharply from the general average in each industry and undertaking. The system of self-management seems in many ways to have definitely weakened the director's position inside the enterprise, while at the same time emphasising his role as entrepreneur and executive head in relation to the outside world. To the extent that he is no longer required to carry out the orders or directives and to await the authorisations of organisations outside the undertaking, he cannot pass on responsibility when difficulties arise and is assured of material and moral rewards in the event of success. 1 A workers' council used to be able in exceptional cases to allow special conditions for a particular post in order to secure the services of an expert. Recent regulations, however, have tightened up the restrictions on this still further. Special inducements may now only be granted if allowed by a specific clause in the undertaking's rules, i.e. in accordance with the procedure for making amendments to the rules. PART III WORKERS' MANAGEMENT IN PRACTICE WORKERS' MANAGEMENT IN PRACTICE Under any economic system the management of an undertaking is a very complicated business calling for countless economic, technical and social decisions. All these decisions, whether they relate to production methods, commercial policy, the sharing out of the income or the fixing of working conditions, are closely inter-related. Under the Yugoslav system, this interdependence is perhaps even more striking. Workers' management is eliminating the common separation of responsibility for managing the production of an undertaking from responsibility for policy exercised by an individual owner, a private company or a public agency, as the case may be. As a result, many types of decisions are now taken at the operating level which elsewhere are often taken at a different level. The declared aim of workers' management is to enable the collective to settle on its own everything connected with the operation of the undertaking without any direct interference from outside. Every decision should therefore take the form of a choice between the advantages and drawbacks of a particular course of action in the light of the material and other interests of the collective. If one of the alternatives is abolished, there is no freedom of choice. For example, if the collective were deprived of the right to share the undertaking's income or an arbitrary ceiling were imposed, the workers might lose interest in efficiency and productivity and indeed in the system of workers' management itself. The full development of the system thus seems to imply that the discretion allowed to the collective must extend to every aspect of the running of an undertaking. This does not, however, preclude the issue of general regulations for the orderly running of undertakings, for setting minimum labour standards or removing certain matters, such as hours of work, from the undertaking's control, or financial and tax legislation to guide undertakings in the direction required by the economic plan while avoiding any direct interference by the authorities in particular cases. In discussing the tasks of the management bodies in a Yugoslav undertaking, Chapter VII deals with their general regulatory powers, Chapter VIII examines the economic aspect of workers' management, while Chapter IX deals with labour relations. Chapter X goes on to 120 WORKERS' MANAGEMENT IN YUGOSLAVIA examine the machinery for sharing out the undertaking's income and remunerating labour. The last two chapters (XI and XII) deal, first, with working conditions and welfare and, second, with the controls and penalties built into the system. CHAPTER VII REGULATORY POWERS AND GENERAL POLICY DECISIONS While most management decisions can be classified according to subject matter—i.e., whether they are connected, for example, with the undertaking's economic activity, labour relations or the disposal of its income—others relate to the operation or even the existence of the undertaking as a whole. Among such decisions, a distinction can be drawn between those of a rule-making and those of an executive nature. The former, which are the exclusive prerogative of the elected management bodies, lay down by-laws and rules to be followed in the undertaking with a view to reducing to a minimum arbitrary action by the organs of the undertaking in particular cases. These play a role within the undertaking similar to that of general legislation within the State. Under the Yugoslav system they are regarded as having priority over management decisions of an executive nature, and the trend is to widen their scope as far as possible. Decisions of the second type include those of the elected bodies on the report on the management of the undertaking over the past year and certain decisions on particular steps, such as the merger or division of the undertaking, the appointment of the director, and so forth. By-Laws and Rules of the Undertaking Under the existing legislation each Yugoslav undertaking must adopt general by-laws (statutes) and rules on labour relations and the system of remuneration. In addition, safety and health rules must be adopted at the request of the labour inspection service. The adoption of other rules is optional but is subject to certain conditions laid down by law. THE BY-LAWS No undertaking may either exist or lawfully operate until it has adopted its by-laws, a copy of which must be lodged with the economic court at the same time as the application for registration of the undertaking. 122 WORKERS' MANAGEMENT IN YUGOSLAVIA Under the ordinance of 1953 on the establishment of undertakings, which has often been amended and supplemented since then, the by-laws must cover at least the following points : (a) The name of the undertaking and the location of its head office.1 (b) The undertaking's activities : it must confine itself to those that are mentioned in its by-laws and were declared at the time of registration. They may cover a branch of productive activity, or several allied branches corresponding to the statutory classification of productive activities.2 (c) The composition, powers and operation of its workers' management bodies. The main points that must be settled by the by-laws in this connection were mentioned in Part II. (d) The rights, obligations and qualifications of the director and the other executives. The description of the qualifications is binding for the selection boards for such posts.3 (e) The internal organisation of the undertaking. The law does not impose any particular organisational structure, so that the workers' council must decide the technical and administrative organisation of the undertaking. (f) Labour relations (recruitment, dismissals, the filling of posts, discipline, etc.). Under the Labour Relations Act, 1957, such provisions may be (and normally are) separated from the by-laws of the undertaking and collected into a special set of labour relations rules.4 (g) The procedure for the adoption of the annual plan of the undertaking, its rules of remuneration and its final accounts for the financial year. (ft) Thefinancialmanagement of the undertaking and the utilisation of its assets. The role of the undertaking in the drafting of the by-laws varies according to whether the subject is covered by legislation which must be supplemented or adapted in the light of the requirements of the 1 An undertaking has the sole right to use the name registered with the economic court, and that name is protected by law. The supreme courts have already been called upon to give decisions in quite a number of cases relating to such names, and it would seem that Yugoslav undertakings now attach considerable importance to this distinguishing token of their individuality as business associations. 2 The conditions governing an extension in the field of activity of an undertaking are usually the same as those laid down for its establishment. On the other hand, if the undertaking gives up one of its stated objectives, the fact that the workers' council has taken such a decision is merely noted. 3 See above, Ch. VI. 4 See below, Ch. IX. REGULATORY POWERS AND GENERAL POLICY DECISIONS 123 undertaking or whether it is one on which there is no legislation and on which the undertaking is free to adopt whatever by-laws are thought appropriate. Provisions on other matters may be included, where appropriate to the branch of activity and business of the undertaking. Drafting and Adoption The procedure laid down for adopting the by-laws of the undertaking is relatively simple. The legislation provides that draft by-laws, which are generally prepared by the board of management or a select committee of the workers' council, are to be communicated to all members of the collective for their observations at least eight days before the workers' council meets. Once they have been adopted by the workers' council, the by-laws must be communicated to the people's committee of the commune, which checks to see that they contain nothing unlawful. If a plenary sitting of the people's committee holds that a provision is illegal, it refers the draft text back to the workers' council for the necessary amendments. If the council refuses, and also if it fails to adopt by-laws for the undertaking when the latter is first established, the people's committee may dissolve it and order new elections.1 The competence of the people's committee is limited to verifying the legality of the provisions, and not their desirability. Neither the people's committee nor any other organ of management in the undertaking is empowered to adopt the by-laws in the place of the workers' council.2 The reasons for the decisions reached by the people's committee must be given and an appeal may be lodged under administrative law. The same procedure generally applies to any amendment or revision of the by-laws. Practical Application A few comments can be made on the practical application of these provisions. Firstly, there seems to have been no known case in which a recalcitrant workers' council has had to be dissolved in this connection. 1 In undertakings which do not elect a workers' council the commune may in such a case remove the director from his post. 2 This principle applies to all the management functions of the workers' council, especially those connected with the adoption of rules. A transfer of functions to the detriment of the workers' council is always ruled out, unless the law provides otherwise in a particular case. 124 WORKERS' MANAGEMENT IN YUGOSLAVIA Secondly, since all undertakings draw up their own by-laws and since there is no model to which they are statutorily bound to conform, it is very difficult to carry out a close check on the legality of each particular provision.1 Thirdly, in recent years the autonomy of undertakings has continued to increase and the powers of their elected management bodies have been further extended. Both of these trends have developed at such a rate that it has been practically impossible to adapt the provisions of the by-laws of undertakings to those of the law. After the legislative reforms at the end of 1957 the revision of the by-laws of undertakings became one of the major tasks of the workers' management bodies in individual undertakings. In any case, the mandatory provisions of the law apply in all these cases irrespective of those contained in the by-laws of an undertaking and are automatically substituted for them if there is a conflict. As they deal with a variety of complex questions, the by-laws of an undertaking generally form quite a bulky document, often running into hundreds of sections.2 In a way, therefore, they really amount to a constitution for the undertaking. In large concerns they usually take the form of a printed document which is distributed to all the members of the collective. In their present form, however, the by-laws are rather rigid from the point of view of adjustment to changes affecting the structure of the undertaking or the methods of running it. The procedure for the amendment of these rules seems to have been little used in practice. In fact, when a change is necessary it is often preferred to settle the matter by a special decision of the workers' council or by adoption of a special set of rules. RULES ON LABOUR RELATIONS A set of rules (or the corresponding chapters of the general by-laws) must lay down the principles applying to labour relations and conditions of work (except remuneration). Under the Labour Relations Act of 1957, they must include provisions covering: (a) the method of recruiting *For example, in one of the federated republics visited by the mission in 1957 the Secretary for Labour had instructed all the labour inspectors to check closely on the legality of the provisions of the by-laws concerning labour discipline in all undertakings of the republic. It was thought that this survey, however limited its scope, would take a very long time to complete owing to the complex problems that arose in each particular case. 2 The authors of a recent work containing suggested draft by-laws for an undertaking put forward a text of 557 sections. Although the authors systematically refrained from reproducing statutory provisions—they sometimes refer to them in the footnotes—the suggested by-laws together with a brief commentary take up about 100 printed pages. Cf. D. ALACEVIC, P. KORD A, R. CISLER and V. TOPOL: Pramo- organizaciona pitanja poduzeca—/ (Legal and organisational problems of the undertaking) (Issue No. 4 of 1958 of Informatorov prirucnik zfl kadrove (Zagreb, Informator)). REGULATORY POWERS AND GENERAL POLICY DECISIONS 125 workers; (b) the allocation of workers to particular jobs; (c) annual and special holidays; (d) the workers' liability; (e) labour discipline, penalties and disciplinary procedure; (f) occupational safety and health; (g) special protection for women and young or disabled workers; (h) the termination of labour relations; (i) the right of appeal and grievance procedure; and (j) the competence of the various organs of the undertaking that are empowered to take decisions on labour relations.1 Under the Labour Relations Act of 1957 the draft rules prepared by the board of management in each undertaking must be brought to the notice of all the workers, giving them at least 30 days to submit their observations or suggestions. A new draft is then prepared by the board and submitted to the workers' council for adoption. Any of the workers' suggestions that have not been accepted by the board must also be communicated to the council. After adoption by the workers' council, the rules must be submitted for the endorsement of two authorities outside the undertaking—a commission specially set up by the producers' council of the commune and the local trade union committee. If no objections are forthcoming, the rules automatically become binding within a period of 30 or 60 days. If, however, endorsement is refused, and unless the difference of opinion can be resolved by direct negotiation, the matters at issue are submitted to an arbitration board attached to the district people's committee.2 The board consists of a chairman appointed by the two chambers of the district people's committee at a joint sitting, two representatives of the appropriate economic chamber and two representatives of the union concerned. Its awards are binding and form an integral part of the rules. The board acts as a workers' management body at a higher level, over whose awards the public authorities have no power of review.3 1 The rules that apply in relation to these subjects are to a large extent determined by legislation; for an analysis of the main statutory provisions, see Chs. IX and XI below. 2 This procedure also applies to any change or amendment which the workers' management bodies wish to introduce in the labour relations rules. The Act also provides that proposals to amend or supplement the rules may be submitted (a) by one-third of the whole collective; (b) by the trade union unit within the undertaking; or (c) by the producers' council of the commune. The workers' council must consider any amendments put forward in this way and take a decision within not more than two months. 3 By a decision dated 3 October 1958, the federal Supreme Court declared that appeals against the awards of such arbitration boards were irreceivable under the rules of administrative procedure. In the preamble of its decision the Court gave the following arguments, inter alia: " As members of the arbitration board the representatives of the union and those of the chamber cannot be deemed to be persons holding public office, for they have no official or administrative connection [with a government agency] nor are they under the supervision of any government agency. . . . The pro(footnote continued overleaf) 126 WORKERS' MANAGEMENT IN YUGOSLAVIA While providing that the labour relations rules must contain no unlawful provisions, the Labour Relations Act does not specify control by any public body; it merely states that provisions in the rules that are contrary to those of the Act automatically become null and void and that the provisions of the Act itself then apply. Failure to adopt labour relations rules is regarded as constituting an economic offence for which the undertaking or the individual responsible may be sentenced to a fine fixed by law, but no administrative or legal sanction is laid down for the workers' management bodies. Since the existing system whereby by-laws on labour relations and conditions of work are adopted within the undertaking was introduced only in 1957, and since the first sets of by-laws did not come into force until the beginning of 1959, it is not yet possible to evaluate any trends that may have emerged when the new by-laws were drawn up and the problems that arose in consequence. At present such by-laws are to be found in most of the larger undertakings. RULES ON REMUNERATION "Tariff Rules" It is compulsory for each undertaking to have a set of rules laying down the criteria to be applied for determining the remuneration (" personal incomes ") of the workers. These rules are known in Yugoslavia as " tariff rules ". Any payment for the remuneration of labour must be based on them and comply with their provisions. The contents of these rules and the procedure to be followed in adopting them are at present governed by the provisions of the Labour Relations Act of 1957, which was the outcome offiveyears of experiment in the course of which various systems of remuneration were applied. Until 1952 wages were fixed for all occupations and branches of the economy through administrative channels, by agencies that directed the economy under the planning system. From 1952 to 1957 Yugoslav undertakings themselves determined the rates of remuneration at the beginning of each year. However, they were required to abide by certain fundamental proportions (particularly with regard to the average rates for manual and non-manual workers in the four main occupational ceedings of the commission itself are not under the supervision of any state agency." The Court drew a clear distinction between an arbitration board and a body such as the employment exchange committee, which, although its membership is similar, is " called upon to apply the laws and administer public funds under the supervision of an authority (in this case, the labour and public health council of the people's committee of the commune) ". Cf. Zbirka sudskih odluka (Belgrade, Sluzbeni list FNRJ), 1958, Vol. Ill, Decision No. 487. REGULATORY POWERS AND GENERAL POLICY DECISIONS 127 categories—unskilled, semi-skilled, skilled and highly skilled workers) and to follow various other principles of a more or less restrictive character. The adoption and annual revision of scales of remuneration nevertheless constituted one of the main features of workers' management and was of vital interest to each collective. The concept of a " wage " has completely disappeared from the Act of 1957, which replaced it by that of a worker's personal income, in the sense of remuneration depending on the net income of the undertaking1, and which is determined by the collective will of the workers in each undertaking. In this process the rules on rates of remuneration have an essential part to play.2 Contents. Each set of rules contains a number of sections or chapters which define, inter alia, the system of remuneration applying in the undertaking, the method of calculating and paying personal income and advances of pay, the allowances payable in lieu of remuneration if the undertaking ceases to operate, the various fringe benefits (allowances for absence from home, daily travel or work done away from the normal place of work) and the remuneration of apprentices. They must also define the competence of the various organs of the undertaking that are empowered to take decisions affecting the workers' remuneration (for example, the right of workers' councils at department level to adopt their own rules subject to supervision by the central workers' council). The most important section of the rules, however, is that containing the schedule of jobs and corresponding rates. This must list all the jobs (or series of identical jobs) in the undertaking (or in each separate workshop or department), and indicate the occupation, grade and number3 of workers doing each job, the amount of the guaranteed minimum remuneration4 and the rate that applies for the distribution of the income of the undertaking. Certain schedules also show the relative importance of the main factors taken into account when deter1 A system of remuneration of labour under which the amount paid varied according to the earnings of the undertaking had been the main characteristic of workers' management since 1952, but the right of the undertaking to fix rates of remuneration (that is to say each worker's share in its earnings) remained rather limited until the end of 1957. 2 However, the general system for the remuneration of labour can be studied only in the context of the machinery for the distribution of the income of the undertaking (see Ch. X below). 8 When several workers do the same job at the same place of work and under the same conditions. 4 In order to simplify the terminology and to avoid any confusion, the term " remuneration " is used for this concept although Yugoslav legislation refers to " personal incomes ". 128 WORKERS' MANAGEMENT I N YUGOSLAVIA mining rates (for example, skill, responsibility, arduous or unhealthy work, etc.). Table II gives an example of the layout. The various headings in the table call for the following remarks: (a) The list of occupations and jobs (columns 4 and 5) gives the occupational structure of the collective. Both the workers' management bodies and the executives have to use these job titles for existing jobs. New jobs may only be created by amending the rules. The number of holders of existing jobs (column 6) may, however, be increased simply by decision of the workers' council. (b) The entries relating to grade of skill (column 2) correspond to the grading laid down by the legislation in force with regard to guaranteed minimum remuneration; in principle the undertaking is free to classify each job in the most suitable grade or introduce other supplementary grading systems for internal purposes.1 (c) The amount of the guaranteed minimum remuneration (column 9) is to be fixed by a general law.2 The guaranteed minimum rates of remuneration now in force have been fixed on the basis of the standard rates applied by the undertaking at the end of 1957. The relative levels of the minimum rates of remuneration now applying in various undertakings for particular jobs or grades, and in different industries, reflect fairly closely the structure of rates of remuneration which grew up between 1954 and 1957 under the influence of the workers' management system. However, in order to reduce the variations in the rates paid in different undertakings in 1957 for jobs in the same grade, the Federal Assembly decided on 26 December 1958 to fix new guaranteed minimum rates of remuneration for the various branches of the economy and the four main grades of manual and non-manual workers.3 In most undertakings this measure led to an increase in the guaranteed minimum remuneration. From the worker's point of view, the amount of this guaranteed minimum becomes important only if the undertaking does not earn enough to pay a remuneration at least equal to the minimum, in which case the balance has to be found by the commune unless the under1 For details see below, Ch. IX. No final decision has yet been taken on the contents of this Bill. It has, however, been decided that the federal Act will lay down the amount of the guaranteed minimum remuneration for workers in each industry or branch of the economy by fixing either a single rate or differential rates for the four grades of skill. 3 The guaranteed minimum rates of net remuneration fixed by the Federal Assembly varied according to the grade of skill from 9,420 to 17,825 dinars for manual workers or 8,814 to 25,334 dinars for non-manual workers in coal mines (maximum) to 5,535 to 11,202 dinars for manual workers or 6,300 to 15,145 dinars for non-manual workers in municipal services (minimum). It should be pointed out that these rates correspond to the average guaranteed remuneration for all workers in each undertaking and grade, whereas the amounts payable for individual jobs may be higher or lower. 2 REGULATORY POWERS AND GENERAL POLICY DECISIONS 129 taking has other resources to fall back on. 1 On the other hand, the guaranteed minimum remuneration is of fundamental importance since it serves as the basis for the assessment of income tax payable by the undertaking, which influences the amounts available for remuneration and other purposes.2 (d) Finally, the main purpose of the remuneration table is to fix standard rates (columns 7 and 8) for each job. By law the undertaking is entirely free to fix these rates as it thinks fit. It is not compelled to abide by the statutory proportions nor by those laid down in its rules with regard to the guaranteed minimum remuneration. These rates do not correspond to a fixed amount payable by the undertaking for each unit of time worked, but determine only the proportions in which its net income is to be shared out. 3 However, the social importance of the differences between the minimum and maximum rates for the various jobs and the differences between the various grades of worker within an undertaking is such that the collectives have not been left entirely free in this respect. Agreements for particular branches of the economy have therefore been concluded under the Labour Relations Act of 1957 between the various unions and the corresponding associations of undertakings. These agreements, the first of which came into force early in 1959, generally set a maximum limit to the difference between the lowest and the highest rate which undertakings in a particular branch of the economy or industry may fix in their rules. The ratios vary according to the size of the undertaking, from about 1 : 4 to 1 : 8 (for the largest undertakings).4 1 In practice the bank automatically provides the necessary sums and debits them to the commune until the finances of the undertaking have been restored or it is wound up. 2 See below, Ch. X. 3 An example may give a better idea of how this system works. Let it be assumed that an undertaking with 2,000 workers has earned a net income of 1,000 million dinars over the year and intends to distribute that amount. Basically, it is of little importance whether the average hourly or monthly rate laid down in its rules is 10, 20 or 100 dinars (or thousands of dinars a month), since the average annual income for each worker in the undertaking will be 500,000 in any case. On the other hand, a worker whose hourly rate is fixed at 150 will normally be entitled to three times as much as a worker on a job for which the hourly rate has been fixed at 50 (in this case their respective shares would be 750,000 and 250,000). If the undertaking managed to double the net income available for distribution the workers' earnings would increase in the same proportion, and vice versa. In practice these proportions would, of course, be altered by progressive income tax. Moreover, the initial assumption does not allow for sums allocated to reserves and investments. 4 So that where the rules fix the monthly rate for unskilled manual or non-manual workers at the bottom of their grade at 8,000 dinars, for example, the rate for the managing director (or any other worker in the undertaking) may be no higher than 32,000 or 64,000 dinars, as the case may be. In this instance the undertaking may increase the maximum rate only if the lowest is adjusted accordingly. TABLE II. EXTRACTS FROM THE REMUNERATION SCHEDULE OF A L Ref. No.' Years of exGrade • perience required Occupation Description of the job o I. Metallurgical D 1/1 le Metallurgical engineer 2/1 4/3 6/5 13/12 17/16 21/20 21 a/20 a le Io Ilo Ilo ni o IV o IV o 382/1 383/2 384/3 385/4 388/7 389/8 Dir. Dir. Dir. Ie lo Ile 15 10 10 8 10 6 Ile Ile 5 4 Metallurgical engineer or engineering technician . '.I Furnaceman or founder of non-ferrous metal . . Founder of non-ferrous metals Semi-skilled caster Unskilled worker Unskilled worker Chief of the metallurgical departme (a) Foundry Section Chief of the foundry section i Senior foreman—directs the work 1 Foreman caster—directs the wor Charging and running off non-ferro Preparing sand, stripping and clean Transport of castings Collection of scrap metal VI. Technical D 400/19 408/27 420/39 Typist Technical director Chief of the production section Chief of the technical production p Chief of the technological service Induction and briefing of new work Technological planning, specificatio for the work of the metallurgical Production planning and control fo Co-ordination of production prog utilisation of materials Typist in the technical directorate Economist Economist or secondary commercial education , Economist or secondary commercial education . Accountant , Director of the Finance Division Chief of the financial accounts secti Chief of the production accounting Accountant (departments) Mechanical or electrical engineer Mechanical or electrical engineer Mechanical or electrical engineer Mechanical or electrical engineer Fitter Metallurgical or engineering technician . . . . Metallurgical or engineering technician . . . . Full secondary education (Matriculation) . . . VIII, Finance and Acc 472/1 473/2 473/3 489/18 Dir. I e/II e I e/n e He 10 6710 5/10 4 TABLE II (cont.) Ref. No. 1 Years of exGrade ' perience required 495/24 501/30 He Hie 3 1 502/1 506/5 507/1 le He le le le Ile Ule IV e IV e Ilio IV o Occupation Description of the job or Accountant Administrative officer Accountant (remuneration) Assistant cashier 15 3 10 Mechanical or electrical engineer . . . . Typist Electrical engineer or economist or lawyer Chief of the production development Typist for general duties, production Director of the undertaking 6 10 2 4 1 Lawyer Lawyer with state diploma Shorthand writer Administrative officer Auxiliary worker Auxiliary worker Assistant cook (female) Unskilled worker Secretary of the undertaking Legal adviser Clerk for workers* management bod Statistician and administrator (consu Porter Assistant porter Preparation of hot meals Indoor cleaning, office buildings IX. Production Develop X. Generai Administra 508/1 509/2 513/6 525/18 532/25 532/27 543/36 548/41 — — — 1 Only a few jobs—the most typical—have been listed in this table. They include the highest and lowest paid ones. This acc The original table lists 548 jobs with a total of 1,474 workers distributed among ten main departments or divisions, viz. three prod cables and manufacture of steel cables), the maintenance service, the technical institute, the technical directorate, the trading divis bureau, and the general administration division. It will be noted that in2 this particular case there is no heading for the office of direc taking is simply classified under the production development bureau. The roman figures correspond to the four grades of skill—I, refers to non-manual workers, the letter o to manual workers and Dir. to executives. a The figures in these two columns give the down hourly, weekly or monthly rates. The difference between the gross and the net rates corresponds to the deductions at sou personal income tax and other contributions. During the period covered by this study the official exchange rate of the dinar wa reform, the rate changed in April 1961 to 750 dinars to one U.S. dollar. However, these figures might be misleading in respect of the according to the type of product or service; with the exception of some products or services (automobiles, television, etc.), purch seem to indicate. 132 WORKERS' MANAGEMENT I N YUGOSLAVIA The agreements in force also include index numbers corresponding to the difference between the average rates payable for workers in the four main grades of skill. These index numbers set a standard which undertakings should try to attain. The agreement for the timber industry, for example, gives the following index numbers for workers in that industry, "for guidance purposes": 100 (unskilled), 130 (semi-skilled), 155 (skilled), and 200 (highly skilled). Even if the undertaking agrees to apply this scale, it naturally remains free to fix the rates for particular jobs falling into a particular grade of skill as it thinks best. It should also be added that for certain jobs the undertaking may fix not a single rate but maximum and minimum rates, in which case the rules must lay down the criteria to be followed in calculating rates for individual workers doing the jobs concerned (for example, seniority or the winning of certificates of proficiency corresponding to the qualifications required, merit rating, etc.). Once they have come into force, the rates laid down in the rules are binding on the undertaking in the sense that it may not reach an agreement with the holder of the job to pay a rate different from that laid down in the rules, or pay any incentive or other bonuses unless the rules provide for these and specify the principles to be applied in granting a bonus of this kind. For the worker, the.remuneration due to him under the rules constitutes a fundamental right which cannot be denied to him by any organ of the undertaking. Adoption. With regard to the procedure to be followed in adopting rules concerning rates of remuneration within the undertaking, the Act of 1957 merely stated that this was a function of the workers' council.1 The Act also stated that in large undertakings the central workers' council might decide that separate sets of rules should be drawn up under its supervision by the workers' management bodies at the department or workshop level. However, an ordinance issued by the Federal Executive Council on 31 January 1959 2 introduced a rather complicated procedure which undertakings have to follow when adopting their rules on remuneration, and also laid down certain basic principles to be taken into account in that connection. An attempt is made here to describe the main features of this ordinance.3 1 If the workers' council is dissolved, the function cannot be transferred to an official receiver. 2 Sluzbeni list, No. 6, 11 Feb. 1959, Text No. 89. The full text of the ordinance, including the preamble, was published in the daily press (cf. Borba, 13 Feb. 1959), and was commented on at length in the trade union and technical press. 3 This analysis also takes into account statutory regulations issued by the Federal Secretariat of Labour (Sluzbeni list, No. 11, 18 Mar. 1959, Text No. 190). REGULATORY POWERS AND GENERAL POLICY DECISIONS 133 The adoption of the rules is a process which falls into two main stages—preliminary action and the adoption procedure proper. The preliminary action is taken by the board of management, which must first compile, on the director's initiative, a dossier conforming to the requirements of the ordinance on the undertaking's financial position, its system of remuneration and the practical effects over the past three years, as well as estimates for the current year.1 On that basis the board of management prepares draft rules which it submits with the dossier to the workers' council for preliminary examination. The council may then return the draft to the board for revision in accordance with its directions. When the council has decided to give a final reading to the draft, the dossier, the draft and an account of the proceedings in the council are communicated to the collective for its observations 2 ; the council may at the same time submit the draft to a specially formed committee. (In practice such committees seem to exist in all undertakings or departments of any size.) The purpose of these preliminary proceedings is to associate all members of the collective, or at any rate each group of workers, not only with the choice of methods of remuneration but above all with a sort of self-evaluation of jobs at the workplace.3 1 The ordinance issued by the Federal Executive Council lists ten types of information which must be included in the dossier. This information is generally given in schedules or tables similar to the optional models given in the regulations. The schedules cover in particular the distribution of the undertaking's net income, the state of its finances and its commitments, the amount actually paid in remuneration, the average, maximum and minimum rates according to grade, etc. It should be noted that the preparation of a similar, though less complicated, dossier had for several years already been a prerequisite for the adoption of rules on remuneration. 2 In most of the undertakings that were visited by the mission the observations submitted to the workers' council by members of the collective were very numerous and sometimes ran into hundreds. In one case, the factory bulletin carried a detailed analysis of about 200 proposals and the action taken on them. (Cf. also Komunist (Belgrade), 2 Oct. 1958, p. 3.) 3 The leader writer of one of the main Yugoslav economic weeklies has described the magnitude and value to the collectives and to the national economy of the effort involved in this aspect of " self-management " : " At present in this country millions of people are working at least one hour of overtime every day. They are toiling over the drafting of rules concerning rates of remuneration, over the shaping of a remuneration policy and system, the adoption of which is one of the most important functions of workers' management. It is not only members of workers' councils and remuneration committees who take part in this work, which is often much more arduous than their daily eight-hour stint. Moreover, their task does not consist in attending meetings and applauding leaders who try to explain why a particular decision should be taken; their task consists in finding the answer to the question which those same millions ask themselves every day, namely how to secure and distribute the highest possible income. "These people are not just working for themselves; they are not formulating economic policy for their undertaking alone. In fixing rates of remuneration they also very largely determine the amount available for consumption in the country as a whole, and by deciding what differences there should be between the rates for different jobs they determine the differentials between the personal incomes of the various categories (footnote continued overleaf) 10 134 WORKERS' MANAGEMENT IN YUGOSLAVIA When discussing these rules the workers' council is required to consider a whole series of points listed in the order of the Federal Executive Council with the aim of promoting efficient management, i.e. realistic decisions based on what the undertaking can afford. For example, the workers' council must determine the effects of the proposed distribution on prices, the amounts to be assigned to the different funds of the undertaking, the relationship between increases of remuneration and higher productivity, possible reductions in production costs, and other elements of efficiency. In general, any disproportionate increase or one achieved at the expense of reinvestment and growth of profits, etc., is regarded as incompatible with sound management unless it is needed to correct defects in the existing system, in which case the workers' council must give reasons for its decision. When the workers' council has adopted the rules on rates of remuneration it must communicate them for observations to the people's committee of the commune and to the local trade union committee. The text must be accompanied by the whole dossier prepared at the preliminary stage as well as by a copy of the minutes of the sittings of the council at which they were discussed. (These minutes must show not only what decisions were taken but also any divergent minority views whose inclusion in the minutes has been requested.) At the commune level the dossier is first examined by a committee set up for the purpose by the producers' council (committee on remuneration rates). 1 If the committee considers that the rules have not been drafted in accordance with the prescribed procedure or that their application might lead the undertaking into serious difficulties, it must report to the full producers' council, which may then " recommend " to the undertaking that certain changes be made."2 As regards the union, the local committee or, according to the circumstances, a higher body appointed by the Central Council of Trade Unions may make similar recommendations to the undertaking. The commune and the union have a period of 30 days—which may be extended to 60—to put forward their recommendations to the undertaking. If they have made no recommendations by the end of that period, the rules come into force automatically. On the other hand, of workers throughout Yugoslavia. In addition, the amount of non-distributed earnings within an undertaking is directly related to the general level of investment." Cf. Ekonomska politika (Belgrade), No. 362, 7 Mar. 1959, p. 237. 1 If the draft rules raise issues of general concern, the chairman of the people's committee may submit them to the two chambers of the people's committee of the commune. 2 This procedure is directly connected with the right of producers' councils of the communes to make " recommendations " concerning the distribution of the income of undertakings (see below, Ch. X). REGULATORY POWERS AND GENERAL POLICY DECISIONS 135 when certain recommendations have been made and the workers' council does not consider them acceptable, the rules cannot come into force as long as the divergences of opinion have not been eliminated either by direct agreement or by an arbitration award handed down by a board which is set up for the purpose under the district people's committee. (This board has the same status, composition and powers as the arbitration board that gives decisions on labour relations rules.1) Rules for Special Schemes If the rules on rates of remuneration provide for payments by results, the undertaking must adopt a special set of rules to lay down the procedure for fixing, checking and revising output norms and for working out the remuneration due on the basis of output. The law forbids the alteration of output norms before at least six months have gone by unless there has been an error in calculation or a technological change has intervened. Provisions of another kind, which until 1957 had to be adopted by each undertaking, were bonus rules. There was a general suspension of bonus rules in the first half of 1958, and the adoption of new rules is now purely optional. In these rules undertakings had to define how they intended to distribute a specified part of their surplus income among workers who had made a special contribution to the success of the concern through their personal efforts or by reason of the duties they performed. An undertaking may also superimpose a special remuneration scheme on the general system of remuneration rates.2 Various methods have been tried out over the last few years by a number of undertakings. Since 1958 interest in various trade union and industrial circles has been concentrated on so-called " complex " remuneration schemes based on production cost or units produced.3 Special rules of this kind are 1 See above, p. 125. According to information supplied by the Federal Secretariat of Labour, relatively more use was made of such arbitration boards in 1959 than in earlier years, when the procedure was regarded as being quite exceptional. The statistics still list six districts, including three that are among the most highly industrialised in the country, in which there was no recourse to arbitration in 1959, and the regional distribution of these appeals is rather uneven—Slovenia, 16; Serbia, 355; Bosnia-Herzegovina, 31; Macedonia, 112; Montenegro, 7. In one district of Northern Serbia that was visited by the mission 19 appeals had been reported in November 1959 for 120 or so undertakings in existence; each appeal usually related to several provisions of the rules. It was estimated that in this district about 60 per cent, of the arbitration awards were favourable to the undertakings (i.e., the workers' councils). 2 The provisions in the general system concerning job titles, minimum guaranteed remuneration and so forth naturally remain in force, but the normal distribution based on specified rates may be suspended or altered under a special scheme adopted by the undertaking. For details see below, Ch. X. 3 See Ch. X. 136 WORKERS' MANAGEMENT IN YUGOSLAVIA generally designed to give the collective in each department or workshop (or each work unit) an economic interest in the various factors that enter into production costs, total production, etc., and thus to provide conditions for more direct participation in the management of the workshop or the work unit. Whatever their nature or their scope, special rules of this kind can be adopted only by the workers' council.1 The law also provides that before they are adopted the rules in question must be brought to the knowledge of the collective concerned. On the other hand it lays down no procedure for prior approval or confirmation by authorities or organisations outside the undertaking. If they consider that there are abuses in the practical application of these rules the commune and its producers' council may use the " recommendation " procedure described above. Practical Application The first rules concerning labour remuneration that were adopted under the new legislation did not come into force until the first half of 1959.2 The information available to the mission was therefore rather fragmentary, though certainfindingsbased on experience in earlier years remained valid in spite of the profound changes introduced in this field under the Act of December 1957.3 From the beginning, the main function of the remuneration rules was to determine the structure for the distribution of income within each undertaking. In fact it seems established that Yugoslav undertakings made wide use of their powers of self-determination in this respect. The standards which they had to observe until 1958, particularly with regard to average rates of remuneration and the various procedures for securing preliminary approval, had no doubt acted as quite a strong brake on their individual initiative, but they were by no means an insuperable barrier, and the remuneration " ladder " seems to have been entirely rebuilt in all cases as far back as 1953. As a result of subsequent revisions of their rules by undertakings at the beginning of each year, in 1957 there were very considerable differences between undertakings with regard to 1 The legislation in force until the end of 1957 provided that bonus rules were to be adopted merely by the board of management on the proposal of the director. 2 In 1958 Yugoslav undertakings were covered by a transitional scheme pending the issue of statutory regulations under the Labour Relations Act of 12 December 1957. 8 It will be remembered that the fundamental change that had a direct effect on the drafting of remuneration schemes was the abandonment of compulsory average rates for particular categories of workers, which undertakings had been obliged to apply until 1958. REGULATORY POWERS AND GENERAL POLICY DECISIONS 137 the rates payable and the classification of jobs. For example, in a group of 35 brown-coal mines the average rates applying in 1957 for highly skilled manual workers ranged from 13,000 to 20,900 dinars, according to the mine, while the proportion of workers classified in that category ranged from 0.33 to 34.7 per cent.; for semi-skilled workers the average rates in the same 35 mines ranged from 8,400 to 12,800 dinars, while the proportion of workers in that category ranged from 13 to 49.5 per cent. Moreover, if a list of the 35 mines in question classified according to the rates payable to highly skilled workers is compared with the corresponding classification according to the rates payable to semi-skilled workers, it is immediately apparent that the two lists do not tally. For example, the mine which paid the lowest rates for highly skilled workers comes third as regards the average rates for semi-skilled workers.1 Similar developments, which caused surprise even in the best-informed circles, were also noted in other industries in this branch of the economy, and it seems clear that even before 1958 undertakings and workers' management bodies in Yugoslavia in fact had great latitude in adapting the structure of remuneration to their particular situation. By fixing rates of remuneration not for tasks defined in an abstract manner for a whole industry or the whole country but for each particular job, it has also been possible to take account of the relative value of work done in particular conditions, assessed with full, detailed knowledge in accordance with the particular standards of each working or local community. This system which—viewed from the national level —involves a " subjective " evaluation of each job by the collective concerned has, from the point of view of the individual, still the advantage of objectivity, since rates of remuneration are fixed for each post irrespective of who is doing the job at the time. Each worker's terms of remuneration are automatically determined by the mere fact that he is assigned to a particular job. The fact that legislation no longer sets a precise limit on the increase in rates of remuneration means that the internal regulations of undertakings play a much more important role in this regard than formerly. Through the remuneration rules adopted in 1959, undertakings in fact largely determined the policy they would follow in distributing their net incomes. The proceedings leading up to the adoption of the rules compelled them to assess carefully all receipts and expenditure for the current financial year, to determine the proportion of their funds which they 1 Cf. Radar (Belgrade), 14 Mar. to 12 May 1958. In these issues the weekly journal published by the miners' union gave the full results of an analysis of the remuneration structure in the main coal mines, iron and steel works, non-ferrous metal works and certain allied trades. 138 WORKERS' MANAGEMENT IN YUGOSLAVIA would pay to reserve, and to follow closely, the estimated rise in net income when increasing rates of remuneration. It seems that in general the purpose of the preliminary proceedings has been achieved in this respect, and it is reported that, after they had carried out a more careful analysis of the situation on the basis of the dossier prepared for the purpose, many undertakings which had already reached a decision went back on their earlier intention to make excessive increases in rates of remuneration. 1 A notable feature of the rules on remuneration rates that were adopted in 1959 lay in the tendency of the great majority of undertakings to distribute most of the estimated income directly without budgeting for a surplus to be distributed at the end of each accounting period and at the end of the year. It was also noted that in 1959 increases in rates of remuneration were often favourable to the higher grades of manual and non-manual workers, partly because many undertakings interpreted the maximum differences laid down in industry agreements as a sort of standard to which they should conform.2 As regards special schemes, in 1959 the system of payment by results (output norms) was reportedly losing ground almost everywhere outside Slovenia. In many undertakings the funds previously set aside for such payments were wholly or partly diverted to cover a greater increase in hourly or monthly rates. Special bonus schemes had practically ceased to exist. On the other hand, since 1959 a growing number of undertakings have introduced special rules concerning remuneration schemes based on production costs and other schemes to give the workers collectively an interest in the results achieved at the level of the workshop or the work unit. One of the aims of this is to bring decision-taking and the process of distribution of earnings closer to the workers. More recently, this became a nation-wide trend and it is now a main topic of discussion. 1 According to preliminary estimates for the first half of 1959, however, the increase in remuneration due to higher scales did not exceed 20 per cent, as compared with the same period in the previous year. The total volume of workers' incomes distributed by undertakings in fact rose by 24 per cent., but part of this increase was due to the rise of 6 or 7 per cent, in the number of workers (cf. Ekonomska politika, No. 384, 1 Aug. 1959). According to a survey by the Central Council of Trade Unions covering 55 per cent, of undertakings, the increase in the rates of remuneration in 1959 averaged 15.5 per cent, (average for all branches of the economy), with considerable variations in the various branches—7 per cent, in printing (minimum), 17.3 per cent, in the food industry, 20.2 per cent, in the building materials industry, etc. (cf. Privredni pregled (Belgrade), 18 Oct. 1959). 2 In fact both psychological pressure by the authorities, the unions, etc., and statutory provisions had for years been directed towards countering what was considered to be an excessively egalitarian trend with regard to remuneration, and towards guiding the policy of undertakings in the direction of an increase in the rates for senior staff, especially the leading executives. REGULATORY POWERS AND GENERAL POLICY DECISIONS 139 From many points of view it seems to mark a new departure in the growth of the workers' management system.1 The body of rules adopted within the undertaking with regard to remuneration represents for the collective and its management bodies an essential instrument not only for controlling the distribution of the results of production but also for the organisation of work and personal relations within the undertaking. The rules are posted up in the workshops and distributed in mimeographed or printed form; they make it possible for all members of the collective to see where they stand in the undertaking, to compare their position with that of all others, from the rank-and-file up to the director, and to express their views on the subject. The drafting of remuneration rules is thus tending to become one of the principal tasks of workers' management in each undertaking, like the approval of the accounts and the final distribution of income. In 1958 and 1959 the amount of preparatory work was unprecedented and the dossiers compiled for the purpose generally enabled members of the collectives and workers' management bodies to play a more active part in the process than they had in the past. The great diversity of the remuneration schemes and of the levels and spread of remuneration applied by different undertakings seems to reflect the great diversity of interests at work in the process of elaboration. On the other hand, it appears that neither in 1959 nor in earlier years were these regulations always drafted in compliance with the letter and spirit of the system. In 1959, in particular, attempts were made by a number of communes and trade unions to fix standard differentials and even to impose particular rates of remuneration for certain key jobs in all undertakings falling within their field. It is alleged that in another case a large industrial municipality required each undertaking to reserve 60 per cent, of its surplus income for the housing construction fund of the commune. According to a resolution of the Central Council of Trade Unions dated 27 May 1959, cases are also said to have arisen in which draft regulations on remuneration were not submitted to the collectives for discussion but were kept in the office in order to gain time and to ensure that they would be adopted without extensive discussion and without genuine participation by the whole personnel.2 The resolution therefore recommended that the schemes should be submitted to the collectives for reconsideration, even though at the time most of them had already come into force. 1 For further details see below, Ch. X. "Borba, 29 May 1959, p. 5. 140 WORKERS' MANAGEMENT IN YUGOSLAVIA OTHER RULES ADOPTED WITHIN THE UNDERTAKING In addition to the rules already mentioned, each undertaking may introduce others according to its own particular needs or conditions. In all cases the final decision lies with the workers' council. Among the types that are most frequently found are rules governing the procedure to be followed by the workers' council, the board of management and their committees.1 Detailed rules relating to paid holidays and other authorised absences have been widely adopted of late. The principles for the grant of annual holidays must be stated in the rules on labour relations, but the existing legislation fixes only the minimum duration of holidays with pay (12 to 30 working days according to length of service) and a maximum of 30 working days. Each workers' council is allowed to determine the basic holiday entitlement for each job in the light of the conditions and rate of work, etc.2 A need therefore arose for a general table of holidays for all j'obs in the undertaking. For practical reasons such a table had to be kept apart from the rules on labour relations. The rules governing paid holidays may also lay down the conditions for the grant of paid or unpaid leave for family reasons (marriage, death of a near relation, etc.), periods of vocational or technical training, etc. An undertaking may be required by the labour inspection service to adopt safety and health rules; these are said to have been introduced already in about 2,800 undertakings. A variety of other rules had been adopted by the workers' councils in some of the undertakings visited by the mission—rules concerning workers' housing, business travel or the use of the undertaking's cars, representation allowances, commercial travellers, etc. General Policy Decisions THE UNDERTAKING'S ANNUAL PLAN The undertaking's annual economic plan is on quite a different footing from the internal regulations already described, since it is not regarded as having a binding legal character. Although certain enactments sometimes refer to the plan, it would seem that none of them expressly 1 These rules or standing orders may play an important part by widely publicising the various rules that apply, for example, to the right of appeal, the right to organise a referendum, the autonomy of workers' councils at department level, etc., especially when they are available, as was the case in several undertakings visited by the mission, in the form of mimeographed or printed leaflets. 2 Entitlement to a longer holiday may also be secured on the basis of certain general principles, for example for pregnant women or women with small children, workers who are suffering from a chronic disease or handicap, etc. REGULATORY POWERS AND GENERAL POLICY DECISIONS 141 compel an undertaking to draw up regularly a plan for its economic activities in the coming year. However, such an obligation is clearly part of the Yugoslav economic system, and forms one of the duties of good management. 1 These plans in fact exist everywhere and are an important instrument of management, particularly in large industrial and commercial undertakings. There is no direct connection between them and the economic plans prepared by the federal State, the federated republics, the districts and the communes. The undertaking need no longer attain particular targets fixed in the state plans for the utilisation of productive capacity, the volume and range of production, prices and delivery dates, the compulsory supply of products to particular buyers, etc. On all these points it reaches its own decision in the light of the relevant economic and social factors. The undertaking is therefore quite free to direct its economic activity towards obtaining the maximum return for labour, subject to the sole condition that it must not engage in prohibited practices.2 In reaching its decisions, however, an undertaking will have to take account, in its own interests, of the various economic and financial instruments adopted in the state plan or by special laws and regulations—the rate of depreciation, interest on capital, interest and redemption on investment loans, credit facilities, etc. Apart from their role in the field of public finance, the essential purpose of these instruments is to link the interests of individual enterprises to the general aims of the federal plan without intervention by the authorities in the management of the undertakings. 3 The plan of an undertaking is prepared in the light of all this information, in accordance with the procedure laid down in its by-laws. The workers' council alone is empowered to take the final decision on the plan. The legislation in force does not provide for any formalities, but it is the usual practice for the plan to be communicated to the local authority. 4 1 The financial and production plan is one of the items in the dossier which the undertaking must attach to its draft rules on remuneration when it communicates them to the commune. 2 In particular, unlawful monopolistic activities—speculation, cutbacks in production in order to raise prices, boycotts, etc. (see below, Ch. VIII). 3 The targets of the state economic plan are also useful for those who are drafting the plans of undertakings: they can be regarded as forecasts of the rate of development of the economy as a whole or of a particular branch of the economy; above all, they provide information on the total volume of production which is considered to be desirable and for which the plan makes financing and marketing arrangements. 4 Since all an undertaking's records are open to inspection by the authorities, no special obligation is involved. 142 WORKERS' MANAGEMENT IN YUGOSLAVIA In fact, the preparation of the annual plan is a singularly complex process, especially in industrial undertakings. All the technical and administrative departments must co-operate closely to compile the preliminary estimates. A first draft, prepared by the board of management, is generally submitted for consideration to specialised committees of the various workers' management bodies, including those existing at the department level. The discussion of a plan in the workshops and departments is, of course, essential where some of the indices (for example, production costs) have been chosen as the basis for a collective remuneration scheme.1 Contents of the Plan An undertaking's plan consists normally of two kinds of data, the first relating to the physical volume of production and sales, with appropriate itemisation, and the second to financial estimates, particularly cost calculations.2 The production plan for the year is derived from actual performance in the previous year by taking into account expected changes in market conditions (in particular, changes in demand), availability of supplies (raw materials, semi-finished products, power, etc.), and the undertaking's productive capacity (machinery, floor space, labour, etc.). The relative importance of these factors varies from industry to industry and from undertaking to undertaking. Generally it may be said, however, that with the development of the economy the " availability of supplies " factor has a decreasing importance, and the demand factor has an increasing importance (causing a gradual shift from a " seller's market " to a " buyer's market "). A Yugoslav undertaking has a number of aids for estimating changes in demand for its products. The most important of these is the federal global plan, which serves as a basic indicator of the rate of change in particular sectors. Its value is enhanced by the fact that it is not only a kind of official forecast but also a target, the achievement of which the Government supports by measures at its disposal. Information on market trends is another aid for formulation of an undertaking's production plan. This is available from various sources, both official and unofficial, 1 The procedure for the adoption of the plan is not normally laid down in much detail in the by-laws, but rather constitutes a part of the workers' management practice in each undertaking. 2 Contrary to the uniform accounting system that applies to all undertakings, there is apparently no uniform official pattern for the plans of undertakings because, although the same accounting system can be applied by any undertaking, the economic and financial plan will of necessity have to be adapted to the nature of its production and its internal structure. The information given in the text is mainly based on the practice followed in the industrial undertakings visited by the mission. REGULATORY POWERS AND GENERAL POLICY DECISIONS 143 in the form of market reports, special surveys, studies, etc. Undertakings also make use of information obtained from their clients. Apart from that, larger undertakings provide their own market research. The second kind of data incorporated in an undertaking's plan are financial estimates. These consist of the production plan, translated into financial terms by means of prices which the undertaking expects to be able to obtain for its products, and of an analysis of costs incurred by producing the given volume of output. It is this part of the plan which presents special interest for the undertaking's workers. While market forecasts are rather for use by experts, cost analysis—broken down by products and also by departments and workshops—offer more scope for the initiative of production workers who are interested in increasing the undertaking's income—and thus their own income—by reducing costs or stepping up output. 1 Such analysis of costs is also essential in undertakings where the system of remuneration is linked to the production and cost plans of departments or workshops.2 The extent to which the production plan, and more particularly the cost plan, goes into detail naturally varies with the type and size of the undertaking. If the undertaking manufactures only a limited number of products, a costing analysis by products and an analysis of departmental budgets can go into all the details. (For example, the annual plan of a mediumsked steel works gave in about 100 tables—often accompanied by a commentary—a complete account of the various factors entering into production costs, including labour costs and profit margins for each product and for each department, and also covering the ancillary services ; a third series of tables was devoted to a more detailed analysis of overheads by department and in joint administrative services such as the general management, the personnel division, etc.) Similar financial planning methods are, however, applied just as satisfactorily in footwear factories, chemical plants and other undertakings with a wide range of products. In small undertakings, on the other hand, it is possible to 1 In this connection it will be noted that a partial conflict of interest may emerge between supervisory staff (particularly executives) who are mainly concerned with obtaining the maximum return from each unit of labour, and production workers whose interests are basically identical on all points except the amount of physical effort involved. This conflict of interests seems to be one of the built-in incentives of the workers' management system. It also accounts for the importance attached in Yugoslavia to ensuring that production workers, especially manual workers, are represented on workers' councils in proportion to their numbers and have a majority of three to one on the boards of management (see above, pp. 75-76 and 85). Further reference will be made to this in Chapter VTII on the economic management of the undertaking. * For an account of such remuneration systems, see Chapter X. 144 WORKERS' MANAGEMENT IN YUGOSLAVIA make do with more or less rough estimates of the various items in the annual profit-and-loss account (according to the planned volume of output, etc.), since in such a case the connection between the various series of figures and the decisions involved is easier to trace than in a large undertaking. Practical Implications of the Targets Set in the Plan A plan drawn up along these lines in no way implies a commitment by the undertaking towards the authorities or other outside agencies. The workers' council which adopted the plan may also (and often does) amend it during the year in the light of changes in demand or for any other reason.1 Within the undertaking, on the other hand, the targets amount to a directive for the implementation of which the board of management and the director are responsible to the workers' council and the whole collective. They are also the starting point for all the work of the undertaking's technical and administrative services and a guide for the conduct of its business. For the technical directorate and the commercial division they provide a framework of authority within which to carry out their specific functions of organising production, supplies and sales. Any marked deviation from the targets or major difficulties in attaining them are likely to become apparent quickly and be brought to the attention of the elected management bodies, which can then look into the matter more closely on the spot and decide on the measures to be taken.2 Similarly, a comparison between the targets and the current results allows a day-to-day assessment of the progress made, and in fact constitutes the gist of the periodic management reports submitted to the workers' council at intervals for approval. 3 As with the various internal regulations, adoption of the financial and production plan provides a very important means of communication within each undertaking. Preliminary discussion at all levels and the analysis of the progress made towards the targets of the current plan 1 There are no penalties involved if the targets in the plan are not actually reached, and no benefits to be expected if they are exceeded. However, any increase or fall in output, production costs, etc., will normally be reflected in the undertaking's net income. Moreover, if the undertaking is unable to meet its sale or delivery dates it will often have to pay the buyer statutory or contractual compensation which may often be comparatively high. 2 The management is under an obligation to keep the elected bodies informed, but it should be remembered that the difficulties encountered in the fulfilment of the plan by a particular service or department will in fact, in most cases, be known to the workers concerned as soon as they are known to the management, and sometimes even earlier. 3 See below under the section concerning approval of periodic management reports. REGULATORY POWERS AND GENERAL POLICY DECISIONS 145 are intended to enable—and compel—each member of the workers' management bodies, and even each individual worker or group of workers, not only to be aware of their production tasks and to check on their performance but also to appreciate the financial implications, and particularly what part of the income from their work comes back to them and what part is diverted to other uses. Publicity is certainly given to the financial estimates and to the accounts at the end of each year.1 It is, of course, obvious that the effectiveness of workers' management depends on the extent to which they and the members of the elected bodies assimilate the main items relating to the enterprise and their particular departments. APPROVAL OF PERIODIC MANAGEMENT REPORTS The most direct example of the general character of the powers of workers' councils is their right to approve the periodical reports of the board of management and the director of the undertaking. As soon as it takes up its duties, the workers' council must receive from the chairman of the outgoing board of management a general report on the operations and accounts of the undertaking. On this basis the council relieves the outgoing board of its responsibilities.2 1 Even if a profit is no longer listed as such in the balance sheet of a Yugoslav undertaking, the accounts give the workers a particularly clear idea of their contribution to society (in the form of various taxes, interest on capital, etc.), which may often be much greater than the amount of remuneration distributed for work done (see below, Ch. X). 2 The statutory provision which governs this transfer of power within the undertaking includes the following: " The power of management shall be transferred as hereinafter stated : the chairman of the outgoing board of management shall submit to the newly elected board of management in the presence of the director of the undertaking a general report on the operations of the undertaking. The report shall cover in particular the material and financial situation of the undertaking, its fixed and liquid assets, and the achievement of the plan of the undertaking in physical and financial terms. In his report the chairman of the outgoing board of management shall also give an account of the difficulties encountered and the successes achieved in the management of the undertaking during the period under review. " The transfer of management powers shall be recorded and the record approved by the chairman and members of the newly elected board of management and the chairman of the outgoing board of management. " The chairman of the newly elected workers* council shall then convene within not more than eight days a full sitting of the workers' council, to which he and the chairman of the outgoing board of management shall report on the transfer of management powers. " The transfer shall be deemed to be final once it has been approved by the workers' council." (S. 67 of the order concerning the election of workers' councils and boards of management (codified text); Sluibeni list, No. 8, 22 Feb. 1956.) 146 WORKERS' MANAGEMENT IN YUGOSLAVIA This procedure seems in general to have been scrupulously applied in undertakings, and the opening sittings of the management bodies are accordingly rather formal occasions. The main general report is in fact often submitted by the outgoing chairman of the workers' council. The members of the elected management bodies are normally provided with material on the activity of the undertaking and its financial situation, and the report tends to give an over-all picture of operations and the main measures taken by the management bodies during the period under review. The examination and approval of general reports on the management of the undertaking now form an integral part of the regular work of workers' councils, especially in large concerns. The report of the board of management is automatically regarded as the first item on the agenda at each ordinary session of the council. Besides the reports which must be prepared at the end of the year prior to approval of the annual accounts and balance sheet, most of the larger undertakings have introduced a system of monthly or quarterly reports which are submitted to the workers' council for approval and then to the collective of the undertaking or of individual departments for discussion and comment.1 In many undertakings visited by the mission these reports went well beyond the statutory requirements, since in fact they included detailed reports on the various functions of the undertaking and on the work of each of its services or departments. They therefore provided not only the workers' councils but also the specialised committees and management bodies at department level with necessary information about the affairs of the undertaking and the points calling for decision.2 For example, the report for the third quarter of 1957, published in the form of a special issue of the bulletin of the workers' council of a medium-sized undertaking (a steel rolling mill with about 2,600 workers, included the following 19 main headings 3 : 1 The reports are generally prepared at intervals that correspond to the accounting periods of the undertaking. The preparation of an annual balance sheet is a minimum statutory requirement; according to the scale and nature of their operations, however, undertakings may be called upon to make up their accounts at much shorter intervals. 2 This tends to create a direct relationship between the various workers' management bodies and the undertaking's specialised services or departments, whose chiefs must be consulted by the workers' representatives on the special problems with which they have to cope. 3 This report, which seems to be fairly typical of its kind, runs to 85 large mimeographed pages and about 100 statistical tables and sheets of accounts. The undertaking was not particularly well known for its organisation or its workers' management methods, and it had not adopted any of the more advanced methods of financial control or remuneration. The mission went there at its own request at only a few days notice, and for quite different reasons. The report, which covered the period from 1 July to 30 September, had already been distributed and discussed in the undertaking during the first fortnight in November. REGULATORY POWERS AND GENERAL POLICY DECISIONS 147 1. Introduction. 2. Over-all survey of progress in the production plan (diagram). 3. General analysis by six production departments of progress of the plan in terms of quantity and value (16 pages). 4. Analysis of the variations (increases or reductions) in production costs by departments and products (16 pages). 5. Account of overheads (two pages). 6. Report on the work of the commercial division—purchases, sales, exports and stocks (eight pages). 7. Statistical report and analysis, by departments, concerning progress of the sales plan (eight pages). 8. Statistical report and analysis concerning sales prices (two pages). 9. Report of the technical production office (three pages). 10. Statistical report on the application of output norms by departments and according to percentage over-fulfilment of norms (three pages). 11. Statement of bonuses paid in accordance with the rules (one page). 12. Statement of overtime worked (one page). 13. Statement concerning the use made of the operating fund (two pages). 14. Report of the maintenance and repair service (four pages). 15. Report on the utilisation of investment loans (one page). 16. Use made of the depreciation fund (two pages). 17. Analysis and distribution of total income (two pages). 18. Distribution of net income (three pages). 19. Report of the general administration and the legal service (five pages).1 In this form general reports on the management of the undertaking give each member of the management bodies, and even each member of the collective, an opportunity of looking into a particular problem or aspect of the undertaking's policy, such as the unit cost of production, the grant of unduly large bonuses, difficulties encountered by a particular group of workers in reaching their norm, the severity or absence of penalties, the progress made with repair or mechanisation work, the use of welfare funds, travelling expenses or other overheads, shortcomings of the commercial department in a particular field, illness or occupational accident rates, etc. The general reports may therefore be an important means of educating the workers in economic matters. 1 The report of the general administration (point 19 above) included seven tables on personnel questions, namely (1) the number of persons at work each month, by department or service and by category (manual and non-manual); (2) changes in the male and female labour force (monthlyfigures); (3) monthly statement of the number of working days lost (illness lasting more or less than seven days, authorised absences, etc.); (4) monthly statement of late arrivals, by category; (5) quarterly statement of disciplinary sanctions, by department and according to the severity of the sanction ; and figures on the results of the qualifying examinations for promotion to the grade of (6) skilled worker and (7) highly skilled worker. In addition to tables and accounts, each chapter of the report included a technical commentary on the subject and sometimes also suggestions concerning the future policy of the undertaking. A note stated that a twentieth heading was missing since the technical inspection department had been unable to meet the deadline for submitting a summary of its activity report. 148 WORKERS' MANAGEMENT IN YUGOSLAVIA OTHER GENERAL DECISIONS Apart from their responsibility for the internal regulations and planning, the workers' management bodies may also be called upon to take other general decisions. These may relate to any matter affecting the existence and status of an undertaking, such as the extension of its field of operations, its merger with another, its division into several independent undertakings or establishments and its winding up or sequestration, as well as to questions connected with the right of undertakings to associate for economic purposes, etc. In all these cases the workers' council must either take a decision or, in the event of winding up or sequestration, take the necessary steps to defend the rights of the collective before the courts and the administrative authorities. In the event of the division of an undertaking the collective of the establishment concerned may decide to separate from the undertaking (for example, through a referendum) if the workers' council is opposed to such a step. Decisions of this kind are admittedly unusual in the life of an undertaking, but they are nevertheless not so rare that they cannot be regarded as a normal element in the operation of the workers' management system. For instance, the workers' management bodies in one of the industrial undertakings visited by the mission devoted most of their attention for many months to the establishment of a chain of retail shops, which involved both an extension of the scope of the undertaking and the setting up of a series of independent establishments. On the other hand, the splitting of large groups formed in the post-war period into independent undertakings corresponding as far as possible to territorial and production units has undoubtedly been the dominant trend since the introduction of the workers' management system. It is still a topical issue even now, especially for undertakings that have grown quickly or have auxiliary services and establishments sometimes not running to capacity. In such cases division may combine the advantages of more direct workers' management with those of greater specialisation and a more intensive use of existing plant.1 However, legislation now under consideration would prevent certain abuses in the exercise of the right of separation, particularly so as to protect 1 For example, it was reported that the workers' council in one of the largest textile factories of the country had decided to convert a series of its auxiliary departments (fancy goods, special orders, packing, cotton-wool manufacture, etc.) into independent handicraft undertakings, which would thus be in a position to market their products directly and to ensure more complete use of the available plant. Similar measures are stated to be under consideration in a whole series of other undertakings in the same area. Cf. Izbor (Zagreb), No. 34, 24 Aug. 1959, p. 1. REGULATORY POWERS AND GENERAL POLICY DECISIONS 149 undertakings against the loss of their branches in other communes. On the other hand, the principle of self-determination for each work collective does not seem to be challenged, even where the desirability of separation is not clearly established.1 More recently, the need for a concentration of production potential and for closer co-operation among undertakings has made itself increasingly felt in various sectors of the Yugoslav economy. A merger does not always provide a satisfactory answer to the problem; in fact, for a variety of reasons it is often apt to meet with opposition on the part of the workers' council or collective, and Yugoslav undertakings generally prefer, now that they are allowed to do so under the Act of 1957, to form an economic association. By this means they can pool certain resources, establish joint facilities or launch joint manufacturing programmes and, in general, pursue any legitimate economic objective enunciated in their articles of association. However, the existing legislation provides only for partial association and a limited pooling of resources; it specifically forbids any association whereby the workers' councils and boards of management of the associated undertakings renounce their fundamental rights of workers' management, especially their independence with regard to planning, labour relations and the distribution of income within the undertaking. The decision to join in an association lies with the workers' councils of the undertakings; they also approve the articles and appoint the representatives of each undertaking on the management bodies of the association, whose income is then distributed among member undertakings in accordance with the articles. A decision that an undertaking should join an industry-wide union and the appointment of delegates to general meetings of these unions and of economic chambers are also within the competence of the workers' council. It seems that in certain industries the members of executive committees of these organisations are generally the chairmen of the workers' councils and the directors.2 1 For example, two chemical concerns in the same town were merged in 1959 after a unanimous vote of the two workers' councils. However, divergences soon arose between the two collectives with regard to the effects of the merger: one was in favour of a complete and immediate amalgamation, whereas the other simply wanted the merger to be a very long-term process. Ultimately, the collective that had belonged to the second of the two former concerns decided by a majority vote that their undertaking should resume an independent existence. Although the division of the undertaking in these circumstances gave rise to a certain amount of criticism, the principle of separation was regarded as having been finally settled by the result of the referendum. 2 For example, the chairman of the workers' council of a steel works stated that in his industry the chairmen of the workers' councils of member undertakings each had a seat reserved for them more or less ex officio. He regularly attended the monthly (footnote continued overleaf} 11 150 WORKERS' MANAGEMENT IN YUGOSLAVIA Various decisions which the workers' council may be called upon to take with regard to the director of the undertaking (appointment, dismissal, fixing conditions of work, etc.) also affect the operation of the undertaking as a whole and can therefore in no way be regarded as mere matters of staff policy. The procedure to be followed in these cases was described in detail in Chapter VI. * « * All the activities of a Yugoslav undertaking and its workers' management bodies are therefore carried on within a superficially complex framework of rules, plans and periodic reports. The most important of these documents have been dealt with already—the by-laws of the undertaking, the rules on labour relations and remuneration, the economic and financial plans and the reports on management. These and all other over-all policy-making functions lie within the exclusive competence of the elected management bodies, more especially the workers' council of the undertaking. In addition, Yugoslav law and practice tend to ensure a very extensive discussion of all these documents within the undertaking by associating specialised committees, management bodies at department level and the collective as a whole. Although some of the internal regulations need approval or endorsement by economic or social agencies outside the undertaking, the latter retains both the initiative and the responsibility for the contents. Since the adoption and periodical revision of by-laws and rules is an essential condition, in law or in fact, for the proper running of the undertaking and even for its very existence, the workers' management bodies can and must deal with all aspects of the management of their undertaking. The latitude they enjoy in reaching their decisions naturally varies considerably according to the nature of the subject, but in all cases it would seem sufficient to give them an active interest in the process. In fact, on a large number of points and in a variety of circumstances the decisions taken are obviously of vital interest to the workers concerned, including the rank-and-file members of the collective. Having said this, it should be emphasised that the adoption and revision of the regulations of the undertaking only constitute actual management decisions in exceptional cases, e.g.fixingindividual rates of meetings of the executive committee of the association, and this enabled him to keep permanently in touch with the other undertakings and to have an over-all view of the situation in his industry. Similarly, in 1960 the annual assembly of the union of the non-ferrous metal industries decided to allocate a number of seats in its committee to the chairmen of the workers' councils of several of its member undertakings. REGULATORY POWERS AND GENERAL POLICY DECISIONS 151 remuneration, establishing or abolishing an administrative department, creating or suppressing a series of jobs, etc. In most cases these provisions constitute only a framework within which management functions proper are to be performed—financial management, manpower policy and labour relations, distribution of income, scales of remuneration, etc. In the following chapters a brief account will be given of the role of workers' management bodies in the performance of these specific functions within the undertaking. CHAPTER VIII ECONOMIC FUNCTIONS The economic activity of an undertaking calls for an uninterrupted flow of decisions of all kinds. The implications of these decisions can be understood only in the light of the circumstances in each particular case, but they all contribute to the creation of economic values, whether by laying the necessary foundations for normal production or by organising and directing production operations. This chapter is confined to a brief review of some of the more characteristic aspects of the economic activity of Yugoslav undertakings in the light of the workers' management system and in the setting of the present economic system.1 ADMINISTRATION OF THE ASSETS OF THE UNDERTAKING The assets of an undertaking constitute the material foundation without which it could not operate. When it is established, each undertaking receives the necessary resources, in the form of a loan. (The funds of existing undertakings were gradually transferred to direct administration by the collectives over the years 1953-57, without any obligation to pay back the sums involved.) In addition, existing undertakings may increase their resources through bank credits or by allocating part of their current income to their capital accounts. All an undertaking's assets, whatever their origin, constitute " social property " which may be freely used for economic purposes (and partly for social purposes), but which must be maintained at their full value. Strict auditing of the undertaking's business operations as well as internal supervision, particularly by the elected management bodies, and external supervision by the commune and special inspection services2, are therefore essential to the system of workers' management. The first 1 In spite of their obvious economic implications, employment policy and labour relations will be considered separately in Chapter IX, since from the point of view of workers' management they not only serve a productive purpose but also determine the internal organisation and operation of the undertaking as a " producers' association ". 2 See below, Ch. XII. ECONOMIC FUNCTIONS 153 question, however, concerns the powers of disposal as regards the various assets of the undertaking. Yugoslav legislation distinguishes between the various categories of resources commonly recognised in economic theory and accounting practice, and regulates each of them. Under the Act of 1957 concerning the administration of resources the assets are divided up into four main "funds "—(a) a basic resources fund (fixed capital), (b) an operating fund (working capital), (c) a reserve fund, and (d) a " collective consumption " (welfare) fund. Special funds may be formed, but they must then be part of one of the four main funds listed above. Each fund's resources may be used only for its appointed purpose. Fixed Capital The fixed capital " fund " comprises all the means of production : plant, transport facilities, machinery, etc. (except for small tools and items written off within less than one year), buildings and land used for productive purposes, patents or licences and cash set aside for the purchase or renewal of such physical assets. Therefore it also includes amounts set aside for investment and the unused capital of the sinking fund. Normally, only the workers' council has the right to dispose of the fixed capital fund, and therefore any purchase or sale (or any other kind of acquisition or alienation of machinery or other equipment) must be submitted to it for approval. However, the workers' council may authorise the board of management and the director of the undertaking to carry out certain transactions of this kind (if this is specifically provided for in the by-laws of the undertaking, which must also specify the maximum amount that may be involved).1 In addition, the workers' council is the only organ qualified to submit an application, on the basis of a special decision, for an investment loan, and to supervise its use under a predetermined programme. The fixed capital fund is the basis of the undertaking's productive capacity and it is therefore in the interest of the collective to increase it in so far as new assets, whether in the form of a machine, a licence or anything else, help to increase the value of each unit of labour. Thefixedcapital fund also involves expenditure which the undertaking must meet out of its current income, particularly (a) statutory interest payments on the value of the fixed capital fund, (b) the statutory 1 The practice of undertakings in this regard seems to vary a great deal, but authorisations given to boards of management or directors are generally of rather a limited character. In certain cases the workers' council was even called upon to decide on the disposal of some items of equipment that had been written off and were sold for a nominal sum. 154 WORKERS' MANAGEMENT IN YUGOSLAVIA allowance for depreciation, (c) the annual redemption and interest payments on investment loans, and (d) the cost of making up any loss of capital over the year. This expenditure affects the income of the undertaking, and consequently the personal incomes of all members of the collective, who therefore have a direct interest in ensuring that the available capital assets of the undertaking are used to the best advantage (if necessary, by doing without capital goods that are unused or only partly used1), in avoiding damage and excessive wear, and in investing only in projects that will show a clear margin over expenditure. The statutory rate of interest which undertakings at present pay on fixed capital to the Federal Investment Fund is 6 per cent, for the economy as a whole, except in certain sectors for which lower rates have been introduced by decision of the Federal Assembly. From the point of view of the collective, this is a fixed charge automatically levied on its income, which among other things determines the minimum return on capital assets required to avoid bankruptcy or public receivership.2 The sums compulsorily set aside for depreciation remain at the disposal of the undertaking. The rate of depreciation isfixedby law and varies according to the nature of the item involved (buildings, machinery, etc.).3 The workers' council must adopt an annual or quarterly plan or programme for the use of the depreciation fund and must supervise its implementation. From the point of view of the current income of the collective, depreciation represents an additional charge similar to the interest on thefixedcapital, but at the same time it makes available large sums for modernisation of plant and equipment.4 Working Capital The " operating fund " (working capital) includes the stock of raw materials and finished products, goods in process, small tools and non1 Of course the search for the most profitable use of capital does not stop there, but is intended to be reflected in all the operations of the undertaking: for example it may be very much to the advantage of an undertaking with fairly considerable capital assets to introduce shift work and increase the yield from capital even if this involves increased labour costs. 2 Lower rates of interest have quite frequently been introduced during recent years. They have in fact been one of the main instruments of economic planning, aimed particularly at stimulating various sectors of the economy. a Since the intention is to ensure the actual release of the funds necessary to renew the assets of the undertaking (which the collective might perhaps otherwise fail to provide for) as well as to fix a maximum that may be deducted for income tax purposes, the rates fixed by law cannot be departed from by the undertaking. The workers' council is competent to determine only depreciation schedules for licences and patents. 4 While changes in depreciation rates are not ordinarily used as an instrument for regulating the investment policies of undertakings, various percentages of the depreciation fund are sometimes frozen under the federal plan with a view to delaying their utilisation for new investment. ECONOMIC FUNCTIONS 155 durable production equipment. Its resources are also used to pay advances on remuneration and any current expenses connected with the business of the undertaking (travelling expenses, advertising, etc., fines and compensation payable by law or by agreement, etc.). They may also be used, if the workers' council so decides, to buy certain kinds of capital goods. The right to dispose of the amounts standing to the credit of this fund depends on the use proposed. For instance, advances on remuneration are made in accordance with the relevant rules, and this is therefore normally an automatic operation.1 The purchase of raw materials, the marketing of finished products and, in general, any ordinary commercial operation must, of course, fit in with the undertaking's production and financial plan or programme, but within those limits the commercial manager of each undertaking is normally empowered to enter into contracts on behalf of the undertaking without prior authorisation from the workers' council.2 On the other hand, such approval is essential for expenditure on overheads such as advertising, business travel and so forth ; however, in large undertakings, or if business travel is very common, the workers' council may adopt a quarterly travel budget and programme in advance, on the understanding that the directorate must, at the end of each quarter, submit to it for approval a report on the expenses incurred. Equipment may be purchased from the working capital fund only to the extent that such purchases are authorised by the workers' council and comply with the financial estimates it has approved. The interests of the collective in administering the working capital fund are basically the same as in administering the fixed capital, namely to provide an ample financial basis for the proper operation and growth of the undertaking, while endeavouring to obtain the maximum return on each unit of capital. The collective has an interest not only in reducing overheads and waste of raw materials, power, etc., in the course of production, which directly affect its income, but also in reducing stocks and the volume of goods in course of manufacture—in other words, in accelerating capital turnover so as to reduce fixed charges to a minimum. It should be added that, while the interest payable on working capital is calculated on the basis of a statutory rate 3, additional credit which may be needed by the undertaking to finance its day-to-day 1 If the operating fund is not large enough the workers' council will have to be asked to authorise a withdrawal from the reserve fund or an application for a loan (see below). The same applies to certain variable elements in remuneration: for instance, overtime may be neither ordered nor paid for without prior authorisation from the workers' council. 2 For details see below, Ch. IX. 3 The statutory rate of interest on working capital is also 6 per cent., but a special rate may be fixed for certain branches of the economy or for particular industries. 156 WORKERS' MANAGEMENT I N YUGOSLAVIA operations is generally granted by the banks on less favourable terms (i.e., at a higher rate of interest), thus encouraging undertakings to resort to advances of this kind only when absolutely needed or tofinanceparticularly profitable development plans. The Reserve Fund Any undertaking whose net income enables it to pay over 40 per cent. above the guaranteed statutory minimum remuneration must pay part of the excess income into its reserve fund. As a rule, it must allocate an amount corresponding to 2 per cent, of the working capital to the reserve fund, but it is understood that such payments may cease when the reserves have reached 10 per cent, of that capital.1 The workers' council is free to allocate sums to reserve in excess of the statutory minimum. The reserves are essentially an earnings stabilisation fund which the undertaking may use, if necessary, to maintain the workers' remuneration at a level 25 per cent, higher than the guaranteed minimum.2 Withdrawals from the reserve fund may also be made to compensate for a loss on the year's operations that becomes apparent when the annual accounts are made up. Only the workers' council is empowered to draw on this fund. Welfare Assets The " collective consumption fund " consists of sums voluntarily appropriated by the workers' council at the time of the final distribution of the income from the year's operations (i.e., when the annual balance sheet is adopted).3 It comprises all the real and movable property, including the cash, allocated to the various welfare facilities of the undertaking, such as workers' housing, kindergartens, canteens and household services, holiday and rest centres, scholarships, apprenticeship grants, vocational training grants for adults, educational facilities, etc. In the case of certain welfare services, 20 per cent, of the sums paid out of the welfare fund is deducted as a contribution to similar funds of the commune and district authorities. 1 Other principles apply in certain branches of the economy such as agriculture, commerce, the sugar industry, etc., in which reserve funds must be built up more quickly and must correspond to a higher proportion of the working capital. 2 Under a recent amendment to the Act concerning the administration of resources, a workers' council is authorised to draw on its reserve fund for the full amount of the remuneration specified in the rules of the undertaking on the basis of time or piece rates (Sluibeni list, No. 48, 2 Dec. 1959, text No. 769). 8 Until the end of 1957 the minimum amounts to be paid into this fund were laid down by law. Under the legislation now in force there are no such provisions, except in respect of vocational training. ECONOMIC FUNCTIONS 157 This fund may not be used to increase the workers' remuneration, but if the reserves are insufficient the cash must be diverted to cover operating losses. Authorised uses of the welfare fund must be defined either in the by-laws of the undertaking or by a resolution of the workers' council, which also takes the decision in each particular case involving disposal of these assets, unless it has transferred certain limited powers to the board of management or the director of the undertaking under a specific provision of the by-laws. Holding Account If the workers' council did not approve a final distribution of all the undertaking's income when it adopted the final annual accounts, it may pay the amounts outstanding into a holding account. The workers' council may subsequently pay these sums into any of the main funds of the undertaking. A special reserve fund may also be formed to maintain remuneration at a level higher than that below which the law authorises the workers' council to draw on the general reserve fund.1 Pending their final allotment, the law permits such funds to be added to the working capital of the undertaking so that it can avoid borrowing and the attendant expenses. Transfers from One Fund to Another Transfers from one fund to another are not allowed unless specifically authorised by law, and only the workers' council may make the decision. The Act of 1957 concerning the administration of resources authorised transfers from the fixed capital fund to the working capital fund, but prohibited transfers in the reverse direction.2 In addition, withdrawals from the reserve fund may be made only if the undertaking's income over a particular period is too low to allow for the initial value of one or other of the capital funds to be maintained. Amounts held in the welfare fund may be transferred to either of the capital funds, or to reserves; in this way the undertaking can remain open at the cost of a reduction in the welfare facilities it offers its workers.3 1 For example, the workers' council might decide that this special reserve should be used to guarantee that actual earnings are held at more than 25 per cent, above the guaranteed minimum rate. 2 This restriction was abandoned early in 1960. 3 This type of transfer will in most cases be automatic since if the undertaking's income is too low it will have to reduce or even abolish the grants for day-to-day welfare and educational activities, gifts to third parties, subsidies to transport services, canteens, etc., but the workers' council will then have to draw up a list of priorities. 158 WORKERS' MANAGEMENT IN YUGOSLAVIA Assessment of the Initial and Current Value of the Various Funds Any system for the administration of special purpose funds requires that each asset of the undertaking shall have a definite value that can be ascertained at the end of each accounting period. The total initial value of these funds must not only be preserved unchanged but also determines various obligations of the undertaking towards society (interest payable on capital) as well as internal obligations (allowance for depreciation and allocation to reserve). The value of the assets of all undertakings then in existence was reassessed in 1953 prior to transfer to direct administration by the collectives. This was done on the basis of inventories drawn up with the aid of the management bodies (valuation commissions). The value of each undertaking's initial capital was mainly determined on this basis by specially appointed expert committees, and does not seem to have given rise to any particular controversy or criticism. For newly established undertakings, the initial value of the funds must be approved by the workers' council after investigation by a committee appointed by it. The value of investments, stocks, current production, etc., is assessed at cost (purchase price, transport and installation costs, etc.), and the depreciation for tangible fixed assets is calculated at the statutory rate. A general inventory of all the undertaking's assets must also be made at least once a year when the annual accounts are prepared. A special committee is appointed for this purpose by the board of management. When adopting the balance sheet, the workers' council also finally approves the statements showing the position of the various funds in which the assets of the undertaking are divided.1 A large proportion of the national assets are therefore administered by the workers' councils of undertakings, which are accordingly one of the most powerful forces in the economy. SHORT- AND LONG-TERM LOANS ; INVESTMENTS Yugoslav undertakings seem to have been supplied with sufficient funds initially to enable them to operate normally. Complaints and criticisms on the grounds that the initial allocation was inadequate appear to have been few and far between. 1 To allow for the rise in prices, during the initial period the federal Government had to reassess the book value of the assets of all the undertakings in the country. By the terms of the Act of 1957 on the administration of resources by undertakings, such reassessment may be ordered only by virtue of a federal Act. ECONOMIC FUNCTIONS 159 Any undertaking may, however, need a loan either to tide it over some temporary difficulty in financing its operations, or to enlarge its capacity and expand production.1 Undertakings normally obtain loans for expansion or investment through periodical competitive adjudications organised by the banks (especially the Investment Bank), which distribute the sums earmarked under the federal economic plan for various sections of the economy or industry and for different forms of credit.2 These adjudications, which are also open to founders of new undertakings (communes, etc.), receive wide publicity; the conditions or criteria of each adjudication are published in the official gazette and the press, while the bank itself also publishes lists of applications and other details about each adjudication in its own bulletin. As the general conditions covering the granting of investment loans are laid down in the federal plan and its detailed regulations, the specific criteria depend on the purpose for which the funds are to be used. Generally, the factors used as a yardstick are the estimated return on the project and its effect on the balance of payments, the cost of the investment per unit of output, the repayment periods offered by the bidders, the proposed rate of interest, etc. Normally, the bank also requires the bidder to furnish security and a guarantee from the local authority concerned. The credit system thus gives communes and districts a very useful means of promoting and guiding the development of undertakings within their territory. The economic chambers and associations of undertakings also have an important part to play in carrying out preliminary studies and co-ordinating expansion projects. The final allocation of loans is made (on the recommendation of a panel of experts) by the board of the Investment Bank, which includes representatives of all 1 As a result of the growth of the economy, the banking system is now in a position to make loans to financially sound undertakings which need them. The bank is aware of the financial position of each undertaking, since it keeps the latter's accounts and handles all of its transactions. The bank may, if necessary, ask the local authorities (communes, etc.) to guarantee repayment of the loan. In any event, in normal circumstances it would not appear that an undertaking is likely to encounter serious difficulties in overcoming financial problems. On the other hand, if these continue for some time, a joint effort is made to rescue the undertaking before it finally goes bankrupt. Since 1958, undertakings with exceptionally large incomes have been required to pay a contribution to a " solidarity fund " (or pool) for their particular branch of the economy (administered by representatives of all the undertakings in it) which can be used to help undertakings which have not earned enough for reasons beyond their control. 1 Only in exceptional cases (when it is considered that the available resources are sufficient to meet all demands) do the banks grant credit to applicants other than by the adjudication procedure. Part of the investment funds are allocated direct to finance large-scale schemes (electricity, transport, etc.) or for the development of backward areas. The holding of special adjudications for undertakings in these areas is now under consideration. 160 WORKERS' MANAGEMENT IN YUGOSLAVIA sections of the economy. The public and administrative authorities, especially the Federal Assembly and its special committees, retain a general right of supervision.1 In practice, the system obliges undertakings and local authorities to make a very close scrutiny of the returns on any investment or expansion project because of the heavy cost of servicing the loan and, above all, the obligation to repay the principal over a fairly short period (usually between four and 20 years). As this may make serious inroads on the future income available for remuneration, an application for a loan cannot be entertained unless it is accompanied by an extract from the minutes of the workers' council of the undertaking concerned. In fact, however, neither the procedure that has to be gone through nor the economic risks involved have curbed the initiative of the collectives in Yugoslavia as regards investment. The funds earmarked for this purpose under the federal economic plan have not been adequate to meet all the demands.2 The value of investment by undertakings far exceeds investment in all other sections of economic and social life, and in 1958 accounted for more than 70 per cent, of all the sums invested in the public sector.3 Nearly all the undertakings visited by the I.L.O. mission had quite sizeable investment or expansion projects in hand, some of which entailed very substantial outlays. An analysis—unfortunately far too cursory— of some minutes of meetings by workers' councils and boards of management seems to indicate that investment policy and projects are one of the main concerns of these workers' management bodies. Despite its semi-administrative character, this decentralised system of allocating public investment funds, relying on undertakings to take the initiative and providing them with a material incentive, has intro1 For an actual example of how this works, see Bitten Saveze Narodne SkupStine (Federal Assembly Bulletin), No. 14, 31 Dec. 1957, pp. 12-13 (verbal reply by the Federal Executive Council to a question by a member of a producers' council about the delay in granting reconstruction loans to undertakings in the paper industry). Needless to say, the credit and investment position is closely watched by the trade press, so that undertakings are kept informed of any developments that might affect them. 2 According to figures issued by the Investment Bank, the latter received 13,302 applications for loans, totalling 657.5 thousand million dinars during the first 11 months of 1958; during the same period, it granted 7,665 investment loans amounting to 199.2 thousand million dinars, while 1,840 applications totalling 27.5 thousand million dinars were turned down. The Bank was thus able to be selective and grade the large number of projects according to their relative economic interest. 3 Investment in a particular undertaking is, of course, always carried out by the undertaking itself and there is no question of any external body investing in it or on its behalf. Investment by the State, the local authorities and other social bodies is confined to new undertakings, public works and services, education, health facilities, etc. ECONOMIC FUNCTIONS 161 duced far-reaching changes in the pattern of capital investment in all areas and types of undertaking. It is generally agreed that the new pattern yields better returns for the economy as a whole. Certain aspects of the system are subject to criticism and may call for adjustment \ but by and large it seems to have become a permanent part of workers' management.2 Investment by an undertaking itself does not necessarily require a bank loan, but may be financed wholly or partly from the undertaking's own resources. The depreciation fund or any special reserves set aside from current income can all be used for this purpose.3 A recent Yugoslav survey 4 covering 508 large industrial concerns illustrated how that portion of current income earmarked for investment was distributed. Table III shows that about one-third of these funds was to be used directly by the undertakings for new investment, while the remaining two-thirds were allocated for repayment of past investment loans. The shares allocated to direct investment varied widely from one industry to another, and in some cases even exceeded 50 per cent. The figures indicated the ability of Yugoslav industrial undertakings to 1 One of the most difficult problems is the inequality between undertakings which had been established or reconstructed before 1953 at state expense, and those which have since been founded or which have expanded or modernised themselves at their own expense. Inequalities in interest rates and repayment periods on loans negotiated at different times also lead to complications. A higher charge on capital assets beyond the present 6 per cent, interest rate is generally considered as indispensable, and the introduction of a new capital tax is at present being studied with a view to reducing, at least in part, existing inequalities among undertakings. 2 A further point is that, owing to the constant increase in their own income (in the shape of interest on capital lent to undertakings and the repayment of loans as they fall due), the public investment funds are gradually becoming independent of regular budget appropriations or other outside sources, and are thus developing into a means of economic self-financing. As early as 1957, according to figures published by the Federal Investment Bank, the Federal Investment Fund's own income (interest and capital repayments) amounted to 85,700 million dinars out of a total income of 169,900 million dinars, i.e. over 50 per cent. 3 In fact, a large share of the investment is financed by appropriations out of undertakings' current income which, instead of being distributed in the form of remuneration, is used to increase the capital (self-financing in the true sense of the term). A survey of 101 undertakings carried out in connection with the First Congress of Workers' Councils (1957) showed that as early as 1954-56 an average of 16 per cent, of the surplus income available for remuneration had been retained in undertakings to finance expansion or investment programmes. Moreover, the workers' councils allocated to investment 41 per cent, of the funds which they were entitled to assign to welfare. Self-financing accounted at that time for 15.6 per cent, of the increase in fixed capital and 17.3 per cent, of the increase in working capital (cf. the general report by D. Salaj, Chairman of the Central Council of Trade Unions, at the First National Congress of Workers' Councils). 4 See Ekonomska politika (Belgrade), No. 378, 17 June 1959, p. 644. The undertakings covered by this survey accounted on the average for about 75 per cent, of the total income and working capital of undertakings in the industries concerned (35.3 and 39.5 per cent, in the case of the food industry—lowest—and 97.4 and 99.6 per cent, in the iron and steel industry—the highest). 162 WORKERS' MANAGEMENT IN YUGOSLAVIA finance a good part of their expansion programmes from their own resources. TABLE III. FINANCING AND INVESTMENT IN 508 INDUSTRIAL UNDERTAKINGS (Percentage forecasts for 1959) Service on loans Fixed capital Branch of industry Non-ferrous metals Electrical engineering . . . . Wood and paper Textiles Hides, skins and footwear . . Tobacco Total (millions of dinars) . Selffinancing Working capital Welfare fund 45.8 21.6 39.7 28.6 20.6 28.0 48.5 33.1 38.5 57.8 37.8 16.3 13.0 39.5 29.7 14.0 31.0 26.6 25.7 27.1 10.2 25.9 3.0 2.3 4.2 4.1 7.2 2.0 2.3 1.6 1.3 0.8 3.3 43.9 63.0 16.6 37.6 58.2 39.0 22.6 39,6 33.1 31.2 33.0 16,364 11,224 1,416 14,317 It appears that, far from seeking short-term gains by pursuing an over-generous distribution policy at the expense of assets, the bulk of workers' councils frequently set aside sizable sums for expansion.1 Of course, there is " social pressure " on them to do so, especially from the communes and through the " recommendations " procedure when pay scales are approved.2 However, the comments of the leading Yugoslav economic weekly, Ekonomska politika, emphasise rather the undue propensity of collectives to invest and the danger that they may impair the solvency of their undertakings by taking on more commitments than can befinancedout of current income.3 Cases have even occurred where collectives, in order to be able to invest, have decided not to increase their remuneration or to accept less than the scales laid down in their regulations.4 1 For further details on the distribution of current income, see Appendix I, Tables F and H. 2 Cf. above, pp. 134-135. 8 On the other hand, it was reported that some undertakings only practise token self-financing. For example, one of the biggest industrial concerns in the country set aside 400 million dinars to increase remuneration by 50 per cent, over the existing scales, but only allocated 161 million dinars for investment, including 32 million for housing (Ekonomska politika, loc. cit.) 4 Cf., for example, a report presented by M. Spiljak to the Fourth National Trade Union Congress (¿etvrti kongres saveza sindikata Jugoslavie, Belgrade, Rad, 1959), pp. 289 ff.). ECONOMIC FUNCTIONS 163 It is considered—and this seems to be borne out in practice—that in any event the collectives and workers' councils have every incentive to obtain the highest returns on any investment or expansion project they are financing out of their own resources. On the basis of the surveys it was expected that targets of the five-year plan for 1957-61 would be reached a year ahead of schedule 1 and with a saving of 164,000 million dinars on the estimated investment (710,000 million dinars actually spent as against 874,000 million budgeted for under the five-year plan). Each 100 dinars of additional production required an investment of only 160 dinars as against 260 in the previous five-year period.2 INTERNAL ORGANISATION OF THE UNDERTAKING Any modern undertaking is based on specialisation and grading, each group of workers being assigned certain clearly defined responsibilities. In concerns of any size, the internal organisation and the relationship between different departments and between staff and line functions is one of the keys to efficient management. In a Yugoslav undertaking, the workers' management bodies are directly responsible for some of the duties that elsewhere fall to top management and the senior or medium level executives—as regards a host of detailed decisions as well as policy matters. Moreover, decisions by a member of the line management can be queried and, if necessary, amended by the elected bodies on their own initiative or following an appeal or recommendation by a committee or outside body. Nevertheless, the technical and administrative departments, like the senior executives, still play a very important part in any Yugoslav undertaking. They are responsible—with or without the assistance of the elected bodies—for the technical side of any projects submitted to the board of management and workers' council, and are normally responsible as well for carrying out their decisions. In commercial and routine production matters, this inevitably entails a good deal of delegation of power and responsibilities. Moreover, the directorate is generally responsible for seeing that the law is obeyed in everything the undertaking does.3 1 This anticipated development was later confirmed and a new five-year plan launched in 1961. (Cf. DruStveni plan 1961-1965, particularly art. 8, in Sluzbeni list, No. 53, 31 Dec. 1961.) 2 Cf. Borba, 12 June 1960, p. 3. 3 In the event of a breach of the law the undertaking can only be fined. In the more serious cases it is usual for criminal proceedings to be taken against the responsible executives, i.e. the director or other members of the management. 164 WORKERS' MANAGEMENT IN YUGOSLAVIA It is also required to ensure that the elected bodies take any decisions that are needed in good time. Any decision affecting an undertaking's internal structure and the allocation of powers to different departments hes in principle with the workers' council. Questions of this kind can be settled by amending the by-laws or by a special meeting of the workers' council. The number and description of supervisory posts, the remuneration payable and the staffing of all technical and administrative departments at any level are laid down in the remuneration rules. Only the posts of the director and the chief accountant exist by virtue of the law, independently of any decision by the workers' council, and the holders of these posts cannot be deprived of their statutory powers.1 In practice, there are a number of common features in the internal structure of most Yugoslav undertakings. In addition to the directorgeneral, there is usually a " college " composed of heads of the principal departments in the undertaking, namely fa) the technical director (production manager or chief engineer) who usually takes over in the director-general's absence; (b) the chief of the finance and accounts department; (c) the commercial director; and (d) the secretary of the undertaking (administrative director). Depending on the size of the undertaking, each of these departments may be subdivided into a number of specialised sections or divisions whose heads are sometimes granted a fair amount of autonomy.2 Elsewhere, the organisational structure may be much simpler. For example, in a large coal mine visited by the I.L.O. officials there was (as might be expected) only one specialised department—for underground and surface production— apart from the director-general's office, which had a small staff and was divided into a few non-specialist sections. The by-laws and regulations of each undertaking usually define in great detail the organisation and powers of each tier of the staff and line. Any practical problems which arise are then usually settled as the undertaking expands and the elected bodies strengthen their authority. These problems are commonest when new establishments or departments are opened or other activities curtailed. The introduction of decentralised machinery for sharing out income and remunerating the workers is usually accompanied by a thorough overhaul of the organisational structure, so that the actual authority of executives and medium 1 The workers' council, it may be added, cannot reduce the remuneration of the chief accountant without the consent of the commune in which the undertaking is located. 2 The production department may, for example, be split into two divisions— " current production " and " development and expansion ". The legal department may also be organised as an independent division. ECONOMIC FUNCTIONS 165 and lower level supervisors largely depends on the activities and policies of the management bodies.1 Personnel policy is a particularly striking example of this. Up to 1952, the secretary's department was responsible for both the political and financial supervision and the detailed operation of personnel policy. The transfer of its executive functions to the elected bodies took place only gradually up to 1958. But in many cases the workers' management bodies had in fact secured direct control over personnel policy, largely through their special committees, well before the 1957 Labour Relations Act officially granted them the necessary powers. 2 In certain cases (including some of the undertakings visited by the mission) they had taken even more direct action, for instance by simply abolishing the general administration department and splitting it up into a number of divisions which were either independent or attached to others (those dealing with recruitment, supervisory staffs, legal matters, etc.). Although this has only happened in a small minority of Yugoslav undertakings, it illustrates the role of workers' management in the internal structural evolution of undertakings. The growth of specialised internal control departments (especially for financial purposes) reporting direct to the workers' council is also another significant development.3 The problem of finding the most efficient organisational structure receives a great deal of attention from industry (economic chambers, etc.), institutions specialising in industrial efficiency, productivity and supervisory training, and also from the management of the bigger undertakings themselves. The weekly magazine Izbor, published at Zagreb, often reproduces and discusses administrative and technical layouts and describes the practice of various Yugoslav or foreign concerns. In the republic of Croatia alone, four teams of experts are available to undertakings wishing to have surveys made. Quite recently, the committee on staff matters of the Executive Council of the Diet of Croatia passed a 1 Mention has already been made, in Chapter VII, of the development of " horizontal " links between senior executives and the corresponding elected bodies, enabling the latter to keep a permanent check on the work of executives, who in turn are also associated with the workers' management machinery. These horizontal links, in the form of direct personal contacts between the members of the board of management or workers' council (or the workshop workers' management bodies or collective) and individual executives (workshop engineers or supervisors) seem to develop at plenary meetings of the elected bodies as they assert their authority. If any special difficulties arise in a workshop or department, these bodies often decide to investigate them on the spot between meetings. In cases of this sort, the authority of any member of the executive will largely depend in practice on his ability to stand up to his questioners. a The extent of the power they had acquired, which was revealed at the Congress of Workers' Councils in 1957, caused a certain amount of surprise and presumably explains the provisions of the Labour Relations Act of 12 December 1957. See also below, Ch. IX. 8 See below, Ch. XII. 12 166 WORKERS' MANAGEMENT I N YUGOSLAVIA recommendation that undertakings should set up independent personnel departments consisting of a committee of the workers' council and an administrative section.1 Workers' management has mainly had an indirect effect, by allowing undertakings to depart from any rigid uniform structure, so that scientific study of organisation and adjustments to special circumstances have become possible. It should be added that any recommendations or schemes affecting the organisation of an undertaking, whatever their source, require the approval of the workers' council before they can be put into effect. COMMERCIAL ACTIVITIES In preparing their purchasing and sales programmes, departments can draw on the forecasts of the federal plans, the material regularly published by various institutions and organisations (including the Federal Planning Bureau) and the economic and trade press, in addition to their own experience in assessing the state and likely trend of the market. Some undertakings hold periodical ordering sessions for their customers, or alternatively themselves take part in sessions held by other undertakings when big orders have to be placed.2 The gradual stabilisation of prices and the smoother functioning of the market (particularly as regards the availability of supplies) have generally tended to simplify the problems facing undertakings and their management bodies in drawing up their commercial programmes. In addition to the close accounting supervision exercised by the appropriate bank—which covers all commercial transactions by the undertaking—workers' management provides a new form of internal check. Yugoslav practice allows the commercial manager of an undertaking general authority to conduct current transactions in accordance with the plan, but his efficiency is closely scrutinised by the workers' management bodies when examining the periodical reports and, above all, whenever the undertaking runs into trouble on his account.3 It seems to be common for commercial questions to be discussed in detail in the periodical 1 Cf. Izbor, No. 32, 10 Aug. 1959. Competitive bidding appears to be standard practice in the allocation of orders by public bodies and for major investment projects of the undertakings themselves. 3 As with financial and accounting operations, the absence of the secrecy which usually surrounds commercial transactions also means that a constant check is kept on the directorate by the junior staff, either because they themselves belong to the management bodies or because they are in a position to inform others of any malpractices or negligence which may come to their notice. Moreover, the heads of the production departments have every incentive in their own reports to point out any shortcomings of the commercial department which may have had a harmful effect on the volume of output, costs or earnings. 2 ECONOMIC FUNCTIONS 167 progress reports on the work of individual departments, production trends, and costs and profit margins. For transactions which are in any way exceptional or which depart from the planning forecasts because of their size or the terms offered or demanded by the undertaking's trading partner, the commercial manager should notify the workers' management bodies and seek their prior approval.1 The workers' management bodies are apt to react very sharply whenever some difficulty or shortcoming of the commercial department, such as a shortage of components, threatens to hold up production.2 Similar pressure by the collective—although not so prompt or easily detected—may also occur if there is any difficulty in disposing of production output on the market. The workers are often among the first to be aware of this because they can see for themselves that stocks are piling up and output of some items is falling off. This pressure is largely believed to account for the growing interest being shown by industrial concerns in expanding their own sales departments, prospecting new markets (including international ones3 4), negotiating long-term delivery contracts, etc. Consumer credit is also in many cases receiving close attention from workers' management bodies.5 While commercial freedom helps industry to adapt itself to its customers' demands and tastes, it may of course have a number of serious drawbacks. For example, as soon as the market is fairly saturated, 1 For example, under the by-laws of one of the undertakings visited by the mission " in any exceptional transactions such as the sale of goods at a price below the current price, discounts in excess of the usual percentage, etc., the director must, on the advice of the commercial manager, obtain the approval of the board of management ". 2 The mission was present at an animated, though invariably polite, discussion between the worker members of a board of management (together with the chairman of the workers' council) and executives of a big undertaking (the commercial and technical managers). When the latter had left the room, the committee decided on a number of practical measures to deal with the situation and the director promised to take immediate action. For an account of a meeting of the workers' council devoted to a discussion of the management report, at which it was decided to reorganise the sales division of the undertaking because of difficulties encountered in marketing its products, see Borba, 31 Oct. 1960, p. 4. 3 Under an order dated 15 June 1960 Yugoslav undertakings can establish or help to establish undertakings abroad and can use part of their earnings in foreign currency for this purpose. 4 In one undertaking, for example, the workers' council was given most of the credit (both for the idea and for the financing and working out of the details) for the opening up of an agency abroad which enabled the undertaking to sell its products throughout one part of the world at a time when competition from a number of other undertakings led to relative saturation of the home market. 5 Yugoslav undertakings practise sales on the instalment plan and other forms of credit on quite a large scale. Periodic submission of reports and accounts gives the workers' management bodies an opportunity of keeping a close check on this item (especially doubtful or bad debts, pending court cases, etc.) and of taking any action that may be needed. 168 WORKERS' MANAGEMENT IN YUGOSLAVIA competition may well get out of hand and place some producers in jeopardy. As early as 1957, this appears to have been the case in some of the consumer goods industries. In some quarters there were even complaints about excessive competition between Yugoslav firms in markets abroad * despite the fact that agreements in this field do not come under the legal ban on monopoly practices. Similarly, it has sometimes been argued that, where the same article, such as a refrigerator, is launched on a fairly small market by a number of undertakings simultaneously, it would in fact be more economic to give a monopoly to a single producer.2 Despite the ban on all forms of monopoly practices, undertakings in some sections of the economy have tried to shield themselves against competition by means of price agreements. Nevertheless, owing to the publicity given to their accounts and to the meetings of the workers' management bodies, it appears difficult to conceal the existence of such agreements from the authorities or the public. The specialised press and reviews often refer to cases of this kind. 3 There can be no doubt, however, that some practices of this kind are occasionally condoned as long as they do not cause any market distortions. Some cases have even been quoted where communes have encouraged undertakings to expand their incomes by raising prices. The authorities seem, for their part, to prefer not to make too extensive use of the penalties laid down by law (fines, dismissal of the director and workers' management bodies, etc.) and tend to combat agreements by indirect 1 Cf., for example, Komunist (Belgrade), No. 133, 12 Nov. 1959, p. 30. * For some big items or those that require mass production (such as motor cars), production is inevitably regulated to some extent—as in all countries with limited resources—owing to the simple fact that no firm can start making them unless it can obtain loans and currency allocations on an exceptional scale. * For example, the review Nova administracija (No. 3, May 1957, pp. 338-341) gave a detailed account in 1957 of the meetings held by the edible oil producers' association about retail selling prices, despite the fact that the organisers tried to keep these meetings fairly private. Among many others the following exchange of views was reported: The representative of a small oil factory: " The big producers are competing with us unfairly. No matter which customer we contacted [offering our product at the price set by big producers] the answer was that others were selling more cheaply. Our collective accordingly decided that we should sell at any price provided it would cover our costs." " The representatives of the big oil factories then threatened to sell their products at a discount in the areas supplied by the small factory and were told that the small factory would not accept an ultimatum and if necessary would cut its own prices still further." These negotiations and the agreements between the " big edible oil producers " were considered to be wholly illegal and objectionable from all points of view by the author of the article. The question was not finally settled until 1959, when the Oil Factories Association adopted " regulations for the fixing of prices of edible oils " which allowed individual undertakings complete freedom in this respect while forbidding certain types of unfair practices. (Cf. Privredni pregled (Belgrade), No. 1158, 1 Nov. 1959, p. 4). ECONOMIC FUNCTIONS 169 methods, some of them economic (e.g., by issuing additional import licences) and some of them psychological. The press, the trade unions and the bodies representing consumers all play an important part in this task. Nevertheless, all agreements on prices, the allocation of markets, etc., are of course void and legally unenforceable.1 Another monopoly practice which occurs is boycotting, i.e. refusal by the producer to sell to one or more buyers at current prices. Practices of this kind are particularly hard to fight by legal means because they involve interference in the right of each undertaking to choose its own business relations. As a prohibited practice, a boycott can obviously not be openly " declared " or enforced. In one case, for example, an undertaking which was largely dependent on regular supplies of small quantities of a special alloy was notified by its supplier (which also happened to be the only producer in the country) that all deliveries would be suspended because its own production was barely adequate for its new development programme. The director's protests had no effect and the chairman of the workers' council had to pay two visits to the supplier to plead his case with the latter's jdirector and workers' council. Hefinallywon them over, but only after bringing the case out into the open in one of the daily newspapers.2 Another more recent case concerned three heavy engineering concerns which were charged with being unwilling to agree to carrying out a large public contract for the building of several sugar refineries.* After the three concerns had flatly refused any joint arrangement with the " founders " of the refineries, talks between the parties were held under the auspices of the executive committee of the Engineering Industry Association, which finally advised the " founders " to negotiate directly with the undertakings of their choice and to take the case at the same time to the Court of Honour of the Chamber. The executive committee simultaneously decided to draw up a memorandum to be submitted to the workers' councils of the three undertakings concerned, giving an account of the negotiations and all the other circumstances. 1 The Federal Economic Court holds that the ban on monopolies entails and makes unenforceable local contracts granting exclusive representation at the regional level. An undertaking which gives an exclusive dealership to a particular concern is therefore free at any time to sell direct to any other customer in the same area. 2 Direct contact between representatives of workers' management bodies does not seem to be unusual, either socially or on a business basis, or when any major difficulty affecting relations between their undertakings crops up. In fact, most problems appear to be settled at this stage. Cf. also an article in Borba, 15 June 1960, p. 6, giving details of a joint session by the workers' councils of two neighbouring undertakings to settle the problem of the indebtedness of one undertaking to the other. 3 Priwedni pregled, op. cit., No. 1076, 29 July 1959. It should be added that, according to the newspaper's account, the disagreement was not over the cost of the plant; the factories were simply unwilling to co-operate in carrying out the contract. 170 WORKERS' MANAGEMENT IN YUGOSLAVIA According to the president of the Association, this was " a case without precedent in the annals of Yugoslav industry " and a flagrant abuse of the autonomy of enterprises. A final point which should be made here concerns the duties and practice of workers' management bodies in the fixing of current prices. At first sight, it might be feared that workers' management would lead to a constant rise in producer prices, because the collectives would find this the easiest way of increasing their incomes. But, despite countless cases of allegedly excessive increases which have been quoted by authors and discussed in the press, the prices appear recently to have remained on the whole stable, and the upward pressure to have been checked by competition between enterprises.1 Although up till the beginning of 1958 prices were in most cases fixed quite freely, the collectives had at that time less incentive to raise prices because they could not distribute the surplus income beyond a certain limit. The introduction of the present system of distribution, with wider powers for the workers' management bodies, gave rise to the fear that there might be a sharp jump in prices, and a series of ordinances were issued in the early part of 1958 imposing price controls on a number of major industrial products.2 The prices of these items could not be increased above the March 1958 level without sufficient reason. At the present time, however, an undertaking need only notify the Federal Secretariat for Economic Affairs of any increase in its prices a month before it comes into effect (explaining its reasons for doing so); the Federal Secretariat only has the power to postpone the increase for a period of not more than six months. For some raw materials in short supply (coal, iron and steel, etc.), a system of official price ceilings for all users in the country has been in operation since 1954.3 As prices had generally reached their economic level under free competition, these price control schemes do not appear to have hampered regular economic development. Controlled goods did not disappear from the market 4, and there has been no particular increase in the prices of uncontrolled products. The publicity given to the accounts of each undertaking also makes it far easier to maintain price control and to 1 See Appendix I, Table L, first column. There are no general controls on the prices of wholesaling or retailing undertakings, although local communes are empowered where necessary to fix maximum prices for certain staple items. 3 Maximum (or fixed) prices are also imposed on certain staple items (bread, sugar, etc.), fares, electricity, etc. 4 Although a quota system has had to be introduced for some ores in short supply (especially copper), whereby the producers are required to earmark part of their output for certain specified consumers (non-ferrous metal smelters, etc.). 2 ECONOMIC FUNCTIONS 171 examine applications for price increases. Few infringements of the price regulations have been brought before the courts. Existing price regulations and controls are nevertheless the main restriction on self-management rights which is likely to cause difficulty. If the controlled price does not provide a minimum return, the collective may well lose all interest in the management of the undertaking. In the early part of 1958 the price regulations led to a fairly unusual dispute, involving a stoppage of work, in a big coal mine where the workers considered that in the circumstances they could not earn a fair living. To meet their grievances, the mine in question was empowered (by a special order) to charge higher prices than the official ceiling. At the same time, the minimum guaranteed remuneration of all coal workers was increased by 10 per cent. Subsequently, controls on coal prices have been made more flexible and a number of other mines have been authorised to fix their own prices.1 This opposition between administrative regulation and the interests of the undertakings is generally regarded in Yugoslavia as the main possible source of disputes. As a result, the whole question of price regulation is followed very closely on all sides. The recent overhaul of the customs system and the liberalisation of external trade now taking place both testify to the wish of the Yugoslav authorities to eliminate the administrative restrictions which still exist. Moreover, in several of the undertakings visited by the mission, the workers' leaders said that they took account of the economic and social implications of their commercial policy. They said that the drive to expand production and exports, especially in industry, was due not only to various economic incentives (tax reliefs, allocations of a share of the undertaking's currency earnings, etc.) but also to a sense of public duty. Some undertakings have reportedly been guided by these considerations even in their price policy, and have not made certain possible profits during shortages in an expanding market.2 In some cases such considerations have been noted in the internal plans or reports of some undertakings, e.g. to justify a very small profit margin on small-scale farm equipment. ORGANISATION OF PRODUCTION, MODERNISATION, MECHANISATION Since remuneration is directly linked with the undertaking's income, the collective has a strong incentive to ensure that production is as efficiently organised as possible. Modernisation and mechanisation 1 2 Cf. Sluíbeni list, I960, orders Nos. 2, 251 and 268. It is true that these undertakings were generally highly profitable in any case. 172 WORKERS' MANAGEMENT IN YUGOSLAVIA not only help to increase the value of each unit of labour, but also reduce the physical effort required of the workers and lead to healthier conditions. As the collective has direct responsibiUty for the volume of employment and all other aspects of employment policy (transfers, allocation of jobs, scales of pay) it can take any action that may be needed to cushion the social consequences of technical progress. In point of fact, because of the rapid expansion of production and the shortage of skilled labour, the problem is likely to be uncommon as things are at present. The day-to-day organisation of production is the responsibiUty of the directorate, and particularly of the technical manager. In large industrial concerns, the technical manager usually heads a special department known as the design and production office. In each manufacturing department or workshop, the technical superintendents and the foremen are responsible for organising production and for giving the workers such instructions as may be required. The by-laws and regulations adopted by the workers' councils are expected to define their powers. The more decentralised the system of workers' management is, the more direct the participation by the collective can be. Where there are workers' councils or other management committees in individual workshops, or where there are regular meetings of all the workers in workshops with only a small staff, the various aspects of organisation of work—remuneration, safety, etc.—are usuaUy foremost on the agenda. For example, in a rolUng mill employing about 50 workers per shift, the mission was able to attend a meeting of the workers at which, after fairly general talks by the workshop superintendent and a trade union secretary about the position of the plant as a whole and the routine work of the rolUng mill itself, the discussion dealt almost entirely with organisational problems such as losses caused by frequent switching from the main product to an alternative product which was turned out from time to time, and the fact that some of the plant and methods were obsolete and (among other things) entailed certain safety hazards. It is worth noting that at this meeting comments, complaints and suggestions came from all sides—a third or more of the workers took part—and there was hardly any embarrassment due to verbal hesitancy, the presence of a foreign delegation or differences in grade between the speakers.1 1 It will be recalled that, unlike a workshop council with powers under the by-laws, a meeting of the workers in a workshop is not usually authorised to take decisions. For some time, however, an increasing number of cases have been reported in which financial decentralisation has been accompanied by power to take decisions on the organisation of work; this power has been transferred direct to such working groups as workshop meetings, etc. Some examples of this will be mentioned in later pages of this study. ECONOMIC FUNCTIONS 173 In an undertaking of any size, the day-to-day production problems can obviously not all be dealt with centrally, whether by the directorate or by the elected management bodies. In approving the production plan and the undertaking's regulations (especially those on remuneration which, as was stated earlier, have a major influence on organisation) the workers' management bodies have performed their main task, and it seems to be uncommon for them to insist on giving prior approval to more detailed matters (e.g., the effect of changes in organisation on output standards). The central workers' management bodies and the directorate may, of course, have to deal from time to time with production problems arising on the workshop floor, either in their periodical reports or in dealing with complaints by workers. In addition to this role of general supervision and, from time to time, of arbitration, the workers' management bodies, especially the boards of management and some of the specialised committees, can also play a direct part in organising production on the workshop floor. Thus, for example, in one undertaking which, in order to take advantage of certain tax reliefs, had put into effect an additional production plan designed to give all the workers one or two additional months' pay (over and above the earnings provided for under the annual plan), the board of management took the step of calling a special meeting once a week to discuss the carrying out of the plan, with special emphasis on rationalisation and interdepartmental co-ordination. Members of the directorate and the heads of all the production departments attended these weekly meetings. The mission gathered during its visit that this arrangement, which was fully in accordance with the general desire to expand production, enabled organisational difficulties to be ironed out almost as soon as they arose, especially those affecting the flow of production from one workshop to another. Here, too, the main initiative appears to have come from the workers' spokesmen in different departments, who often seem to have been better informed than some technicians and executives about the state of affairs in their own workshops and the organisational problems involved; at least, they brought them up more often in discussions, with the result that each problem was aired and analysed and, where possible, settled on the spot while everybody was present.1 This, however, is only one 1 By short-circuiting the usual channels, this arrangement in fact strengthened the director's position as referee in technical matters, partly because of the information supplied to him by the other members of the board of management and partly because of the readiness of workers in individual departments to accept measures which they themselves had either inspired or demanded. 174 WORKERS' MANAGEMENT IN YUGOSLAVIA example. A more careful survey would be needed before any general conclusions could be put forward about the influence of workers' management on the level of productivity in Yugoslav industry. From the standpoint of workers' management, modernisation and mechanisation are regarded in very much the same light. Schemes of this kind do not appear to have come up against any resistance from the collectives or management bodies. In fact, they seem to set their hearts on it as soon as enough money is available. This attitude seems mainly due to the fact that they themselves control the volume of employment in their undertaking and that any initiative they display has an effect on their earnings. However, undertakings which bring new plant into service or put new products on the market can also benefit by substantial tax reliefs which, in some instances, account for a sizable share of their surplus income. A further point is that, in dealing with these problems of organisation, modernisation and mechanisation, undertakings are not simply left to their own devices. Their own associations, especially the Chamber of Industry, have special committees and sections for this purpose, which hold meetings and conferences for technicians, and (with the assistance of the authorities) conduct research themselves into the more costly production techniques such as electronics and automation.1 There has also been a remarkable increase in the number of publications (periodicals and others), specialised institutions, etc., concerned with industrial organisation and production. PRODUCTIVITY AND PACE OF WORK From the standpoint of the collective, the main purpose of all these economic measures in the undertaking is to increase the return on each unit of labour. Whatever the subject—administration of funds, commercial policy, mechanisation, etc.—the workers' material interest points in only one direction : obtaining the highest possible net income for the undertaking so as to be able to improve working conditions and earnings. This same objective can also be achieved (other things being equal) by stepping up the rate of work or, in other words, by greater exertion by all members of the collective. The following pages will deal with only a few of the practical consequences of workers' management in this respect. 1 Cf., for example, Borba, 12 Sep. 1959 (proceedings of a special meeting organised by the Chamber of Industry and devoted to the introduction of automation in the chemicals, paper and food industries). ECONOMIC FUNCTIONS 175 The introduction of workers' management led to the abandonment of methods such as labour emulation, shock work, campaigns for the periodical revision of output standards, rationalisation and invention schemes, etc., which had been used under the earlier system to ensure that the targets laid down in the state and undertaking plans were reached and, if possible, exceeded. The reversion to a free labour market, the incorporation of the managing staff into the collective, the different approach to labour discipline and other changes in the framework of labour conditions also largely changed the nature of the problem. For example, the pre-1950 legislation on workers' inventions and proposals for greater efficiency fell into abeyance, and it was only in 1959 that it was realised that it might be advisable to raise this question once more so as to make it possible for workers' councils to display initiative in this particular field.1 According to a ruling by the Federal Secretariat for Finance2, suggestions for increasing efficiency can still be rewarded in accordance with the procedure laid down by the earlier 1948 legislation, but workers' councils are not obliged to follow this procedure. This development is due to a revival of interest in proposals or suggestions of this kind, which have again been mentioned in the Yugoslav press recently. In some cases, workers' councils have awarded fairly large bonuses, rationalisation committees have been set up and suggestion boxes have reappeared. Various types of decision by workers' management bodies, described earlier, influence the input of work, notably the annual plan (as regards volume of production), the remuneration regulations and related decisions governing the size and pattern of the labour force, output standards, etc. The following chapters include references to various other aspects of management which may affect the pace of work required of the workers, e.g. the choice of workers to be hired or dismissed, labour discipline, income distribution, etc. The community of interests between all the members of the undertaking does not alter the fact that the manual workers who have to supply the physical effort do not see entirely eye to eye with the technical and administrative executives, who will generally be concerned to increase 1 Cf. Nova administracija (Belgrade), Vol. VII, No. 1, Jan.-Feb. 1959, pp. 51-54. It is worth noting that the last reference to worker " innovators " and " rationalisers " is in fact contained in the Basic Law of 1950 which gave boards of management responsibility for " taking decisions regarding . . . workers' proposals for rationalisation and innovations ". Neither subsequent legislation nor the internal regulations of undertakings, nor even theoretical publications on workers' management, seem to refer to this clause. 2 Cf. Privedni pregled, op. cit., 14 Sep. 1959. 176 WORKERS' MANAGEMENT IN YUGOSLAVIA labour productivity in every way, including the rate of work. Though their possibilities in this direction are doubtless fairly limited, the executives have an influence, if only because of their interest in devising systems of payment which stimulate output. On the other hand, it should be borne in mind that the elected management bodies not only decide the pay scales but also settle matters affecting their operation and any other relevant problems. If need be, they can institute special procedures to deal with the subject. For example, the " output standards regulations " of one large factory, while leaving it to the research department tofixindividual standards, stipulate that regular reports must be made to the board of management on their operation, and also lay down a special procedure whereby the grievances of individual workers can be taken as far as a special arbitration board (the Output Standards Board) comprising four members appointed by the workers' council and one trade union representative. On the whole, however, output standards for individual workers are far from being the exclusive basis of remunerationa, since Yugoslav undertakings tend to lean towards systems of collective remuneration based on the economic performance of production units rather than of individual workers. The problem of raising productivity by increasing the tempo of work as distinct from improved management, material savings and other ways of reducing unit costs, has in recent years given rise to a good deal of controversy.2 Discussion on the subject is by no means uncommon among management bodies, and doubtless does much to explain their emphasis on the purely economic aspects of management rather than on greater effort as such. This view seems to be shared in official circles. In a series of speeches in Serbia and in various parts of Montenegro 3, the President of the Republic made a point of emphasising that the handing over of management to the work collectives was not intended 1 In several undertakings the mission noted that the percentage by which output standards were fulfilled in different workshops tended towards equality. Under the present arrangements for sharing out income, the system of payment by results in fact takes the form of an " extra wage " for the production workers. Its popularity varies considerably from one part of the country to another, presumably in accordance with local habits and preferences. 2 It may be of interest to mention that, while some Yugoslav writers continue to emphasise the importance of labour productivity, others stress that for an average undertaking in Yugoslavia direct labour costs represent only a small percentage of the total cost of production (cf. Appendix I, Tables F and H) and that it may be in the interest of most undertakings to seek to increase their profitability first of all by reducing operating costs other than labour costs. One of the examples often cited is that of a footwear factory which, on introducing a system of individual output norms, found that wastage of raw materials was far in excess of any possible saving in labour costs. a Cf. Borba, 16 June and 20 Sep. 1959. 177 ECONOMIC FUNCTIONS to " extract the maximum physical exertion from the workers " but to " provide them with fair remuneration ". The head of the Yugoslav State considered that the production efforts of the workers under the new system were satisfactory, and that the main problem at present— despite the progress that had been achieved—was to induce the technicians to make the best possible use of existing equipment. It is perhaps hardly necessary to recall that the state and local authorities have an indirect influence on the rate of work, as on other cost factors, through different financial and fiscal policy instruments which determine the ability of an undertaking to make a surplus. The minimum level of productivity is clearly defined by the need to cover the fixed charges and overheads, but the prospects of higher earnings do not appear to have spurred the undertakings to special productivity drives. In some cases there have been exceptional bursts of exertion to make deliveries on time, particularly when—as often happens—the contract has contained a severe penalty clause.1 Summing up the practical effects of workers' management in this respect in 1954, the Vice-President of the Federal Executive Council, Mr. E. Kardelj, concluded that " forecasts that the workers' councils would have a disastrous effect on production have turned out to be false ". If one looks at the problem a little more closely, a number of points stand out. Firstly, the workers' councils are usually credited with having, from 1952 onwards, brought the volume of employment in their undertakings more into line with real needs and eliminated some of the excess manpower, which clearly helped to raise productivity without necessarily speeding up the rate of work. Thereafter, the volume of industrial production rose sharply, and in 1958 had reached an index figure of 210 (1952=100), while the volume of employment also expanded by 70 per cent. However, although Yugoslav industry made a substantial contribution to the general productivity of the economy and to the rise in the level of employment, the improvement in its own productivity during these years, especially at the start, was less substantial. The annual productivity indices for industry were as follows (1957 = 100): 1952 1953 1954 1955 81.5 86.5 86.5 89.0 1956 1957 1958 1959 90.0 100.0 101.0 107.0 It will be noted that after the initial period (1952-53) the sharpest increases occurred in 1957 and 1959 when, as a result of bumper harvests, industry was able to draw on ample supplies. 1 See also below, Ch. X. 178 WORKERS' MANAGEMENT IN YUGOSLAVIA Analysis of productivity by branch of industry shows that—inevitably —the best performances are found in industries which have benefited most by technical progress (heavy metallurgy, chemicals, paper). In the timber industry, where executives often complain about the lack of funds for modernisation, there has, on the other hand, been a fairly marked fall in labour productivity. Most of the improvement in industrial production has been accounted for by the new plants.1 The annual productivity indices also show that there is some relationship between productivity and a more liberalfinancialpolicy. Periods of high productivity have also been those when undertakings were able to keep a large slice of their incomes, whereas the stagnation which occurred in 1954-56 and (above all) in 1958, is widely attributed, at least in part, to the restrictive character of the " financial instruments " employed during these years of transition. Allowing for the great influence of harvests and technical progress, it can probably be concluded that workers' management in general has not had a negative effect on the productivity of labour, and that it may not yet have reached the limits of its possibilities. 1 Cf. Savezni zavod za statistiku (Federal Statistical Institute): Studie i analize, No. 11 (Belgrade, 1959); Table 7 (1952=100) shows that the productivity of new plants was 189 in 1957 as against 111 for " other industries ". CHAPTER IX LABOUR RELATIONS IN THE UNDERTAKING The ultimate aim of the Yugoslav workers' management system is to turn each undertaking into a " free association of direct producers " or, to be more precise, into a primary cell of such an association, which would gradually extend over the whole economy. In this context, the right of the collectives to reach their own decisions in personnel matters is just as important as their right to distribute the product of their labour. However, the undertaking must still be able to perform the function that distinguishes it from a voluntary association in the usual sense of the word, namely that of providing qualified leadership to weld the personnel into a productive unit. Whereas the basic law of 1950 on workers' management had reserved for the director of an undertaking wide prerogatives regarding workers' entry into the undertaking and departure from it, section 125 of the Labour Relations Act of 1957 endorsed the changes that had since occurred in the practice of the collectives and stated that the workers themselves, exercising their right to manage their own affairs both directly and through elected bodies, should regulate the reciprocal relations arising out of work done jointly within the undertaking. Before describing how work relationships are organised under the workers' management system, a reference must be made to the guarantees applying to all citizens in the field of work. These comprise— (a) freedom in the choice of occupation and job, and to change jobs (sections 1, 5 and 6 of the 1957 Labour Relations Act); (b) a right to work corresponding to the individual's qualifications and aptitudes (under the Constitution). The Labour Relations Act adds a right to " personal income " in return for work varying with the income of the undertaking, a guaranteed minimum for this income, dismissal only under statutory conditions and procedures, and retention of the workers' rights while temporarily unemployed (sections 5, 6, 10, 183 and 206) 1 ; 1 In particular, unemployed workers retain their rights to social security benefits and family allowances, and receive an allowance proportionate to their former earnings (at present the normal rate is 50 per cent.). From the economic point of view, in the absence of direction of labour the guarantee of the right to work is conditional on the capacity of the economy to absorb the unemployed. 180 WORKERS' MANAGEMENT IN YUGOSLAVIA (c) equality of rights in work relationships, irrespective of sex, religion, political views, race, ethnic or social origin (sections 8 and 9 of the Act); (d) special protection for young, disabled and women workers ; (e) protection against any reduction of a worker's legal rights by any organ of the undertaking or any public authority, or under the terms of an individual or collective agreement (section 13 of the Act); and (f) a right of appeal to the elected management bodies, administrative authorities and courts on issues arising out of the work relationship (section 25 of the Act). ESTABLISHMENT AND TERMINATION OF WORK RELATIONSHIP Through its plan and its remuneration rules an undertaking lays down its employment policy for a fixed period, generally of one year. The application of the policy, that is to say the recruitment of new workers and, if necessary, the dismissal of surplus labour, then becomes the direct responsibility of the workers' management bodies. Under the Act of 1957 the collective, or in undertakings with more than 30 workers the workers' council, may reserve the right of decision in each particular case. It may also set up for the purpose special recruitment and dismissal committees.1 In a large undertaking the workers' council may if necessary set up several recruitment and dismissal committees or delegate its powers to workers' councils at the department level.2 In certain undertakings increasing decentralisation of management functions and of the system of remuneration has already led to transfers of powers with regard to labour relations to the collective of each workshop, which may then choose and dismiss its members. On the other hand, the Act prohibits any delegation of powers of recruitment and dismissal to the director of the undertaking or to other executives, except in cases when workers are recruited for short-term work in establishments or on work sites located away from the main plant which have a high labour turnover. 3 1 According to a recent survey by the labour relations committee of the Central Council of Trade Unions, the composition of such committees is not always satisfactory in practice, since sometimes they include only a small number of production workers while the majority may be made up of various members of the administrative hierarchy. Some cases have been reported where the committee was presided over by the secretary of the undertaking or where decisions were taken outside the committee (by the director, the secretary or an officer of the personnel service). Cf. Bitten (Belgrade, bulletin of the Central Trade Union Council), No. 1, Jan. I960, p. 42. 2 Any provisions of this kind must be specified in the by-laws of the undertaking or in its labour relations rules. 3 This statutory provision is thus mainly intended for work on construction sites or other seasonal work done away from the undertaking. LABOUR RELATIONS IN THE UNDERTAKING 181 This reservation of powers to the management bodies is of practical importance since it renders any engagement or dismissal of a worker ordered by an executive null and void (except in the cases of temporary recruitment specified in the Act). A dismissal that is not based on the decision of a workers' management body may make an undertaking liable to pay damages equal to the worker's loss of earnings.1 Unauthorised action of this kind thus involves serious consequences for the undertaking and the directing staff. Recruitment Procedure General Provisions. Under the Industrial Relations Act of 1957 it is normally the director of the undertaking or other authorised executives who must notify the recruitment committee or the workers' council when new workers should be taken on. The notification must mention the number of workers to be recruited and the qualifications required. The recruitment committee or the workers' council then considers the applications submitted to it in the light of any relevant provisions of the by-laws and other rules of the undertaking, and decides whether to give a job to a particular worker. If the director considers that the workers selected by the committee do not possess the necessary qualifications he may submit the matter to the board of management for reconsideration; if the original decision was taken by the workers' council or by the whole collective, the director may ask the body concerned to reconsider the matter itself.2 Once a binding decision has been reached, the director concludes with each worker an " agreement establishing a work relationship ". Within the framework of the general procedure described above, each undertaking is in principle free to follow its own policy and to adopt the methods that suit it best for the selection of new workers. It has been reported, for example, that a whole series of big industrial concerns have 1 There is no specific provision on this subject in the Labour Relations Act of 1957. Most Yugoslav courts consider that a worker whose dismissal is null and void is entitled not only to reinstatement but also to compensation equal tó his entire remuneration and allowances for the period during which he has been kept out of his job. Other courts consider that such payments should be limited to " equitable compensation ". Such damages can involve large sums: since the Labour Relations Act does not state that appeals shall be barred after a specified period, workers who have been unlawfully dismissed may sometimes wait for months before appealing to the courts in order to obtain more substantial compensation for loss of earnings. Some observers consider that, pending a ruling by the Supreme Court or an amendment of the Act, appeals should not be allowed unless they are submitted to the courts within two weeks (Socijalna politika (Belgrade), 9th year, No. 10, Oct. 1959, p. 73). 2 The Act specifically states that in both cases the director may have recourse to this procedure only if his objections relate to the qualifications or experience of the newly recruited workers. 13 182 WORKERS' MANAGEMENT IN YUGOSLAVIA introduced various preselection methods including aptitude tests, medical examinations, induction training, etc. However, the Act of 1957 maintained in force a special system in use since 1954 for the recruitment of executive staff by public competition. Recruitment of Executives. At present a public competition must be organised whenever there is an executive post to be filled, unless this can be done by promoting a worker who meets all the requirements for the job from within the undertaking.1 The workers' council of each undertaking must specify in the by-laws or in the labour relations rules of the undertaking which executive posts or other jobs calling for high qualifications are to be filled by way of competition. In practice, recruitment by competition is not limited to members of the " college " of departmental managers but applies to most of the posts of heads of departments or services. Some undertakings even use this method to recruit supervisory staff or highly skilled manual or non-manual workers.2 For each job filled by competition the by-laws or rules of an undertaking must also set the conditions to be met by applicants—degree of specialisation required and minimum requirements with regard to theoretical knowledge and practical experience.3 Competitions are normally organised by the board of management.4 Notices of a competition must be published in the press or in any other appropriate manner, and must state the qualifications and experience required and the time limit for lodging applications which, under the terms of the Act, may in no case be less than a fortnight. Judging by the number of notices which large undertakings publish in the leading dailies, this procedure seems to be widely used. On the basis of the applications received, a selection among the applicants is made by the recruitment committee or, failing that, by an ad hoc committee of the board of management, which reports to it and through it to the workers' council. If the competition is unsuccessful owing to a lack of suitable applicants, the board of management may fill the job by 1 The decision on whether a promotion is desirable is taken by the board of management, which submits its recommendations, if any, to the workers' council. 2 The bulletin of the Central Council of Trade Unions states {Bitten, No. 1, Jan. 1960, p. 40) that, contrary to the spirit of the Act, the by-laws and rules in certain undertakings provide that recruitment for all jobs shall be by competition. * The by-laws or rules often provide for several possibilities, such as an engineering graduate with four years' experience, a holder of a technical school diploma with eight years' experience or a person with 15 years' experience in a responsible post. 4 However, the workers' council or its recruitment committee may organise the competition directly. LABOUR RELATIONS IN THE UNDERTAKING 183 direct selection. Any applicant, as well as any person whose interests have been affected by the results of a competition, is entitled to apply to the workers' council if he considers that the competition was not held in accordance with the by-laws or rules or that the person selected does not have the requisite qualifications. If the workers' council agrees, it may cancel the competition and the resulting appointment. Termination of Relationship A worker may at any time terminate his work relationship with the undertaking by giving the statutory notice. The Act also provides for automatic termination when the worker has made it quite clear that he does not intend to go on working in the undertaking.1 The relationship may also be terminated at any time by written agreement, although this requires the prior approval of the workers' council when the person leaving the undertaking is one of its members or a member of the board of management. When it is the undertaking that wishes to terminate the relationship the bodies that take the decision are the same as for recruitment, namely the recruitment and dismissal committee or the workers' council (or, where appropriate, the collective) or, in the case of an executive post, the board of management. Their freedom of action, however, is limited by law. Apart from dismissal for disciplinary reasons, for which there are special procedures 2, the Act makes specific reference to only two grounds for dismissal—lack of work or a reduction of costs—and in any case it is understood that no worker may be dismissed without a valid reason.3 It is expressly forbidden to dismiss workers who are ill (during treatment or convalescence), expectant or nursing mothers, workers who belong to the workers' management bodies or who hold elective posts in the people's chambers or producers' councils, those who are on military service or 1 In such a case the Act requires either a specific statement to the worker's chief or an unexplained absence of at least seven consecutive days. In fact this provision mainly seems to be taken advantage of by semi-skilled or unskilled workers who are looking for better living and working conditions; a survey carried out by district trade union committees revealed that from 1 to 14 per cent, of the workers, according to the area, broke off their relations with the undertaking in this manner during the year 1958-59. (Cf. Bitten, loe. cit.) 2 Cf. below, pp. 195-196. 8 It is always the workers' council which decides, if necessary, on appeal by the worker concerned, whether the reasons for a dismissal are sound. The extent to which the councils' decisions are subject to judicial review has not yet been finally settled. The Act prohibits mention of the reasons for a worker's dismissal or departure in his testimonial or work-book, even if he leaves his job without notice and of his own accord. 184 WORKERS' MANAGEMENT IN YUGOSLAVIA taking full-time vocational training courses, workers against whom disciplinary proceedings have been instituted, etc.1 In addition, workers whose working capacity has been reduced may be dismissed only with the prior approval of the labour authorities. These prohibitions are also binding where an undertaking is being operated or wound up by an official receiver. The Act also provides that any dismissal measures affecting a certain number of workers 2 must be preceded by a special discussion in the workers' council, which must decide whether such a measure is desirable and fix the number of workers to be dismissed. Only on that basis may the recruitment and dismissals committee, if any, select the workers to be dismissed. In this connection the Act does not lay down an order of dismissals, but fixes periods of notice of a length varying according to length of service, so as to protect older workers and those who have spent many years with the undertaking. In addition to the statutory period of notice, which ranges from one to five months according to length of service 3, the Act provides that workers who have worked for at least 20 years or have served the same undertaking continuously for 15 years may be dismissed only by decision of the workers' council on the proposal of the board of management; in addition, workers in this category are entitled to a predetermined amount of compensation amounting to four months' remuneration. The board of management may decide that a worker's services should be dispensed with during the period of notice, and that he should therefore be paid compensation equivalent to the remuneration that would otherwise have been due to him during 1 However, the relationship is terminated automatically in the following cases: confirmed total and permanent incapacity for work; military service for a period exceeding three months; court decision barring a worker from practising his trade; sentence to a term of imprisonment exceeding one year. An undertaking must provide half-pay while a worker is undergoing preventive detention and full pay if he is acquitted. It is entitled to secure a refund from the authorities which ordered the worker's detention or arrest. 2 The Act allows each workers' council to fix the exact number in the labour relations rules in accordance with the circumstances. It seems that workers' councils have generally wished to retain in their own hands direct control over collective dismissals, even if they affect only a small number of workers. For example, according to the rules of an undertaking with over 2,000 workers, any dismissal measure affecting five or more workers in any one department or workshop, or 15 workers in different departments of the undertaking, is deemed to constitute a collective dismissal. In another undertaking the rules provide that the workers' council should decide in each case whether there should be a prior discussion on a proposed dismissal. 3 The period of notice is at least one month for workers with less than five years of service, two months for those with between five and ten, and so forth up to a maximum of five months for workers with at least 20 years of work or 15 years of uninterrupted service in the same undertaking. An undertaking may provide in agreements for periods of notice longer than the statutory minimum, subject to a maximum of six months. LABOUR RELATIONS IN THE UNDERTAKING 185 that period; when the person concerned is the director of an undertaking, the decision is taken by the workers' council. Any worker who is dismissed has a right of appeal to the higher management bodies (the board of management and the workers' council) and then to ordinary civil courts (acting as labour courts). The courts have a power of review only over the lawfulness of dismissals and not over their desirability.1 Most undertakings have an expanding labour force and the workers' councils are therefore naturally reluctant to dismiss workers, even when some reduction in personnel seems necessary or desirable ; generally they prefer to suspend recruitment and to allow natural adjustment to the conditions by normal labour turnover due to voluntary departures, retirements, etc.2 In the undertakings visited by the Office mission there had been practically no dismissals.3 ASSIGNMENT, TRANSFER AND PROMOTION A worker is normally recruited for a particular job. If he subsequently becomes dissatisfied with his work he may complain to the board of management or to the appropriate committee of the workers' council. The board of management is normally responsible for dealing with questions connected with the assignment of workers to particular jobs. Occasional examples of individual requests for regrading or transfer were noted in the minutes or records of decisions of workers' management bodies. Certain new developments as regards the allocation of jobs were, however, reported in 1959. One occurred in an undertaking visited by the mission, where it was decided that the collective of each department should determine the allocation, if necessary by a vote. In each of 1 For many years the local trade union committees and the arbitration commissions of the commune people's committees examined dismissal orders from the points of view of legality and expediency. The abolition of this check early in 1959 followed the extension of the direct powers of the elected management bodies to all dismissal questions. Previously, the arbitration commissions had normally examined decisions by directors, which the elected bodies could only review on appeal. Their activity was considerable ; for example, in Belgrade municipality it was estimated that they dealt with 6,000 cases a year. 2 The practice of temporary layoffs for economic reasons is unknown, and the period of notice would be incompatible with such a practice. 8 In only one of the undertakings visited was reference made to a collective dismissal (of some 30 workers), due to a permanent reduction in the volume of work within a department. The central workers' council allowed the workshop collective to select the workers to be dismissed; it had nevertheless to reconsider each particular case, since all the workers chosen appealed against the decision taken at the workshop level. Most of them also appealed to the local trade union committee. Discussions had therefore been going on for several months, and one of the most difficult cases (concerning a woman worker with three children who was said to have been very careless in her work) was still not settled six months after the original decision. 186 WORKERS' MANAGEMENT IN YUGOSLAVIA 12 election divisions of the undertaking, the collective considered each workplace and the job descriptions, qualifications and rate approved by the workers' council; and then filled in a name for each job on a list, beginning with the better-paid posts, on the basis of nominations, after a vote where appropriate. For very few of the posts was it necessary for the board of management to correct the result.1 With regard to promotion proper, no such developments were noticed apart from occasional provision for seniority bonuses in the remuneration rules. The system of recruitment by competition for executive posts, which certain undertakings apply even to supervisory staff and skilled jobs, enables boards of management or workers' councils to promote from within the undertaking whenever there are qualified applicants. The position of manual or non-manual workers who are not in responsible posts is much simpler as a result of a statutory provision giving effect to the guarantee of the right to work and under which no worker may, without his consent, be given a job or work assignment that does not correspond to his vocational qualifications and training.2 In the opinion of officials in undertakings with whom this point was discussed, any worker who passes vocational examinations automatically acquires the right to be promoted to a job in the corresponding grade (semi-skilled, skilled or highly skilled) unless he is already in that grade. Since under existing conditions a considerable proportion of the jobs in each undertaking are held by workers who have not taken the vocational examinations for their grade3, it should obviously not be difficult to apply this principle. This contributes greatly to the popularity of adult vocational training schemes in Yugoslavia (discussed below). JOB EVALUATION AND CLASSIFICATION Adoption of the tariff of personal income rates in the undertaking by the workers' management bodies involves rating and classifying each job. In drawing up the graded list of jobs and of the corresponding rates 1 This novel procedure was favourably commented upon by a number of Yugoslav technical reviews (cf. hbor (Zagreb), No. 31, 3 Aug. 1959, and Ekonomska politika (Belgrade), No. 384, 6 Aug. 1959). 2 The only exception that is allowed to this principle is in the case of a reduction in the volume of work. In such a case the law permits a temporary transfer for a period of not more than three months, on the understanding that the worker concerned is still entitled to the remuneration for his former job. A similar arrangement is made for skilled workers assigned to jobs in lower grades for reasons of health (for example, in mines), in which case the extra remuneration is paid from social security funds. The workers' council in each undertaking is required to lay down in the labour relations rules a detailed procedure for transfers allowing for special circumstances. 3 In 1957 the report on the management of a large concern noted that this was the case for about 50 per cent, of the members of the collective. That proportion roughly corresponds to the national average. LABOUR RELATIONS IN THE UNDERTAKING 187 of remuneration, the workers' management bodies are required by law to take into account the vocational qualifications needed for each post, the conditions under which the work must be done, and the responsibility involved. The workers' council may lay down a certain number of principles beforehand, particularly with regard to the average rates for various grades or differentials for degree of skill and responsibility. The normal procedure nevertheless requires a specific rate to be fixed for each job (if necessary, on appeal by the worker).1 This gives highly differential values both within the undertaking and when rates applied by different undertakings in the same branch are compared. The system is intended to take account of all the factors that determine the value of work in specified circumstances, but it renders the task of the workers' management bodies heavy and hazardous when objective criteria are difficult to apply.2 To cope with this difficulty, certain Yugoslav undertakings have tried to adapt various systems of job analysis to their requirements. A uniform system of job analysis was made compulsory by a federal ordinance at the end of 1956, and in 1957 a series of regulations were issued to govern its application in industrial and public transport undertakings. The system is applied under the supervision of the workers' management bodies. Associations of undertakings and economic chambers have been instructed to assist individual undertakings and to co-ordinate their activities in this respect. Each undertaking was required to set up a special committee of at least three members, one of them an engineer or technician, one an experienced worker and one a representative of the union; in large undertakings subcommittees were also set up at department level. The committees or subcommittees were first to describe each job in detail and then to analyse it on the basis of uniform outlines drawn up for each industry.3 1 In a large undertaking the central workers' council generally does not discuss each particular job; it may even adopt the draft rules on pay rates, or certain chapters of such rules to which there is no opposition, by a single comprehensive decision, but each job must have been evaluated separately in the course of the discussion in the workshop, in the board of management, in the rates committee or at some other stage in the preliminary proceedings. 2 The system enables due allowance to be made in particular for the special features of each job (effects on health, type of work, etc.), which may vary within one undertaking for jobs covered by the same definition; for the relative shortage of certain qualified workers or the value attached to certain work in a particular local community; for the more or less egalitarian outlook within the collective, etc. On the other hand, the results are obviously not as clear-cut as those secured by applying a general rule which enables a single rate of pay to be prescribed for all the workers in the country or in an industry who are engaged in a particular occupation or kind of work. a The posts of directors of undertakings and of departmental managers were, however, not covered. 188 WORKERS' MANAGEMENT IN YUGOSLAVIA Although the ordinance provided that each stage of this process should be completed in a matter of months, it soon became apparent that a much longer period would be necessary. It was only in 1959 that certain undertakings completed the third stage of the programme. This seems on the whole to have been found satisfactory by undertakings, since although they have to apply a uniform system, they remain free to fix the various differentials and the value of the points they give to various factors and to different jobs. To give an idea of the amount of work that this programme involved for all concerned, members of a department subcommittee in an undertaking visited by the mission stated that, at the job description stage, they were able to review only one or two jobs at each meeting. In addition, there were numerous meetings of the central evaluation committee, the board of management, workers' councils at department level and other workers' management bodies that were to co-ordinate and approve the work of the subcommittees at various stages. In an industry in which this work was completed in 1959 the mission was also able to gauge the effort made to secure some uniformity at the industrial level by a technical committee set up by the association of undertakings for the industry concerned, which had carried out a comparative analysis of evaluations prepared by member undertakings for several hundreds of the more typical jobs in this industry; the object of this analysis was to suggest to undertakings any adjustments or corrections required to achieve co-ordinated policies and observance of the principle of equal remuneration.1 The trade unions also co-operated in this co-ordination of the remuneration policies of different undertakings. Whatever the stage actually reached in various undertakings, it does seem that most Yugoslav industries have already made considerable progress in the systematic study of all existing jobs.2 Once the results of ajob evaluation are known and approved, theymay be used in various ways. Mention has already been made of the use to which they have been put in certain undertakings in allocating jobs among the members of the collective in the various departments. More frequently, such information simply serves as a basis for the work of recruitment committees or other bodies responsible for selecting workers to be taken on. It is also communicated to the medical service of the 1 It was considered that, as a matter of principle, one job (such as that of foundry foreman or skilled founder tending a specified type of blast-furnace) should require more or less identical skill and responsibility differentials in all undertakings, whereas those for the pace and physical conditions of work would naturally vary according to the local situation, production techniques, etc. a By the end of 1959, in the republic of Croatia alone over 150 undertakings had already introduced remuneration based on job analysis. LABOUR RELATIONS IN THE UNDERTAKING 189 undertaking when applicants are medically examined. The main purpose of the evaluation, however, is to provide an objective basis for fixing standard rates of pay.1 Where job analysis has already been carried out, its results are reported to have generally been well received by the collectives, and so far they do not seem to have become a particular subject of dispute. TRAINING In view of the general shortage of skilled workers, the authorities, the unions and, in most cases, workers' management bodies in undertakings devote particular attention to vocational training. The keen interest generally shown by the workers themselves can be easily explained by the growing tendency to make possession of a proficiency certificate an essential prerequisite for obtaining a job in a senior grade or a supervisory post.2 The guarantee of work corresponding to the worker's qualifications, the system of recruitment by competition and systematic job analysis all naturally tend to give special value to training and to proficiency tests. In addition, the wide functions of the workers' management bodies and their duties in promoting social and vocational development highlight the need for more advanced general, economic and administrative training to fit workers for personal participation in the proceedings of workers' councils and their specialised committees. Apprenticeship The apprenticeship system of present-day Yugoslavia was inherited from the older craft system and even today still relies partly on small1 In practice the system can be applied as follows: on the basis of job specifications all jobs are analysed and evaluated in the light of 20 specific criteria. The points allocated to each job as a result are then reduced by appropriate coefficients to form a single scale ranging, for example, from 100 for the easiest and lightest jobs to 500 for the most skilled and heaviest, so that the value of each is expressed by a particular number of points. If this evaluation is used as a basis for fixing individual remuneration rates, it is sufficient for the workers' council to fix minimum and maximum rates (for example, 50 and 150 dinars respectively) and to determine how the points are to be converted into individual rates of remuneration on the basis of a specially chosen conversion curve or table. Finally, they must be adapted to the amount of the remuneration which it is hoped to distribute during the year for which the remuneration rates are adopted. a According to the results of a public opinion poll held in a series of undertakings in Croatia under the auspices of the Zagreb Social Management Institute, about a third (4,496 answers) of the workers interviewed considered that further vocational training was the best way of securing promotion or a more highly remunerated job; other answers singled out transfer to piece work (2,037), election to a workers' management body (1,621), election to a trade union (1,149) and admission to the Communist League (1,525): in addition, there were 1,022 miscellaneous answers (cf. Komunist (Belgrade), 28 Jan. 1960, p. 3). 190 WORKERS' MANAGEMENT IN YUGOSLAVIA scale private industry.1 The legislation in force specifies the apprenticeable trades and the duration of apprenticeship, as well as the curriculum and tests for apprentices and their conditions of work, including the minimum wage to which they are entitled.2 Each undertaking of any size is required to train a specified number of apprentices and to set aside part of its income for that purpose. Several undertakings may agree to organise and finance a joint programme, which may also be placed under the direct responsibility of a regional chamber or association. The board of management of each undertaking decides on the methods of apprenticeship, appoints the examination boards and issues the certificates. When adopting the rules of the undertaking, the workers' council lays down the general fines of the apprenticeship scheme.3 Undertakings have to provide apprentices who have passed the final examinations in their trades with skilled work for at least six consecutive months; at the end of that period, the apprentice has the same status as a worker. Training on the Job for Adults Undertakings also organise proficiency tests at intervals, under the supervision of the workers' management bodies, for adult workers trained on the job. In the towns training of this kind may be supplemented by special courses organised by the workers' universities, the unions, etc. Certificates granted by the boards of examiners are official documents which qualify their holders for the corresponding jobs in all undertakings in the country. The progress made with such training, and success or failure in the tests, are generally noted in the periodical reports 1 In 1956 there were still 44,228 apprentices in the private sector, including 44,172 in the various branches of handicrafts, as against 60,777 apprentices undergoing training in the nationalised sector. Since then the share of private handicrafts has tended to fall off rapidly (36,186 apprentices in 1957 and 29,535 in 1958). (Cf. Statisticki bitten (Belgrade, Federal Statistical Institute), No. 141, July 1959, p. 7.) 2 Since apprentices are entitled to a fixed wage of an amount decided by the workers' council in each undertaking, subject to the statutory minimum, they are not regarded as members of the collective either from the point of view of voting rights or from the point of view of distributing the undertaking's income. An apprentice's wage is generally between one-third and one-half of the basic remuneration of skilled workers; according to a survey in 1957 about 18,000 apprentices were receiving a wage higher than the statutory minimum in undertakings belonging to the public sector (cf. Socijalna politika, op. cit., Seventh Year, No. 12, Dec. 1957, p. 49). 3 In several undertakings the mission saw records of the workers' council's decisions on various aspects of the conditions for apprentices, including wage scales for the different trades. In one case it was explained that, by granting very considerable increases to apprentices for a given trade (metal founder), the workers' council had managed to restore a balance in the intake of young workers, who had previously almost all chosen more popular trades (such as mechanic). LABOUR RELATIONS IN THE UNDERTAKING 191 on the management of each undertaking. The existing legislation also allows undertakings to grant members of the collective special leave with or without remuneration for study or vocational training. Scholarships and Outside Training Another way in which undertakings assist in general and technical training is the financing of secondary and university studies.1 Although quite voluntary, this practice is becoming increasingly common. Almost all Yugoslav undertakings of any size now grant scholarships of this kind 2, some of them holding open competitions similar to those for the recruitment of supervisory and technical staff. Since undertakings generally try by this means to obtain highly qualified personnel, they normally guide the holders of their scholarships towards subjects that are particularly needed (for this purpose some of them have even drawn up long-term training programmes) and can in this way help to regulate supply. Moreover, the direct contacts that are established between the students and the undertaking while the former are pursuing their studies may enable the undertaking to exert a positive influence on the students' training.3 It can also offer a guarantee that the student will subsequently be engaged in the work for which he has been trained. 1 According to information supplied by the Federal Statistical Institute, 5,139 university students held scholarships from undertakings in the academic year 1958-59 (as against 3,617 in 1957-58 and 2,571 in 1956-57). 2 In an undertaking in the food industry with a staff of 2,000 to 3,000 workers, reference was made to some 200 scholarships or other arrangements for studies or vocational training, including 40 full university scholarships; many foremen or ordinary workers worked shorter hours than usual so that they could take evening courses, etc. The grant of such scholarships rested with a special committee presided over by the chairman of the workers' council. Moreover, the record of decisions taken at almost each sitting of the board of management mentioned a number of exemptions from work (special leave with or without remuneration) for periods ranging from one week to several months to enable the workers concerned to pass or study for examinations. In addition, the workers' council had just decided to set up, in conjunction with other undertakings in the same district, a vocational training centre attached to the undertaking. 3 It is generally the board of management which grants scholarships within the limits of the funds available and is responsible for relations with scholarship holders. Since such cases are generally dealt with on an individual basis, they crop up quite often on the agenda under the heading " other business ". For example, a board of management had before it letters from two scholarship holders—university students—referring to their failure to pass examinations and asking for an extension of their scholarships. After a very brief discussion it was decided to reply that the scholarships would be extended for six months at the most and that their amount would be reduced by 20 per cent. Elsewhere the mission was present at meetings of the training committee of the workers' council, which was drawing up a programme for the coming year and assessing the results achieved under the various existing programmes. Particular attention was devoted to individual failures or backwardness and various measures were planned with a view to maintaining contact between the scholarship holders and the undertaking. 192 WORKERS' MANAGEMENT IN YUGOSLAVIA By accepting a scholarship, however, a worker is not formally binding himself to serve the undertaking once his studies are completed.1 A special aspect of the training arrangements under Yugoslav conditions is co-operation between undertakings, particularly among those that are in course of establishment or rapid development. A typical example of active co-operation of this kind was noted in a large undertaking which had just begun to operate and in which all the supervisory and technical staff, including certain skilled workers in key posts, had been trained by spending periods of several months in another undertaking within the same industry. This arrangement, financed by the founders of the new enterprise, does not seem to have caused any special difficulties, in spite of the fact that putting this new undertaking, with ultra-modern plant, into operation was a subject of great concern to those in charge of the older one owing to the commercial competition.2 Practical Training for Workers'" Management The best method of training in workers' management is considered to be the active participation of hundreds of thousands of workers 3 in the proceedings of the workers' management bodies. Many undertakings also organise courses and seminars for members of workers' management bodies and assist them to attend training programmes organised by the unions or the workers' universities. At the National Congress of Trade Unions held in May 1959 it was reported that about a quarter of the 215,000 persons who were members of workers' councils at that time had by then followed courses of training 1 If he does not comply with his obligations towards the undertaking a person who received a scholarship is, of course, expected to refund the amount involved, but under existing conditions he will almost always find other undertakings (or local authorities, etc.) prepared to pay it back for him. Such practices in fact cause a good deal of controversy and criticism, especially in undertakings and areas that are located at a distance from urban centres and where it is very difficult to attract university graduates. 2 Practically all industrial undertakings of any size have also been able to arrange periods of training for a few months in foreign undertakings for a certain number— sometimes quite large—of their technicians and skilled workers. The I.L.O. alone has helped to organise and finance over 1,700 such training periods in a number of European countries (including about 20 trainees from the undertaking mentioned above, which had about 2,000 workers). It is generally recognised that Yugoslav undertakings, particularly their workers' management bodies, immediately appreciated fully the value of this experiment and that they devoted particular care to the selection of trainees, their placement in appropriate jobs and the dissemination of the experience they had acquired among the other members of the collective. On the whole, the programme of technical training abroad has had very encouraging results in all these respects. It might also be mentioned that, as part of a large-scale project under the Special Fund of the United Nations which began in 1960, the I.L.O. is helping the Yugoslav Government to establish a central co-ordination service as well as eight instructor-training centres for the purpose of improving and speeding up the training of skilled workers. 3 See table E in Appendix I. It is estimated that about 800,000 workers have been members of workers' management bodies to date. LABOUR RELATIONS IN THE UNDERTAKING 193 organised for them in social and economic matters. 1 This proportion is probably much higher in the towns and in large undertakings. The amount of training provided through the workers' universities, of which there were 97 in 1958 (as against 15 in 1953) is considerable. Some of them, in the big towns, have hundreds of outside assistants (about 500 in Zagreb and Belgrade) on their staffs and run special courses for the members and chairmen of workers' councils, the directors of undertakings, etc. In 1958 their activities, which seem in general to be about equally divided between general education, vocational training and managerial training, included over 6,000 classes or lectures attended by about a million persons.2 As an example, the following is a list of the classes and other forms of vocational training provided for its workers by an undertaking with a labour force of about 1,000. The undertaking was only established after the Second World War, and it therefore found it particularly difficult to secure skilled personnel.3 1. Training of ordinary workers : (a) industrial school for the training of skilled workers (three-year course), set up by the undertaking itself because there was no other appropriate training centre in the area; (b) rapid training centre for skilled workers' jobs in certain departments (particularly for newly recruited workers) ; and (c) follow-up courses for workers wishing to continue their training or to change jobs or trades. 2. Training of intermediate and junior supervisory and technical staff: The following are organised at regular intervals for foremen, inspectors and technical instructors: (a) advanced vocational training seminars; (b) seminars on labour relations and the organisation of work; and (c) seminars to train instructors for supplementary on-the-job training schemes. Senior foremen, workshop and department heads and individual nonmanual workers attend courses and seminars organised by various centres and institutes in the main towns of the country, particularly on production organisation techniques, business management and personnel matters. These facilities are at the expense of the undertaking. 1 See report by M. PAVICEVIC, in Cetvrti kongres saveza sindikata Jugoslavije (Belgrade, Rad, 1959), p. 194. 2 These figures do not cover the activities of the " people's universities ", of which there were over 700 in 1958. They had organised over 20,000 classes or lectures attended by 2.2 million persons (cf. Statisticki godiSnjak (Statistical yearbook published by the Federal Statistical Institute; English translation of the text published separately), 1959, p. 264). 8 The implementation of the training programme is entrusted to a special department of the undertaking, the vocational training centre, which co-operates with the heads of the departments concerned under the supervision of two special committees, one consisting of representatives of the workers' management bodies and the other of technicians. 194 WORKERS' MANAGEMENT IN YUGOSLAVIA 3. Other training activities : (a) seminar for the heads of sales agencies; (b) language, shorthand and typing courses; (c) seminars for members of the workers' council and the board of management; (d) lectures and film shows for training purposes; and (e) training through the undertaking's gazette. The attention devoted to vocational training in Yugoslav undertakings may largely be due to the fact that undertakings have to rely on their own efforts to find trained personnel and must provide the training themselves if such personnel cannot be recruited from outside. Their training activities have in many cases been facilitated by sizable surpluses, but it is agreed that existing measures are still inadequate. A considerable development of education and training programmes, particularly for intermediate grade and junior technical staff, is considered to be one of the most urgent tasks facing industry.1 LABOUR DISCIPLINE AND WORKERS' LIABILITY Workers' management implies that the collective should settle problems involving labour discipline on its own. Although the basic law of 1950 contained no express clause to this effect, this " selfdiscipline " was looked upon from the start as one of the " primary tasks " of the new workers' councils.2 In 1952 the powers of workers' councils in this respect were prescribed in detail under a federal ordinance which provided for a " disciplinary tribunal ", consisting of two members appointed by the workers' council and one trade union representative, to be set up in each undertaking. All major breaches of discipline were to be dealt with by these tribunals, which were also to hear appeals 1 A resolution of the Federal Assembly concerning the training of technical staff, dated 4 June 1960, includes the following estimates of the demand for additional qualified personnel during the next five-year period (1961-65): 60,000 specialists with a higher education, 180,000 technicians of the intermediate grade, 80,000 highly-skilled workers and 325,000 skilled workers. The resolution states that undertakings must henceforth become the main force in society for the training of technical staff. While emphasising the role of the workers' management bodies in this connection, the resolution calls on all undertakings to assess their future training needs, to choose the training programmes in which they intend to participate accordingly, and to set up, where necessary in co-operation with other undertakings, appropriate institutions for initial or upgrading training. The resolution states that in institutions set up by undertakings the latter will have to define objectives, outline the curriculum and syllabus, direct the teaching staff and so forth. In future, therefore, any system of technical and vocational training will have to be based on training centres within undertakings (cf. Sluibeni list, No. 25, 22 June 1960). 2 This aspect of workers' management was particularly stressed by President Tito when the 1950 law was passed by the Federal Assembly. Cf. Borba, 27 June 1950, p. 2. LABOUR RELATIONS IN THE UNDERTAKING 195 in cases of minor importance. Further detailed regulations on this matter were introduced by the Labour Relations Act of 12 December 1957.1 The Act lays down the following two fundamental principles : (a) the maintenance and strengthening of labour discipline are the responsibility of the collective of each undertaking and of its management bodies; within the framework of the law, they lay down the rules governing workers' responsibility in the event of a breach of discipline; (b) during working hours, the director is head of the entire collective for disciplinary purposes 2, and exercises the powers conferred upon him by law. The 1957 Labour Relations Act lists a number of punishable breaches of discipline. Under section 270 of the Act, the following, inter alia, are regarded as serious breaches of labour discipline : abuse of official position or excess of authority; an act or omission which hampers or prevents the proper functioning of the undertaking; failure to safeguard the property of the undertaking; unjustified or inadmissible refusal to carry out orders connected with the work, where given by the competent authorities or by a superior; deriving material gain from the operations of the undertaking and to its disadvantage; unjustified absence from work for more than three consecutive days; or inciting others in the undertaking to disorder or violence. The Act further specifies (section 266) that a worker must accomplish his work in person and on his own responsibility. The clauses dealing with discipline cover all manual and clerical personnel, supervisors and executive staff without exception. Details are to be laid down in the rules of the undertaking.3 The penalties allowed by the Act are as follows : warning, reprimand, public reprimand, fine, removal from an executive post, and dismissal. A fine may not exceed 10 per cent, of a worker's personal income over a period of three months. Dismissal for disciplinary reasons may only be ordered as a result of serious breaches of discipline causing loss or other serious consequences or involving special danger to the under1 For further details, see the text of the Labour Relations Act, Ss. 263-314, in I.L.O.: Legislative Series, 1957—Yug. 2. 8 This clause in the Act may be compared with the one granting disciplinary powers to the chairman of the workers' council during council meetings. In both cases disciplinary measures must—implicitly or explicitly—be endorsed by the appropriate bodies within the undertaking. 8 The rules cannot add to the statutory penalties or introduce new ones (e.g., by depriving a worker of his annual holiday) nor can they change the statutory definitions of offences (e.g., by making one day's absence without good reason a serious offence instead of the three consecutive days specified by law; or violence or disorder outside the undertaking, etc.). 196 WORKERS' MANAGEMENT IN YUGOSLAVIA taking 1 ; a worker may also be dismissed following repeated major breaches of discipline. A worker may not be punished until he has been given a chance to state his case. He may appoint counsel to defend him or may be represented by his trade union at hearings of the disciplinary bodies. The director or any other responsible person designated in the by-laws is entitled to give a warning or reprimand. The director is also entitled to impose a fine not exceeding 5 per cent, of a worker's monthly income. Other more serious penalties are imposed by a disciplinary committee comprising two members appointed by the workers' council (one of whom is chairman) and a trade union representative. This committee also has power to deal with appeals by workers against disciplinary action by the director or other persons in authority.8 The committee's ruling on a worker's appeal against a disciplinary measure taken by the director is final. In other cases an appeal against the committee's decision can be made to the disciplinary tribunal attached to the people's committee of the commune. Both the director of the undertaking and the worker concerned (or the union) can appeal under this procedure. The disciplinary tribunal of the commune contains three members, two of them appointed by the people's committee and the third representing the trade union.3 Its decisions are final.4 Disciplinary cases against the director of the undertaking or members of the undertaking's workers' council, board of management or disciplinary committee must go straight to the disciplinary tribunal of the commune. In such cases the workers' council sets the procedure in motion. Appeals by either party are dealt with by the district disciplinary tribunal. The law authorises the director (or other responsible chief) to suspend any worker against whom disciplinary proceedings have been instituted 1 Breaches involving special danger to the undertaking must be defined in its rules. Failure to observe the ban on smoking in workshops or depots containing explosives or inflammable substances is the commonest example of a breach of this kind. 2 Cases are normally taken to the disciplinary committee of the undertaking at the request of the director, who must submit a reasoned statement of the circumstances of the case. The committee may order further inquiries and may appoint a reporter. It may also consult other undertakings or administrative and judicial bodies. The hearings are all public and must normally be held outside working hours. Reasons must be given for the committee's decisions, which are notified in writing to the worker, the director and the trade union committee of the undertaking. 8 No member of the disciplinary tribunal may come from the undertaking in which the case occurred. * Any decision on disciplinary matters which infringes the law may be appealed against by the public prosecutor to the body immediately senior to the one which took the decision (i.e., the disciplinary tribunal of the district people's committee if the decision was taken by the tribunal of a commune). For his part, a worker can lodge a complaint with the board of management or workers' council against any decisions by disciplinary bodies in the undertaking and, if he feels that the law has been infringed, he can take his case to the courts. LABOUR RELATIONS IN THE UNDERTAKING 197 because of a serious breach of discipline. The same measure can be taken against a worker who is caught in the act of committing a serious offence. The director must submit his decision for discussion at the next session of the undertaking's board of management, which is free to endorse or cancel it. While suspended, a worker is entitled to compensation equal to the income he has lost. By law, a worker must compensate the undertaking for any damage caused wilfully or through negligence. If circumstances warrant it, the workers' council may reduce the amount of damages to be paid or even waive them completely if the damage was not intentional.1 Disciplinary procedures are thus largely left to the control of the workers' management bodies. The powers of the commune and district disciplinary tribunals and of the public prosecutor's office do not in practice appear to lead to undue interference in an undertaking's internal affairs. From the standpoint of the individual worker, they are important additional safeguards against victimisation, over and above the normal appeals procedure. It is very difficult to make any general assessment of the practical effect of this independence in disciplinary matters because no information on the over-all situation is available. But it is certain that workers' management has not led to a widespread breakdown of discipline. Indeed, most of the criticisms 2—for instance, in the reports of the labour inspectorate—concern abuses of disciplinary powers (excessive or undeserved punishment), mostly by executives but in some cases also by workers' management bodies.3 1 If it becomes necessary to assess the amount of the damage or to ascertain the exact circumstances or responsibility, a panel of three experts is appointed by the undertaking's board of management. Payment of damages not exceeding 10,000 dinars may be ordered by the director or (if he caused the damage) by the workers' council. When the damage exceeds 10,000 dinars, compensation can only be obtained through the normal judicial channels. 2 It is true that most of the reports available on the subject refer to the period before the current regulations came into force, when the disciplinary powers of directors were far wider, in both law and practice, than they are now. In some cases excessive " self-discipline " was probably also due to the special conditions in some branches of the economy (e.g., the railways). Misuse of disciplinary power has mostly been reported in non-industrial branches such as building and commerce. 3 The report on the management of a steel works for a period before the current legislation came into force contained a breakdown of 178 penalties inflicted during the period between July and September 1957 (the breakdown being by departments and type of penalty); this figure amounts to about 6 or 7 per cent, of the total work force. Out of these 178 cases, there were three dismissals for disciplinary reasons and five " recoveries of damages " (ordered by the workers' council after discussion at department meetings), three transfers and a disciplinary fine amounting to 5 per cent, of the workers' monthly earnings; there were also 59 cases of warning and reprimand and 107 deductions of one day's pay. About 80 per cent, of the workers punished by a departmental head appealed to the director, while about 30 per cent. appealed against the latter's decision to the board of management. On the other hand, (footnote con.inued overleaf) 14 198 WORKERS' MANAGEMENT IN YUGOSLAVIA APPEALS, GRIEVANCE PROCEDURE AND STRIKES An appeal may be made against any decision of an undertaking affecting labour relations. The appeals procedure for dismissals and disciplinary penalties has already been described. But, apart from these special cases, the law allows any member of the collective to lodge a grievance about any measure which may concern him, such as his assignment to a particular job, the output standard he is expected to reach, the calculation of his earnings, the length and dates of his annual holiday, etc. In any of these cases, he can apply to the workers' management bodies specified in the rules. The same procedure usually applies to workers' requests or applications, irrespective of whether they are based on a legal provision or the undertaking's own rules.1 The law also entitles a worker to apply to the labour inspectorate or the courts. Thus, the lawfulness of any decisions taken by the undertaking is subject to a double check—administrative and judicial. The very large number of complaints and appeals by workers referred to in the reports of the labour inspectorate and in the courts' statistics seems to show that this procedure is not by any means superfluous and is in fact quite popular amongst the workers. Appeals and complaints appeals to the workers' council appear to have been " very uncommon ". The sharp rise in the number of " disciplinary cases " shown by these figures appears to have been due to a new policy of the workers' council, which also decided to take on no more workers from among the local smallholders who used to go on living on their holdings and were very prone to absenteeism, especially at harvest time. In another undertaking, on the other hand, no penalties were inflicted throughout the year with the exception of two fines imposed on foremen for infringements of the safety regulations. In a metallurgical undertaking employing some 1,600 workers, it was reported that only six cases had been submitted to the undertaking's disciplinary tribunal during the year. The same applied in a big food plant in a neighbouring district where in 1959 only four disciplinary cases were brought before the workers' management committee; two of these involved petty thefts (two packets of margarine, etc.) and resulted in the workers' dismissal. In another case the statutory maximum fine was imposed on a technical executive who obtained permission from the board of management to borrow one of the undertaking's vehicles for the day so as to transport materials for the building of his own house, but in fact lent it to somebody else for other purposes. On the other hand, " minor penalties " for indiscipline were quite common in this undertaking. 1 In many undertakings, one or more " grievance and claims committees " of the workers' council have been set up to settle disputes, examine individual applications and report back to the full council. Some undertakings have also set up appeals machinery to deal with special cases. For example, in one undertaking where output standards were particularly important, the " output standards rules " laid down the procedure for dealing with workers' grievances, the last stage being an appeal to an " output standards committee " consisting of four members appointed by the workers' council and one trade union representative ; any decision by this committee was final under the rules, but only as regards the individual output standard involved in the grievance. If no preliminary inquiry is carried out by a special committee, an appeal or grievance may—by law—be submitted direct to the board of management (or, in appropriate cases, to the workers' council or collective.) LABOUR RELATIONS IN THE UNDERTAKING 199 mainly come, however, from the less up-to-date undertakings and the less developed areas. 1 The labour inspectorate can only intervene to assist in reaching an amicable settlement; at the most it is empowered by law to order temporary action to safeguard the workers' interests pending a ruling from the appropriate bodies. Decisions by the courts are final and are binding on the management.2 All decisions affecting individual members of collectives must be in writing and must indicate the body to which an appeal can be made, together with the time limits within which it may be lodged. This also applies to the director of the undertaking; the forms on which decisions by the recruitment and dismissals committee are recorded usually indicate the time limit within which the director must inform the board of management or workers' council of any complaints he may have about the qualifications of newly recruited workers. Furthermore, the administrative and judicial bodies which deal with disputes keep a strict watch to ensure that the rules of procedure are observed. Any decisions taken by bodies with no power to do so are consistently considered to be null and void. It has been reported that directors of undertakings who on their own responsibility went on dismissing workers or inflicting penalties when they had no power to do so have in some instances involved their undertakings in heavy loss because of the compensation granted to the workers concerned. Similarly, the fact that a penalty has been imposed without the worker having been given a hearing is one of the grounds for rescinding a disciplinary decision. Thus the legislation on labour relations also compels undertakings to ensure that the workers' management bodies operate along the right Unes even if the collective itself is not fully conscious of its rights and responsibilities. Yugoslav legislation contains no specific provision on collective stoppages of work. In law, therefore, strikes are neither recognised nor 1 Thus, in their reports for 1956 the inspectorates in the republics of Slovenia and Macedonia reported 10,486 and 14,728 infringements in matters of labour relations, whereas the number of workers in Slovenia is more than double that in Macedonia. 2 Workers can also appeal to the trade union for assistance. According to a recent survey, trade union committees in 57 districts received nearly 32,000 complaints and applications from workers in 1958 and 1959, while the Central Council of Trade Unions received more than 9,000. Nevertheless, intervention by trade union bodies in individual disputes is still somewhat exceptional and, according to some sources, not always very vigorous. For example, the report of the labour inspectorate of Slovenia for 1956, referred to earlier, states that out of 5,407 dismissal proposals submitted to the trade union committees for approval (in accordance with the legislation in force at the time) only 869 or 16 per cent, were turned down. According to the same report, the reasons behind these dismissals would have been far more closely scrutinised by the commune arbitration boards which, under the earlier regulations, dealt with workers' appeals. 200 WORKERS' MANAGEMENT IN YUGOSLAVIA forbidden. However, strike action could be interpreted as a violation of certain legal rules, and particularly of one of the fundamental principles of workers' management which enjoins collectives and workers' councils to be " good managers ". At the same time, since each collective or workers' council decides for itself (subject to the limitations imposed by the undertaking's income) how it intends to remunerate its members and at what rate, and since it has sufficient power to settle all other working conditions as it wishes, the workers—according to the spirit of the system—can have little interest in backing up their demands by stopping work in concert. Normally—also according to this spirit—they need merely come to a decision to suit their own wishes and then carry it out, provided their undertaking can afford it and no breach of the law is involved. Moreover, any hold-up in production would inevitably curtail the undertaking's earnings, and this would automatically lead to a corresponding fall in the amount of money available for distribution as remuneration.1 Accordingly, in the view of the Yugoslav leaders, the strike as a means of securing better working conditions is obsolete and ineffectual. It therefore has no place in the practice of Yugoslav trade unionism or workers' management. On the other hand, it must be apparent that the workers might regard a stoppage of work as justified in certain special circumstances, e.g. if there are serious differences of view within their undertaking or if the latter is saddled with obligations which are considered to be unfair, for example in such matters as pricing policy or tax liabilities. Although some cases of this kind have been noted, the circumstances involved were so special that no generalisation is possible. PERSONNEL ADMINISTRATION AND METHODS OF COMMUNICATION It has been seen that Yugoslav law and practice aims at integrating both the over-all personnel policy and the day-to-day administration, at least in matters of some importance, into the workers' management system. This is clearly demonstrated by the standard forms in use in the big and medium-size undertakings. Some of these indicate the workers' management bodies to which an appeal can be made (e.g., the forms used for job assignments, transfers and annual holidays) ; others are to be sent to the workers' management bodies (e.g., proposals from the director to recruit or dismiss workers); yet others bear the signature of 1 As no remuneration can be paid in respect of hours which have not actually been worked, a decision by a collective or workers' council to stop work would in fact resemble a lockout without pay rather than a strike. LABOUR RELATIONS IN THE UNDERTAKING 201 the workers' management bodies themselves.1 Personnel administration thus depends to a large extent on co-operation between the workers' management bodies and the collective. This being so, it is evident that, from a practical point of view, labour relations require a special department to handle them. Mention has already been made of the political aspect of relations between workers' management bodies and the general administrative services (the secretariat), especially when the latter is responsible for all personnel matters. In this respect the position probably varies considerably from one undertaking to another, depending on local circumstances. In practice, personnel departments usually seem to be fairly small.2 At the same time, wherever relations within an undertaking have settled down there may be a revival of interest in various " personnel techniques " such as vocational selection and guidance on recruitment, induction courses or talks, etc., with or without the assistance of psychologists or other experts. Experiments in this field receive a good deal of attention in the trade press and in the pioneer undertakings, as does any foreign literature on the subject. This is true as well of systems of communication and information within the undertaking. The workers' management system involves considerable publicity for information on the undertaking and its staff, and offers the latter an opportunity to be kept informed and to make suggestions. In addition to the channels of communication mentioned earlier, the workers' councils in the big undertakings quite often publish their own bulletins or newspapers.3 In addition there are the printed editions of the by-laws and rules, various monographs on workers' management and numerous stencilled news sheets and other publications. The periodicals and publications seen by the mission made little use of diagrams or eye-catching devices and usually confined themselves to reproducing or summarising the main documents relating to the manage1 Each undertaking naturally devises its own forms to meet its own needs. The reference here is mainly to the model forms drawn up by authors of management manuals or handbooks. 2 According to estimates by the weekly magazine Izbor, there are on the average in each Yugoslav undertaking only two members of the staff dealing with labour relations for every 1,000 workers (whereas it is estimated that about ten would be needed) and many of them perform other jobs as well. On the other hand, personnel management is often divided up between several departments or sections. For example, it seems to be common for the settlement of labour disputes to be the responsibility of the legal department, which tends to become an independent section with its own special status. 3 The 1959 Statisticki godiinjak (p. 279) mentions 131 newspapers and 113 reviews published by undertakings or groups of undertakings (leaving out publishing houses) appearing at anything from weekly to quarterly intervals (32 newspapers and 44 reviews only appear at irregular intervals). However, these figures probably include a number of periodicals published for commercial purposes. 202 WORKERS' MANAGEMENT I N YUGOSLAVIA ment of the undertakings, such as internal regulations, management reports, balance sheets and operating accounts, announcements of decisions and so forth. The space given to recreational activities or non-technical subjects was usually quite small and often nil. Before concluding this chapter, it should be emphasised that the present system of self-government in labour relationships, whereby the powers normally forming part of the prerogatives of management are transferred to the collective and its organs of management, did not take place without arousing qualms and indeed opposition among the experts and some of the leading figures in the country's economic and political life. Even some prominent supporters of the principles of workers' management did not conceal their fear that the authority of executives, and especially of the director himself, would dissolve under the impact of the changes which led to the passing of the present Labour Relations Act in December 1957. It was feared that such extensive selfgovernment might completely undermine the director's responsibility for efficient management once he could no longer choose his subordinates. The head of the Federal Secretariat for Legislative Co-ordination stated in the following words the problems which in his view were raised by the principle of collective management in labour relations in a booklet published before the passing of the 1957 Labour Relations Act: The question arises how far the director can still be regarded as the head of the collective [in undertakings]. This question arises because it is contrary to the principles of Socialist relationships between men to entrust one man with such power over his fellow men that their lives and work depend on another's will. . . . This question is particularly acute in the case of the recruitment and dismissal of workers . . . the general trend, which did not come in overnight, is to deprive the director of his powers in personnel matters so that he can neither recruit nor dismiss. However, this comes into conflict with the director's main function, which is to organise the work. The question arises whether it is possible to organise work under a system where the head has no influence on the choice of his subordinates. Can the director be held responsible when others decide whether or not a particular worker is needed in his job ? The drawbacks of this state of affairs are apparent in industry, where the powers of the director nowadays [1957] are already very limited. In practice, the director is no longer in a position to dismiss anybody. The tendency to curtail his prerogatives has gone so far that, as proposed in various Bills on labour relations [which were then under consideration], it is intended that even transfers of individual workers from one job to another should be forbidden. It is obvious that in such cases the director could not accept any responsibility for organisation of the work.1 Although these fears seem largely a thing of the past among directors of undertakings and the local and central authorities, recent surveys 1 Cf. L. GERSKOVIC : DruStveno upravljanje u Jugoslavi^ (Social management in Yugoslavia), (Belgrade, Savremena administracija, 1957), p. 90. LABOUR RELATIONS IN THE UNDERTAKING 203 make it clear that for the rank and file the problem of worker-management relations (especially where foremen are concerned) is still a live, and indeed the main, issue involved. For example, in a recent opinion poll the majority of the workers who answered in the affirmative on being asked whether they would like to change their jobs explained that they wanted to work in a better atmosphere. In most of these cases the personality of the foreman was the reason given. On the other hand, a much smaller proportion of workers wanted to change their jobs in order to earn more money (about 20 per cent, of the affirmative replies).1 According to a survey carried out in a number of small concerns in Croatia 2 in 1958, the great majority of workers (57 per cent.) apply to the workers' management bodies when they consider they have been unfairly treated; 20.6 per cent, prefer to apply to the unions and only 8 per cent, to the director or foreman. According to the authors " the workers' councils and boards of management enjoy respect and authority even in the small undertakings ". 3 By and large, while the self-government machinery for labour relations has curtailed the former powers of the supervisory staffs, it would not appear to have impaired their authority, but on the other hand it has not solved all human relations problems at one stroke. It has undoubtedly strengthened the position of the collective vis-à-vis the management, but it does not appear to have undermined labour discipline. The experiment is still too recent, however, for any final or generally valid conclusion to be drawn. 1 This unexpected finding led the investigators to check the results by examining the changes of job that had already taken place involving workers who had left on their own account and found another job elsewhere. It appeared that the percentage of workers who found themselves earning more money after changing their jobs was only about 20 per cent. The bulk of them must therefore have done so for reasons of personal convenience, including their relations with their superiors and fellow workers. Similar results appear to have been obtained in other cases (cf. Komunist, op. cit., No. 159, 12 May 1960, p. 1). 2 Cf. Privredni pregled (Belgrade), No. 983, 13 Mar. 1959, p. 1. 3 Criticisms that the workers' management bodies are under the thumb of the director or foreman are commonest in the small undertakings. CHAPTER X DISTRIBUTION OF THE UNDERTAKING'S INCOME AND THE REMUNERATION OF LABOUR The worker's entitlement to a share in his undertaking's income and the corresponding right of the collective to dispose of this income either by sharing it out to its members as remuneration for their labour or by allocating it to welfare or investment is the cornerstone of the Yugoslav system of workers' management. To use the expression current in Yugoslavia, the system of sharing out an undertaking's income is the " material basis " of the system. Workers' management can only become a full reality if the collective has a direct stake in the economic performance of its undertaking and participates in the risks and benefits of each decision and indeed of its whole attitude (as a community and as individuals) towards production, labour discipline and every other aspect of the undertaking's operations. Each management problem is to be seen as a choice having a direct influence on the material interests of the collective and of each of its members.1 The right to allocate the undertaking's income for remuneration or other purposes (such as investment, welfare, etc.) is also the main feature which is common to all undertakings under workers' management, for the system also operates in cases where there is no need for the usual bodies (for example, in small undertakings). It is found in undertakings of different categories with widely varying functions. It may come up against opposition from some executives who are not particularly anxious to give the workers a real say in management, or perhaps the workers may show only scant interest in the economic problems of management. But in all these cases, whether the undertaking is a small factory, a retail store with only three employees, or a large engineering plant, the income is still shared out among the workers as remuneration according to the work done, each worker's share taking the place of his wages. 1 This does not mean that non-economic factors (group loyalty, prestige, national and local patriotism, political and ideological considerations) are not expected to play an important role in the decisions and attitudes of the collectives, or that these are not influenced by local custom and the practices of the industry concerned. The financial aspects are stressed because past results provide the clearest guide for policy-making and implementation in the undertaking. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 205 This feature of the system is fundamental in Yugoslav economic and social thinking. Mainly because of it, workers' management is regarded as a distinct economic system. On the social side, it is regarded as of equal if not greater importance than autonomy in labour relations within each undertaking in the desired transformation of production relationships from wage earning into free co-operation by " producers " in joint enterprise. Addressing the Congress of the Socialist Alliance in April 1960, the Vice-President of the Federal Executive Council referred in the following terms to the system of workers' management x : The true meaning and substance of workers' management in production therefore consists primarily in the fact that it enables, and will continue to enable, the working collective to exert a direct influence on distribution, namely —within the planned limits of the global social distribution—to distribute the fruits of labour independently. The individual quantum of labour of the producer under such a system should become the criterion for his share in the total income of the collective which is earmarked for distribution, while the collective quantum of labour of the enterprise becomes the standard for the share of the working collective in the general social funds of distribution. This share of the collective is the source of its internal funds. The income of the commune, namely the material basis of the social standard of living, is derived from these material sources. . . . By such a distribution, the consciousness of the individual worker is no longer formed only under the influence of his job and his relationship towards the factors which determine his salary, production quotas, etc., but rather under the influence of the work itself and the interests of the enterprise as a whole, and to an ever greater extent under the influence of the conscious realisation of the interests of the commune in particular, and the broader community in general. The consciousness of the emancipated producer is beginning to supplant increasingly the vestiges of wage labourer mentality. . . . As the worker no longer has a salary in the old sense of the word, but a share in the total income of the enterprise which the working collective earmarks for personal distribution, and as the criterion for the amount of this share is the individual quantum of labour of that worker at his job, namely the concrete value created by his labour, the worker is interested in working well and also in the achievement of the best possible results by the enterprise as a whole. Apart from this, the worker no longer lives simply from one day to the next, but can plan his own living conditions through the economic plan of the enterprise. Precisely for this reason the worker is becoming interested in the production process, in an efficient commercial service, and in the technical advance of the enterprise; for the thrift, profitable investments, long-term plans of the enterprise, etc. This means that the worker is materially interested also in active participation in the bodies of workers' management, that is, in the management of enterprises. He also tends to a higher economic education, that is, acquires it through practice. It is thus that he is no longer merely a manual labourer operating a machine, but rather a worker participating socially in the system of workers' management. The contradiction between manual and intellectual labour in this sphere is being gradually eliminated. 1 Edvard KARDELJ: " The Basic Tasks in the Further Development of Socialist Relations ", in Review of International Affairs (Belgrade, Federation of Yugoslav Journalists), Vol. XI, 1-16 May, 1960, pp. 8-10. 206 WORKERS' MANAGEMENT I N YUGOSLAVIA A higher level of productivity is becoming the basic concern of every individual producer. I n this chapter an attempt will be made to describe briefly (a) the process and methods of the distribution; (b) the procedures followed in approving the undertaking's annual accounts and the means of " social control " available to the local authorities ; and (c) the practical effects of the system from the point of view of the amounts and destination of funds under the control of the collectives and the effect on various other functions of the undertaking and the workers' management machinery in general. The Process of Allocating the Undertaking's Income and Distributing Remuneration GENERAL In addition to the constitutional provision of 1953 which guarantees each collective a share in the earnings of its undertaking, the present scheme of income distribution is based on several Acts passed during December 1957, some clauses of which were discussed earlier, and which deal with (a) the management of the resources of undertakings; (b) labour relations; (c) taxation of undertakings' income; and (d) personal income tax (on remuneration) of workers. These four enactments are closely related and in fact dovetail into each other.1 Many detailed regulations have been issued under them and they have also been amended very frequently. The annual plans of the Federation, the state budgets and, in some cases, local taxes, may modify details of the scheme according to circumstances at a given time or in a given area. The present scheme of distribution was not introduced overnight but represents the outcome of experience acquired during the previous period. The various distribution schemes in force between 1952 and 1957 are now only of historical interest2 but they gradually familiarised undertakings with a series of concepts which have since become an integral part of workers' management: the gross income as the point of departure 1 The Acts under (a), (c) and (d) in fact only formed a single Bill until they were submitted to the Federal Assembly by the Executive Council. As all four Acts went together through all the preliminary discussions preceding and following the National Congress of Workers' Councils in June 1957, their approach is uniform and they can be regarded as a single piece of legislation. 2 For a detailed analysis of the working of these distribution schemes, their practical effects and the problems involved see Duäan SÍJAN: Problemi stimulacije u privredi (Belgrade, Kultura, 1957). This book also contains an analysis and critical assessment of some theoretical schemes and other projects put forward during the discussions preceding the passing in December 1957 of the enactments now in force. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 207 for the whole distribution process ; the " distribution " of the income in several distinct stages involving the successive deduction of different charges (operating costs, taxes, allocations to various funds in the undertaking, etc.), where the order in which the deductions take place is nearly as important as their size in absolute terms; the levying of a progressive tax on the undertaking's income, not in relation to its absolute level but in relation to the percentage of the labour costs it represents assessed on the basis of some accounting formula. Such concepts as special purpose funds x , guaranteed minimum remuneration and the rates of remuneration applicable under the rules of the various undertakings, etc., were mentioned earlier in this study. The current system differs from those that preceded it in two important respects. Firstly, the whole of the income is available for distribution without there being any ceiling on the remuneration of the workers in any particular undertaking; it is for the collectives themselves to decide what share of the net income should be retained in the undertaking for direct investment, although they may be subject to certain obligations in this respect.2 Secondly, the remuneration for the work of the members of the collective is not regarded as an operating cost; it is considered to be simply the part of the undertaking's income which is received by the workers after payment of other costs (operating expenses, taxes, reserves, allocations for investment, etc.). The undertaking no longer pays any " wages " ; nor does it have any " profits " but only a residual income, which it shares out as remuneration for labour. The present scheme for income distribution encompasses all aspects of an undertaking's activity in one single process which, starting from the total income of the undertaking, finally determines the personal earnings of each individual worker. In order to understand this process, and the part played by the collective and the management bodies, it is convenient to examine the main stages in turn. 3 Starting with the gross income, i.e. the total receipts of the undertaking, the first phase in the process is the deduction of operating costs and other current charges (interest, " turnover tax ", maintenance, depreciation) directly related to its economic activity. The remaining income is then divided up between the undertaking's " contributions to society " (income tax), investments and the remuneration fund. This 1 See above, Ch. VII. See above, p. 156 (reserve fund). a Although the classification normally adopted by Yugoslav writers has been adopted here, this kind of distribution machinery does not rest on any provision of the law but is simply a summary of all the regulations applicable from the standpoint of an individual undertaking. 2 208 WORKERS' MANAGEMENT I N YUGOSLAVIA second phase consists of three main operations : (a) the deduction of the undertaking's income tax adjusted for any rebate due as a result of increased productivity ; (b) the deduction by decision of the workers' council of any part of the income which has not been obtained by the " efforts of the collective " but is due to market fluctuations ; (c) the distribution of the residual income between the part set aside for the remuneration of labour and allocations to the various funds of the undertaking (investment, welfare services, etc.). It is this second phase of the distribution process which is the most characteristic and the most important from the standpoint of workers' management, because it is the responsibility of the workers' council (or the collective) alone and must be settled by a single decision at a special meeting called for this purpose. The third phase involves the distribution of the sums available for the remuneration of the workers in the undertaking; this distribution takes place in accordance with the remuneration rules. The amount available at this stage may be distributed forthwith to all the workers in the undertaking in accordance with the pay scales or any other criteria which may be used, or in two stages if the undertaking's rules provide for the money to be shared out first to workshops or departments and thereafter to the individual workers. This whole process, as outlined in Figure 4 and the summary of the accounts appearing in Table IV, calls for a certain number of comments and explanations. FIRST PHASE OF THE PROCESS: GROSS INCOME, DEDUCTION OF OPERATING COSTS The process starts with the undertaking's gross income (item 41 of the summary of accounts in Table IV) mainly comprising the value of the goods or services sold during the year 1, including those invoiced but not yet paid for, and the value offixedor other equipment manufactured by the undertaking for its own needs. Work in process and any increase of stocks unsold are excluded from the figure in order to discourage undertakings from producing beyond market requirements.2 To the gross value of production (item 34) are added any special receipts by way of discounts, bonuses, refunds, contract penalty payments, etc., and receipts not included in the previous year's accounts 1 Or any other accounting period used by the undertaking (monthly, quarterly, etc.). In order to simplify matters only the final annual accounts, which in Yugoslavia cover the calendar year, will be considered here. 2 Undertakings, especially those engaged in seasonal trades, can if necessary obtain loans or advances on goods in stock from banks or from bodies providing financial backing, trading associates, etc. FIGURE 4. DISTRIBUTION OF THE TOTAL INCOME OF UNDERTAKINGS Undertaking's income tax * ^ ^ „ r * l Special I rebate i 1 Federal budget and investment funds Decentralised investment funds j J J Special reserves .. : (stabilisation of remuneration rates), Income due to tradingprofits ~| J TABLE IV. SUMMARY OF OPERATING ACCOUNTS AND DISTRIB OF AN INDUSTRIAL UNDERTAKING Final Annual Accounts for 19591 Serial number» Item A s on 31.12.58 s A. Breakdown of Gross Income Sales (invoiced to third parties or self) . . Non-recurring receipts Non-recurring expenditure . . . . . . . Total income (34 + 3 5 - 38) Dinars Dinars 34. 35. 6,898,098.811 120,863,533 174,426,339 6,844,536,005 8,259,567,410 102,000,609 75.917,860 8,285,650,159 38. 41. A s on 31.12.59 s Serial number 2 77. 78. 79. B. Distribution of Gross Income 42. 43. 44. 45. 46. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 59. 60. 61. 69. 70. Material purchases (supplies) Services by third parties Interest on fixed capital loans (supplementary loans) Interest on working capital loans (supplementary loans) Maintenance of capital goods Insurance premiums Other expenses chargeable to materials. . Personnel expenses chargeable to operating costs * Depreciation Interest on fixed capital Interest on working capital Land tax Vocational training contribution Contribution to economic chamber and association of undertakings and other contributions Special social insurance contribution . . . Total operating costs (42 to 58) . . . . Purchase price of goods resold, other materials and scrap Federal turnover tax Total operating expenditure (59 to 68) . Income of undertaking (41-69) . . . . 4,398,123,446 32,322,803 4,647,222,141 28,003,438 24.728,083 28,129,181 31,888,924 172,246,555 26,536,907 2,183,731 27,830,883 191,229,369 31,167,134 11,317,821 75,710,969 186,600,537 192,490,068 101,255,546 59,394 13,009,109 100,506,419 187,303,665 203,352,052 121,372,341 60.122 18,665,133 3,425,432 26,610,251 5,284,265,475 3,790,500 596,414 5,600,657,896 80,871,682 23,810,023 5.388,947.180 1,455,588,825 65,354,904 36,325,030 5,702,337,830 2,583,312,329 1 This table follows the official form (somewhat simplified) for the annual operating accounts which industrial concerns were required to maintain in 1959. The periodical accounts (monthly and quarterly) follow much the same lines. The same is also true of periodical accounts drawn up by non-industrial undertakings subject to workers* management. * The serial numbers are not consecutive because in order to simplify matters some of the items on the official form have been left out, especially those included to allow for 90. 91. 96. 97. 100. 105. 106. 108. 109. 110. 113. 114. 115. 118. C. Distrib 1. Calculation of (a) Tax on the u (b) Special allow (productivity (c) Income tax ( 2. Distribution of Tax (a) Share of the (b) Share of th republic inve 3. Calculation of (a) Net income (b) Income due special opera •Net income availa D. Distrib Workers' persona (a) Amount of special allow (b) Special allow (productivity Allocations to res (a) Compulsory (b) Additional a workers' cou Contribution to undertakings (f Allocation to fixe Allocation to wo Allocation to we Undistributed ne money-losing undertaking to certain charges or taxe items have also been left (of taxes and other contr the undertakings visited * For details see Table V. 210 WORKERS' MANAGEMENT IN YUGOSLAVIA (item 35). This item is usually insignificant because Yugoslav undertakings have little or no purely financial income. From this total, any special expenditure (item 38), such as forfeited guarantees, fines or contract penalties and expenses not included in the previous year's accounts, is deducted. The costs listed under items 42 to 59 call for little comment at this stage, and thefinancialcharges (interest, depreciation, etc.) have already been discussed.1 The operations which they represent will have been approved by the workers' management bodies, either indirectly in the adoption of the annual plan and periodic reports on management (as regards cost of materials) or directly in cases where there is a possibility of abuse (items relating to entertainment, travelling expenses, advertising, etc.). The remuneration chargeable as an operating cost (item 50) is that paid to workers during short illnesses up to seven days. The special social insurance contribution (item 57) is payable whenever the sickness or accident rate rises above a certain level2; the undertaking is entitled to a rebate of social security contributions if this rate is below normal. In appropriate circumstances a rebate can also be obtained on the vocational training tax (item 55). The contributions to the economic chamber and association of undertakings (item 56) chargeable to operating expenses is limited by legislation. The "turnover tax" (item 61) is an important feature of the system. This tax is levied only at thefinishedproduct stage and is therefore paid exclusively by industrial or handicraft undertakings. Although the tax rates are at present comparatively moderate (mostly ranging from 0 to 25 per cent, ad valorem and only exceeding 50 per cent, in certain exceptional cases such as large cars, lighter flints and cigarette paper), the yield accounts for nearly half the revenue of the federal Government (47.7 per cent, in 1960). These turnover tax rates, varying widely according to the type of article and readily adjustable to the conditions at the time, make it possible to absorb certain profits and to steer undertakings in the desired direction, along the lines laid down in the development plan. At the same time this tax is one of the main instruments of the Government's price policy. 1 2 See Ch. VIII. As this extra contribution may be very heavy, the collectives have every inducement to reduce the accident and sickness rates, especially those forms of sickness which—whether fictitious or genuine—cause intermittent absenteeism. A scheme is at present under consideration for the refund of these special social security surcharges to the undertakings affected so as to enable them to finance the necessary industrial health and safety measures. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 211 As indicated earlier, the workers' management bodies in general tend to react promptly to these financial or fiscal instruments. 1 SECOND PHASE: CONTRIBUTIONS TO THE COMMUNITY AND ALLOCATION OF NET INCOME The operations which constitute the first phase of the distribution process form part of the day-to-day business of management and may take place at any time during the month, quarter or year. When the workers' council receives the final accounts of operating expenses, nothing further can be done (unless there are illegal, fraudulent or unauthorised items a ) and it can only try to use the experience in the future. But, on the other hand, it now has a given sum of money at its disposal—the undertaking's income—which must now be allocated.3 As can be seen from the chart the undertaking's income is, in the first place, subject to income tax. Tax on the Undertaking's Income The tax on the incomes of undertakings is regarded as a key instrument in the apportioning of national resources as between the needs of the community for budgetary and investment funds and the needs of the undertaking. Income tax is payable on the part of the undertaking's income which exceeds by more than 20 per cent, the total guaranteed minimum remuneration of its personnel. This total is obtained by multiplying the guaranteed minimum rate * for each post by the number of hours worked 1 One case among many others which was quoted was the virtually complete stoppage in the production of office furniture as a result of the relative increase in the turnover tax; the furniture industry, which was in any case expanding fast, simply switched over to other lines, especially for the home. This situation caused concern not only to the management bodies in the factories affected but there were also discussions and criticisms within the wood and paper workers' union because of the detrimental effect on its members' conditions. 2 The procedure in such cases will be discussed later in the section dealing with the adoption of the balance sheet and periodical accounts and in Chapter XII. 3 To simplify matters, this study will not deal with cases where the undertaking's income is equal to or lower than the total minimum guaranteed remuneration of the workers and where (since there is nothing to divide up) all the available money, possibly supplemented by a contribution from the commune, must be shared out among the workers. The same usually applies when the undertaking does not earn sufficient income to pay its workers at least the remuneration specified in its own bylaws. These cases are, however, fairly exceptional and the incomes of industrial undertakings particularly are usually well above the minimum levels (see Appendix I, Table H). 4 The choice of the guaranteed minimum remuneration as the unit of measurement was and still is one of the most controversial points of the present scheme of income distribution. It was mainly dictated by practical needs since the guaranteed minimum (footnote continued overleaf) 212 WORKERS' MANAGEMENT IN YUGOSLAVIA by its occupant, and the undertaking's income before income tax is then expressed as a percentage of this amount. The tax is progressive1 so that it is heaviest where the income is largest and the guaranteed minimum remuneration is lowest. There can be no question here of analysing the effect of this tax on individual aspects of the policy of undertakings or the problems that arise. The important point is that the collectives have an incentive at all times to earn the highest possible income without employing more workers than they need, and thus to make the undertaking as profitable as the concrete situation permits. Allocation of Tax Revenue to Public Budgets and Investment Funds When calculating the share of its income due to the community in the form of tax, a Yugoslav undertaking works out (according to the scales set by law) the portion of this tax which must be paid into the federal budget and investment funds and the portion due to the local communities, especially the commune.2 It should be added that, as remuneration was felt to be the only yardstick which could be used to measure the product of the undertaking. On the other hand, if this guaranteed minimum is related to the idea behind it, i.e. the " living wage " (or " subsistence wage "), it has the drawback that only undertakings that are earning incomes higher than the minimum can be expected to contribute (in relation to the amount of their surplus) to capital accumulation and other social needs. It is expected, however, that a new method of calculation will shortly be introduced (e.g., an " accounting income " per worker with a flat rate for each branch of the economy). 1 The tax scale applicable to most undertakings is as follows: Income as percentage of total minimum remuneration Rate of tax 120-140 25 per cent, (on part exceeding 120 per cent.) Í 12.5 „ „ (on part between 100 and 140 per cent.) 140]55 I 50 „ „ (on part exceeding 140 per cent.) .,. ]70 Í 22.73 „ „ (on part between 100 and 155 per cent.) I 60 „ „ (on part exceeding 155 per cent.) ._ 0 ] 8 5 Í 30.72 „ „ (on part between 100 and 170 per cent.) I 65 „ „ (on part exceeding 170 per cent.) 185 200 I 36.77 „ „ (on part between 100 and 185 per cent.) i 68 „ „ (on part exceeding 185 per cent.) Í 41.45 „ „ (on part between 100 and 200 per cent.) n 9nn uver z I 70 „ „ (on part exceeding 200 per cent.) A steeper scale is applicable to certain commercial undertakings and a less steep scale is applicable to labour-intensive branches such as coal mining, forestry and some parts2 of the food industry. The shares of the commune and the federal Government are not a fixed percentage but depend on the ratio between the total tax and the degree of capitalisation (i.e., the value of the undertaking's assets) ; the greater an undertaking's income in relation to its capital the greater the share of the federal Government, and vice versa. This arrangement thus favours communes or regions where the degree of capitalisation is low (i.e., poor communes or regions) while giving local communities a direct stake in the prosperity of the undertakings for which they are responsible. At the present time the share of these local communities is fairly low, ranging on a regressive scale from 20 to 1 per cent, of the income tax payable. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 213 undertakings become more prosperous, and despite various reliefs, this tax now provides public bodies with a substantial income (nearly 300,000 million dinars in 1959); it thus finances nearly half the expenditure of the Federal Republic and is the main source of income of the Federal Investment Fund. Sharing by Undertakings in Higher Output and Productivity (Income Tax Rebate) In order to increase the incentives and to expand production and improve the use of capital and labour, Yugoslav legislation provides for a rebate of from 50 to 70 per cent, on the part of the total income tax relating to increased profits over the preceding year.1 If, other things being equal, an undertaking increases its output, reduces its personnel, etc., it can thus recover half or more of the tax on the increase of income. Apart from this rebate, which applies to all undertakings without exception, federal plans and budgets also provide for certain special income tax rebates (partial or total refunds) in industries which are less fortunate or which, because of their special character, are unable to achieve sufficiently high earnings per worker (e.g., the post office, railways, agriculture, coal mines, etc.). These special rebates cannot be used for remuneration purposes, and workers' management bodies are usually required to allocate them to their undertaking funds. A further type of special rebate is available to any undertaking starting to manufacture a new product, opening a new workshop or introducing a new technique. This usually applies for the first six months only but may be extended. These rebates may also be fairly large and may lead to appreciable increases in workers' remuneration. Distribution of the Net Income Section 6 of the 1957 Act on the administration of assets provides that " the part of the total income of the undertaking remaining after reduction of operating expenses and contributions to the community (interest and taxes) shall be apportioned by the undertaking to personal income for the workers and to funds for broadening the material basis of 1 The formula according to which the income tax rebate is calculated varies somewhat from one branch of the economy to another, but in all cases the most important factors influencing the size of the rebate are the total amount of the undertaking's income tax in the absence of the rebate in the current and in the past year (Tt and Tt—1 respectively), and the net income (before tax) of the undertaking in the current and in the past year (Yt and Yt-1 respectively). The 50 per cent, rebate (R) is then calculated according to the following formula: 15 214 WORKERS' MANAGEMENT IN YUGOSLAVIA its activities and for other needs". The decision is a major responsibility of the workers' council, which must hold a meeting for the purpose, and may if necessary hold a referendum among the whole collective. Present Yugoslav legislation places virtually no restriction on the right of the collective to dispose freely of its net income. There is nothing to stop the whole of this income being used for remuneration, so that allocations to the undertaking's own funds are optional.1 On the other hand, it is clear that they cannot absorb such a large proportion of the undertaking's income that the remaining funds would be insufficient to cover the workers' statutory minimum income. Moreover, a decision by the workers' council is considered illegal if it deprives the workers completely of a share in the income of the undertaking, as guaranteed to them by the Constitution. Such a decision can be taken only in a particular instance following a consultation with the entire collective through a referendum.2 This right to dispose freely of the net income—which in practice represents the whole of the undertaking's income in the normal sense of the term and corresponds to the " added value " after deduction of tax—is the keystone of the whole distribution system. Submitting the Bills which form the basis of the present system to the Federal Assembly, the Vice-President of the Federal Executive Council, Mr. M. Todorovic, summarised as follows the aims and scope of the powers assigned to collectives in sharing out their incomes, and the psychological and economic problems involved 3 : Apart from the functions assigned to them in the organisation of production, the workers' management bodies will henceforth be able to decide on the use to be made of the income of their undertakings and thus take over one of the most important functions in economic life which determines the social character of production and the orientation of all economic activity. The fear expressed in some quarters that workers would not be able to make the right apportionment of the income at their disposal between the remuneration of labour and the assets of the undertaking (which is not their property but belongs to the social community) is quite unfounded. This right of the collective is based on a very real and genuine interest of the direct producers in safeguarding and developing the material basis of their work, for otherwise there would be no funds available for appropriation as personal income. The accumulation of productive resources is the only way of expanding production and achieving a genuine rise in labour productivity, thereby paving the way for an improvement in personal incomes and standards of living in general. 1 Apart from the allocation to the statutory reserve fund, which may be compulsory (see above, p. 156) but only involves a fairly small part of the surplus income and so does not impair the principle of freedom to distribute the net income. 8 Cf. Socijalna politika (Belgrade), No. 10, Oct. 1957, p. 68. 3 Statement made on 11 December 1957; cf. Zbirka saveznih propisa (legislative reports) (Belgrade, Sluzbeni list, 1957), No. 158, pp. 8-9. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 215 In order to dispel these apprehensions, many cases could be quoted where —even under the present system [that existing in 1957] whereby the funds available for remuneration are defined by law—workers have given up part of their remuneration and allocated the resulting resources to their undertakings so as to overcome production problems or finance expansion. Of course there have also been tendencies in the opposite direction. It will obviously take time and some experience before the workers in each undertaking become aware of their rights and grasp the long-term interests by which they should be guided in drawing up production plans, in deciding on distribution policy and in the day-to-day conduct of business. However, this awareness and experience can only be acquired if and when the workers' councils (and collectives) assume their full duties and responsibilities. Undoubtedly this freedom to distribute the income also presupposes greater productive capacity, stable economic relationships, the formation of higher reserves than those now available, a more liberal taxation policy, etc. All this has not been fully achieved as yet and we are therefore obliged at this stage to levy higher and more steeply progressive taxation for social purposes than would be necessary if our economic situation were more favourable.1 However, although tax rates are still high none of these instruments, either by its nature or its effects, is comparable with the previous system of determining remuneration funds, and none therefore conflicts with what we have said about the elimination of wage-earning relationships in the economy. These restrictions are merely unavoidable methods of social control designed to cushion the effects of any abuses—and to do so indirectly and in the background without changing the nature of the new production relationships. Profits Due to Special Operating Conditions. Before actually sharing out the net income the workers' council must decide how far this income is due to the efforts of the collective or to special operating conditions (e.g., exceptionally big profit margins on items in short supply, the possession of a defacto monopoly, lower prices of materials, etc.). Under the current regulations 2, an undertaking's income is considered to be the result of the collective's efforts when it has been achieved by the reduction of costs, an increase in production or turnover and an improvement in the range and quality of goods or services. The part of the income due to special circumstances—as may be decided by the workers' council—still belongs to the undertaking but may not normally be shared out as remuneration and must be used for development or to build up the reserves.3 Unfortunately, there are no general figures to show the size of the sums deducted in 1958 or 1959 1 In fact substantial tax reliefs have, as mentioned later, been decided since December 1957. 2 Ordinance of the Federal Executive Council dated 12 March 1958, s. 12 {Sluzbeni list, No. 14, 9 Apr. 1958). 8 Nevertheless, the workers' council may at a special meeting also decide to share out this part of its income in the form of remuneration, but it must then give the reasons for its decision. 216 WORKERS' MANAGEMENT IN YUGOSLAVIA from the net income of undertakings and paid direct into the reserves as profits derived from special operating conditions. Everything goes to show, however, that this has only occurred fairly seldom and that by and large this item in the annual accounts represents a mere formality. The fact remains that it may be important in some special cases; it may also cause argument between the commune and an undertaking over distribution policy and economic management in general when the undertaking's accounts come up for examination by the producers' council. Distribution of Net Income between the Undertaking's Funds and Remuneration. Whether or not the workers' council has deducted part of the net income as commercial profit, it can legally distribute the remaining sums at its own discretion. At the same time, it must meet the needs of the undertaking, for example welfare services already in existence or planned, thefinancing(or a share in thefinancing)of investment or modernisation programmes, urgent repairs, the need to increase working capital, etc.1 In theory, allocations to the various funds and for remuneration purposes are equally important in the distribution process. In practice, the interest of the collective obviously tends to centre firstly on the amount of its remuneration. It is not only possible, but in fact occasionally happens, that the whole of the available income is used for this purpose; the case of one undertaking which had not yet set up a " welfare fund " and had made no allocation under this heading is probably not unique.2 In the majority of cases, however, the workers' council is forced, if only to keep the undertaking running properly, to maintain the existing welfare services and to allocate part of the current income to its funds. At this stage of the distribution process a whole series of considerations may come into the picture. It would appear (judging by the 1 In fact, at the final distribution a fairly large part of the undertaking's income will already be earmarked more or less irrevocably for purposes of this kind, either under decisions taken by the workers' council during the year (e.g., the approval of an investment programme, a housing scheme, etc.) or because of current expenses connected with the operation of welfare facilities (e.g., the works canteen) or the day-to-day conduct of business. However, it is only when the annual accounts are approved that it is possible to set off commitments against resources, to allocate money to reserves and the workers' remuneration, and to choose between the various alternatives available. 2 Cf. Privredni pregled (Belgrade), 24 Dec. 1959, p. 6. In this particular case, the question put to the newspaper was about the fund (in the absence of a welfare fund) to which the undertaking should charge the remuneration of its director, who had been granted leave of absence to take a long training course, and the special post allowance made by the workers' council to the commercial manager who took over in his absence. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 217 agreements between unions and the associations of undertakings in a number of branches of the economy which ask undertakings to state in their remuneration rules exactly how they intend to distribute their net incomes) that most of them have stipulated in advance how much of their net incomes they plan to distribute in the form of remuneration and how much they intend to pay into their funds.1 A planned distribution of income was the main point of policy in the discussions held in undertakings and the " negotiations " carried on with the communes over the remuneration rules adopted in 1959. Although such planned distribution of income does not bind the workers' council when it shares out the income after the final annual accounts have been approved, it does ease its task because it provides a yardstick adopted by the council itself and approved by the appropriate outside bodies, namely the producers' council and the trade union. A growing number of undertakings have for some time past been displaying great interest in distribution schemes which involve a more or less automatic preliminary distribution of the net income as between the undertaking's funds and the workers' remuneration. These schemes, which will be reverted to later, are bound up with systems of preliminary distribution by workshop or department, in relation to production costs or some quantitative or other index or, yet again—and this is perhaps the commonest practice—by a combination of these methods.2 Whatever method of distribution is employed, the workers' council and collective are in any event called upon at the end of each financial or calendar year to examine and approve the undertaking's operating accounts and make any adjustments in the distribution of the income in the light of the results. It is up to them to decide or define the share of the net income to be distributed in the form of remuneration and the share to be allocated to other purposes. The division of the latter between the four " funds " of the undertaking 3 is a matter for decision by the workers' council in the light of its business and welfare policy. This does not imply that the undertaking's decision will not be influenced by financial or tax legislation. 1 To take the simplest case, 70 per cent, of the net income can be set aside for remuneration and the remaining 30 per cent, would go into the other funds. In other cases, this " pre-distribution " may be linked with certain financial or production targets laid down in the plans for the undertaking or the individual departments. It was found in some instances that the share set aside for remuneration had been worked out to a hundredth of 1 per cent., e.g. 91.35 per cent, for remuneration and 8.65 per cent, for the undertaking's own funds. 2 See below, pp. 222 if. 3 Viz., fixed capital, working capital, reserve fund and welfare fund (see Chapter VUI, pp. 153-157). 218 WORKERS' MANAGEMENT IN YUGOSLAVIA For example, the 20 per cent, tax levied in some instances for the benefit of local authorities on allocations to welfare is intended to do this, among other things. Similarly, in order to curb the propensity of collectives to invest without allowing for a corresponding increase in working capital, the federal plans for 1959 and 1960 stipulated that, for every sum set aside for fixed capital, at least 20 per cent, must be allocated to working capital.1 This leaves us to consider how the gross remuneration funds are shared out, in accordance with the decisions of the workers' council, between the individual members of the collective. THIRD PHASE: DISTRIBUTION OF REMUNERATION FUND AMONG THE WORKERS This phase is, generally speaking, perfectly straightforward. When the sum to be distributed in the form of remuneration has been fixed by the workers' council, it is shared out among the workers of the collective under the terms of the relevant remuneration rules. In other words, each individual receives the remuneration for his job calculated in accordance with the number of hours spent at work or his output, plus any extra payments due for night work, overtime, etc., bonuses and his share in any surplus. Deductions for social security and housing fund contributions and personal income tax are made at the source. Each worker's pay slip must give details of the following 2 : (a) the number of hours actually worked, together with the number of hours of overtime and of hours not worked but remunerated from the undertaking's funds; (b) (i) the remuneration payable for this work expressed as a total, and separately— according to the appropriate pay scale or other basis laid down in the undertaking's rules (unit of output, turnover, etc.), including piece rates and overtime pay; according to the rules on premiums or bonuses or other methods of remuneration not linked with the length of time worked; according to the worker's share in the undertaking's net income over and above the relevant pay scale or according to such other criteria as may be laid down in the undertaking's rules; 1 This aspect of the distribution process thus forms part of the economic and social side of management which has already been discussed (cf. Chapters Vili and IX). » Cf. order by the Federal Labour Secretariat (Sluibeni list, No. 30, 30 July 1958). DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 219 (ii) any other benefits payable in addition to his personal income (separation allowance, compensation for the first seven days' sickness, etc.); (c) statutory deductions in the form of personal income tax, social security contributions and any other deductions (advances, payment by court order, disciplinary fines, alimony, etc.); (d) the worker's net pay. The main part of his remuneration is normally based on the hours worked, i.e. the value of his work (as defined by the pay scale applicable to the worker concerned) multiplied by the number of hours spent on the job; to this are added various extra payments at statutory rates for overtime (time and a half), night work (time and one-eighth), work on Sundays (time and a half) and on public holidays (double time and a half).1 Workers paid on piece rates are entitled to extra payments if they exceed their output standards. The surplus is then distributed among the members of the collective in the form of extra months of pay or in any other way laid down in the undertaking's rules or decided by the workers' council. If the rules allow, part of the surplus may be distributed in the form of bonuses calculated in a prescribed way. Similarly, a reserve may be formed to offset possible future fluctuations in the undertaking's income. The ordinary statutory deductions from workers' personal incomes need little special comment. They represent a fixed percentage of the incomes, amounting to 13 per cent, for income tax 2 , and 22 per cent. for social security contributions. The revenue from personal income tax is largely made available to the local communities (i.e., the communes) because the object is to give them a stake in the general prosperity of the undertakings in their areas.3 Despite its apparent simplicity, this third stage in income distribution raises two major problems. The first is the priority for the different parts of remuneration if the available funds are inadequate to meet all the claims which the workers individually have under the rules of their undertaking. The second problem concerns cases where the remuneration fund is not shared out among the whole personnel in a single opera1 Occupants of senior posts are only entitled to these extra payments, however, in such circumstances as may be specified in the undertaking's rules. In no circumstances are members of the management entitled to them. 2 The progressive personal income tax introduced by law in December 1957 as an additional means of redistributing incomes, and which ranged from 10 to 40 per cent. depending on the level of workers' earnings, was abolished on 1 January 1959. 3 The commune therefore has no incentive to force investments up alone because its own tax revenue will largely depend on the volume of remuneration distributed to the workers in its area. 220 WORKERS' MANAGEMENT IN YUGOSLAVIA tion but is first " pre-distributed " between the different departments in accordance with production costs or various other formulas intended to give workers a more direct interest in the management and in the performance of their own groups. Priority of Different Elements of the Remuneration Unlike the provisions in force up to the end of 1957, which clearly laid down priorities for the payment of remuneration 1, the present regulations simply state that an undertaking must first deduct the money necessary to pay remuneration in accordance with its pay scales or any other criteria, such as production costs, laid down in its rules on basic remuneration. Extra payments for night or Sunday work, overtime, etc., are included in the basic remuneration.2 Apart from this, an undertaking is at liberty to lay down in its own rules whatever order of payment it thinks best.3 This order of priority may be of considerable importance if an undertaking does not earn enough money to cover all the items in the workers' remuneration. Workers who feel that they have been left out during distribution of the surplus are likely to show their discontent and to ask for changes in the rules on this point.4 On the other hand, a sensible order of priorities which takes account of the special circumstances of 1 The former regulations also required the remuneration fund to be charged with a whole series of additional payments now regarded as operating costs, e.g. sickness benefit, the wages of apprentices, fees for outside professional services, residence allowances, removal compensation, etc., which usually had priority over the actual remuneration for the work done. Workers' remuneration during holidays (which legally form part of normal working time) is of course paid out of each undertaking's remuneration fund. 2 As these are legal rights the extra payments must be made in full even when the undertaking only pays the guaranteed statutory minimum remuneration or a remuneration lower than the scales laid down in its rules. If in the course of any one month a person has worked more or less hours than the normal number, his guaranteed minimum remuneration is thus increased (or reduced) in proportion. s For example, the rules of one of the undertakings visited by the mission state : " The personal incomes of workers shall be calculated in the following order: 1. The guaranteed minimum personal income. 2. The difference between the minimum income and the pay scale for each job prescribed in the rules. 3. Any extra payment for piece work (exceeding the output standard). 4. Seniority payments (length of service in the undertaking). 5. Individual rationalisation and economy awards. 6. Bonuses linked with the general performance of the undertaking payable under the relevant rules. 7. The surplus income available for distribution in the form of remuneration." 4 This at least seemed to have been the main reason for the decision of various workers' management bodies to overhaul the remuneration rules in force in a number of the undertakings visited by the mission. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 221 each undertaking can create a direct link between the personal interest of the groups of workers benefiting by a particular form of extra payment and the general prosperity of the undertaking. As far as piece work is concerned, under the present system authorities or organisations outside the undertaking no longer have to interfere directly in matters affecting output standards, because if an undertaking fixes standards which can easily be exceeded it must pay for this out of its own net income or, in other words, at the expense of other items in the workers' remuneration. Thus, a fairly reasonable balance tends to be struck within the undertaking and—above all—the output standards can no longer be used as a device for artificially stepping up the workers' remuneration.1 Extra pay for Sunday work, overtime, etc., is no longer chargeable to operating costs, which virtually eliminates any incentive that the collective might have to try to step up incomes in this way. As long as a given volume of output can be obtained during normal working hours, the volume of workers' personal incomes would hardly increase under the present system even if hours of work were artificially stretched out.2 (Any tendency by the collective to pile up overtime would have no point nowadays unless the undertaking were losing money and the workers' incomes had fallen below the statutory minimum and even overtime consequently came under the guarantee. But any undertaking in this position would normally forfeit its autonomy and would be placed in the hands of the public receiver.) On the other hand, if overtime has to be worked due to negligence or bad preparation, earnings for each hour of work are reduced in proportion.3 The main practical difficulty which is often mentioned as a result of this order of priority occurs when undertakings have fixed unduly high 1 Until the end of 1957 the " basic remuneration " including piece-work payments was treated as an " operating cost " to be met out of gross income and therefore not subject to tax. Thus, for example, if an undertaking cut its output standards by half it doubled its workers' basic wage and in doing so correspondingly reduced the net income subject to tax. It followed that, since under those conditions the fixing of output standards could obviously not be left entirely to the discretion of each undertaking, the authorities or the associations of undertakings were bound to reserve the right to intervene to put a stop to possible abuses. 2 This, of course, only refers to cases of overtime which serve no real purpose and are used to stretch out hours of work so as to increase earnings ; it does not refer to overtime being worked in order to eliminate a bottleneck or to fulfil an urgent order. In such a case overtime clearly serves its purpose from the standpoint of the collective despite the fact that it may alter the distribution of the income by benefiting those of its members who are directly affected (e.g., if workers in only one department have to work on Sunday in order to carry out repairs, etc.). 3 Cf. in this connection the section on hours of work in Ch. XI. It may be added here, however, that following the introduction of the present distribution scheme there has been a substantial fall (about 33 per cent.) in the amount of overtime worked in industry and in undertakings subject to workers' management as a whole (an average of four hours' overtime per month in 1958, as against six in 1957). 222 WORKERS* MANAGEMENT IN YUGOSLAVIA pay scales in their rules so that most or even all of the funds available for distribution are absorbed as basic remuneration. In such cases there is little or no surplus left to distribute and the different bonuses or other extra payments cannot be met. Some mention should be made here of the different types of calculation used in sharing out the surplus income. Ever since the concept of income distribution was incorporated in workers' management, the tradition has been for surplus income to be shared out as extra months' pay (or fractions thereof), at the rate of 8.5 per cent, of each worker's average annual remuneration. This method is deeply rooted in practice and still seems to be followed by most undertakings. It has, of course, the advantage that it expresses each individual's share in the performance of his undertaking in straightforward terms which are known and understood by everybody, but it still has a number of drawbacks nevertheless. In the first place, the method tends to perpetuate the habit of judging an undertaking's success by the number of extra monthly payments it makes to its workers instead of by the actual remuneration shared out per unit of work. The result is that some workers' councils and many collectives tend to concentrate unduly on this aspect of management and on the need at all costs to share out at least as many extra monthly payments as are customary in the district, industry, etc.1 Another more fundamental objection which has often been made to this arrangement and any system that entails a proportionate distribution calculated in relation to the basic remuneration of each member of the collective is that—especially in undertakings with large numbers of workers—it tends to obscure the contribution of each individual or group of workers. Finally, in the view of some critics, this distribution based largely on financial criteria is not in itself an adequate gauge of the exertions made by the collective (and hence of its entitlement to the surplus income) but should also be linked with such economic criteria as the volume of production. Special Arrangements for Distributing Remuneration Under the current regulations the general pattern of distribution may be altered to fit the circumstances. Undertakings have sufficient freedom in their choice of remuneration systems to be able to alter the over-all 1 The concept of the extra monthly payment was only valid as long as the average level of pay scales in each industry was laid down by law. The current pay scales, however, are fixed by undertakings themselves, so that extra monthly payments are no longer a reliable yardstick. (As stated earlier, the pay scales of many undertakings tend in practice to absorb all the net income expected to be available under their plans; in such cases there is hardly any extra pay to plan for or distribute.) DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 223 pattern in any respect. In practice, the search for distribution systems to suit the special conditions of each undertaking and achieve the closest possible association of each worker or group of workers with management and the undertaking's economic and financial performance is the main concern of all who are connected with workers' management— directors, associations of undertakings, government departments, trade unions, independent experts. It is important, therefore, to summarise the ideas behind this new stage in the reform of Yugoslav industry. Decentralised Distribution. " Departmental pre-distribution " forms part of the attempt to decentralise management down to the departments or workshops which was referred to earlier in Chapter V. Since the workers' councils or other management bodies at the departmental level can only exercise real managerial power in so far as they are financially autonomous, the right of the department collective to appropriate the income it has created and to share it out among its members is an essential factor. This also presupposes decentralised planning and accounting down to the department, workshop or work group. In such cases the distribution of remuneration funds falls into two distinct stages: the central sharing out of the available funds between the departments or workshops in accordance with the performance of each, and the internal distribution of each department's share to the individual members. The possibility of a pre-distribution by departments was provided for in Yugoslav legislation and in fact practised by some undertakings for many years. A distinction should be made between two types of undertakings. There are those with departments which are actually separate because of the nature of their economic activity or because they do not form a physical part of the main undertaking, so that the decentralisation of management and the distribution process is inevitable and may even be a statutory obligation. This applies, for instance, to agricultural estates (or undertakings) which " own " one or more industrial plants, or to points of sale or workshops which are separate from the main undertaking and have their own independent status. In practice, large building sites operated by a construction concern also tend to be treated in this way. The second type of undertaking that may avail itself of this arrangement is the big industrial or commercial concern, where decentralisation of management may yield useful economic and social dividends. Not surprisingly, the variety of distribution procedures catering for special cases is almost unlimited. A separate establishment may be 224 WORKERS' MANAGEMENT I N YUGOSLAVIA almost completely independent, its only link with the parent undertaking being its share in the overheads and any deficit. Alternatively, a fairly substantial share of its income may be earmarked by the central workers' council. Similarly, the " pre-distribution " normally affects only the remuneration funds, but lately the trend has been for the departmental workers' councils to enter the picture when the net income is distributed by deciding for themselves the share of the income to be allocated to the different departmental funds and the amount to be distributed in the form of remuneration to the workers.1 Remuneration Related to Production Costs. The system of remuneration on the basis of production costs, which may be used in any undertaking, is normally employed in conjunction with pre-distribution by departments. It implies a financial plan giving a breakdown of costs for each workshop or work group: cost of raw materials, power, etc., and cost of labour calculated at the rates laid down in the undertaking's rules. These production costs, together with the prices of thefinishedproducts, are worked out for the period covered by the plan (usually one year), while any changes caused by market fluctuations are absorbed by the undertaking as a whole. The workshop (or work group) receives an income based on the volume of output and the planned prices of products; any additional income produced by savings in costs is shared out among the workers in addition to their planned remuneration. In planning the prices and costs for each workshop, a margin is allowed for undertaking overheads, price fluctuations and any other cost components which are not shared out among the workshops or work groups. The pre-distribution of the earnings on the basis of costs can also take a number of different forms. It may involve the whole of the undertaking's income or only a part. If the nature of the production and the state of the accounting system allow, there is nothing to stop all the items in the undertaking's operating expenses (including its financial liabilities) from being included in the financial forecasts. Generally, schemes have been confined to the " material costs " (or some of them), overheads being met out of the central budget or shared out ad hoc between the different departments. There are a number of different ways of computing the planned labour costs. General and commercial policy, the representation of the undertaking in dealings with third parties, as well as co-ordination between 1 This arrangement implies decentralisation of all or part of the management of the undertaking's assets to the departmental or workshop level. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 225 the departments, can of course only be handled centrally. On the other hand, the day-to-day management of production, the organisation of the work, personnel matters, etc., can be settled at first hand on the workshop floor by the people working there or by the management bodies they have themselves appointed. Pre-distribution by departments enables operating costs and production efforts to be pinpointed in the places where they occur, i.e. in this particular case in the workshop and in each group of workers, who within the limits of the decentralised arrangements thus benefit from the results of their own management. Remuneration Related to Output. Unlike the two foregoing systems, remuneration based on units of production is of recent origin. It was launched at the end of 1958 by the Central Council of Trade Unions with the initial purpose of providing undertakings with a pattern for the distribution of their net incomes, the idea being that the remuneration of labour should normally only increase in step with the rise in the volume of output. This volume would be measured in physical units (" production units ") selected for this purpose by the undertaking, which would then incorporate the principle (with details of its operation) in its remuneration rules. In its simplest form this scheme would therefore have meant a sharp departure from the current system, and its replacement by a kind of collective output standard. However, it was always understood that this was only to be an additional criterion to be fitted into the existing distribution machinery, so that remuneration would only increase in step with the volume of production in so far as the undertaking earned an adequate net income. Production had to be profitable before any distribution could take place. On the other hand, if the undertaking earned a larger income without increasing the volume of its production, the higher profits would no longer be automatically reflected in the level of remuneration, but must be paid into the undertaking's funds. The direct interest of the collective would be in a higher physical volume of production rather than in profitability. This scheme stirred up unprecedented interest on all sides, partly because of the authority and vigour with which it was launched, but also because it gave the collectives a simple, definite criterion to go by in sharing out their earnings between the remuneration of labour and capital accumulation. In fact, it has largely been responsible for the present popularity of pre-distribution schemes which are often referred to as " remuneration by production units ". Many undertakings have based their distribution systems on physical production units because 226 WORKERS' MANAGEMENT IN YUGOSLAVIA higher volume is, in most cases, in their own interests as well as those of society at large. Two practical points should, however, be made at this juncture. Firstly, there appear to have been hardly any cases where remuneration has been linked with the volume of production alone; the systems introduced in individual undertakings have in one way or another also taken profitability into consideration, even at this stage of the distribution. Secondly, it has now been settled that the clauses in the remuneration rules prescribing in advance the net income distribution criteria, do not legally bind the workers' council or collective in dealings with the authorities or organisations outside the undertaking, but are simply an internal pattern which they can ignore if they wish, provided of course that they do not do so at the expense of individual workers' acquired rights.1 For example, the workers' council is in no way bound, when making its periodical distribution of the net income, to pay a specified percentage into the undertaking's funds even if it undertook to do so in approving its own remuneration rules. This scheme has, however, drawn the attention of all concerned (especially the workers' councils) to the importance of a steady expansion in the volume of production in an economy where a high rate of growth is still the main objective, although it was perhaps liable to be overshadowed by considerations of profitability. In any event, it made directors realise that higher production was the best way of disarming criticism or opposition whenever they tried to make any appreciable increase in the amounts distributed in the form of remuneration. Combined Systems of Pre-distribution. In actual fact, it would be hard to find any undertaking in which one of these systems of pre-distribution is used in its original form. Predistribution by departments, in fact, usually follows the internal apportionment of certain costs. Similarly, distribution according to costs usually implies full-scale decentralisation of management down to the departmental or workshop level. And the volume of production is usually an important criterion in internal distribution schemes. The actual nature of each system thus depends less on the name given to it than on the way in which different features are combined in each par1 Cf. ruling by the Federal Labour Secretariat No. 06-2244 dated 26 September 1959 (Socijalna polittico, op. cit., Ninth Year, No. 11, Nov. 1959, pp. 85-86). In this ruling the Federal Secretariat laid down the principle that clauses of this kind were no more than " indices of the undertaking's internal plan from which it can depart either one way or the other . . . and therefore serve no useful purpose in the remuneration rules ". (Cf. also Nova administracija (Belgrade), Seventh Year, No. 5, Sep.-Oct. 1959, p. 651.) DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 227 ticular instance. Nowadays all these systems tend to be lumped together under the heading of " complex " remuneration (or distribution) systems. Among the latter, special mention should be made of the systems employed in a small number of pioneering undertakings, in some cases for a number of years past, which are not directly related to any of the three systems of pre-distribution already discussed, but which cover the entire productive operations of the undertaking in all their complexity. The main feature of systems of this kind is that for internal purposes they completely drop financial accounting and use a separate operating and labour points system (the units being chosen in the light of the special circumstances of the undertaking) showing the added value or the value of the work performed at each stage of the production processes. Thus all the components of workers' remuneration—individual output standards, bonuses, the volume of output, production costs, together with the basic remuneration—are merged to form a given number of points which automatically accrue to each group of workers or individual worker. Once the undertaking's financial performance (i.e., its net income) is known, the value of each point is worked out, and this at once shows the cash remuneration of each member of the collective.1 It is difficult to estimate how widespread these complex distribution and remuneration systems are in practice. As was stated earlier, they have been in operation for some years in a few undertakings in certain industrial centres, the best known being Zagreb, where about ten of the biggest concerns are renowned for their experience in this respect.2 These particular schemes at first spread fairly slowly, but since 1958 they have been developing rapidly. According to figures collected by the Central Council of Trade Unions at the end of 1959, complex remuneration systems had by then been introduced in more than 1,700 undertakings, most of which, however, were in agriculture and only 184 in industry.3 But several 1 It is perhaps unnecessary to emphasise that the account of these " complex " remuneration systems and also of the other pre-distribution schemes, is only given here in bare outline. An analysis of the " complex " remuneration systems employed in 15 pilot plants has been published by the Yugoslav Federal Chamber of Industry; it fills a book of 370 pages (cf. Savezna Industrialna Komora: Metode kompleksnog nagradivanja it industriji (Complex methods of remuneration in industry) (Belgrade, 1959)). For a thorough analysis of the theory and practice of these complex systems, see I. JERMAN, J. GASPERT and E. SEMUAK: Metode nagradivanja po jedinici proizvoda (Methods of remuneration based on production units) (Issue No. 10 of 1959 of Informatorov prirucnik za kadrove) (Zagreb, Informator) ; and M. SPILJAK and others : Stimulativno nagradivanje (po jedinici proizvoda) u privrednim poduzecima sa primerina iz prakse (Incentive remuneration by production units in industrial undertakings, with practical examples) (Belgrade, Rad, 1960). 2 8 Cf., for example, Nase teme (Zagreb), Third Year, 1959, No. 4, pp. 37-38. Cf. Borba, 18 Nov. 1959, p. 5. 228 WORKERS' MANAGEMENT IN YUGOSLAVIA hundred undertakings were planning to introduce schemes of this kind on 1 January I960.1 As these systems are mainly found in the big and medium undertakings, their importance in practice is far greater than might appear from the small percentage of the total number of undertakings employing them in one branch or another of the economy.2 It is difficult to overestimate their value as examples or pilot experiments. 3 Without going into details over the procedures and practical problems involved in these systems, it is worth mentioning a few points that seem barticularly striking, but not necessarily typical, in the experiment made py one industrial undertaking quoted in a daily newspaper 4 : (a) The undertaking was divided into 32 independent units (departments, etc.) each of which has its own plan, accountancy and remuneration fund; in dealing with each other the departmental units are partners with equal rights, who buy and sell goods, bill each other, pay penalties in the event of delays, etc. They may even lend money to each other, and if necessary seek loans from the central workers' council; in the event of a dispute, the matter is settled by arbitration within the undertaking. (b) The remuneration fund in each department depends in the first instance on its own financial performance; if this exceeds the forecast the fund is increased proportionately, and vice versa; any savings in costs thus accrue to the work group. (c) The breakdown is also based on production units corresponding to the undertaking's three products (e.g., one ton of product A) and per million dinars of sales; a share (fixed in advance) goes to each department in respect of each production unit for payment into its remuneration fund; thus any increase in the volume of production is also directly reflected in the level of remuneration. (d) Pay scales, output standards and other features of the more traditional distribution schemes are merely used as secondary criteria in sharing out the income within the group; by decision of the central workers' council, each 1 According to a sample survey carried out at the time by the Federal Labour Secretariat covering 399 undertakings, 112 of them, or 28 per cent., had introduced or had decided to introduce various complex systems of distribution. 2 Figures supplied by the Yugoslav authorities show that at the end of 1960 about 5,000 undertakings (or 26 per cent, of the total) had adopted complex remuneration systems. 3 Thus, during 1959 one of the 15 undertakings forming part of the Steel Industry Association introduced a complex remuneration system as a pilot experiment on behalf of all the other undertakings in the industry. In addition to the three factors already mentioned (departmental distribution based on production costs and the physical volume of production), the experiment also entailed a form of distribution which distinguished between each job in accordance with the contribution of the person performing it to the undertaking's economic andfinancialsuccess. At the end of 1959, an advisory conference was called at which representatives of all the steel works in the country studied the experiment on the spot and discussed its results, forfivedays, to see what lessons could be drawn for their own undertakings (cf. Nas glas (Smederevo), No. 240, p. 3). 4 Cf. Borba, 8 Dec. 1959, p. 5 ; see also Izbor (Zagreb), No. 14, 4 Apr. 1960, p. 13. It need hardly be added that most of the features of this experiment are closely related to the special type of production in which this undertaking is engaged. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 229 group is empowered to share the surpluses out among its own members in accordance with each individual's merits. This is decided at periodical meetings attended by all the workers in the group.1 (e) These group meetings have responsibility for all aspects of the management of their own units, e.g. production planning, improvements in organisation, rules regarding the distribution of the income surplus, overtime, discipline, absenteeism, dismissals, etc.; workshop supervisors and executives are only required to see that production is efficiently organised. (f) One of the practical effects of the system has been a substantial increase in output, ranging from 11 to 100 per cent, depending on the product, despite the fact that, according to the technical estimates, the undertaking's "production capacity " was already being used to the full and any rise in output appeared out of the question; overtime working has virtually come to an end, there has been a sharp fall in unjustified absenteeism and in the number of unnecessary workers, as well as in various other items which were swelling the costs of the departments. (g) The productivity, personal incomes, and hourly earnings of workers also rose as a result, but the changed relationships within the collective caused by the direct participation of all the workers in management are regarded as the chief merit of this " complex " distribution and remuneration scheme. It cannot be overemphasised that, in its complex form, the distribution and remuneration machinery can be varied to any extent in order to allow for the special circumstances in each undertaking. Judging by the great number of experiments that have already been made or are being planned in one undertaking or another, there can be little doubt that good use of this adaptability is in fact being made by collectives and their management bodies. The support they receive from government departments and various specialised bodies and institutes has probably had a good deal to do with this. The available reports and analyses dealing with the practical working of the various schemes usually emphasise the economic progress achieved. Increases of 50 per cent, or more in output and productivity, combined with similar increases in incomes and payments into the undertaking's funds, etc., do not seem to be at all exceptional.2 In Yugoslavia, 1 This feature, which can be compared with the independence given to groups in job assignments (see above, p. 187, footnote 2), is not typical of complex remuneration systems in Yugoslav undertakings and provoked controversy. In this particular case the product, by its nature, made it difficult to measure the output of each worker, or indeed any other individual aspect of his merit. 2 A summarised version of the operating accounts given in Table IV is one example of this. The improvement in the economic andfinancialperformance in 1959 was partly due to the introduction of a complex remuneration system and decentralisation of the distribution machinery down to the departmental level. According to a survey made in Zagreb in 1960, a comparison between one group of ten undertakings which had introduced a complex system of remuneration, and the same number of similar undertakings which had not yet done so, suggested that methods which give workers a more direct incentive have produced better operating (footnote continued overleqf) 16 230 WORKERS' MANAGEMENT I N YUGOSLAVIA however, interest tends to be concentrated on the possibility offered by the system for direct participation by workers in decisions affecting them, either at the place where they work or at meetings of the autonomous groups. But it should be recalled that the experiment is still in its early stages, and is only a variant of the general type of distribution scheme to meet the special needs of workers' management in certain types of undertakings. A careful survey of a number of representative undertakings —after a sufficiently long trial period—would be the only way of finding out whether and to what extent these individual experiments have tended in practice to develop certain features or aims in common. SECONDARY OR RELATED FINANCIAL RECORDS Hitherto we have confined ourselves to describing the distribution machinery on the basis of the chart in Figure 4, the summary of the annual accounts submitted for approval by the workers' council, and the calculation of an individual worker's remuneration. However, the periodical operating accounts—or the workers' pay slips—are not the only documents showing the undertaking's economic and financial position at the end of each accounting period. There is also a " gross balance sheet " (consolidated accounts and balance sheet) which shows in detail the state and movement of all the undertaking's assets and operating accounts. For example, the gross balance sheet prescribed for industrial undertakings contains several hundred items grouped according to the decimal classification of the standardised accounting system, which enables a breakdown to be made for all the operations affecting different capital and operating accounts over the period in question.1 Each aspect of the running of the undertaking can therefore be studied and analysed separately, and if necessary traced back to the individual operations forming a particular item in the balance sheet. results, as indicated in the following table which gives the average annual growth indices (1959 results as percentages of 1958): Undertakings which have not introduced a '* complex system " Undertakings which have introduced a " complex system " 118 128 Income (before tax) 122 136 Net income 138 153 Item Gross income (volume of sales) 1 The gross balance sheet is made up in three columns (each subdivided into " assets " and " liabilities ") which show for each account the position at the beginning of the period, the operations during the period, and the balance at the end (i.e., the state of the assets and any temporary balance in the operating accounts). DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 231 TABLE V. SUPPLEMENTARY ANALYSIS OF WORKERS' PERSONAL » INCOMES A. EXTRACT FROM SUMMARY OF SUPPLEMENTARY PERSONNEL COSTS Amount in dinars Serial No. Item 139 Daily allowances, fares, and removals within the country . . . 2,421,261 140 Daily allowances and fares abroad — 141 Residence and separation allowances 142 Apprentices' wages 143 Compensation for the first seven days of sickness 1958 145 1959 . 1,991,036 — 5,693,634 6,113,444 11,565,680 16,517,566 45,634 67,130 1,353,239 1,224,022 Contribution towards workers' travelling expenses to and from 146 Fees for Yugoslav and foreign professional services or experts . . B. BREAKDOWN OF WORKERS' PERSONAL INCOMES 2 (In thousands Serial No. Hours worked (thousands) Grade Highly skilled workers 603 dinars) Personal incomes calculated and paid in accordance with the scales or other criteria specified by the undertaking's rules Piece 152 of 22,432 Time rates Bonuses Total 89,437 111,869 Personal incomes in addition to the pay scales (distributed surplus) 34,066 222,210 262,275 484,485 145,935 153 Skilled workers . . 3,745 154 Semi-skilled workers 2,009 99,854 98,239 198,093 33,697 231,790 155 Unskilled workers . 360 10,818 19,118 29,936 4,879 34,815 . . . 6,717 156 Total 355,314 469,069 824,383 108,54 Total — 180,696 592,539 1,005,079 1 The figures in this table and in Table IV concern the same undertaking, and notes 1 and 2 of Table IV are therefore relevant here. s The records of the undertakings also include a corresponding summary for 1958, although this is not reproduced here. 232 WORKERS' MANAGEMENT IN YUGOSLAVIA The consolidated accounts and balance sheet must also be accompanied by a series of documents or additional summaries—an inventory of raw materials, work in process and finished products, a summary of the personal income locked up in the stocks at the beginning and end of the period, a summary of suppliers' and customers' accounts, and a statement of the fixed and working capital accounts. Two of these additional summaries which are most directly connected with the remuneration of the workers are reproduced in Table V. The general inventory referred to earlier is clearly a key document among these additional records. All these documents must be countersigned not only by the chief accountant, but also by the director of the undertaking and the chairman of the management committee, and are of course available to the workers' council and its subcommittees. Approval of the Accounts within the Undertaking and External Supervision Two other aspects of the distribution system still have to be explained, namely the process whereby the collective decides on the distribution of income, and the means available to the authorities or other agencies outside the undertaking for preventing unlawful decisions and, if necessary, for inducing undertakings to act in accordance with the public interest. THE PROCESS OF DECIDING INCOME DISTRIBUTION The first phase of the " distribution " process derives from the whole activity and each individual decision of the collective and its management bodies, in the form of production results and operating costs, so that it can hardly be the subject of a decision when the annual accounts come up for approval.1 The essential aim is that the workers and those in charge of the undertaking should be aware of the connection between their actions and decisions on the one hand and the remuneration of their labour on the other, and should be prepared to act accordingly. A real decision can be taken only at the second and most important phase of the distribution process, when the amount to be distributed to the workers and the amount to be paid to the funds of the undertaking 1 From this angle, every worker who saves or wastes power or raw materials or who falls ill, etc., is playing a part in the first stage of the distribution process. The same applies to any decision by the workers' management bodies which is not a mere vote on procedure or a purely formal resolution. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 233 must be settled. Since the remuneration of individuals is automatic once this has been done, the third phase in the distribution process does not as a rule call for any special decision. Adoption of the accounts of the undertaking is therefore a major step in the process, and the legal and practical aspects should be briefly described. As regards the current legislation governing the procedure to be followed for the approval of annual accounts, a recapitulation of fundamentals will suffice. The workers' council is responsible for distributing the income of the undertaking, and must hold a special sitting for examination of the final annual accounts. There are also strict time limits for the submission of the detailed accounts to the local authorities and the appropriate bank. For most undertakings the time limit is 20 days for monthly or quarterly accounts, and two months for the final annual accounts. The accounts of the undertaking must be made up and, if necessary, approved by the workers' council or collective within that time; otherwise the undertaking will have to pay a fine to the exchequer for every day's delay, and the bank is required to block its current account, which means in particular that all payments for the remuneration of labour will be suspended except the guaranteed statutory minimum amounts. 1 The detailed procedure to be followed within the undertaking must also be laid down in the by-laws and in the other decisions of the workers' council. The following remarks may be made on the practical operation of this procedure. The accounts are prepared by the financial department of each undertaking under the responsibility of the chief accountant. They are first examined and approved by the board of management, assisted if necessary by special committees, and then submitted on its behalf to the workers' council. In many cases they are discussed in the works before they are submitted to the council. In spite of the complexity of the work often involved and the very limited time available, the preparation of the accounts does not seem to involve special technical difficulties. For example in 1958, according to information supplied by the Federal Bureau of Audit, barely 10 per cent. of undertakings found it impossible to submit their accounts on time. Very great importance is attached to this point, not only with a view to ensuring the regular collection of taxes and dues, but above all to enable 1 A current account is not blocked immediately the time limit has expired but after a further period, the duration of which is also laid down in the regulations. According to the regulations concerning the final annual accounts for 1959, workers' management bodies might be dissolved and the undertaking placed under public receivership if the delay exceeded 60 days (cf. Sluzbeni list, No. 3, 20 Jan. 1960, Text No. 24, s. 13). 234 WORKERS' MANAGEMENT IN YUGOSLAVIA undertakings to distribute their incomes as soon as possible after they have been produced, so as to preserve the connection between the work done and the remuneration distributed among the collective. This is also in the interest of all members of the collective, who want to be paid as soon as possible and are therefore generally prepared to be expeditious in their consideration of the accounts, to offer special bonuses to the accounting department, etc. In order to promote the efficiency of accounting departments in undertakings, the Chamber of Industry is trying to ensure that accounts are always ready within five days of the end of the financial period to which they relate. Once the final accounts are made up, the results of the year's operations—or at least the main items on the balance sheet, including those relating to net income—are soon known to all members of the collective or at least to all those who are interested. No considerations of business or departmental secrecy normally prevent thesefiguresfrom being made known within the undertaking. It seems to be the normal practice for the accounts to be published in the undertaking's newspaper, if any, and the accounts are always distributed to members of the workers' council and the heads of the various departments, and sometimes to supervisory staff as well (particularly when they have to be discussed within the work unit). A distinction should, however, be drawn between the final annual accounts, for which a special session of the workers' council to deal with distribution is required, and the monthly or quarterly accounts, which are normally considered in connection with the periodical management reports.1 Although in many undertakings the workers' council had long been in the habit of distributing part of the surplus in the form of extra months' payments, it is only since January 1958 that the regular and frequent distribution of remuneration concurrently with the monthly or quarterly reports has been a part of the workers' management system. Until the second half of 1959 undertakings were allowed to distribute during the year only an amount corresponding to the guaranteed statutory minimum plus not more than 50 per cent., and any surplus had to be kept in reserve until thefinaldistribution at the end of the year. This clause, which considerably reduced the importance of periodical distributions during the year2, was then dropped, and since July 1959 undertakings have been allowed to distribute their income in the course 1 Cf. above, pp. 145 ff. Since in most cases all the workers' council had to do when approving the periodical accounts was to abide by the statutory maximum, while the real distribution of the surplus could not take place until the annual accounts had been closed. 2 DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 235 of the financial year without being bound by any predetermined ceiling. On the other hand, the workers' council is not obliged to distribute income at the end of each accounting period; it is in fact very unusual for surplus income to be distributed every month. The council may carry over the sum available to the following financial year or until the closing of the annual accounts. Although periodical accounts have to be submitted to the workers' council for approval, until now it has been only in certain of the more developed districts or regions that they have had to be approved by the council before they are submitted to the bank or to the local authorities. For the moment these are only local administrative arrangements which are particularly designed to promote the preliminary examination of monthly or quarterly accounts within the undertaking and to develop the role of workers' councils in this connection. There is no statutory obligation as in the case of the annual accounts.1 Control of Operating Expenses What possibilities of action are available to the workers' council when it examines the financial results for a given period? In the first stage of the distribution process, involving the operating expenses, the function of the workers' council is mainly one of internal supervision. It may, either on its own initiative or after considering a report from specialised departments or committees, refuse to approve certain expenditure which it regards as unlawful or as misappropriation, or which has simply not been approved by it beforehand; the council may then impose sanctions or take other steps to protect the interests of the undertaking. Possible measures to guide the undertaking's future policy are however, more important. For example, in one of the undertakings visited by the mission the workers' council found that the amounts made available for travel on business were being spent much faster than expected, and decided that in future all journeys for business purposes would have to be approved beforehand by the board of management following application by the director, giving the reasons. In other cases it was decided to introduce stricter rules regarding powers of signature for certain kinds of expenditure in order to improve the control over financial administration. 1 It should be emphasised, however, that no sum may be deducted from the undertaking's net income, whether during the year or at the end of it, without prior authorisation from the workers' council. 236 WORKERS' MANAGEMENT IN YUGOSLAVIA The main object of this internal check, however, is to enable the collective and all the workers' management bodies concerned to review the practical financial implications of the undertaking's economic policy as a whole (production, trading, investment, manpower, etc.). An examination of the minutes of the sittings of several workers' councils revealed that this practice was already widespread. In one case, for example, involving a sitting at which quarterly accounts were examined, a discussion lasting nearlyfivehours was mainly devoted to various suggestions, criticisms or requests for information put forward by many members of the workers' council and other workers attending the meeting, on the subject of operating expenses—unused machinery that could be sold, inefficient plant needing minor repairs, defective safety equipment, delay in modernising transport between two workshops, a bottleneck on the assembly line, a temporary breakdown in the rail and water transport of raw materials and goods and the possibility of rectifying this at the level of the undertaking by setting up a road haulage service, tardy and chaotic planning for the representation of the undertaking at an industrial fair and so on. The financial implications of the various proposals were not ignored. A number of those attending—including several manual workers— cited tentative figures concerning, for example, the financial burden of interest and depreciation on unused plant or the cost of a particular item of equipment or plant which they thought it essential to acquire. The financial arguments were in most cases interspersed with, and discussed at the same time as, requests for the elimination of arduous or dangerous work, the improvement of health conditions in the works, and the modernisation and repair of machinery in order to ensure adequate output and remuneration.1 This discussion not only enabled administrative and technical executives to supply explanations on the various points raised; for some of them it also provided an opportunity of stressing the particular needs of their departments or special interests and of advocating early action on them. The discussion therefore centred on general considerations of efficiency and of environmental and working conditions within the undertaking; the most pressing claims involved a series of technical or modernisation measures demanded by the production departments. The council then considered the report of the specially formed internal control service, and quickly dealt with several cases of expenditure that 1 In this particular case a leading part in the discussion was taken by production workers and supervisors in production departments, most of whom took an extremely firm line and were fully informed of the state of affairs in the works and of the various previous and existing plans and programmes concerning them. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 237 had been incurred without its prior authorisation. After it had endorsed several items of this kind 1 on the basis of the explanations it received, it decided by a majority " to put an end to this practice ", and refused to endorse the purchase out of the fixed capital fund of a small quantity of second-hand equipment; after the director of the undertaking had pleaded the case in some detail, the council accepted a compromise suggested by the chairman of the board of management to the effect that a disciplinary inquiry should be held to determine who had been responsible. On the other hand, the quarterly distribution of the net income involved few problems and was dealt with very quickly because everyone knew perfectly well that, in accordance with principles decided on beforehand, the quarterly earnings of the undertaking would allow an extra monthly supplementary payment to be made while the remainder would be carried over for distribution at the end of the year. The only question which the council actually had to settle was whether the payment should be made on 20 November or on 20 December. DISTRIBUTION OF THE NET INCOME It is impossible to say to what extent the above example can be regarded as typical under existing conditions. Only when an undertaking's remuneration policy has been determined and its principles generally accepted can full attention be devoted to the first stage of the distribution process, i.e. internal control over operating expenses. This can also be done in the course of a financial year if it is agreed to postpone to the end of the year a final decision on the shares to be allocated to labour remuneration and to the funds of the undertaking respectively. Otherwise, the question of dividing the income between the two is of course a basic one which needs to be settled first. It is of vital importance for the workers, and hardly less so for the undertaking, which is bound to have growing needs, and for society, which wants the economy to develop quickly. Under the existing workers' management system, this is undoubtedly the most important issue facing the collectives and society generally. 1 In all cases the sums involved were small and in some cases the money had been spent a long time before. The expenditure had occurred, for example, because on one occasion, owing to an error, the undertaking had received more office furniture than it had ordered and it was later asked to pay the difference at a time when it had already distributed all the articles received; on another occasion certain preliminary construction work on approach roads had been carried out by a building undertaking which had in the meantime gone into liquidation and whose administrators were asking for payment. 238 WORKERS' MANAGEMENT IN YUGOSLAVIA Special arrangements have therefore been made to enable local communities to have a say in the matter without impairing the autonomy of each collective. " Social Control " by the Commune The procedure known as " social control ", as between the commune and the undertaking, does not relate only to the distribution process but also to the economic and social activities of the undertaking as a whole. This question will therefore be referred to again in Chapter XII, which deals with this aspect of workers' management, but it is convenient to mention the basic principles at this stage. Once the workers' council has reached a decision on the distribution, the relevant accounts drawn up on the prescribed forms must be transmitted to the local commune. The administrative departments of the commune (notably the financial and labour planning departments, with the assistance of the banks and auditing services) then prepare a general review of the situation and of the policy of the undertakings in its area and submit this to the producers' council, which may also ask for special studies or analyses relating to particular undertakings.1 The commune producers' councils must carry out a general study of these documents at the end of each half year, as well as quarterly, whenever possible, and are entitled to make recommendations to workers' councils concerning the distribution of the net income and other aspects of the economic management of the undertaking directly related to the targets of the national economic plan, investment programmes, vocational training schemes, etc. It is understood, however, that through such recommendations the producers' councils may not interfere—they are specifically forbidden to do so by law—in the internal affairs of the undertaking (such as methods of remuneration or determining the amounts to be allotted to the various funds of the undertaking) or in the day-to-day management of affairs (for example, pricing, except in a public service) or make suggestions that go against the law or the general principles of the economic system (for example, by restricting competition). The representatives of the workers' council are also normally allowed to attend the sitting of the producers' council at which the situation of the undertaking is discussed. The workers' council of the undertaking concerned must then meet once more and consider the recommendations of the producers' council. 1 In this event the papers prepared by the administrative departments must first be submitted to the workers' councils of the undertakings concerned. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 239 The workers' council is free to accept the recommendations in whole or in part, to reject them, or to ask the district or republic producers' council to reconsider the whole matter.1 This procedure provides only a general framework for relations between the commune and the undertaking, which may in practice vary greatly according to circumstances and according to the particular commune and region of the country. For example, in a commune visited by the mission—a mixed agricultural and industrial town of 30,000 inhabitants with about 100 undertakings—the two chambers of the people's committee had devoted a nine-day session to discussing the bi-annual accounts of undertakings for 1959. The representatives of all the larger undertakings had been heard by the producers' council and various recommendations had been made for most of them. Whereas most of the workers' councils followed these recommendations when they were called upon to reconsider the matter2, there were about 20 undertakings in which the workers' councils refused to act on the recommendations of the producers' council. In particular, several undertakings insisted on their right to distribute their whole net incomes as remuneration.3 1 The commune may react to an undertaking's failure to co-operate through its taxation policy or if requested to grant or guarantee investment loans, etc. In particular, a supplementary tax of not more than 25 per cent, may be levied by the commune on that portion of the income of the workers in the recalcitrant undertakings which is in excess of 160 per cent, of the guaranteed minimum remuneration. In addition, if the undertaking has infringed a specific provision of the Act concerning the administration of resources (for example, by failing to make the compulsory payments to reserve or allowance for depreciation) it is of course liable to the appropriate penalties. The undertaking concerned may for its part counter such measures through the normal procedure of appeal to administrative authorities or to the courts. For further details see below, Ch. XII. 2 The acceptance of many recommendations would seem to be due partly to civicmindedness and partly to the fact that the producers' council consists of leaders from among the workers of the undertakings in the commune, who are generally aware of the problems of undertakings and accordingly show little inclination to make unacceptable recommendations. They are also entirely free to amend the conclusions of the administrative departments of the commune in the light of their personal knowledge. While the Office mission was in the commune in question the producers' council rejected (or referred to a committee) a series of measures adopted by the people's chamber with regard to economic and financial questions, and on each occasion the producers' council took a decision favourable to the undertakings' views. 3 It would not seem possible to define the true dividing line between the commune's powers of social control and the undertakings' autonomy until practice has become stabilised and the courts have built up case law on the subject. At the moment there are no precedents whatever, since it is only very recently that administrative and financial cases of this kind have been heard. It is worth mentioning, however, that in the past the supreme courts have annulled various orders issued by the communes concerning such matters as the introduction of supplementary local taxes, the fixing of prices, amalgamation of certain undertakings, etc. 240 WORKERS' MANAGEMENT IN YUGOSLAVIA The Collectives and Net Income Distribution This stage in the distribution process has always been and still is the driving force behind the workers' management system. It brings into the open the relations and possible divergences between the commune or other organisations outside the undertaking and the workers' management bodies, as well as the relations between the collective or certain particular groups or categories of workers and the workers' management bodies in their own undertakings, which may be more concerned with the interests of the undertaking and society in general than with the views of those who elected them, or may offer less resistance to outside influence or pressure. This is the origin of the practice of holding a referendum within undertakings.1 According to various estimates it appears that most of the referenda held in Yugoslav undertakings since 1953 have related to this aspect of management, i.e. the distribution of the undertaking's net income. No very clear pattern emerges from the results of these referenda, which probably express the will of the collective most directly, since the cases reported include many where the collectives declared themselves in favour of a more liberal distribution of funds and many where a majority of the workers recognised the imperative need for investment.2 Although trade unions and political organisations, the communes, etc., can and do exercise an influence in the latter direction, the representatives of production departments in undertakings and even the workers themselves often also exert pressure on management bodies to secure the carrying out of various modernisation plans or to improve the conditions of work and hygiene (noise abatement, ventilation, lighting, protection against the weather, etc.), not to mention the welfare services, even though once such proposals are implemented they are bound to cause the allocation of larger sums to the funds of the undertaking at the expense of cash remuneration.3 This is not, of course, 1 As stated above, although a referendum within the undertaking still has no real legal basis it is now regarded, even by the authorities, as a necessary stage in the distribution process in certain circumstances, particularly when the workers' council intends to distribute none of the surplus and to pay it all into the funds of the undertaking (cf. above, p. 216). 2 Mention has already been made of the presumably very exceptional cases in which collectives are reported to have decided not to distribute any of the surplus, or even not to distribute part of the basic remuneration. It should also be pointed out that it is hardly possible to sum up the results of these referenda because of the very large number of different situations that are apt to arise in practice. 3 This tendency is confirmed by the propensity of certain Yugoslav undertakings to increase their fixed capital without making corresponding increases in their working capital. In some communes an excessive propensity to invest funds from working capital was cited as the main, if not the only cause, of economic offences for which sanctions for improper administration were imposed. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 241 surprising where such technical improvements lead either to an immediate increase in the incomes of those concerned (for example, when more efficient plant is installed), or to an improvement in the conditions on the premises where they spend most of their time. It should also be mentioned that, in order to do away with the conflicts or divergences that may arise both within the collective and in its relations with outside agencies \ great reliance is now being placed on the various " complex " distribution and remuneration schemes, and the various predetermined distribution patterns laying down the proportion of the net income to be devoted to the remuneration of labour on the basis of indices of productivity and profitability, taking account of the position of each undertaking and the conditions peculiar to it. Decisions on Individual Incomes When the workers' council or collective has decided what part of the income it intends to distribute in the form of remuneration, the distribution itself is a straightforward calculation in accordance with the provisions of the rules concerning rates of remuneration and the other rules and by-laws of the undertaking concerning the remuneration of labour. If the workers' council were to interfere at this stage, it would necessarily infringe the workers' accrued rights, since by increasing the shares of some of them it would have to reduce those of some others. In this respect, therefore, the role of the workers' management bodies is mainly confined to hearing appeals concerning the accuracy of the calculation of the remuneration due.2 In practice, however, it has been necessary to diverge a little from this principle in respect of individual bonuses, since strict application of the bonus rules might mean that particular workers or groups of workers were granted bonuses that were quite out of proportion either to the general level of remuneration or to their personal merits, or even to both. It is therefore recognised that in such circumstances the workers' 1 For example, according to M. Spiljak, Vice-Chairman of the Central Council of Trade Unions and one of the main advocates of these complex distribution schemes, " until now the unions and other social organisations were often faced with the thankless task of having to limit the rise in earnings because they were not sufficiently closely tied to increases in production and productivity, and could therefore upset market equilibrium. However, if earnings are directly linked to changes in production and productivity, the unions will be able to support the collectives in their endeavour to secure a rapid and steady increase in real earnings ". (Cf. Socijalna Politika, op. cit., Vol. IX, No. 11, Nov. 1959, p. 12.) 2 All that was said in the previous chapter about the role of the workers' management bodies and of the courts, the labour inspection service, the unions, etc., with regard to disputes concerning employment relations also applies to the calculation and payment of remuneration for work. 242 WORKERS' MANAGEMENT IN YUGOSLAVIA council may reduce the amount to be paid out. Similarly, the council may deduct from the available income the sums required to pay a personal bonus if it considers that circumstances justify such a step. This may be done even if there are no rules on the subject. In all these cases the decision of the workers' council, together with an explanatory statement, has to be submitted to the commune, which may make " recommendations " with regard to it under the procedure already described.1 The workers' council or collective may also set aside part of the remuneration fund as a special reserve to be drawn upon if the undertaking's income over a given period is insufficient to maintain personal incomes at a specified level. Such reserves already exist in quite a number of undertakings, and usually constitute an essential element of the complex remuneration schemes. FINANCIAL INSPECTION AND AUDIT Like all financial and accounting operations, an undertaking's accounts and periodical balance sheets, its books and the distribution and calculation of remuneration are subject to inspection by various public agencies (the bank, the financial and labour inspection services, the departments of the commune administration), which are expected to check both their accuracy and their conformity with the legislation in force and to discover any error or fraudulent misappropriation. These bodies act as guardians of the public interest and of the " social property " and interests of the undertaking. Among the courses of action available to them, the one most closely affecting workers' management is the power—in increasing use—of submitting their conclusions or observations to the elected management bodies, particularly the workers' council. The same bodies may also make use of the services of various specialised auditing undertakings or institutions, or themselves set up a service within the undertaking for that purpose. The internal and external 1 The weekly Komunist devoted a long article in its issue of 15 October 1959 (p. 5) to the discussions that had taken place in a large undertaking at Sarajevo concerning a testimonial to be offered by the collective to the director on his resignation after eight years of good and faithful service. Apart from an unofficial collection among the workers, it was moved in the workers' council that he should be given a valuable present in kind and in cash. The factory committee of the Communist League considered that for reasons of principle the gratitude of the collective should be expressed only by a symbolical gift (presentation of some object of artistic value). When the vote was taken, however, all but five members of the workers' council voted for the first proposal, and several objects of value as well as a sum of about half a million dinars were given to the outgoing director. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 243 inspection and the penalties that may be imposed for any shortcomings that come to light are questions that cannot be covered fully in a review of the distribution process. A special chapter (Chapter XII) has therefore been devoted to them. Practical Effects of Income Distribution under Workers' Management The practical effects of the distribution process described in this chapter can be examined from various angles. An attempt should probably be made in the first place to ascertain how far the interests and policies of the different collectives have been reconciled with a general policy of co-ordinated economic development. It will be natural to consider in the second place the effects of the system on the situation and outlook of the workers, i.e. if and how far their earnings have improved and whether the system promotes awareness of, and active concern with, management of the undertaking. This question may be asked not only as regards workers individually but also as regards the management bodies whose work depends on such awareness by individuals and the collective as a whole. OVER-ALL EFFECTS ON PRODUCTION, EMPLOYMENT AND PRODUCTIVITY A certain amount of information on the over-all effects of this distribution process is shown in the statistical tables F to L in Appendix I.1 It cannot be overemphasised that in its existing form the distribution and remuneration system, like other fundamental aspects of workers' management, goes back no further than December 1957, and that the experience acquired is therefore not sufficient to allow the full effects to be assessed. The increase in the gross and net incomes of undertakings, which is shown in Table F, reflects an appreciable increase in the volume of output for the whole workers' management sector since 1956. Since 1957 production increased at a higher rate than had been provided for in the targets of the Five-Year Plan (1957-61): the rate of growth of industrial production was 13 per cent, per annum instead 1 Through _the statistical series published by the National Bank, the Investment Hank and the Federai Statistical Institute it is now possible to carry out very detailed analyses of the various aspects of the economic and financial operations of undertakings, of the remuneration of labour, of family budgets, etc. In addition, Yugoslav economic journals and reviews publish numerous special analyses of the effects of the distribution process in the various groups or categories of undertakings, or according to the various items of the remuneration distributed. 244 WORKERS' MANAGEMENT IN YUGOSLAVIA of the 11 per cent, fixed in the Plan.1 Yugoslav leaders consider that this result is largely due to the existing system of income distribution and to its stimulating effects on all those associated with the running of Yugoslav undertakings. With regard to employment, the targets for new placements in productive jobs were each year greatly exceeded.2 A report of the Economic Commission for Europe noted in this connection that " it also seems to be generally agreed that the present built-in incentives to seek personal profit have not outweighed the feelings of solidarity that have grown up among the personnel of enterprises and which make workers' councils reluctant to eliminate redundant labour so long as there is some profit to distribute and hope of future expansion ".3 Although the over-all productivity of labour has not reached the planned targets, it has nevertheless shown a fairly marked increase over the last few years. However, at present individual productivity is the issue which, according to certain commentators, seems to call for a reform of the existing distribution system.4 In this connection there is much confidence in complex remuneration schemes, the introduction of which often seems to cause a real leap forward in the individual productivity index.6 The information available has not yet allowed an index to be compiled with regard to the returns on capital in the workers' management sector 1 The expansion can be followed in the " production index tables " in the Monthly Bulletin of Statistics of the United Nations. Economic activity is still tending to increase steadily, and the economic plan for 1960 forecast that the rate of growth would be definitely higher than in earlier years (over 16 per cent.). 2 During the 1956-59 period the volume of employment in economic undertakings rose each year by about 150,000 to 160,000 (or about 8 per cent, per year), as compared with the target figure of 107,000 under the Five-Year Plan. In 1960 the increase in the labour force exceeded 200,000 persons. 3 Cf. " Economic Planning and Management in Yugoslavia ", in Economic Bulletin for Europe (Geneva, United Nations), Vol. 10, No. 3, Nov. 1958, p. 60. In a number of the undertakings visited the mission noted the abolition of quite a large number of jobs after the introduction of schemes for preliminary income distribution among departments, or of other complex remuneration schemes. In an undertaking in the food industry, for example, all the " reserves " of unskilled workers attached to the various departments were abolished. On a similar occasion a large motor car factory reported that it had abolished about 400 non-essential jobs. (It had turned out that the market for private cars could absorb an output very much higher than the set target, so the annual plan was revised in order to ensure that all the workers whose jobs had been abolished would be placed elsewhere.) The appropriateness of a system designed to encourage labour force reductions largely depends, of course, on the workers' chances of finding alternative jobs or sources of income. 4 Cf., for example, the speech by S. Vukmanovic, Chairman of the Central Council of Trade Unions, at Pristina (Borba, 16 Nov. 1959); see also Economic Bulletin for Europe, loc. cit. 6 Cf., for example, Nova administracija, op. cit., July-Aug. 1960, Eighth Year, No. 4, pp. 344-353. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 245 as a whole, although work on such analyses is being actively pursued in the various undertakings and economic sectors.1 As already mentioned 2 , however, there has been a marked increase (of about two-thirds) in the productivity of new investment over recent years. Tours of undertakings and the partial information available seem to confirm that there has been such a general improvement in the returns from invested capital and that great importance is attached to it by the directors and the collectives of undertakings. DISTRIBUTION OF THE NATIONAL INCOME AND PRODUCTIVE RESOURCES The distribution system determines how the profits derived from production in the workers' management sector are divided between the workers' individual incomes and the common needs of society (especially through taxation and interest payments on the assets of the undertaking). 3 Under the system this division receives great publicity not only at the national level but also at the level of the undertaking.4 It also promotes a study of trends at the industry level and if necessary their rapid correction by economic and political agencies.5 Tables F to L (inclusive) in Appendix I show that the sums deducted from gross incomes for " turnover " and income tax are in fact several times greater than the amounts fixed by the workers' management bodies for allocation to the undertaking's funds out of net income. The two taxes, together with interest, therefore provide society (the federal Government) with a powerful instrument for regulating the level of *At the end of 1960 the Yugoslav National Bank issued the first comprehensive statement of accounts and balances for various branches of the economy, including those of over 2,200 individual undertakings in industry, for the years 1958 and 1959. These figures cover over 50 items for each industry and each undertaking, including the various funds, gross and net incomes, taxation, volume of employment and the personal income of the workers. It has not been possible to make an extensive analysis of these data which, however, seem, generally speaking, to confirm the various remarks made in this chapter. Table H in Appendix I is based on an official computation of data contained in this survey as regards the relative level of workers' income in industrial undertakings. 2 Cf. above, Ch. VIII. 3 In fact through this distribution system the workers' management sector alone supplies almost all the funds required to meet the "common needs of society". 4 Tt is not l.inijsuBi to find in the bulletins and other papers of an undertaking a detailed breakdown of a sum of hundreds or even thousands of millions of dinars which represents the contribution of the undertaking to society (interest payments, taxes and miscellaneous contributions) and which may in many cases be much greater than the amount set aside for remuneration. 6 Under the Yugoslav system such co-ordination of financial policy with development programmes is the main (and in principle the only) operational function of the development plans. 17 246 WORKERS' MANAGEMENT IN YUGOSLAVIA savings and investment in accordance with the development policy laid down in the economic plans adopted at the federal level.1 The share of net income allocated by the undertakings to capital and other assets is nevertheless of major importance. On the one hand, from the point of view of the economy the sums so added to the public investment funds in a given branch are sufficient to determine the rate of expansion in that particular branch or group of undertakings. Since the undertakings that can finance their own development on a larger scale are those with higher incomes—and therefore, in principle, the ones that are most profitable and of the greatest value to society—the increase in production is of necessity more marked in sectors where the demand is strongest and trading conditions are most favourable.2 The system whereby an undertaking allocates its own income may thus to some extent correct errors in planning estimates and provide the planners with valuable indications concerning spontaneous trends within the economy. On the other hand, since allocations to these funds are intended exclusively to finance the development of productive capacity and the improvement of welfare facilities within the undertaking, they create a personal link between the workers and the undertaking's assets which they have helped to build up. Although not based on ownership, the fink is nonetheless real. Its strength, however, largely depends on the extent to which a worker or group of workers has a desire, an opportunity or a need to continue to belong to a particular collective. The information concerning the sums allotted to the funds of undertakings (Table F, columns 18 to 20) is of real interest only for the period after 1957, i.e. since the collectives have been able to decide freely how much should be set aside. A comparison of the amounts allotted to the funds of the undertaking and the amount earmarked for the remuneration of labour in 1958 and 1959 is regarded in Yugoslavia as particularly significant, for it shows that the collectives not only continued to invest and thus to build up " the material foundation for their productive activities " but also that the part of the net income earmarked for meeting 1 The operations of the various sectors or industries can be analysed in detail on the basis of the monthly and quarterly abstracts of the accounts of undertakings, and prompt action can thus be taken to deal with any trends found unsatisfactory. By this means the economic authorities can react promptly not only to general economic trends but above all with regard to specific aspects of the operations of particular undertakings or groups of undertakings. 2 The existing method of distributing the public investment funds undoubtedly has a multiplier effect in this respect, since an undertaking that can plough back 100 million dinars, for example, to finance its own development will normally be able to obtain long-term loans for much larger sums (i.e., 200 to 500 million dinars, according to the branch of the economy) for its development programme. DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 247 the financial needs of the undertaking is increasing at a definitely faster rate than the workers' remuneration. 1 Even Yugoslav leaders and specialists were apparently surprised by this trend, which first emerged at the end of 1959. The estimates for 1960, which were based on the plans of undertakings, seemed to suggest that it was likely to continue, but the period of observation was much too short for the trend to be regarded as well established. It should also be noted that, whatever shares are allotted to investment and the remuneration of labour respectively under the existing distribution system, they can increase only to the extent that the net incomes of undertakings also increase, or at each other's expense. In short, the machinery of autonomous distribution of income by undertakings under the workers' management system seems compatible with the pursuit of a policy of rapid economic expansion under a central development plan. In particular, it has allowed the volume of investment to be maintained at a very high level. Providing that taxation is not confiscatory, the distribution scheme leaves undertakings a reasonably substantial margin by which they can influence the direction of growth and investment policy generally, depending on their degree of success. It would seem that, on the whole, under Yugoslav conditions the policy in fact pursued by the collectives of undertakings has not disappointed those who introduced the system, and that their propensity to invest has even exceeded the forecasts for the first two years of practical application of the system. It could therefore be said that, through the various material incentives built into the present distribution scheme, the workers' management system can play a positive role in the distribution of the 1 In 1958 and 1959 however, there was a lack of balance in the allocation of investment funds between fixed and working capital. This seems to epitomise the tendency on the part of executives and collectives to give first priority to the modernisation and improvement of production plant. The general opinion was that steps should therefore be taken to slow down somewhat the rate of investment and to induce workers' councils to diversify the use of their funds (cf. Borba, 12 June I960, p. 3). The following figures (in thousands of millions of dinars) show the amounts involved: Allocations to capital Total gross investment Year Fixed capital info 59.3 1959 67.2 Fixed capital Working capital 1.Ö 543.1 76.4 ll.I 702.7 56.0 Working capital In fact, various measures were taken in I960, especially by the National Bank, to induce undertakings to allocate the necessary sums to the financing of their current activities and to prevent over-investment in fixed capital. 248 WORKERS' MANAGEMENT I N YUGOSLAVIA national income within an economy based on collective ownership of the means of production. WORKERS' PERSONAL INCOMES AND REAL EARNINGS Despite the considerable increase in the sums allocated to reserves (an increase which has been more rapid than the increase in the remuneration of labour) and the rapid increase in the number of workers in the workers' management sector, the average " personal income " of the workers has also risen markedly since 1956 (see Table J in Appendix I, and Figures 5 and 6). The increase was particularly noteworthy in 1957, when the existing system of distribution was tried out in certain branches of the economy, and in 1959 and 1960 when there was a rapid expansion of economic activity. The introduction of the present distribution system was therefore accompanied by a rapid increase in workers' incomes * although the rise has not always and everywhere been a steady one. An analysis by branches of the economy, however, gives a far from complete picture of the situation and needs to be supplemented by an analysis of the average level of remuneration in individual undertakings, and the variations between different groups of undertakings within the same branch of the economy and within the economy as a whole, as well as their causes. It has not been possible to analyse the comprehensive data which were published recently by the National Bank2, but there can be no doubt that these differences are fairly considerable, ranging from the small group of undertakings paying the guaranteed statutory 1 This marked rise in the level of the remuneration of labour has had a side effect that is of great economic and social importance, namely an increase in the proportion of the family income derived from the main occupations of members of the family and a corresponding fall in the income which the family receives from various welfare benefits, and particularly from the secondary occupations of its members. Many workers used to have to work on their own account or take on a second part-time job to support their families, but the need for this is becoming less imperative. It is therefore expected that they will be able to identify themselves more completely with the collective of the undertaking in which they have their main jobs. 2 See footnote 1, p. 243. For the year 1957 some data of this kind were also collected by the Labour Remuneration Committee of the Federal Executive Council on an ad hoc basis in connection with the survey which preceded the working out of the existing system for the distribution of income and the remuneration of labour. Of greater interest is a detailed analysis of the position in 1958 carried out by the Federal Secretariat for Economic Affairs. It included a comparative study of the earnings of labour and capital in 1958 for a large number of individual undertakings and for various industries (Table K in Appendix I). The reader's attention is drawn both to the great variations between undertakings in terms of earnings from labour and to the substantial surpluses in the more prosperous undertakings. It should be noted, however, that these differences were greatly reduced at the net income stage (owing to financial and fiscal charges) and even more so by the time the workers received their personal incomes (owing to the sums allotted to the funds of the undertaking). DISTRIBUTION OF INCOME AND REMUNERATION OF LABOUR 249 minimum, through a group in which the remuneration of labour exceeds the statutory minimum by about 40 to 80 per cent., up to the outstanding undertakings in which the workers' incomes have reached even higher levels. While the undertaking's net income no doubt to a great extent reflects the production efforts of the collective, it may also depend on special trading conditions for the particular undertaking. The problem of ensuring that the various undertakings all start out on the same footing is not yet fully solved and continues to be a matter of concern to Yugoslav leaders. The differences in the levels of workers' incomes, and particularly their variation over time, are undoubtedly considerable, and stimulate the workers' interest in the management of undertakings by providing evidence that work put into management and production can pay, and often does so quite handsomely. It seems to be beyond dispute that this direct material interest in the performance of the undertaking is now playing a very important role in the Yugoslav economic system. One interesting point is the very marked increase in remuneration between the first and the fourth quarter of any one year (see Table J in Appendix I). This periodical increase becomes even more noticeable if the monthly averages given in Figures 5 and 6 are examined. The difference between the month of January (or February) and the month of December (or November) is generally about 50 per cent., and in many branches of the economy it even exceeds this percentage considerably. In most branches of the economy there is an initial rise, culminating in the month of July (or August) in the distribution of the income earned in the first half (often preceding the workers' departure on their annual holidays) followed by a slight fall until October, with a sharp rise in the months of November and December owing to the distributions at the end of the year. These seasonal variations are so marked that the connection between the undertaking's income distributed in this way and the remuneration of labour must be apparent to all. These variations also show that in many cases the surplus is not distributed at the time when the workers have produced it, but only with a certain time lag, since most of the collectives set aside part of the available funds for quarterly, half-yearly or end-of-year distribution.1 The variations and increases in remuneration that have just been mentioned apply to the average levels for various branches of the 1 Provided they have completed a certain qualifying period, workers retain the right to a share in the end-of-year distribution even if in the meantime they have ceased to be members of the collective. The Yugoslav press publishes occasional notices by undertakings calling on workers who have left to draw the share of a surplus which is due to them. FIGURE 5. WORKERS' PERSONAL INCOME EM INDUSTRIAL O (Monthly averages per worker, in thousands of dina 26T 20Iron and .steel ' for 15- ,...••'' Textiles ,->•*-. y \ ,•=•' 108 J'F'M'A'lvl'J'J'A'S'O'N'D 1957 \7 W/ v *"•-,.** J'f'M'A'M'J'J'A'S'O'N'D'J'F'M'A'M'J'J' 1958 1959 Source: Data supplied by the Yugoslav Federal Statistical Institute. FIGURE 6. WORKERS' PERSONAL INCOME ES NON-INDUSTRIAL (Monthly averages per worker, in thousands of dina Source: Data supplied by the Yugoslav Federal Statistical Institute. 252 WORKERS' MANAGEMENT IN YUGOSLAVIA economy; thefiguresrelating to the various grades of skill or to particular undertakings naturally vary even more. THE DISTRIBUTION SYSTEM AND THE WORKERS' MANAGEMENT BODIES The direct interest in the results of business which the distribution system provides is fully shared by the members of the management bodies and technical and administrative staff. In view of the comparatively low level of remuneration, even directors or highly qualified technicians cannot remain indifferent—and indeed personal contact clearly showed that they were not indifferent—to the prospect of receiving additional amounts equivalent to some months of ordinary remuneration, and perhaps even twice their normal earnings for the year. For those at the head of an undertaking (the chairmen of the workers' council and board of management, the director, the chief engineer, etc.) this financial inducement is further supplemented by the reputation they may acquire in their own circle, in their commune, possibly in their republic or even at the national level, for having helped to improve the material conditions of a section of the working population or the welfare of the region and the country as a whole. Above all, the system of distribution demands greater activity on the part of the workers' management bodies. To arrive at their decisions and in general perform the functions that are theirs by law and cannot be evaded, they must meet more frequently, appoint various specialised committees, set up councils at the department level, etc. Even more important is the fact that their decisions have a direct and immediate bearing on every worker's financial position. The recent introduction of decentralised distribution machinery is also intended to give the workers in large undertakings a more direct interest in the results achieved and thereby also in the management process, at a level as close as possible to that of the workplace. CHAPTER XI CONDITIONS OF WORK AND WELFARE FACILITIES However essential the economic aspect of an undertaking's activities, discussed in the previous chapters, the social role of the workplace must not be overlooked. All over the world modern enterprise is exerting a major social influence by transforming habits and living conditions, an influence that often extends far beyond the borders of the local community. In Yugoslavia, this social function of the undertaking is tending more and more to be emphasised. Although no comprehensive study or regulation of the non-economic functions of Yugoslav undertakings has yet been undertaken, there are countless regulations and studies on particular aspects of living and working conditions in undertakings under workers' management. Welfare and social questions accounted for a high proportion of the activities of management bodies in most of the undertakings visited by the I.L.O. mission. It is, of course, in the direct and immediate interest of each collective to secure through the undertaking the best possible living and working conditions. In view of the still rather low level of economic development, this interest extends to a whole series of benefits and services which the local community or the nation as a whole has been unable to provide. Facilities of this kind in the fields of workers' education, vocational training and the social aspects of employment policy have already been mentioned, and the same interest is found in housing, medical services, leisure facilities, etc. Although this is not formally laid down in any legislation, it can be said that the welfare function of the undertaking has come to be one of its features.1 In principle, apart from hours of work which, as will be 1 This is one of the main issues in the discussions that are carried on in many undertakings. For instance, in the management reports of a steel works visited in 1957 it was said that the most urgent question facing the management bodies was that of knowing whether the policy followed should be dictated by economic or socia! considerations. The reply was given in the by-laws of the undertaking, which were adopted in 1958: in addition to steel production and related operations, the objectives of the undertaking also include " the provision of canteen services for all members of the collective " and " the provision and repair of housing ". Special committees and administrative departments (directorates) were set up to carry out these two social functions of the undertaking. 254 WORKERS' MANAGEMENT IN YUGOSLAVIA seen later, give rise to special problems, the undertaking's welfare policy is limited only by the amounts of income which must be ploughed back or which the collective wishes to share out as remuneration. A decision on the amount to be allocated to welfare activities indeed often causes the most protracted discussions within the undertaking. The role of social legislation has been affected as a result. Its protective function tends in many respects to take second place, since it is expected that the collective will generally be able to look after its own interests. The workers' management system is felt on the whole to require extremely flexible social legislation that allows undertakings to choose the most suitable course among those open to them, while merely laying down general principles and various procedural rules. There can be no question of dealing here with every aspect of the undertaking's social function. The problems are innumerable, and individual and collective interests are very diversely affected according to the nature of the particular problem, the undertaking, production methods, local habits and requirements, etc. This chapter will therefore be confined to a brief over-all survey of the principles underlying the action taken by Yugoslav undertakings and of the practical effects of workers' management in the following fields: hours of work and leisure; safety, health and medical services; housing, works canteens, leisure facilities and miscellaneous benefits. The relative importance attached to the various aspects naturally varies greatly from one undertaking to another. HOURS OF WORK AND RECREATION Hours of work are fixed by law on a uniform basis throughout the country. The collective is not, in principle, entitled to extend or reduce daily or weekly hours of work, whether when planning its operations or when the annual accounts are made up.1 This rule, which is not regarded as absolute but contingent on current conditions, is mitigated by the very great diversity of the adjustments allowed with regard to weekly hours, and above all with regard to annual 1 A Bill to grant some autonomy in this respect was reported to be under discussion. The main practical objection to giving the collective full powers to reduce hours of work is that the general level of remuneration has been rather low, and is still often insufficient to cover the needs of the workers and their families, so that many workers have had to supplement their earnings during the daily or weekly rest periods. In these circumstances any one-sided reduction in hours of work by undertakings with relatively high incomes would seem improper and contrary to the general interest. It may further be noted that, if such a reduction in hours of work were to lead to a fall in the income of an undertaking, the reduction would largely be financed—in the proportion of 70 per cent, in the more prosperous undertakings—out of the amount which the undertaking would otherwise have contributed directly to the general needs of society (tax on the income of the undertaking). CONDITIONS OF WORK AND WELFARE FACILIITES 255 holidays and the various forms of special leave with or without remuneration. The various statutory provisions and the practice followed by undertakings in this matter will therefore be briefly reviewed. Daily and Weekly Hours ; Breaks ; Timetables Under the Labour Relations Act of 1957 the normal length of the working day was fixed at eight hours. Within the limits of the 48-hour working week, however, a workers' council was allowed to introduce longer or shorter daily hours, provided the working day did not exceed a maximum of nine hours.1 The statutory working day must include one or more rest periods totalling 30 minutes a day, so that a total of 71/*» hours are actually worked.2 The workers' council in each undertaking decides on the timetable, the times for starting and stopping work and taking the break, the shift roster and so on. The relevant provisions have to be included in the labour relations rules of each undertaking. In practice, almost all Yugoslav undertakings have a working day of eight consecutive hours, normally falling between 6 a.m. and 2 p.m. for the first shift. Seasonal variations (starting work later in winter) nevertheless appear to be fairly common in certain areas. On the other hand, the weekly short day (five or six hours of work on Saturdays) is still rather the exception. The break for rest normally lasts 30 minutes, and this usually enables the workers to take their midday or evening meal at work. On the whole, this timetable seems to meet with the approval of the great majority of workers 3, since it leaves them a long unbroken period in which they can look after their own affairs. It also greatly facilitates the activities of management bodies, which can meet outside working hours without encroaching on the period of nightly rest.4 In recent years the problem of hours of work has been approached chiefly from the angle of rest breaks. At the Congress of Workers' 1 Redistribution of working hours may also be carried out on an annual basis in seasonal industries. The federal Government is also empowered to authorise certain types of undertaking to adopt a 45-hour week so that the workers' councils can introduce a five-day week. 2 Until the end of 1957 the statutory break for rest amounted to only 15 minutes. 8 A proposal by the Central Council on Trade Unions that the working day should be divided in two had to be withdrawn in view of the almost unanimous opposition from undertakings; the same applies to the five-day week. 4 Since meals are taken during the break in working hours the workers' councils, staff meetings, etc., may be held as soon as the working day ends, i.e. normally from 2 p.m. onwards. 256 WORKERS' MANAGEMENT IN YUGOSLAVIA Councils held in June 1957 many delegates reported that as an experiment their undertakings had introduced breaks of 30 minutes or more. On this point, therefore, the legislation of December 1957 simply sanctioned a practice which was tending to become general. Subsequently, experiments have also been made with varying the statutory daily hours, and it has been reported that, with the more or less express agreement of the labour inspectors concerned, certain undertakings have introduced a 7^-hour day, i.e. seven hours of actual work. According to information supplied by the labour inspection service, such experiments have in general given good results in terms both of production and of thè real earnings of the workers concerned. In 1960 hours of work became a publicly debated issue. In a speech the Chairman of the Central Council of Trade Unions, Mr. Vukmanovic, said he considered that it would not yet be realistic to propose a general reduction in hours of work, because the main aim was still to do away with the need for an extra income from secondary occupations. He went on to say, however, that the current development of the country's productive forces was obviously tending in that direction; in particular, complex remuneration schemes gave the workers the prospect of rising productivity and increasing incomes with a parallel reduction in hours of work.1 Shorter Working Day Yugoslav legislation prescribes a shorter working day (generally by two or more hours) for various categories of jobs or trades that constitute a health hazard or are particularly arduous. 2 The workers' council in each undertaking is responsible for appointing a committee to prepare a list of the jobs in question and for giving rulings in disputed cases. Overtime At present, overtime may be ordered only on the basis of a formal decision by the workers' council or, if circumstances render this necessary, under a plan approved by it.3 In such a case the directorate 1 Cf. Borba, 19 Mar. 1960, p. 1. The economic journal Privredni pregled published in its issues for 3,10,17 and 24 April the results of an extensive survey on the reduction of hours of work. 2 See, for example, Socijalna politika (Belgrade), Tenth Year, No. 2, Feb. 1960, p. 25. 8 The Labour Relations Act of 1957 prohibited all overtime as a matter of principle, but allowed the director to order it in certain urgent and exceptional cases defined in the Act. It soon appeared, however, that in practice this almost complete prohibition would have to be somewhat relaxed, and this was done by an Act of 2 July 1958; at the same time the right to order the working of overtime was included among the reserved powers of the workers' council in each undertaking. CONDITIONS OF WORK AND WELFARE FACILITIES 257 must submit reports at regular intervals (at least quarterly) for approval by the workers' council with regard to the overtime actually worked in each period. Since overtime, like shorter daily hours or other gains of this kind, has to be paid for out of an undertaking's income 1, there has been a marked drop in the number of abuses in this field. In several large undertakings special rules have been adopted by the workers' councils to deal with questions of substance and procedure connected with overtime. Weekly Rest and Public Holidays Work on the weekly rest day (normally Sunday) and on public holidays may be ordered only in an emergency and following a decision by the workers' council. In the same way as for overtime, the remuneration for work of this kind is much higher than normal (50 per cent, or 150 per cent., according to the case). Annual Holidays and Supplementary Leave Yugoslav legislation leaves the workers' councils considerable freedom in deciding the entitlement of workers to paid or unpaid leave. Each worker is entitled by law to an annual holiday with pay of 12 working days if he has been at work for less than five years, with an additional six working days after five years and for every ten years at work up to a maximum of 30 working days when he has been in employment for 25 years.2 Young workers are guaranteed additional days of leave according to age. A workers' council may provide for holidays lasting longer than the statutory minimum, up to not more than 30 working days a year. As a rule, such holidays in excess of the statutory minimum are not to amount to more than one week. The conditions governing the grant of such additional holidays have to be laid down in the undertaking's rules. These rules may also provide for the grant of special leave with remuneration for not more than seven days a year to enable workers to 1 Except for those absences or reductions in hours of work, the cost of which is met out of social security funds; they include sick leave and convalescence leave (as from the eighth day of absence), the reduced working day for certain categories of disabled workers and for young nursing mothers, etc. 2 This does not refer to continuous service in any one undertaking; periods of employment are aggregated in calculating the annual holiday due to each worker. Various periods of military service, resistance activities, internment or preventive detention, work on one's own account in a liberal profession, periods of involuntary unemployment, discharge of elective functions on public or social bodies, etc., are treated as equivalent to time spent at work. 258 WORKERS' MANAGEMENT IN YUGOSLAVIA settle their personal or family affairs or for other reasons. Paid leave without limit of time may be granted to workers to allow them to improve their qualifications. The undertaking is free to grant leave without remuneration. By law, the board of management is required to adopt an annual leave schedule and give rulings in particular cases. At present, however, such powers are very often exercised directly by the workers' council (or workers' councils at department level), with the assistance of a special committee when required. In large undertakings the executives are sometimes empowered by the rules to authorise short leave of absence in special cases. In practice, workers' councils seem to make quite extensive use of their powers in this field. The grant of additional holidays was relatively widespread even before the adoption of the existing Labour Relations Act. Even before 1958 little surprise was shown when certain undertakings closed down for a whole month owing to a collective holiday; special leave for a week or more was freely granted in several of the undertakings visited by the I.L.O. mission to workers in various categories on account of their particularly arduous occupation or of a special effort they had made, or for reasons of health, for confinement 1 , etc. At present, in most undertakings these matters are generally dealt with under detailed rules or a special set of rules. The number of days of additional leave is often fixed for each job; elsewhere, the criteria or indexes established by job evaluation for particular jobs or kinds of work are used for this purpose. One week's additional holiday is generally granted to senior executives, among others. The special arrangements introduced by certain undertakings include a day off every month for women who have a home to look after, the grant of special leave for family occasions (the family is sometimes defined in very wide terms) and so forth. In one undertaking members of the workers' council and the board of management were also entitled to a week's additional leave.2 Special leave seems to be granted very frequently. In certain undertakings the lists of decisions of the board of management for almost every sitting mentioned one or more authorisations to take leave, with 1 Yugoslav legislation provides for compulsory maternity leave with remuneration for 105 consecutive days. It also recognises a woman's right to shorter working hours for six to eight months before the confinement, and her right to a four-hour working day until the child reaches the age of 3 if no other member of her family can care for it. The social security administration makes up the remuneration. 2 The idea of this was to compensate those concerned for loss of part of their leisure time, since their services in this capacity were unpaid; the management of some other undertakings, however, thought the practice unjustified. CONDITIONS OF WORK AND WELFARE FACILITIES 259 or without remuneration, for workers who had to pass examinations or wished to take special courses or complete courses of secondary or university studies. Special leave was also authorised for study tours abroad or within the country, to enable those concerned to attend scientific, professional or other conferences or meetings, etc. Quite large groups of workers had their hours reduced so that they could take courses organised for supervisors and highly skilled workers, for certain professional workers, for members of workers' management bodies, etc.1 In certain undertakings almost 10 per cent, of all the workers were scholarship holders, on special leave, or working reduced hours on educational grounds. Check on Hours Actually Worked The current system of apportioning the undertaking's income gives the workers an interest in the full use of the normal working day. Direct or indirect losses resulting from late arrivals or any other absence from or stoppage of work have to be met out of the common remuneration fund or, where the undertaking applies a decentralised remuneration system, by the collective at the workshop level or the work group. A desire to ensure observance of the timetable and to eliminate absenteeism lay behind most of the measures taken by the workers' councils with regard to discipline (strict application of penalties, automatic imposition of penalties for unjustified lateness, the keeping of normal hours by office staff, etc.). It should be mentioned, however, that the workers' councils have generally abolished time clocks where they existed, this fact being regarded in some instances as the first sign and the definite proof that the workers were really in charge. Nevertheless, a check on late arrivals had been reintroduced in certain undertakings. Elsewhere such a measure seemed unthinkable to the leaders of the workers' management bodies. In general, late arrivals are recorded only in the workshops and dealt with by the supervisors or within the work group. Supervision of hours of work is also exercised by the competent authorities and inspection services. In this case, workers' protection is only a secondary object of such supervision, the main object being to safeguard the basis of the whole workers' management system, particularly the distribution of income and remuneration according to the work 1 In a group of undertakings located in an area that was in the process of economic development it seemed to be fairly common for directors of undertakings to be granted long periods of special leave (sometimes running to several years) for university courses or to allow them to attend technical schools. Those who are granted special leave of this kind generally continue to receive remuneration at the full rate but are not entitled to a share of any surplus that is distributed. 260 WORKERS' MANAGEMENT IN YUGOSLAVIA done. The time actually spent at work now provides the only objective basis for the calculation of the guaranteed minimum remuneration, and remains an essential factor in the calculation of the workers' personal incomes. In practice, however, as illustrated by the examples given above, such government supervision of hours of work is compatible with the existence of a great number of different arrangements, and it is generally concerned only with over-all figures, with no systematic analysis of individual cases, which are regarded as entirely a matter for each collective. Nowhere does it seem to have caused serious difficulties in relations between undertakings and public authorities (particularly the financial inspection service). In contrast to the problems that used to arise and sometimes still do with regard to output norms, bonuses or other pay elements that are difficult to assess objectively, it appears that it is easier to secure general acceptance of a single over-all standard for hours of work, and that any falling off from the standard below the accepted limits can be quite easily kept in check by the social and economic pressure exercised within the collectives or, if need be, by the community at large. It is said, for instance, that the inspection services have had to intervene very little to prevent abuses in the grant of reduced daily hours of work by workers' management bodies under their independent powers. Similarly, while rumour has it that certain workers' councils in backward areas have sometimes closed their works on the occasion of some social or sporting event, it was not possible to secure any confirmation of this on the spot.1 Although an arbitrary reduction in hours of work or any unjustified stoppage of work (days not worked, etc.) undoubtedly runs counter to the statutory principle of sound management, there was no information on cases in which such measures had led to criminal or civil prosecutions. The direct financial consequences, together with any fines or penalty payments to the exchequer that may be imposed 2, seem to be sufficient to discourage such practices even if social pressure cannot do 1 On the other hand, the mission noted several decisions by workers' councils to close plants owing to a stoppage in production due to force majeure (power cuts, shortages of raw materials, etc.), and to work an extra day to make up for working time lost in this way. Another day is sometimes substituted for the statutory rest day. In one undertaking, when the report of the workers' council was being discussed, reference was made to inopportune gatherings of certain groups of workers who had been forced to stop work owing to holdups in supplies and who were protesting against the management's lack of foresight in this respect; after several executives had left the undertaking the workers' management bodies had to assume direct responsibility for many months for running the plant and dealing with day-to-day business. 2 An undertaking which pays remuneration that has not been earned (i.e., in this case, for time not worked) may be sentenced by an economic court to a fine amounting to three or six times the amount of remuneration involved. CONDITIONS OF WORK AND WELFARE FACILITIES 261 so or when, as occasionally happens, a proposed stoppage of work is a protest measure supported by a large proportion of the collective. SAFETY, HEALTH AND MEDICAL SERVICES Safety and Health The general standards governing occupational safety and health and medical services in undertakings are laid down by law at the federal or republic level, as well as by special regulations. The three inspection services for labour, public health and mines are also empowered to issue binding orders to undertakings with a view to protecting the workers' safety and health. Under an Act of 1959 the Labour Inspection Service is required to make a tour of inspection of all the undertakings within its jurisdiction at least once a year. The existing system with regard to safety and health largely relies on independent action by the workers' management bodies and on their close co-operation with the government departments and inspection services concerned.1 It is considered that the workers have a sufficiently close interest in safety and health measures to be able to take the necessary action themselves, provided they receive suitable advice and assistance. The specific functions of workers' councils in this matter include, first, the adoption of safety rules at the request of the Labour Inspection Service.2 They are also responsible for appointing special committees to investigate all jobs from the point of view of safety and to prohibit, for example, the employment of women and young persons on particular jobs, or to propose any other requisite steps. Standing safety and health committees set up in the last few years in many undertakings are reported to have been generally very active. The legislation promulgated in 1959 on labour and mines inspection provides for close co-operation with the workers' management bodies. In particular, inspectors are required to report to the workers' councils on each visit they make. These reports have to be discussed at a full sitting of the council and its decisions have to be communicated to the inspection service. In mines, the law also requires the workers' council to carry out a general survey of the position at least once a quarter. Decisions on the financing of safety or health arrangements and the purchase of equipment or other safety devices are left to the workers' councils, provided that they comply with any orders issued by the com1 Cf. in particular the Labour Inspection Act of 28 December 1959 and the Mines Act of 2 July 1959. 2 In mines the adoption of such rules is required by law. 18 262 WORKERS' MANAGEMENT IN YUGOSLAVIA petent inspection service under the regulations on the subject. Under the Labour Relations Act of 1957 undertakings of a certain size are compelled to set up special occupational safety and health departments if so requested by the commune. When it is not possible to set up such a department or when it is found that there is no compelling necessity for it, the duties involved are discharged by the labour department of the commune or may be entrusted to specialised institutions or bodies established for the purpose. In practice, occupational health and safety occupy quite an important place among the subjects dealt with by the workers' management bodies, and this allocation of responsibilities is considered in general to be of assistance to the inspection services; in particular, it appears to render the financing of the necessary protective measures much easier, and in many undertakings it has thus been possible to introduce modern and sometimes very expensive equipment.1 For some years safety and health questions have nevertheless been a major subject of concern for all the departments and institutions that are responsible for the smooth operation of the economy.2 This is all the more understandable if it is borne in mind that there has been a massive influx of workers from the land and that in general the great majority of the workers do not have an industrial background and often do not yet fully understand the hazards connected with machinery and modern industry generally. Medical Services From thefirst,Yugoslav undertakings have had to concern themselves with providing workers and their families with medical services and medical care. In many cases, especially in the less developed parts of the country, undertakings were often the only agencies capable of financing medical centres and of bringing in qualified personnel. Even 1 As mentioned earlier, the financial effects of a high sickness or accident rate are directly reflected in the remuneration paid to each worker, and many workers' management bodies go to considerable lengths with a view to reducing such rates both by disciplinary measures (observance of safety rules by workers and supervisory staff) and by voting the funds needed to deal with the causes. 2 The number of working days lost through illness or occupational accidents is rather high, and is still increasing. The same applies to the corresponding expenditure under the social security system and to other related expenses. The social security statistics show a constant increase in the number of working days lost owing to occupational accidents (as against 1.2 million in 1951 it was 2.5 million in 1955,3.7 million in 1957 and 4 million in 1958), while the total number of workers who remained away from work (daily averages) increased correspondingly from 3,831 in 1951 to 7,977 in 1955, 11,903 in 1957 and 12,796 in 1958. However, the number of serious, and especially fatal, accidents, dropped noticeably. Cf. Statisticki godisnjak (Statistical yearbook published by the Federal Statistical Institute; English translation of the text published separately), 1959, pp. 80 and 274. CONDITIONS OF WORK AND WELFARE FACILITIES 263 in undertakings where medical and dental services have existed for many years 1 , the modernisation of equipment or the recruitment of a larger or more specialised staff is one of the main welfare needs. Such medical centres form an integral part of the undertaking concerned, but they have their own management bodies. Under an Act of the republic of Serbia dated 27 October 1956, for example, a board of management for each centre must be appointed by the commune people's committee and include a representative of the Social Insurance Institute, the other members being appointed on nomination by the workers' council. The director of the centre (chief medical officer) is an ex officio member of the board. There are no statutory limitations on the initiative of undertakings in establishing such centres. The local commune or other bodies concerned may help to finance them. Since the nationalisation of all medical services was completed recently throughout the country, the communes have been responsible for their general supervision and, in fact, they themselves operate most of the medical centres for the general population. The medical centres attached to undertakings are nevertheless an important part of the health service. As in other fields, the workers' management bodies can introduce additional benefits provided they are able to finance them. Their field of action is, of course, considerably narrowed by the fact that medical care is free and that remuneration is made up in the event of illness, but it was noted, for example, that a sum had been specially voted to enable the sick to be visited at home, that certain rules relating to medical certificates had been rendered more flexible and that additional ex gratia payments had been granted to individual workers in special circumstances.2 A worker cannot be dismissed during illness and convalescence. In addition, Yugoslav undertakings are compelled to employ a prescribed percentage of workers suffering from war or occupational disabilities. All these workers on joining or rejoining the undertaking have to be found suitable jobs. As can be imagined, the amount of work that this involves for workers' councils and their subcommittees is far from negligible.3 1 In 1956 there were already about 150 medical centres in undertakings in the reoublic of Serbia alone (cf. Sociialna oolitika. OD. cit.. Seventh Year. No. 4. Aür. 1957, p. 42). s In one case, for example, a sum equal to two years' wages was paid out for treatment which the social security administration refused to authorise. Cases of maladjusted workers, including some certified mental cases, have on occasion also been discussed at length by certain management bodies. 8 Decisions as to which jobs can be assigned to the disabled are normally taken by a subcommittee of the workers' council. 264 WORKERS' MANAGEMENT IN YUGOSLAVIA HOUSING, RECREATIONAL FACILITIES, CANTEENS, MISCELLANEOUS SERVICES AND BENEFITS Questions such as hours of work, safety and health and medical services normally concern all the workers in an undertaking. But the latter is also called upon to provide, on the social side, a variety of facilities for those members of the staff who particularly need them or are in a position to take advantage of them. The workers may all be entitled to such benefits but all of them cannot—and would not want to—take advantage of housing built by the undertaking, or its canteen, holiday camp, etc. The main problems which face the workers' management bodies in this connection are as follows: (a) deciding how much money the undertaking can afford for these purposes, bearing in mind the needs and the fact that any allocation will reduce the amount available for other purposes (remuneration, investment, etc.); (b) dividing up the sums allocated between the different types of facilities or services; and (c) where necessary, sharing out the facilities fairly. In some instances they must also take responsibility for running services provided or financed by the undertaking. The sums available for this purpose are fairly substantial. According to figures published by the National Bank1 the cash funds of undertakings amounted to 41,000 million dinars at the end of 1957, 49,200 million dinars at the end of 1958 and 68,100 million dinars at the end of 1959, allocations to these funds having totalled 42,000 million dinars during 1957, 94,300 million dinars during 1958 and 113,900 million dinars during 1959. Since January 1958 undertakings have been at liberty to allocate all these resources to their welfare funds if they wish; they also have a substantial potential reserve because, if necessary, they can allocate the whole of their operating surplus to their welfare fund.2 In actual fact, 1 Cf. Statisticki bilten Narodne Bank FNRJ, No. 15, Table A. This is not just a theoretical possibility. In some cases, especially in the underdeveloped parts of the country, it was found that the whole of the operating surplus was normally paid into undertakings' funds and used almost exclusively to finance the welfare facilities which were regarded as absolutely essential. (Capital investment, which undertakings for these areas are often unable to finance themselves, is usually covered by special loans granted under the federal plan of regional development). It should be borne in mind that the figures and percentages quoted here do not include social security benefits, family allowances, etc., which are paid out of public funds. s CONDITIONS OF WORK AND WELFARE FACILITIES 265 workers' councils appear to have allocated 31,500 million dinars for this purpose out of their incomes in 1958 and 44,300 million dinars in 1959.1 For some forms of welfare, especially housing, they can draw on loans from various sources, such as the local authority, public funds for house building and vocational training, etc. All an undertaking's welfare facihties must normally be paid for out of its welfare fund.2 Details of the distribution of the available money between various welfare services and types of benefits are usually given in a special report which is approved by the workers' council at the same time as the final annual accounts or, alternatively, at a special meeting. Usually, workers' councils also draw up detailed programmes for financing their welfare facihties. A special survey has been made by the Federal Labour Secretariat of expenditure under this heading by a number of representative undertakings in different sections of the economy and parts of the country. The results of this survey3, which covers 1958 and the first half of 1959, are shown in Table VI. They give some idea of the portion of the funds set aside for welfare purposes and their distribution between different facilities or types of benefit. The survey covered 399 undertakings, of which 345 supplied complete replies. Their expenditure on personal income (remuneration) amounted during the period under review to 72,900 million dinars (out of some 400,000 million expended by all Yugoslav undertakings), whereas total expenditure from welfare funds amounted to 11,700 million dinars.3 Table VI shows the main types of welfare facilities financed by undertakings. It will be noted that these facilities or benefits are not by any means to be found in all the undertakings covered. The commonest in 1958 included further training courses, grants to trade unions, scholarships 4 and housing (reported by 298, 254, 249 and 226 undertakings •respectively), whereas only 12 mentioned expenditure on vehicles for the transport of workers, 65 the equipment or running costs of the medical centre, etc. The same diversity of welfare policies was found not only as between one undertaking and another, but also in the same undertaking as between one year and another. 1 Cf. Borba, 12 June I960, p. 3. See above, Ch. X. 3 Thus, compared with the remuneration funds, welfare expenditure in this group of undertakings amounted to about 15 per cent. 4 This subject was touched on earlier in Chapter IX. 2 TABLE VI. EXPENDITURE BY WELFARE F U N D S I N 1958 A N D 1959 I (Thousands of dinars) January-December 1958 S ermi No. Expenditure (purpose) Total Number of undertakings Amount per undertaking 3 (1:2) 8 9 10 11 12 Training grants to students Training grants to members of the collective Technical courses and seminar Grants to undertaking's canteen Housebuilding Purchase of motor vehicles for workers' transport Maintenance and other costs of medical centre . Grants to trade union Grants to holiday camps Assistance to workers and their families . Rewards and miscellaneous gifts to workers Other expenditure 276,694 249 1,111 95,696 207,547 215,620 3,250,855 126 298 78 227 759 696 2,764 14,321 55,462 12 4,622 115,073 351,224 168,413 23,555 27,044 2,121,277 65 254 78 60 59 186 1,770 1,383 2,159 393 458 11,405 2 Source : Data supplied by the Federal Labour Secretariat. 1 Including 54 undertakings which did not give full replies. a I.e., total expenditure for January-June 1959 (column 5) as in CONDITIONS OF WORK AND WELFARE FACILITIES 267 It may be of interest to add some details of the duties that workers' management bodies perform as regards individual facilities or benefits.1 Housing Workers' housing is one of the most acute social problems facing Yugoslav undertakings. The housing facilities available throughout the country are notoriously inadequate and there are sharp differences between one region and another2, so that the close interest taken by workers' councils in housing matters is hardly surprising.3 The survey already mentioned indicated (Table VI, line 5) that housebuilding on the average accounted for nearly 50 per cent, of welfare fund expenditure. The removal in 1958 of restrictions on the distribution of the operating income led to a remarkable expansion in housing schemes financed directly by undertakings.4 Most of the undertakings visited by the mission had already built a fairly considerable number of dwellings and 1 In reading the pages that follow it is important to bear in mind that Yugoslav undertakings are by no means supposed to tackle the provision of welfare facilities single-handed; the primary responsibility for this belongs to the commune (in local matters) and to the public authorities generally. For example, in several rapidly developing communes it was found that large municipal restaurants or canteens were being opened which, while catering for the general public and workers employed in their neighbourhood, also supplied cooked meals to works canteens some distance away. As this brief survey of welfare faculties, housing policy, etc., deals only with services supplied by undertakings it cannot be regarded in any way as a full picture of the over-all position in the country. 2 In 1958 there were 3.77 million dwellings in the country with an average area of only 42.1 square metres, i.e. 8.7 square metres per person; the amount of accommodation per inhabitant averaged 11.1 square metres in Slovenia (the maximum) and only 5.8 square metres (minimum) in Bosnia-Herzegovina (cf. Statisticki godiSnjak, op. cit., 1959). Not until 1960 was it expected to reach the target of some 80,000 new dwellings (compared with 30,000 in 1955 and 61,000 in 1958); this figure is due to be exceeded over the nextfive-yearperiod when the building industry is expected to complete an average of 100,000 new apartments each year. 8 One of the reasons which probably held back the expansion of housebuilding was the lack of a general policy on ownership and management in this field. It was not until the end of 1958 that the first of a series of general enactments was passed laying down a policy of this kind. The following are the main principles: (i) the nationalisation of urban housing, apart from the right of the former owner to retain two or three fiats ; (ii) the introduction and guarantee of the principle of private ownership of individual dwellings; (iii) management of rented premises vested in the tenants (tenants' meetings and block councils) with power to spend part of the income on maintenance, repairs, etc., and to obtain loans for the improvement of property, individual leases being converted into agreements which can only be terminated in circumstances prescribed by law; (iv) the general supervision of property management, the establishment of rules for tenants, etc., by the local commune, which also allocates vacant accommodation, unless it has been built by an institution or an unuertâiCuîg lor its own rricmucrs or employees. 4 According to figures published by the National Bank, expenditure on housing by undertakings, which was insignificant between 1955 and 1957 (about 600 million dinars a year on the average), rose to 10,200 million dinars in 1958 and to 18,000 million in 1959. The total amounts invested in housing during 1957, 1958 and 1959 were 63.4, 82.3 and 102.2 thousand million dinars respectively. Thus undertakings contributed about 50 per cent, of the finance for the housing drive in 1958 and 1959. 268 WORKERS' MANAGEMENT IN YUGOSLAVIA all of them had building schemes in hand. There was a trend towards forming housing associations, sometimes with the assistance and under the auspices of the local commune, on the understanding that a proportion of the dwellings built in this way would be made available to each undertaking. Housing co-operatives sponsored and subsidised by undertakings were springing up on a large scale, and the sale of flats built with the aid or participation of undertakings to individual workers was also becoming widespread.1 Once accommodation is ready, the workers' management bodies are responsible for allocating it to eligible appliants. Formerly, owing to the limited amount of housebuilding going on, housing was often booked in advance, especially in the underdeveloped areas, for technicians and executives whom the undertaking intended to recruit, and directors and boards of management often had a decisive say on the subject.2 This state of affairs caused a certain amount of discontent and there were reportedly some cases where workers' councils went so far as to refuse any allocation of funds for housebuilding so as to show their disapproval of the directorate's policy during the preceding year.3 A more recent practice (confirmed by the 1959 Housing Act) is for accommodation built by undertakings to be allocated in accordance with rules drawn up by the workers' council, which must also designate a body to select workers for new or vacant accommodation. In most cases this is done by a subcommittee of the workers' council which, however, retains the last word on its subcommittee's recommendations and under a specific clause in the Act (section 51) must act as final arbiter for any claims or appeals.4 1 Whatever the legal formula employed, the workers' council in each undertaking (with the aid of one or more of its subcommittees and, where necessary, a full-time employee) is responsible for general building and housing policy. To give some idea of the cost of new housing, the prices quoted by a number of undertakings for flats made available to workers by co-operatives or sold to them by their undertakings ranged from about 0.8 million dinars for a one-room flat to 2-3 million dinars for three or four-roomed flats. When an apartment is sold, the worker must usually put down 10 per cent, of the cost, the remainder being met by a long-term loan from the undertaking. In 1960 the Belgrade Municipal Housing Fund gave undertakings an option on flats under construction at prices ranging from 1.35 million dinars for single-room flats (26 sq. metres) to 3.3 million dinars for a three-roomed flat (62 sq. metres); the minimum share to be put up by the undertaking was 25 per cent., the minimum interest 1 per cent., with repayment over a period not exceeding 40 years (Borba, 30 Apr. 1960, p. 10). 2 In the developing areas a flat usually has to be made available in order to secure the services of a specialist. 3 Cf. also Economic Bulletin for Europe (Geneva, United Nations), Vol. 10, No. 3, 1958, p. 55 (footnote). 4 The Act stipulates that no appeals may be made to the administrative authorities or the courts against decisions by the workers' coimcil on claims arising out of the allocation of housing. CONDITIONS OF WORK AND WELFARE FACILITIES 269 In the undertakings visited by the mission, the subcommittees responsible for allocating housing usually displayed considerable energy. They often made a point of checking up on the housing conditions and family circumstances of everybody who put in an application for a new flat. They drew up priority lists, trying to give due weight to various criteria based on applicants' needs and status and on the undertaking's need to recruit or keep supervisory staffs. The meetings of the workers' councils dealing with the allocation of housing were often stated to be among the most lively and best-attended by members of the collective. In some instances individual applicants had to be selected by a majority vote. These subcommittees and the workers' councils themselves were said to discharge their duties with a great sense of responsibility, and several directors or personnel managers said they were glad to be relieved of a thankless task which often brought them lasting ill-will.1 Holiday Camps and Recreational Facilities Yugoslav undertakings nowadays manage most of the workers' holiday camps.2 Since the introduction of workers' management a number of changes have occurred. For one thing, the unions have gradually dropped their former prominent part in the organisation of leisure. Many undertakings have also given up running holiday camps while others have made sharp cuts in the subsidies granted to them. These measures were mainly for the sake of economy but it was also found by some undertakings, espe1 A worker who leaves of his own accord must normally move out of his accommodation if it has been provided by the undertaking. If he has been dismissed the undertaking must, however, find him suitable alternative accommodation. On the other hand, after ten years' service, neither a worker nor his family can be forced to leave his flat whatever the reason for the termination of the employment relationship. Termination of the lease and expulsion of the tenant can only be achieved through the normal court procedure. No application to this effect can be entertained against an unemployed worker. In one instance, the workers' council had had to deal on several occasions with the case of a worker who moved into a new flat without permission and, after several years, the expulsion proceedings brought against him by the undertaking had still not been settled by the supreme court of the republic. Although the individual concerned continued to work in the undertaking, the council consistently refused to accept the position or to recognise him as the rightful occupant. 2 Industrial undertakings alone ran 306 of these camps (with 12,547 beds) in 1959, out of a total of 792 camps (with 39,162 beds) Usted in the 1959 figures published by the Federal Statistical Institute; 147 camps were administered by political and social organisations, 84 by trade unions and 131 by non-economic bodies and institutions. These figures may be compared with those for the country's hotel industry which, in 1958, comprised about 12,000 units (hotels, boarding houses, etc.) and 132,000 beds. For detailed statistics respecting different types of holiday camps see Indeks (Belgrade, Federal Statistical Institute), No. 2, 1959, pp. 51-53, and Statisticki bitten (idem), Nos. 130 and 148 (hotels and tourism in 1957 and 1958). 270 WORKERS' MANAGEMENT I N YUGOSLAVIA daily in the more developed areas, that their members were becoming less and less interested in collective holidays organised by their own undertakings. Others, however, have continued to open and expand their holiday camps and managements have sometimes expressed their pride in these achievements. It is a fact that in many cases, especially in the newly industrialised areas, these camps give workers an opportunity for the first time of having a genuine hohday and visiting other parts of the country.1 An exhaustive survey of welfare facilities in 1,674 industrial, building and railway undertakings, 270 of which owned or rented holiday camps 2, showed that policy in this respect varied greatly from one undertaking to another. The charges for full board in most cases ranged from 250 to 450 dinars a day (with a reduction of 40 to 60 per cent, for children) and between 25 and 70 dinars for a room without board.3 In some cases charges were scaled according to earnings, and occasionally workers from other undertakings were charged more. The rules of these camps and remuneration of their staffs also varied substantially. Generally speaking, however, there were complaints about the lack of interest shown by the undertakings in this aspect of their activities.4 Apart from these holiday camps, most undertakings have a number of clubs for cultural activities, sports, hobbies, etc., which often receive grants from the workers' council out of the welfare fund. Parties for workers' children and theatricals (among many other activities) seem to be very popular and receive fairly substantial grants.5 By and large, however, expenditure on welfare activities seems to have been cut back under workers' management to a somewhat minor (and still diminishing) fraction of the overheads.6 As was mentioned 1 The capacity of the workers' holiday camps rose from 26,165 beds in 1957 to 39,162 in 1959, i.e. nearly 50 per cent. Cf. Socijalnapolitika, op. cit., Tenth Year, No. 2, Feb. 1960, p. 17. 2 Ibid., Eighth Year, No. 3, Mar. 1958, pp. 30 ff. The undertakings covered by the survey employed about 75 per cent, of the workers in these three branches of the economy. 3 The 1959 figures showed that the average charge for board and lodging was 515 dinars. In both 1957 and 1959 hohday camp charges were, on the average, about 50 per cent, lower than those of the cheapest hotels and boarding houses. 4 It was not until 1959 that comprehensive regulations were introduced laying down the general principles governing the management, financing, etc., of holiday camps. The replacement of the camp manager and tidying up the mess left behind by an incompetent or dishonest manager were often quoted as being among the worst problems of workers' councils. 5 Generally speaking, the workers' management bodies themselves are not responsible for organising these social activities, except for various anniversaries and commemorations involving the undertaking itself or workers' management (ad hoc committees were usually appointed to celebrate the Congress of Workers' Councils in 1957 and the tenth anniversary of workers' management in 1960). 6 Concerning grants to trade unions, see Table VI, line 8. CONDITIONS OF WORK AND WELFARE FACILITIES 271 earlier, workers' management bodies also seem to be very reluctant to commit themselves to major investment schemes for cultural or sporting activities, etc., which would entail very heavy outlay. In fact, no building scheme of this kind was going on or planned in any of the undertakings visited by the mission.1 Canteens and Other Services Works canteens are probably the most striking example of the decline in certain subsidised welfare services under workers' management. The statistics show that works canteens, after reaching a peak of 2,631 in 1950, numbered only 428 by 1954.2 This drastic reduction in the number of canteens, despite the sizable increase in the number of workers employed in industry, coincided, it is true, with the abolition of food rationing, but it still gives some idea of the economy drive that undertakings and workers' councils must have made during the early days. Where the canteens were kept open, there was often a heavy cut in the subsidy 3 and also in the number of workers who regularly ate there. More recently it seems that a number of works canteens have been opened or reopened and that there has been an improvement in the standard of service, but the problem of running them economically, cutting costs and keeping subsidies down has by no means been disposed of.4 1 Nevertheless, quite a large number of undertakings do provide sporting or recreational facilities. One of the undertakings visited by the I.L.O, officials had set up a large aquatic sports centre. However, the cost of the project, which went beyond the credits allocated for the purpose, was one of the main points of friction between the workers' council and the collective on the one hand, and the director on the other, which finally led to the latter's resignation. 2 The complete figures for the years 1946 to 1956 are as follows: 1946: 632; 1947: 1,205; 1948: 1,905; 1949:2,293; 1950:2,631; 1951:1,894; 1952: 510; 1953:463; 1954: 428; 1956: 530. Cf. Socijalnapolitika, op. cit., Eighth Year, No. 3, Mar. 1958, p. 32. The bulletin (Statisticki bitten) of the Federal Statistical Institute (No. 148, p. 7) reports 435 " workers' canteens " in 1958. It should be added that these figures refer (in accordance with the Yugoslav classification) only to " restaurants " (which normally serve hot meals) and do not include snack or refreshment bars where customers eat standing or which sell food for consumption off the premises. 8 See also Table VI, line 4. 4 Most of the undertakings visited by the mission had a canteen, but it was normally used only by a minority of the workers. In addition to the canteen itself, meals and drinks were sometimes distributed in the workshops. As in the holiday camps, the canteen charges were usually about 50 per cent, below prices current in similar establishments catering for the public. The canteens as a rule had their own management committees appointed by the workers' councils, usually in conjunction with the unions or representatives elected by the users. Special accounts and reports were submitted on their management. 272 WORKERS' MANAGEMENT IN YUGOSLAVIA Kindergartens or nurseries are now extremely uncommon in undertakings.1 Usually facilities catering for workers' children have been taken over by the local communes, although they are still often sponsored by undertakings which look after the maintenance of the premises, pay part of the running costs, etc. Transport to and from work organised and subsidised by undertakings appeared, on the other hand, to be increasingly common. Similarly, laundries run by undertakings (of which there were about 100 in 1957) appear to be increasingly popular. In some instances foodstuffs such as milk are reported as being supplied to certain classes of workers in excess of the legal requirements. Workers' management bodies are also responsible for every aspect of the layout, maintenance and decoration of the buildings, land and roads within the undertaking, and the access to it. The introduction of workers' management usually led to the disappearance of many expensive or luxury features and a sudden halt in any work of this kind in progress. Lately, however, as thefinancialposition of undertakings has improved, there has been a resumption of essential work in some cases. Generally speaking, undertakings seem to be trying to tailor their facilities (present or planned) as closely as possible to the needs and wishes of their workers while keeping a close check on their efficiency and ensuring that proper use is made of the money allocated for this purpose. Miscellaneous Benefits As Yugoslav social security legislation provides for relatively high rates of benefit in respect of retirement (between 68.5 and 77.5 per cent, of the remuneration, with a fairly high minimum rate), disablement (up to 100 per cent.), family allowances, etc., there is little scope for supplementary schemes by individual undertakings. The same applies to remuneration and the cost of treatment in the event of sickness or injury.2 Various social benefits nonetheless constitute—not because of their financial effect but due to the number of individual cases involved— one of the important aspects of any undertaking's welfare activities and come up quite often on the agendas of workers' management bodies and especially of the boards of management.3 1 In 1957 there were only 33 kindergartens and 16 nurseries in the 1,764 undertakings covered by the welfare census. 2 According to a survey conducted by the I.L.O. in 1955 covering the total cost of social security benefits and other services or benefits for workers in ten western and southern European countries, the proportion of non-wage labour cost was highest in Yugoslavia. Cf. I.L.O. : The Cost of Labour in European Industry, Studies and Reports, New Series, No. 52 (Geneva, 1959). 3 In some cases the minutes of these meetings contained several dozen items under the heading " any other business " (usually dealt with at the end of the meeting), CONDITIONS OF WORK AND WELFARE FACILITIES 273 Some of the undertakings visited by the mission had adopted the practice of making a gift to members of the collective—a wrist watch, for instance—after they had served a certain number of years. In some cases workers who leave the undertaking on retirement are given one or more months' pay. Pensioners formerly employed in the undertaking are sometimes also entitled to various gifts or periodical gratuities, as are apprentices or scholarship holders who do well in their studies.1 These general gratuities are usually awarded individually by workers' councils, although special regulations have occasionally been introduced.2 The workers' management bodies, especially the board of management, are often asked to give help in individual cases. These applications come not only from workers or former workers who for various reasons are in trouble of one kind or another, but also from individuals and bodies outside the undertaking. Some big concerns, especially if they are well known throughout the country, often receive requests from distant areas (e.g., from schools or other institutions in the economically backward parts of the country). Individual gifts or gratuities may be proposed if there has been an accident, death, or a noteworthy success, or on the departure of a worker or executive who has given meritorious service to the undertaking. In one case it was found that the workers' council had undertaken to finance the education of two orphans, irrespective of the subject they chose or the length of their studies. These benefits appear to be fairly common, and expenditure under this heading is not always insignificant.3 In some instances it was found that even when applications for assistance or relief were received in large numbers, they were usually examined carefully and appropriate action was taken, either in accordance with settled policy or after a short discussion in which the members often showed themselves very much alive to the social and human problems they were faced with. Policy, however, varied considerably from one undertaking to another. Sometimes the coifers of the board of management appeared to be open to any applications that seemed worth while, even if they were only remotely connected with the undertaking and even if the undertaking most of which were taken up with applications for assistance or other individual benefits. 1 For figures of gifts and gratuities to workers, see Table VI, lines 11 and 12. 2 See, for example, in Prva decenija radnickog samoupravlanja (The first decade of workers' management) (Belgrade, Rad, 1960), pp. 473-474, the extract from regulations governing benefits payable to orphans and children of disabled factory workers, whereby the workers' council undertakes to set aside from 0.3 to 0.5 per cent, of the remuneration fund for this purpose. 3 Cf. also Table VI, lines 11 and 12. 274 WORKERS' MANAGEMENT IN YUGOSLAVIA itself was not doing particularly well. In another case it was noted that an application from a number of local authorities in a neighbouring district for assistance in a youth welfare project was turned down because " the workers' council has established the principle that the undertaking can no longer provide help in welfare projects not related to its activities ". On the other hand, the same undertaking was making fairly substantial grants to a number of local projects. * * * By and large, the collectives and their management bodies appear to be increasingly conscious of their ability to shape living and working conditions, not only in their own undertakings but also in their local communities. The direct influence they wield within the local authorities makes them more effective in such matters as town planning, housing, health, public services, etc. Despite the size of the resources they have been able to draw on since 1958 they have, of course, been unable to meet all the needs—even the most urgent ones—of their undertakings or local communities. But the fact that they can, by intervening in particular cases, make sweeping changes in existing conditions or settle individual problems does give them real authority, particularly since improvements in welfare and working conditions are something that the people who benefit by them can see for themselves. Awareness of the fact that their undertaking's welfare activities are run and financed by themselves out of the product of their own labour is likely to give workers and their management bodies a feeling of pride and of " belonging " and also of responsibility for making economical and sensible use (in the light of local resources and needs) of the welfare facilities or any other benefits they may decide to grant themselves. The changes made in welfare policy under workers' management are often quite impressive in themselves—apart from any qualifications that might be made about the advisability of some policies from the standpoint of the general interests of the national or industrial community. It is impossible to draw a clear line between the welfare activities of a Yugoslav undertaking and its other functions in suchfieldsas vocational training, labour relations, personnel matters, etc.1 The combined effect 1 The review Socijalna politika (Tenth Year, No. 5, May 1960, pp. 3-59) contains an account of the proceedings of the First National Conference on Welfare Work (Belgrade, May 1960), at which 400 delegates from the social services and welfare workers from undertakings, communes, public bodies and welfare institutions and organisations paid special attention to the duties of welfare departments in undertakings under workers' management. CONDITIONS OF WORK AND WELFARE FACILITIES 275 of the autonomy of the collective and its right to self-management in all these fields is calculated to make it develop into a more stable and closely knit association. This emergence of a community spirit, which is both a condition for and one of the aims of workers' management is, however, far from being found everywhere in practice and encounters a variety of obstacles along its path. CHAPTER XII GENERAL PROBLEMS, SUPERVISION AND PENALTIES GENERAL PROBLEMS The problems and difficulties that have arisen with the introduction of workers' management vary greatly from one undertaking to another, and experience has often been contradictory. However, it is generally agreed that the problems are the result of the conflicting interests of the various workers' management bodies, groups of individuals and of society as a whole. It is recognised in Yugoslavia that conflicting interests of this kind, while by no means peculiar to the workers' management system, are nevertheless unavoidable, and that the main endeavour must therefore be to find ways and means of reducing them or helping to settle them whenever necessary. The various types of problem which may result in a conflict of interests between a collective and the general needs of society are fairly obvious. Such conflicts may, for example, be connected with the division of powers between workers' management bodies and the bodies that are responsible for representing society as a whole ; with the choice of the questions to be left to be determined freely by the market mechanism or, on the other hand, by plans or legislation ; with fixing the share of the national income which undertakings should be allowed to dispose of or the way in which society's share should be deducted so as to reduce direct interference by the State and the administration to a minimum. Other problems may arise—and it is as well to emphasise this—through insufficient development of the whole or part of the economy and to pressure or imbalance that may result in certain cases. In practice, there have also been problems either because of the insufficient progress made by workers' management in some undertakings or because of what is regarded as undue insistence on independence which is apt to take the form of " selfish " or " self-centred " attitudes on the part of some collectives. It is characteristic of the situation in Yugoslavia that in material on individual undertakings, industries or the workers' management system as a whole, Yugoslav authors generally seize every opportunity of dwelling on these problems while often GENERAL PROBLEMS, SUPERVISION AND PENALTIES 277 pointing out that they are the growing pains of a young system which, owing to its novel character, is unable to rely on experience in other countries. Various authors have tried to analyse these problems. The few comments on the subject given below are based on one of the lists of " deviations " drawn up by a Yugoslav author which, while not at all recent, nevertheless has a certain documentary value.1 (1) The expression " following the directorial (or expert) line " denotes the situation of undertakings in which the real power lies in the hands of a technical or administrative bureaucracy and in which workers' management merely provides a shield behind which this bureaucracy pursues its own policy. While a large number of undertakings were in this situation during the early years, it is considered that it is generally a thing of the past and no longer constitutes a major problem. The situation nevertheless continues to arise in certain cases, particularly in newly established undertakings or in the more backward areas where the prestige of the " founder " or technician can enable those already in authority to continue to run the business. (2) " Primitivism " denotes an excessive but, in the early days, by no means unusual reaction against the previous tendency, for example when all the technical or administrative staff were regarded as bureaucrats and there was pressure to remove them systematically or to reduce their numbers below the limits compatible with proper operation of the undertaking. Sometimes this tendency also took the form of hostility towards technical improvements and study of technological problems and of scientific management. (3) " Parallelism " denotes the situation in undertakings where the various social organisations—particularly the unions and the Communist League—tend to duplicate the management bodies by dealing with the same problems and trying to settle them directly. Such action can, of course, seriously undermine the authority of the workers' management bodies, which are alone entitled to take decisions, whereas the social organisations are expected to confine themselves to raising any general problems and to organising preliminary discussions among their members or within the collective.2 This tendency has been strongly opposed by the higher authorities of these organisations and is contrary to their 'Cf. A. VENELiNOVié: " Stranputnice" (Deviations), in zbornik o radnickom upravljar.ju, op. cit., pp. 196-201. 2 In its issue No. 158 (5 May 1960, p. 5), the weekly Komunist analysed the case of a power plant whose workers' management bodies were alleged to have been completely dominated by members of the directorate and by the secretaries of the Communist League committee and the trade union. The author based his article on a letter and a report by the chairman of the workers' council who had resigned in protest at this state of affairs. 19 278 WORKERS' MANAGEMENT IN YUGOSLAVIA policies and programmes. In addition, efforts have been made to avoid simultaneous holding of office by the same person in a political or trade union organisation and a workers' management body. (4) Workers' management can also involve the risk of " anarchist tendencies " which quite often emerge as a reaction against the abovementioned tendency (distrust or systematic negation of principles advocated by political or social organisations), or as a refusal of all discipline in relations with superiors, or as lack of respect for the competence or prerogatives of the various workers' management bodies. Such tendencies are more likely to occur where there has been an influx of land and craft workers from the countryside who adjust only slowly to industrial methods and the requirements of team work in a modern undertaking. Failure to comply with standing orders, the convening of meetings of the whole collective at frequent intervals to settle even trivial issues, a negative attitude to all authority and extreme egalitarianism are regarded as signs of this tendency. (5) The " bureaucratisation " of workers' management bodies and the emergence of privileges are considered as particularly serious dangers since they are in direct conflict with the principles of workers' management. The workers, and indeed the Yugoslav peoples generally, are very sensitive to any such tendencies, which are often a major subject of discussion even in cases which would otherwise seem of little importance. The remedy is considered to be the avoidance of pluralism and re-election of executives and members of workers' management bodies, and discussion offinancialor personnel questions in public. Increasing decentralisation of management down to the workshop or work unit level is also tending to make this a dead issue. Hence, methods of extending worker participation in decision-making in order to avoid as far as possible recourse to representative bodies are very popular and have for some time been in increasingly general use. (6) " Particularism " is the reproach most frequently levelled against the policy of certain workers' management bodies, which often goes hand in hand with a similar policy on the part of the commune. It is, of course, characteristic of workers' management to give first consideration to the interest of the undertaking. However, the particular good of the undertaking may sometimes be given priority over the common good without thought for the consequences. A desire to derive the maximum of advantage from a privileged position and a refusal to share the profits from a technical invention or from technological progress have led some collectives to insist on their autonomy and right to manage their own affairs. Some of them have been criticised for reverting to the mentality GENERAL PROBLEMS, SUPERVISION AND PENALTIES 279 of owners of small businesses and regarding their undertaking as a sort of co-operative society or joint stock company run for the sole benefit of the workers in it, and with approaching management problems solely from the point of view of the financial results of a particular policy. By making undertakings and their workers parts of larger units such as the communes and districts, the trade unions and industrial associations, and by generally raising the curtain of secrecy that used to hide the management of a business, it is hoped, inter alia, to check the development of these self-centred policies. (7) Other weaknesses or dangers that have been mentioned include the " technocratic outlook " of certain workers' management bodies, which concern themselves mainly with machinery or production techniques while apparently ignoring the human factor; the work of others is characterised by " lack of perspective " because they concern themselves solely with current issues and do not look beyond their term of office; yet others have been criticised for undue attention to detail, such as problems that arise in relation to a particular workshop or aspect of production, without taking a broad view of the position and of the economic and social role of the undertaking within the community and the nation. (8) Another frequent subject of concern, which is by no means peculiar to workers' management, is misuse of authority or fraud by individuals, sometimes causing serious harm to the collective from both the material and the moral points of view. Although they affect only a negligible percentage of the value of the total output, cases of unlawful or fraudulent appropriation of the assets of an undertaking are regarded as a sufficiently serious threat to justify strict application of measures of social defence. In fact, it was mainly in the early years following the introduction of the workers' management system that the various problems, dangers or deviations referred to caused serious concern to those in charge of the Yugoslav economy. As the institutional and administrative framework on which all operations of an undertaking had formerly been based was swept away in a short space of time, undertakings experienced a reaction of self-defence which sometimes took a rather undesirable form. A number of years passed before relations within the undertaking began to settle down again, before a new code of commercial conduct began to stabilise relations among undertakings, and before the latter began to fit into the new legal and institutional forms based on the principles of workers' management. This process is by no means over. In most cases the situation which prevails in a particular undertaking or the policy it 280 WORKERS' MANAGEMENT IN YUGOSLAVIA is following at any given moment can be more or less accurately defined in relation to the various problems or dangers mentioned above. Several types of deviation may be found side by side in a single case. However, while these special problems must be taken into account when considering any particular aspect of workers' management or the conditions prevailing in a given undertaking, it would probably be wrong to attach undue importance to them. Cases in which the operation of the system has been paralysed or seriously affected by them are practically unknown, while the high rate of growth achieved since 1954 shows that they have had no widespread detrimental effect on the economy as a whole. METHODS OF SUPERVISION Under the workers' management system controls over both the operation of undertakings and over economic activity in general exist at various levels—controls within the undertaking through the accounting system and the workers' management bodies; consumer control through free play of the market; controls by the communes and the economic, occupational and political organisations; and controls by specialised government departments, inspectorates and the courts. The machinery of supervision has been touched on at various times, and it may suffice at this stage to deal with essentials while emphasising some aspects that are particularly significant from the point of view of workers' management. Before doing so, reference should be made to two basic features of the Yugoslav system which are important if it is to be fully understood. First, as already indicated in earlier chapters, the internal affairs of an undertaking are widely publicised both within and outside the undertaking. This is, of course, an essential prerequisite if the workers' management bodies are to be in a position to operate effectively. Information is communicated automatically not only to the workers' management bodies but also to all outside organisations or institutions that may be interested in the undertaking or are called upon to supervise its operations.1 The publicity given to such information also results in much public discussion both within undertakings and outside them on every aspect of the economic and social policy of undertakings, public author1 Information is also communicated to third parties, as may be seen, for example, from the undertakings' gazettes or the local press. It is also readily available to foreigners; the mission noted the presence in the country of several parties from foreign universities who were making their own inquiries in certain undertakings or communes they had selected. Research by individuals is even more common. At the November 1959 session of the Central Committee of the Communist League, President Tito warned undertakings against too great a readiness to communicate technical or commercial secrets to foreign associates, because in some cases this had proved to be against the country's economic interests. GENERAL PROBLEMS, SUPERVISION AND PENALTIES 281 ities and social organisations. In this context, therefore, workers' management has a part to play in " social control " of the higher authorities. The resulting clash of opinions is regarded as being the main safeguard of the system and the best way of dealing with difficulties. The second point to be emphasised is the uniform method of presenting this information and the comparability of the data and underlying procedures. A single, uniform accounting system based on a decimal classification of accounting items is the most striking example. Though this system is widely criticised on technical grounds and is inadequate in some respects, so that new legislation is being prepared, its uniformity does permit comparative analysis at all levels by communes, banks, inspectorates or the association of undertakings. The feature of uniformity extends well beyond the accountingfield: whatever the differences of substance between the regulations, plans or practices of undertakings, they are very similar in form, so that cross-checks and comparisons are very easy. It should also be pointed out that all documents relating to the management of undertakings are official, so that fraud or serious negligence in their preparation entails particularly severe penalties. Internal Supervision Under these circumstances the whole of the workers' management system can be regarded as supervisory machinery, general policy being controlled by the assemblies and more technical matters by the various committees. The workers' management bodies often approach their task mainly in this spirit, not only in matters such as examination of the balance sheet and accounts for the past financial year but also in other matters.1 The increasingly direct participation of the collectives in management and the development of workers' management machinery at the workshop and section level tend to reinforce supervision over the undertaking's technical and administrative staff. The accounting arrangements provide two other sources of control. On the one hand, the chief accountant and his department occupy a relatively independent position.2 On the other, specialised institutions 1 This is generally the case in relation to day-to-day commercial transactions. ^* lAuiuucr öl rccruiiment lAjuuiiiiicGa wiiuac i w u i u o « v i v M u u i w u u v X^^UAUWU uivii task as being mainly one of supervision. 2 The chief accountant is entitled to suspend any order to pay if it is contrary to the law or other regulations; he also has special terms of appointment and special protection with regard to discipline, remuneration, dismissal, etc. Major decisions affecting the chief accountant generally have to be approved by the commune. In general, the financial reports are submitted to the workers' management bodies by the chief accountant in person. 282 WORKERS' MANAGEMENT IN YUGOSLAVIA provide technical advice on auditing and the organisation of accounting. In larger undertakings special financial control services with a small but specially qualified staff have been set up over the last few years to verify that all transactions are carried out in accordance with the rules, and to report to the workers' council.1 On the whole it would seem that, as stated by the head of the federal audit service, economic and financial relations within undertakings have over the last few years tended to get away from the excessive " informality " which prevailed in the earlier stages; there is increasing resentment at existing abuses, and when they are brought to light by the collectives there is less hesitation in prosecuting those responsible; the number of prosecutions lodged at the request of the workers' management bodies has shown a marked increase. Administrative Supervision While the Yugoslav system does not allow for direct administrative interference in the management of an undertaking, the latter remains a public institution in spite of its autonomous management, and it cannot close its doors to the authorities. On the contrary, as pointed out on a number of occasions, the more important documents concerning the management of an undertaking must be communicated and the authorities carry out regularfinancialor other checks of the undertaking's economic and social activity. Administrative supervision over the undertaking is mainly designed to test the accuracy of the reports it is required to submit and to make sure that it does not operate outside the bounds of legality. In principle, any public or administrative agency may carry out such checks as part of its ordinary work if it thinks fit, provided it follows the prescribed procedure and does not attempt to take over the duties of the competent body of the undertaking. 1 Such internal services were not brought into existence by virtue of any regulations, and they are not therefore compulsory. Their origin can be traced, inter alia, to the publication in 1956, in a series of technical works issued in Zagreb on the management of undertakings, of a volume devoted to the question of internal auditing under the workers' management system. In addition to the usual review of the more widespread kinds of malpractice or fraud, the work contained a very detailed draft defining the status, powers and operation of a special control service proposed by its author. Cf. S. HEGEDUSIC: Unutrasnja kontrola upriwednim organisacijama (Internal supervision in economic undertakings) (Issue No. 4 of 1956 of Informatorov prirucnik za kadrove (Zagreb, Informator)). This is, incidentally, an example of the role played in the establishment of the workers' management system by technical publications such as the Zagreb Informator (weekly review and series of technical works), Privredni pregled and Ekonomika produzeca in Belgrade, and various other specialised reviews. Apart from serving as information media and facilitating the exchange of experience, they are very important from an educational point of view and prompt much positive action; they are thus very popular in undertakings. GENERAL PROBLEMS, SUPERVISION AND PENALTIES 283 This section merely gives a brief account of the main kinds of inspection machinery which seem particularly characteristic of Yugoslav practice—the financial inspection services 1, the banks and the administrative departments of local authorities.2 Financial Inspectorate. Until 1959 the financial inspectorate set up in 1953 to ensure a minimum of official supervision over the economic activity of undertakings was an autonomous institution attached to the office of the Secretary of State for Financial Affairs and to certain local authorities.3 In principle, the financial inspection service used to be expected to confine itself to noting abuses or irregularities, and if the matter was not settled by agreement the service was simply expected to report to the competent authorities (generally the commune) and to recommend what action should be taken, if any. The powers and means of action available to the service were, however, not clearly defined.4 Under a recent Act which came into force on 1 June 1960 the financial inspection service has been attached to the National Bank and is now part of a Social Accounting Service. This is an autonomous institution which keeps track of the use made of all social property, follows economic trends and checks the payment of taxes by all the " users " of social property such as undertakings, communes, public institutions, etc. All 1 On the labour, mines and health inspection services, see Ch. XI. The usual technical and specialised inspection services or departments such as those for weights and measures, markets, building, etc., are not referred to in this connection. Nor will there be any further reference to the relations between the undertaking and such special institutions as the Bureau of Statistics, the Planning Office, labour exchanges or social security institutes, which may also collect information and check on its accuracy. 3 In June 1958 this service had 713 inspectors at the following levels: federal, 17; republic, 72; district, 476; and commune, 118. In 1957 these inspectors carried out over 23,000 inspections and issued more than 10,000 orders to correct irregularities they had discovered; inter alia, they made 80 recommendations for the institution of legal proceedings to wind up undertakings, and 105 concerning the dismissal of directors; of these recommendations, 65 and 70 respectively were implemented (cf. Jugoslovenski pregled (Belgrade), No. 9, 1958, p. 336). According to information supplied by the federal inspection service with regard to 1958, in 34 cases the financial inspectors recommended that an undertaking be wound up; in 70 cases that it should be placed under public receivership; in 15 cases that the board of management should be dissolved; in nine cases that the workers' council should be dissolved; and in 91 2 lion dinars were imposed on a total of 940 undertakings and 1,450 persons as a result of inspection reports. 4 For example, the right of financial inspectors—like labour inspectors—to issue i mmediate orders in the event of some manifest malpractice or negligence gave rise to much controversy (cf., for example, in Arhiv za pravne i drustvene nauke (Legal and social science reports), 1958, Nos. 2-4, the account of the second congress of Yugoslav lawyers). 284 WORKERS' MANAGEMENT IN YUGOSLAVIA of an undertaking's financial operations have to be carried out through an approved bank, and the service maintains accounts for each undertaking. On that basis it prepares general reports and summaries concerning particular categories or groups of undertakings. In addition, it exercises prior control over theirfinancialoperations (orders to pay, etc.) and an ex post facto check on their economic activities. In this respect, its powers are no longer limited to questions of form or procedure, nor to tax inspection in the usual sense of the words; it also ascertains whether financial transactions conform to the principles of sound management and are compatible with the particular social purpose of the funds involved. In addition to the reports it submits at regular intervals to higher authorities and to other agencies concerned, it must submit its conclusions on particular cases to the commune and to the responsible organ of the particular " user " of social property (i.e., to the workers' council in the case of an economic undertaking). That body must consider the conclusions and decide on the action required. Direct co-operation between the inspection services and the workers' management bodies, which had already occurred locally in a few cases, thus became an official and permanent part of the workers' management system. Under the new system of financial supervision the financial inspectorates and Social Accounting Service may on their own authority hold up orders relating to irregular or unlawful transactions, order the blocking of the accounts involved (or of all the funds of the undertaking) as a precaution, correct inaccurate tax returns, balance sheets or periodical accounts, etc. At the same time, however, the safeguards of an undertaking's autonomy have been considerably strengthened. Economic courts are now competent to hear all financial and administrative cases of this type and are not only empowered to annul the decisions of administrative departments but also to adjudicate on the merits if they think fit (for example, by drawing up a balance sheet for the undertaking or assessing the taxes it should pay).1 Undertakings and public departments are therefore now on the same footing in this respect. Bank Supervision. In addition to the financial inspectorate and Social Accounting Service which have just been attached to it, the National Bank and its branches exercise regular supervision over the activity of undertakings through their lending operations. The same applies to specialised 1 Tn matters falling within the field of administrative law, economic courts have been granted full jurisdiction over cases concerning the financial management of undertakings. This is a power which ordinary courts only have in certain cases, e.g. those relating to social security. GENERAL PROBLEMS, SUPERVISION AND PENALTIES 285 investment, international trade or agricultural credit banks, and to the commune trading or savings banks with regard to local undertakings. Apart from the current audit of the accounts, the banks are expected to ascertain, if necessary by checking on the spot, whether the statements in loan applications submitted to them are in accordance with facts, and to verify that loans are used for the purpose for which they were granted. For this reason they enjoy free access to the undertaking's records and premises, and some of them maintain a special staff of inspectors. Other Forms of Administrative Supervision. Apart from the inspection services that may be attached to the district authorities and the larger communes, these also have various technical departments which are in more or less close touch with the undertakings in their areas, for example with regard to labour and economic affairs (commune or district development plans, manpower policy, etc.). In this case, however, supervision is part of a wider collaboration. This remark also applies to the officials of departments and other agencies at the republic and federal levels whose work seems to be quite commonly carried out and organised on the basis of visits to undertakings or other direct contacts with those in charge of them (reception of delegations, special meetings with the representatives of workers' councils, etc.). " Social Control " by Authorities and Organisations The administrative controls that have just been mentioned are intended not only to bring to light any improper conduct of affairs, but above all to enable the authorities concerned—especially the communes —to study the situation and determine their own economic and social policy on the basis of reliable and complete information and a full understanding of the issues at stake. They also provide a solid basis for the social and technical work of trade unions, political organisations, chambers and associations of undertakings, etc. On the other hand, the local authorities and organisations contain many representatives of the undertakings in the area, and can draw directly on their practical experience of production work and business management. Their activities are consequently regarded as resting on mutual " social control " by those concerned, who are also in the best position to know the problems and prospects of the various undertakings, to evaluate them and, where necessary, to indicate the course to be taken or to propose remedial action. 286 WORKERS' MANAGEMENT IN YUGOSLAVIA Role of Local Authorities. Relations between the undertaking and the commune are extremely close. Throughout this study there have been references to a large number of situations in which the co-operation of the commune is required, for example approval of the undertaking's by-laws and rules, support for its development programmes, rulings on certain disciplinary measures, etc., examination of the undertaking's periodical reports and accounts and making general policy recommendations on that basis. On the latter point, the nature and practical bearing of the procedure followed by the organs of the commune have already been briefly outlined.1 In fact, hardly anything that concerns an undertaking can escape their attention. The documents, reports and accounting statements, as well as the great variety of petitions, that are submitted to them in the ordinary run of things either by undertakings directly or through the inspection services or other special departments or organisations, are normally submitted first to various special councils of the commune, such as the economic council and the labour council. The preliminary examination by such councils is rather of a technical nature and the members generally include a large proportion of executives of undertakings who have had much experience of the matters involved. The councils can settle directly many questions of an administrative character or involving no issue of principle. Their knowledge of the local situation also enables them to deal with current problems themselves, and to take any action they see fit. On more important issues, or on subjects where competence is reserved by law, the special councils or committees report to the producers' council alone or to both chambers of the people's committee. In any case, the more detailed discussions of economic and social questions and the initial statement of the opinions and interests of undertakings take place in the producers' councils, a majority of whose members are in most cases representatives of undertakings.2 The decisions of the commune people's committee are not binding on an undertaking unless there is a specific statutory provision to that effect, but in such cases the law generally provides for an appeal either to an arbitration board (as in relation to approval of an undertaking's rules), to a higher authority or to the courts. The interests of an undertaking can, of course, also be directly affected by decisions taken by 1 Cf. Ch. X, p. 238-239. If the two chambers of the people's committee disagree, the matter is normally referred for settlement to a joint conciliation board. On the other hand, in certain cases the law provides that there shall be a joint sitting of the two chambers. s GENERAL PROBLEMS, SUPERVISION AND PENALTIES 287 local authorities, e.g. in granting or refusing a loan to an undertaking under their budget, in levying additional local taxes, and so forth. In general, however, " social control " by the local authorities takes the form of recommendations which the workers' councils must consider, but on which they are not bound to take any particular action. In applying this procedure the commune may in fact do more than supervise because it can initiate various new forms of action : it may, for example, recommend that a number of undertakings should co-operate in the field of vocational training or should join with the commune in a housing project, the operation of municipal kitchens or canteens and so forth. Proposals directly relating to economic activity may also arise out of the discussions of the commune authorities.1 This recommendation procedure is also available to the federal authorities and those at the republic level, and the latter use it widely. Very varied action can be promoted through such recommendations, which have a rapid effect in undertakings throughout the territory of the particular republic or in the country as a whole.2 Role of Economic and Social Organisations. In all these fields the economic chambers, associations and other organisations of undertakings at the level of the industry, the branch of the economy or within the various territorial divisions play a more or less similar role. Admittedly, the supervision they exercise over their member undertakings is generally of a purely voluntary character, and in theory they have no power to take decisions that would restrict the freedom of action of their members. Such supervision is nevertheless very effective, primarily because it is exercised by persons who have direct knowledge of the situation, prospects and special requirements in their branch, and who are also in the best position to supply 1 The establishment of new undertakings in order to meet local needs or to provide jobs for the manpower available often receives considerable attention in the large communes. Similarly, a commune may recommend an undertaking to expand some existing line of production or department, to enter a newfield,etc., and it may propose certain practical arrangements for such a purpose. Certain communes have even taken the initiative of designing general reorganisation programmes for some industries in their areas (e.g., to enable the building industry to cope efficiently with local housing programmes as they gather momentum). Such plans prepared in conjunction with the undertakings concerned are generally accepted by the workers' councils, although there are quite a few cases where undertakings have preferred to remain aloof and leave things as they were. 2 Mention has already been made, inter alia, of a recommendation by the Diet of Croatia concerning personnel departments (cf. pp. 165-166). The same assembly addressed to undertakings a whole series of other recommendations on, for example, workers' councils at department level and vocational training services. 288 WORKERS' MANAGEMENT IN YUGOSLAVIA undertakings with the technical advice and services they may need in all their fields of operation.1 The various economic organisations also play a very important role in advising higher authority or public agencies on behalf of their particular branch of activity. Just like the economic organisations, the trade unions are regarded in this context as being a part of the workers' management machinery. However, they operate in another field and fulfil other needs both at the level of the undertaking (through the union branch) and at higher levels, territorial and industrial. The functions are basically social and political rather than technical or economic. Trade union bodies at every level regard themselves as bearing the prime responsibility for the proper operation and promotion of workers' management in undertakings.2 They are entitled not only to nominate candidates for election to the workers' councils and to propose the recall of members of such bodies and the dismissal of directors of undertakings, but also to make proposals concerning the internal organisation and procedure of the workers' management bodies. They may, of course, also submit to the workers' councils any requests or proposals they consider desirable, and the trade unions in fact are behind many of the proposals presented to workers' management bodies. Discussion within the union branch committee often prepares the way for proposals to the workers' council to amend projects already before it or to reverse some decision that it has made previously. Similarly, regional or higher trade union bodies often send officials or members to attend important meetings of workers' management bodies (for example, on the occasion of the adoption of periodical management reports), so that they may make their recommendations or suggestions directly, test the reactions of the workers concerned, and submit general reports on the issues before the workers' management bodies. In present conditions, the unions are regarded as a powerful element in " social control ". Some reference must also be made to the political organisations. The role of the Socialist Alliance of the Working People is probably of minor importance with regard to workers' management, since it is chiefly •For example, each month the bulletin of the Federal Chamber of Industry (Bilten) puts on record a large number of opinions, recommendations and reports issued by the executive committees of the Chamber and of the various associations of industrial undertakings and by their committees, working parties and so on. 2 The people's committees and the assemblies at the republic and federal levels generally have workers' management committees, but workers' management itself does not fall within the competence of any particular department or government agency. Apart from the surveys carried out by the Statistical Institute, information on the activities of workers' councils and of other workers' management bodies is collected and analysed primarily by trade union bodies at different levels. GENERAL PROBLEMS, SUPERVISION AND PENALTIES 289 designed to provide initiative and guidance for the local authorities in somewhat the same way as the trade unions do for undertakings. The Alliance may nevertheless set up committees for workers' management or " social self-management " at the local level or above, and convene public meetings or take other steps through which the demands, criticisms or suggestions of the working people with regard to the management of undertakings or their economic operations can be addressed to the appropriate public authorities. In this way it can to some extent influence the economic policies and welfare arrangements of undertakings. The Communist League plays a more important part in this field. It has branches in most undertakings and is therefore in a similar position to that of the unions, and can appeal to the workers' management bodies or the collective on behalf of League members and its own programme. As the latter includes the principle of the autonomy of undertakings and workers' management, it is expected to avoid interference in management proper. The general debates and resolutions of the central organs of the League, as of the trade unions, may also be a starting point for testing the reactions of workers' councils to new proposals. The Communist League also plays an important role in the system of workers' management because it supplies a programme and an ideology to serve as a guiding principle for its members in their activities. Yugoslav leaders are convinced that under present circumstances the role of social and political guidance vested in the Communist League is still essential to a balanced development and gradual strengthening of workers' management in undertakings. Albeit not exclusive, the League's influence on the selection and promotion of senior executives in the economic sphere is particularly noteworthy in this respect. A quite different form of control is provided by the growing number of research institutions which either regularly or occasionally carry out studies and inquiries into the practical operation of workers' management. Opinion polls among workers and members of their management bodies and analysis of the minutes or other records are among the methods most commonly used. The distinguishing feature of these inquiries is that they in no way avoid the more delicate issues such as the attitudes of individual workers, the relations between workers' management bodies and the leaders of political and social organisations, or the implications offinancialandfiscalinstruments and policies; nor do they gloss over the difficulties, shortcomings or irregularities that come to light. The results of these inquiries and critical studies of these results are usually given wide publicity, both in the specialised reviews and in the press at large. 290 WORKERS' MANAGEMENT IN YUGOSLAVIA PENALTIES Like other economic and social systems, workers' management is hard to imagine without an appropriate system of penalties. The changes that workers' management has involved are considerable. The most important of these reflect the abolition of centralised administration of the economy. Penal or administrative constraints designed to ensure that the prescribed standards are complied with have virtually been eliminated from economic relationships between the State and undertakings and between the latter and individual workers. Free competition, coupled with a whole array of financial and fiscal instruments, has substituted economic incentives and penalties. While trying to iron out inequalities and ward off economic fluctuations, Yugoslav economic planning and employment policy does not generally provide for other forms of coercion. Such penalties as exist are therefore the outcome of free contractual relationships between the collectives and their customers and between the collectives and their members, rather than of restraining legislation. It is only when contractual obligations are not fulfilled that these relationships may give rise to civil penalties such as fines, damages, the winding up of the undertaking, etc. Indeed, as was mentioned earlier, workers' management has made it necessary to work out a completely new system of rules for the legal relationships between collectives (i.e., the commercial law for the socialised sector) 1 together with a new type of labour law. Two more specific forms of constraint built into the workers' management system should, however, be mentioned here. The fact that workers' management bodies exist in every undertaking and cannot remain inactive is ultimately due to the care taken in Yugoslav legislation, whenever new duties were assigned to workers' councils, to make their functions unavoidable. For example, they are required to meet on a variety of occasions if only to ratify the rules and approve the annual accounts, finance programmes, investments, etc., failing which the undertaking can hardly take a step of any importance—it cannot finance its own development and current business nor (above all) can it remunerate the labour of the members of the collective. Yugoslav legislation thereby aims at enlisting the self-interest of executives and collectives so as to avoid reliance on penal sanctions, which would no doubt be restricted in effect. 1 It should be recalled that contractual relationships between undertakings and other public bodies are based not on law in the strict sense of the term but on the principles (customs) established by the Supreme Economic Court and on the case law built up by the economic courts. GENERAL PROBLEMS, SUPERVISION AND PENALTIES 291 There remains the question of penalties in the event of mismanagement infringing the law or involving serious irregularities.1 Penalties such as the dissolution of the workers' management bodies, the dismissal of the director or the appointment of a public receiver which can be imposed by communes in particularly serious cases were described earlier in Chapter III. These penalties, in both law and practice, can only be applied in very exceptional cases. A system of penalties has therefore had to be devised for minor breaches of the law and irregularities in day-to-day management. Most of the enactments dealing with management which have been discussed in this study contain clauses laying down specific penalties for various forms of negligence or actions in breach of the law. For example, four of the final sections of the 1957 Labour Relations Act list some 50 breaches of its provisions in respect of which penalties can be inflicted. These provisions cover such cases as failure to adopt the various rules and by-laws of the undertaking, non-payment of remuneration or the payment of higher or lower remuneration than is due, the recruitment or dismissal of workers independently of the proper bodies (i.e., the recruitment and dismissal committees) and a whole series of other actions or omissions infringing the workers' rights or the undertaking's interests. The regulations on the management of funds, the accounting system, financial reports, pricing, etc., also usually provide for penalties. The procedure and the penalties were both codified under recent legislation. The outstanding feature of Yugoslav legislation in this field is that it lays down the principle of direct liability of an undertaking for infringements of this kind. The undertaking can be subjected to no other penalty than a fine, the amount of which is decided by the courts in the light of the circumstances and of the limits fixed by law for each type of offence. A fine may in no event be less than 10,000 or higher than 5 million dinars in each case. Present legislation also provides for the possibility of conditional sentences with stay of execution. In the event of a breach of the law, proceedings are usually instituted by the public prosecutor on application by the appropriate authorities or inspector. The case is heard by the circuit economic court. The undertaking is represented at the hearing by the authorised agent of the 1 It is not proposed to deal here with ordinary offences against an undertaking such as theft or embezzlement, which are covered by the normal judicial procedure but for which the Yugoslav penal code lays down special definitions and sanctions. Under workers' management any appropriation of the undertaking's property by individuals, whether workers in the undertaking or third parties, naturally constitutes a punishable offence for which prosecution is mandatory. 292 WORKERS' MANAGEMENT IN YUGOSLAVIA board of management.1 Any fines inflicted on the undertaking are deducted from its current income and reduce by the same amount the sums available to the workers' council when the income is finally shared out. Thus the collectives have a genuine interest in forestalling or preventing breaches of the economic regulations and, where necessary, in overhauling its managerial methods or practices so as to avoid any further prosecutions. As for the members of the directorate, any fines inflicted on the undertaking through their fault (in addition to any they may incur personally) are liable to weaken their authority and in the more serious cases to make it difficult for them to remain. Judging by the information collected on the spot, there seems to be little doubt that financial penalties for unlawful or irregular management—or even the mere threat of a penalty—do make quite an impression on management bodies and so have a salutary effect on their methods and practices. Above all, they compel the executives to keep abreast of the regulations affecting their own undertaking and to remedy any shortcomings or failures in the conduct of business as well as in the working of the management bodies and observance of the official procedures in general. The judicial statistics, the latest series of which refer to the year 1957 2, appear to bear out this tendency. The number of sentences for " offences against the national economy ", which at one time exceeded the number of offences against property 3, has fallen off sharply since 1955—far more so than for any other type of offence.4 In 1957 there were only 9,779 sentences reported for economic offences, compared with 17,304 in 1955, whereas the number for offences against property remained virtually stationary (27,698 as against 30,300). This development is reflected even more clearly in the nature of the penalties inflicted by the courts. Although there are no separate figures for the rate of economic offences in undertakings subject to workers' management alone, these figures do go to show that relationships and practices in the management of the autonomous public undertakings are to a large extent settling down. 1 If the same offence also entails the personal liability of the director or any other executive of the undertaking, there is only one hearing, but each party is charged separately and, if necessary, sentenced separately as well. 2 Cf. Statisticki godiSnjak (Statistical yearbook published by the Federal Statistical Institute; English translation of the text published separately), 1959, pp. 283 ff. 3 In 1952 there were 29,763 court sentences for " offences against the national economy " (i.e., mainly for breaches of the regulations governing the management of undertakings) as against 28,821 offences against property in general. 4 Only sentences for " offences against the people and the State " have fallen to a similar extent (525 in 1957 as against 882 in 1955 and 2,338 in 1952). SUMMARY The objective of the Yugoslav system of workers' management, based on a fully socialised economy or at least on a sufficiently extensive public sector, is to group the workers into autonomous units according to the technological requirements of the production process, with responsibility both for production and management and themselves deciding how the income from production is to be apportioned. Management rights are to be shared on an equal basis by the individual " producers " through the fact of their participation in joint production, and each is to be entitled to a reward proportional to the social value of his share in the work of his production unit and to the value assigned by this unit to his post and personal performance. Consumer demand and competition between undertakings are to provide the main regulator, and the function of central authority is to be limited to maintaining a general balance and promoting conditions for sustained economic and social progress. The reforms carried out in order to put these basic principles into practice have aifected the status and role of undertakings in many ways, and indeed all fields of economic and social life in the country. The search for the right answers has continued over the years, but the general features of the system are now fairly stable. The preceding chapters have attempted to describe in broad outline the methods eventually adopted, approaching the subject primarily from the point of view of the individual enterprise and its collective, while not altogether disregarding the general background of institutions. From this point of view, the essential element in the system of workers' management is that no decision shall take effect without the express or implied consent of the collective or its elected bodies, and that there shall be wide scope for initiative on their part as far as legal requirements and the material possibilities of the undertaking permit. At the same time, importance is attached in Yugoslavia to mass participation by the workers (especially manual workers of all types) in the work of the management bodies. Through rapid turnover of membership on these bodies a considerable percentage of the workers hold office each year. The periodic meetings of the workers' councils, general and workshop assemblies, the holding of referenda, etc., provide further opportunities for direct participation, while payment according to the 20 294 WORKERS' MANAGEMENT IN YUGOSLAVIA undertaking's results and the links between workers' living and working conditions and local circumstances form a pattern of shared interests which may not be realised by all the workers but affect each one regardless of job, grade or education. In describing the institutional machinery through which Yugoslav workers' management operates, an attempt has been made to bring out the fundamental changes that it has entailed in the functions of undertakings and in management methods, which have been adapted or invented to meet the needs of the system. The decision to give the workers of each undertaking the right to apportion the results of their production and management has provided the workers' management system with a material incentive influencing the whole economic side of the undertaking. As regards current production, output and productivity, maintenance, modernisation of equipment, employment policy—in all these fields the principle of sharing out the results by those who have achieved them encourages the collective to seek the highest returns for each unit of work. In this respect it seems clear that the Yugoslav undertakings have been sensitive to economic incentives. Despite the importance attached to the economic aspect of the system of workers' management, however, it would be a mistake to underestimate the social forces set in action. The possibility of determining internal relationships in the collective or work group, and of modifying living and working conditions according to local circumstances and taste, also gives the collective a stake in the undertaking. The great variety of approaches in different undertakings to the practical problems encountered suggests that there is a wide margin for adaptation to the particular conditions, habits or preferences in each collective. However much these approaches vary in the technical field, they are nevertheless prompted by the same concepts, chiefly because of their common political environment. It must be borne in mind that the collectives are far from isolated but are greatly influenced by outside institutions and bodies representing the community at large or particular sections of it. This " social pressure " (which can greatly modify the impact of economic incentives) is all the more effective because under a single-party system it operates within the framework of a single ideology whose foundations are not open to question. The system of workers' management now operating in Yugoslavia followed upon a complete reorganisation of the political and economic structure of the country and can hardly be dissociated from it. From the point of view of industrial relations, the Yugoslav system of workers' management of autonomous undertakings seems in the last analysis to be a vast melting-pot for concepts which originated in widely SUMMARY 295 differing economic and social systems and which are often considered to be incompatible. Nationalisation of the means of production, over-all planning, industrial democracy, autonomy of undertakings, market competition, remuneration of workers according to production and profits are the main ingredients of a new alloy whose durability only the future can show but whose originality and interest can hardly be denied even today. APPENDICES APPENDIX I STATISTICAL TABLES TABLE A. MAIN ETHNIC GROUPS AND PERCENTAGE OF ILLITERATES Ethnic group Serbs Croats . . . . Slovenes . . . Macedonians . Montenegrins . Yugoslavs of ine leter minate ethnic or igin 2 Hungarians Turks . . . . Total Total (thousands) Children under 10 Percentage of illiterates in the population over the age of 10 > (thousands) (per cent.) Average Men Women 7,066 3,796 1,487 893 466 999 754 502 260 1,432 751 276 230 111 20.3 19.8 18.5 25.7 24.0 28.5 18.0 2.5 26.6 27.0 13.1 10.2 2.4 16.2 10.9 42.9 24.7 2.5 37.2 41.6 284 220 80 75 28.5 29.2 15.9 28.8 48.6 63.5 8.4 55.2 29.3 44.9 6.3 38.6 65.8 83.6 10.2 71.9 16,937 3,555 21.0 25.4 3 14.1 35.8 Source: Final results of the census of 31 March 19S3 (supplied by the Federal Statistical Institute, Belgrade). 1 Persons able to read but unable to ' write are counted as illiterate. * Serbo-Croat-speaking Moslems, mainly living in Bosnia-Herzegovina. * This percentage is only 12.8 in the case of young people between the ages of 10 and 24, and 20.3 per cent, among adults between 25 and 39. TABLE B. YUGOSLAV POPULATION AND OTHER BASIC DATA BY PRINCIPAL Serbia Total tor national Total (or average) average rate) Population (1957) (thousands) Birth rate (1953) General level of employment (1957) (thousands) Index Employment in industry (1957) (thousands) . Index 18,005 7,368 Serbia proper 4,m Vojvodina 1,765 KosovoMetohija 876 Cr 4,1 26.5 25.3 22.4 42.6 2,569 100 928 88.3 607 90.0 272 108.0 49 32.2 6 1 956 100 309 79.0 205 81.7 85 90.7 16 34.4 2 1 28.4 Active population in agriculture (1953) (thousands) Index 5,193 100 2,407 1,695 124.3 113.3 516 101.4 195 77.2 Consumption of electricity (1958) (thousands of kWh) Index 6,047 100 1,463 1,128 59.1 71.1 246 41.5 89 30.3 1,6 1 National income (1958) (thousands of millions of dinars) Index 1,834 100 199 110.7 36 40.3 4 1 Source : Statistiiki godlSnJak. 664 88.5 429 89.1 1, 301 APPENDIX I : STATISTICAL TABLES CS f « m os si t— (S SO oo CS 5 o o © o oo O TJ- »n •* •* r» i -t es SÌ > so r- m TJ- cN en in m i n t ^ ^ u-i 0\ Os VO 00 n os m es so en o so es m es m \Û m m O r- m O i 00 m •-• SO >n •— rn es es in O r- O oo m ~^ sr> so es so CS OO VO O O t o \ Tf i n o \ i o v i en m m -*t r- o s m m i n so -*• < - Ti- so so o SO CS f (si t ON © i—i ( s «n r-1 M M N M ^ H i/iiS oo * n •*}• O 00 00 N fH m t so o oo en rO in Tt- in -i Vi f ir "Tí <— «s —i SO SO r- o> roc •fl ,_, S* ^ •a -= ,. o ¿s -a o o o M O ki . M gË £•3 « S 3 5 o, a e • - <3 O S UU oc o- oo o s om CS io in o r- so r» m so CS »n so es es es — 1—1 T—1 »•^ CS in os 5CS i— •—i m so —• es so so •* m m in ~* C st. rr- res " _ o\ « •* r - c s oo W <~ es S oo os —< Tt 00 in r- es in ri- 00 rin Os r- trot. r- SO OS se SO oc •* es in —m< ~ os es NO NO ON »O ND NO i-< M «S m --t Electric Coal Iron an d ste Non-fei rous metals . . . Enginee ring Electric al eq uipment . . Chemieals Wood a imber . . . . PaDer Textiles Food il "S i!KS (S) « A .2 c S " " CO S S S vi uOTm TABLE D. ECONOMIC UNDERTAKINGS BY NUMBER OF WORKERS EMPLO 31 MARCH 1959 Total of workers employed Field of activity Up to 7 Industry and mines Agriculture1 Forestry 8-15 16-30 31-60 126-250 251-50 53 134 187 336 529 525 460 1,559 2,245 1,173 838 413 177 67 9 7 17 4 9 2 Building 40 95 54 65 98 106 101 Transport 54 32 46 85 92 39 24 2,999 1,207 1,136 1,131 684 195 47 1,188 1,018 831 789 509 196 41 27 Commerce (¡nel. hotels) Handicrafts . . . 1 Communal services Cultural activities Other activities Total 47 55 63 100 63 265 83 21 30 28 14 20 12 6 3 6,220 4,890 3,532 3,387 2,436 5 10 1,280 764 Source : Data supplied by the Federal Statistical Institute, see also StatistlikI bitten, No. 143, Aug. 1959, p. 11. 1 Also includes producer co-operatives. 'Includes forestry culture only. Undertakings engaged in cutting, hauling a TABLE E. COLLECTIVES AND WORKERS' COUNCIL (Size, elections, composition) Undertakings with 30 or more workers N o . of lists of candidates N o . of workers N o . of undertakings Registered Elected me Elected from trade union or basic lists 1 Trade union or basic lists No. of voters Figures for each year between 1952 and 1958 1952 1953 1954 1956 1957 1958 4,646 4,758 5,324 5,989 6,314 6,618 956,221 1,018,615 1,221,916 1,363,788 1,430,341 900,643 982,285 1,184,784 1,329,890 1,396,001 1,591,565 784,233 850,034 1,037,872 1,169,058 1,241,662 1,428,698 5,558 5,331 5,913 6,854 6,958 7,343 5,221 5,020 5,627 6,599 6,715 6,963 105,018 105,540 115,479 124,204 128,607 135,625 102,603 102,626 112,157 121,648 126,080 132,405 Figures for 1958 by republic 2,523 1,700 1,063 736 445 Serbia Croatia Slovenia Bosnia-Herzegovina Macedonia 553,477 447,653 253,552 203,308 83,714 495,938 403,185 232,094 202,520 74,430 2,689 1,964 1,226 852 450 2,657 1,875 1,098 730 442 50,262 37,141 21,113 15,279 8,995 50,083 36,003 19,769 14,966 8,841 Figures for 1958 by field of activity Industry Building Commerce (incl. hotels) Handicrafts Source : Slalls:likl 1 2,250 430 1,777 1,190 866,319 217,634 136,327 98,282 781,409 182,779 126,241 89,272 2,535 518 1,822 1,227 2,397 482 1,733 1,148 56,351 9,724 29,389 19,959 55,430 9,512 28,367 19,226 billeri. N o s . 35 and 38/1955, 57/1956, 77/1957 and 137/1959. In 1953, " complete lists "; from 1953 to 1956, lists put forward by the trade union section; and in 1957 and 1958, " b no elections in 1955; in 1959 the term of office o f existing members of workers' councils was generally extended by one ye 304 WORKERS' MANAGEMENT IN YUGOSLAVIA Remarks concerning Tables F to L The various series covering the years prior to 1957 are not directly comparable because there were changes both in the system of distribution and in the definition of some items. Theoretically, the figures can only be compared within a given year except for those concerning employment and the workers' personal incomes. The series covering the various categories of income or funds of undertakings can nevertheless provide an indication of trends. The figures on personal incomes relate only to net incomes after statutory deductions for taxes, social security contributions, etc. They are therefore directly comparable for the period before and after 1957 despite the fact that since 1 January 1958 the detailed figures relate to gross personal incomes. The figures in dinars are generally calculated at current market prices or simply taken from the accounts of the undertakings concerned. In other words, the entries concerning the incomes of undertakings, the amounts allocated to the funds, etc., are the amounts actually received by the undertakings from their sales; the personal incomes are those actually received by individual workers (net nominal earnings); and the items taken from the balance sheets are totals extracted from the corresponding accounts of the undertakings concerned (valuation after allowance for depreciation, plus cash on hand or on current account). Thus only minor corrections of the different series are needed to allow for price fluctuations. The wholesale price level rose by only 1 per cent. since 1956; the rise in retail prices was greater (about 3 per cent, per year since 1956), but in theory this affects only the evaluation of the purchasing power of the workers' personal incomes. TABLE F. DISTRIBUTION OF INCOMES OF UNDERTA Annual Figures for the Workers' Management Sector, 1 Net income of undertakings (total) Depreciation, interest and land tax •Sa 11 12 O-9 13 382.5 192.7 171.4 6.6 269.3 317.2 281.9 35.9 3.6 268.8 357.9 303.2 47.1 45.7 1.3 259.7 412.4 343.9 149.7 38.6 46.0 1.8 295.4 511.2 451.2 139.1 52.4 41.9 21.7 3.1 284.1 688.1 571. 159.0 63.2 39.9 27.4 4.3 294.8 894.1 749. Interest Year Totiil income (gross receipts) Plant, etc. a 1 2 1953 2,527.0 1,842.3 1954 3,066.7 1955 1956 Gross income (1-2) 3 Tax on turnover e o ¿ "3 o H Income tax and other contributions (Thousands of millions of dinars) a 5 ¡I O at o 0 a g 3 1'Í ! 4 5 6 7 684.7 34.8 118.3 96.6 21.7 8 2,280.3 786.4 127.9 201.5 123.0 31.2 40.7 3,612.4 2,724.1 888.3 154.0 195.9 122.6 33.8 3,782.5 2,909.7 872.8 167.3 243.7 149.6 1957 4,803.3 3,711.2 1,092.1 159.5 256.1 1958 5,77:1.5 4,501.2 1,270.3 174.8 258.2 1959 6,80!. 1 5,304.4 1,497.7 199.5 293.8 9 20.0 3 •0 § u w au v> Ë " n s| 10 Source : Statistical survey published by the National Bank (data supplied by the Federal Statistical Institute). TABLE G. PRINCIPAL ITEMS IN THE OVER-ALL BALANCE SHEET F IN THE WORKERS' MANAGEMENT SECTOR, 1953 (As at 31 December of each year, in thousands of millions of Money on call and res Working capital Year Total resources • (2-5) 1 1953 1954 1955 1956 1957 1958 1959 549.7 697.5 769.6 1,000.5 1,221.2 1,397.7 1,644.6 Working capital resources Loans granted for working capital Other assets 2 3 4 386.0 449.6 479.6 547.0 691.7 761.4 1,000.8 814.4 905.8 1,088.1 2.7 5.8 8.2 8.7 5.2 2.8 11.1 Long- Increase term during credits the (working year capital) Total (8-12) Amounts available in current accounts (working capital) Depre Amounts freely available Free to the underaccoun taking i 5 6 7 8 9 10 15.6 39.5 65.8 1.1 147.8 72.1 239.9 211.7 176.5 246.9 131.2 206.5 233.5 356.7 406.1 422.7 513.2 68.5 87.4 66.3 88.6 127.5 119.2 141.4 21.6 21.5 24.3 49.8 41.0 49.2 68.1 41.1 64.7 73.5 80.4 63.4 70.7 81.3 Source : Statistical Supplement published by the National Bank (data supplied by the Federal Statistical Institute). T received; a dash (—) that the magnitude is nil or negligible. 1 Since 1958, welfare funds and fixed capital reserves, * Until 1959, undertakings were free to dispose of only part of a was " blocked ** for subsequent use in accordance with the provisions of the social plans of the Federation. Including Up to 1 July 1957 this item also included maintenance expenditure of an investment nature from the fixed capital fund. 307 APPENDIX I : STATISTICAL TABLES TABLE H. DISTRIBUTION OF THE TOTAL INCOME OF INDUSTRIAL UNDERTAKINGS (INCLUDING MINES), 1956-59 (Annual accounts, 1956-59, in thousands of millions of dinars) Item 1. 2. 3. 4. Total income (gross receipts) Plant Gross income (1-2) Tax on turnover 1956 . . . 1,518.3 936.9 581.4 163.9 1957 1958 1959 1,841.0 2,046.6 2,458.0 1,140.2 1,280.6 1,523.3 700.8 766.0 934.7 151.6 142.1 156.1 Depreciation, interest and direct contributions 6. Interest on supplementary loans . . 8. Interest on working capital . . . . 9. Land tax 10. Undertakings' income tax and other contributions 82.2 28.0 34.6 81.3 34.4 34.8 0.4 0.2 78.3 24.4 34.3 18.2 0.2 226.9 230.5 213.2 224.4 180.7 158.5 111.8 46.7 241.3 215.4 141.6 55.6 5.2 13.0 310.5 267.1 164.2 59.4 27.6 15.9 425.6 345.7 210.6 75.9 39.6 19.6 22.2 7.9 14.3 25.9 10.1 15.8 43.4 12.5 30.9 79.9 21.2 58.7 135.5 73.3 55.2 45.0 — 88.4 29.0 33.3 22.6 0.3 Net income distributed 11. 12. 13. 14. Total net income of undertakings . Personal income of workers (gross) . Personal income of workers (net) Social security contributions . . . 16. Contributions to housing funds . . 17. Allocations to funds of the undertaking (total) 18. Allocation to reserve funds . . . . 19. Allocation to other funds 20. Surplus of expenditure over receipts (credits, stocks, etc.) — — Source : Statistical survey published by the National Bank (data supplied by the Federal Statistical Institute). Three points ( . . . ) indicate that data have not yet been received; a dash (—) that the magnitude is nil or negligible. TABLE J. NET PERSONAL INCOME (REMUNERATION) OF WORKERS » IN THE W AND IN SOME ECONOMIC BRANCHES, 1955-59 (Monthly averages) Selfmanagement sector (general average) Manufacturing and mining Dinars Index Dinars . . . . . . . . . 11,620 12,270 100 106 9,740 12,490 13,060 100 128 134 10,900 14,300 15,170 100 131 139 1st quarter 2nd quarter 3rd quarter 4th quarter 11,030 11,480 12,340 13,910 95 11,700 99 106 120 12,060 13,260 15,230 120 124 136 156 13,290 13,960 15,470 17,940 1959 . . . 1st quarter 2nd quarter 3rd quarter 4th quarter 13,800 11,500 13,260 14,970 15,220 119 99 114 129 131 14,830 12,200 14,210 16,150 16,540 152 125 146 166 170 17,350 14,500 17,430 17,920 19,460 Year (quarter) 1955 1957 1958 Labour force2 . 1,658,934 Coal mining Index Dinars 849,t 69 Mechanical engineering Index Dinars 84,2 81 Chemicals Timber Index Dinars Index Dinars 10,490 13,620 14,500 100 130 138 9,730 13,490 14,390 100 139 148 122 128 142 165 12,890 13,590 14,970 16,550 123 130 143 158 12,210 12,710 15,710 16,930 159 133 160 164 179 17,310 13,540 16,200 19,950 19,310 165 129 154 190 184 16,040 12,730 15,580 18,310 17,570 1341 81 28.704 Pap Index Dinars 8,720 10,210 10,590 100 117 121 9,410 12,310 13,840 125 131 161 174 9,530 9,810 10,760 12,260 109 113 123 141 11,490 12,260 15,490 16,090 165 131 160 188 11,960 10,170 11,890 12,460 13,320 137 117 136 143 15,390 13,510 15,260 17,300 153 16,090 181 123.309 7.40 Source : Data supplied by the Federal Statistical Institute. Three points ( . . . ) indicate that data have not yet been rece 1 Excluding non-manual workers; the average remuneration of all workers, including non-manual, is slightly higher. Th include family allowances, social security benefits, allowances for annual holidays and other advantages such as housing assis 1959. 309 APPENDIX I: STATISTICAL TABLES TABLE K. FINANCIAL RETURNS FOR WORK IN INDUSTRY IN 2,464 UNDERTAKINGS IN 1958 (Industrial undertakings according to surplus of income over the minimum guaranteed remuneration plus 50 per cent.) Income surplus * as a percentage of the guaranteed minimum remuneration plus 50 per cent." Number Per cent. Less than 0 . . . . Oto 20 20 to 40 40 to 70 70 to 100 100 to 150 150 to 200 200 to 300 300 to 500 Over 500 212 (average). . . . 33 274 368 460 299 305 165 234 176 150 2,464 1.4 11.1 14.9 18.7 12.1 12.4 6.7 9.5 7.2 6.0 100.0 Undertakings Minimum guaranteed Income surplus remuneration plus 50 per cent.* 000 mil. mil. Per cent. Per cent." 000 dinars dinars 0.4 15.1 20.7 27.8 21.4 34.0 25.4 35.7 25.8 22.2 228.5 0.2 6.6 9.0 12.2 9.4 14.9 11.1 15.6 11.3 9.7 100.0 2.0 5.9 15.2 18.6 41.7 44.4 85.9 98.3 172.4 484.4 0.4 1.2 3.2 3.8 8.6 9.2 17.7 20.3 35.6 100.0 Source : Survey by the Federal Secretariat of Economic Affairs. 1 Income of undertakings (gross income: cf. Table H) after deduction of the minimum guaranteed remuneration plus 50 per cent. (cf. note 2). The table does not take into account the various financial and fìsca! instruments such as taxation, interest, etc., which would tend to reduce considerably the variations between the different undertakings. The fìnancial return for work is therefore considered here from the point of view of society as a whole and not from that of each individual undertaking. * The minimum guaranteed remuneration plus 50 per cent, has been chosen as the basis for the calculation because it approximately corresponds to the average rate of remuneration applicable in the industrial sector (in 1958, the average personal income in industry was 155 per cent, of the guaranteed minimum remuneration). * This percentage corresponds to the approximate number of workers employed in each industrial group. 310 WORKERS' MANAGEMENT IN YUGOSLAVIA TABLE L. PRODUCTION COST AND CONSUMER PRICE INDICES (1959= 100) Production cost price Date 1953 1954 1955 1956 1957 1958 1959 March April . May . June. . July . . August September October . November December 1960 January February March April . May . June . July . August September Retail price Industrial products Agricultural produce General index Foodstuffs General index Foodstuffs 95 93 98 99 99 100 100 100 100 100 100 100 100 100 100 100 100 100 100 101 101 102 102 102 103 103 78 81 90 93 104 98 100 112 108 114 111 103 100 98 99 100 105 105 108 110 112 117 119 115 108 106 87 83 91 95 96 99 100 101 101 102 100 101 99 99 101 102 102 105 105 105 106 107 108 109 108 108 76 76 88 94 95 98 100 103 103 104 101 102 96 98 103 96 105 106 106 105 106 109 111 114 109 108 80 79 88 93 95 98 100 102 102 103 101 100 98 99 102 103 103 109 109 109 110 112 112 112 110 110 75 75 86 94 95 98 100 104 103 104 101 100 97 99 102 105 104 107 107 106 107 111 111 111 107 107 Source: Index (Belgrade, Federal Statistical Institute), 1960, No. 4. 1 Cost-of-living index 1 For a worker's family comprising four persons. APPENDIX H BIBLIOGRAPHY In preparing the present study the International Labour Office used many sources, including not only official documents such as official gazettes and other collections of laws, reports from I.L.O. correspondents and from various national administrations, data supplied by the Yugoslav Federal Statistical Institute, etc., but also a wide variety of other documents published in Yugoslavia and other countries—works on doctrine, commentaries on legislative texts and financial regulations, case books, monographs and other documents supplied by individual undertakings (by-laws, works regulations, minutes of meetings of management bodies, business reports, etc.), case studies and public opinion polls, as well as the direct testimony of authors or experts from Yugoslavia and other countries, including I.L.O. experts and fellows. The following list contains but few theoretical or doctrinal works and articles. More comprehensive listings of such works can be found in Yugoslav or other bibliographies mentioned under the appropriate headings. The main emphasis has been placed on the most frequently consulted technical works. By the same token, enumeration of the many available legislative texts and regulations seemed neither necessary nor useful since, in view of the wide variety of subjects dealt with, such a list could never have been complete or up to date. Only the most important texts have therefore been mentioned. Moreover, the present bibliography does not list the voluminous documentation kept by individual undertakings (regulations, minutes of meetings, business reports, etc.) nor that supplied by various organisations and by local or higher authorities, which the I.L.O. officials were able to collect either through correspondence or during their visit to Yugoslavia. Publications of the International Labour Office International Labour Review " The Management of Undertakings by the Workers in Yugoslavia ", by R. UVALIÓ, Vol. LXIX, No. 3, Mar. 1954, pp. 235-254. " The System of Producers' Councils in Yugoslavia ", by L. GERÍKOvié, Vol. LXXI, No. 1, Jan. 1955, pp. 34-59. " Employment Relationships under the Yugoslav System of Management by the Workers ", by M. MARKOVIÓ, Vol. LXXIX, No. 2, Feb. 1959, pp. 141-157. " The Yugoslav Management and Supervisor Training Centre ", by A. L. JAEGER and H. J. SAINT-MAURICE, Vol. LXXIX, No. 6, June 1959, pp. 597-612. Principal Articles Published in Industry and Labour " Workers' Councils and Management Councils in Yugoslavia ", Vol. IV, No. 8, 15 Oct. 1950, pp. 328-333. " The Reform of Management and Wage-Fixing Systems in Yugoslavia ", Vol. Vm, No. 6, 15 Sep. 1952, pp. 281-284. 312 WORKERS' MANAGEMENT IN YUGOSLAVIA " Management of Undertakings by the Workers in Yugoslavia ", Vol. XI, No. 11, 1 June 1954, pp. 471-475. " Wage Determination by Workers' Councils in Yugoslavia ", Vol. XII, No. 4, 15 Aug. 1954, pp. 185-189. " First National Congress of the Workers' Councils in Yugoslavia ", Vol. XVIII, No. 9, 1 Nov. 1957, pp. 339-343. "The Workers' Status under Workers' Management: New Yugoslav Legislation on Employment in the Undertaking ", Vol. XX, No. 5, 1 Sep. 1958, pp. 171-180. Other Texts1 Workers' Management and Labour Relations in Yugoslavia. Record of an informal discussion held on 16 June 1958 in connection with the 42nd Session of the International Labour Conference (Labour-Management Relations Series, No. 5). Geneva, 1958. 49 pp. Bibliography included. Publications of the United Nations and Specialised Agencies UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE: "Economic Planning and Management in Yugoslavia", in Economic Bulletin for Europe (Geneva), Vol. 10, No. 3, 1958, pp. 43-62. UNITED NATIONS FOOD AND AGRICULTURE ORGANISATION Mediterranean Development Project. The integrated development of Mediterranean agriculture and forestry in relation to economic growth. Rome, 1959. 213 pp. See in particular pp. 181-191 (" Yugoslavia—Country Study "). Other Publications PUBLICATIONS IN SERBO-CROAT General Works BALTIÓ, Aleksander M., Dr. Osnovi radnog prava Jugoslavije (The foundations of Yugoslav labour law). Belgrade, Nova administracija, 1958. 387 pp. BOSNJAK, Stanko. Rukovodenje radnom grupon (Management of a working group). Zagreb, Radnicko sveuciliste Mosa Pijade (Workers' university), 1960. 106 pp. BROZ TITO, Josip. Govor i ostali materiali o reorganizaciji u upravljanju privredom (Speech by President Tito and other documents concerning the reorganisation of the management of the economy). Belgrade, 1950. 84 pp. Cetvrti kongres Saveza sindikata Jugoslavije (Fourth Congress of the Yugoslav Trade Union Confederation, April 1959; reports and resolutions). Belgrade, Rad, 1959. 542 pp. DELEON, Aser. Radnici upravljanju fabrikama (The workers managing the factories). Belgrade, Kultura, 1957. 155 pp. DELEON, Aäer, and others. Istoriski Kongres radnickih saveta (The congress of workers ' councils). Belgrade, 1957. 345 pp. DJORDJEVIC, Jovan, Dr. Druitveno-politicko i drzavno uredenje Jugoslavije (The social, political and constitutional system in Yugoslavia). Belgrade, Savez udruzenja 1pravnika Jugoslavije, 1959. 350 pp. For texts published in the I.L.O. Legislative Series see below, pp. 319-320. APPENDIX n : BIBLIOGRAPHY 313 DjORDJEVic, Z., and others. Prirulnik za sastavljanje periodilnih obracuna privrednih organizacija (The periodical accounts of undertakings—handbook). Belgrade, 1959. 448 pp. DURANOVIÒ-JANDA, Sasa, Dr. ¿ena u radnom odnosu (Women in labour relationships). Zagreb, Naprijed, 1960. 327 pp. GERSKOVIO, Leon, Dr. Drustveno upravljanje u Jugoslaviji (Social management in Yugoslavia). Belgrade, Savremena administracija, 1957. 202 pp. GOLDSTAJN, Aleksandar, Dr. Upravljanje privrednim preduzecima (The management of economic undertakings). Belgrade, Savremena administracija, 1959. 172 pp. HEGEDUSÍÓ, Smiljan. Unutrasnja kontrola u privrednim organizacijama (Internal checks in economic undertakings) (Issue No. 4 of 1956 of Informatorovprirulnik za kadrove). Zagreb, Informator, 1956. 232 pp. JAKI6, Vojin, and JEvné, Miloä. Dugorocno kreditiranje u privredi (Long-term credits in the economy). Zagreb, Informator, 1959. 263 pp. JERMAN, Ivo, GASPERT, Josip, and SEMLJAK, Ervin. Metode nagradivanja o jedinici proizvoda (Methods of remuneration based on production units) (Issue N o . 10 of 1959 of Informatorov prirulnik za kadrove). Zagreb, Informator, 1959. 144 pp. KARDELI, Edvard. Socialistilka demokratija i ekonomska politika u dalnjem socialistilkom razvitku Jugoslavie (Socialist democracy and economic policy in the further development of Socialist Yugoslavia). Belgrade, 1956. 74 pp. — Problemi socijalistilke politike na selu (Problems of socialist policy in the countryside). Belgrade, Kultura, 1959. 409 p p . KAVCIÓ, Stane. 10 godina radnilkih saveta (Ten years of workers' councils). Belgrade, Kultura, 1960. 114 pp. Kongres radnilkih saveta Jugoslavie (Proceedings of the Yugoslav National Congress of Workers' Councils, June 1957). Belgrade, Rad, 1957. 790 pp. KosTié, Cvetko, Dr. Seljaci industriski radnici (Peasants as industrial workers). Belgrade, 1955. 250 pp. KOVAC, P., Dr., and MIIJEVIC, Dj., Dr. Samoupravljanje proizvodjala u privredi (Selfmanagement by the producers in the economy). Belgrade, Savremena administracija, 1958. 158 pp. LAKOVIÓ, Milan, and others. Prirulnik zaprimenu zakona o radnim odnosima (Legislation on labour relations, with commentary). Belgrade, Savremena administracija, 1959. 286 pp. MACURA, Milo§, Dr. StanovniStvo i radna snaga kao linilac privrednog razvoja Jugoslavie (Population and manpower as factors in the economic development of Yugoslavia). Belgrade, Nolit, 1958. 374 pp. MATEJIC, Miodrag, Dr. Javne finansije (Public finance). Belgrade, Savremena administracija, 1958. 468 pp. MHJEVIC, Djordje, Dr., and ANTONUEVIÓ, Zoran, D r . Organizacija i upravljanje privrednim organizacijama (The organisation and management of undertakings), third edition. Belgrade, Savremena administracija, 1958. 221 pp. MUJEVIÓ, Djordje, Dr., and others. Razvoj privrednog sistema FNRJ (Development of the economic system of Yugoslavia). Belgrade, Znanje, 1954. 260 pp. Obezbedjenje i koriScenje slobodnog vremena (The right to leisure and its use). Belgrade, Rad, 1960. 69 pp. Obrazovanje radnika (Workers' training—a review of five years of training by the Zagreb Workers' University). Zagreb, 1958. 286 pp. PAJA, Bozidar, ALACEVIÓ, Duäan, and KOVACIC, Julije. Radnilki savet i upravhi odbor (The workers' council and the board of management: a systematic analysis of current legislation and practice) (Issues Nos. 4-5 of 1957 of Informatorov prirulnik za kadrove). Zagreb, Informator, 1957. 391 pp. PAJA, Bozidar, KovAcié, Julije, and MRATOVIÓ, Veljko. Sistem drzavnih organa i organizacija upravljanja u privredi i druStvenim sluzbama (The system of state bodies and the organisation of management in the economy and public services) (Issue No. 8 of 1958 of Informatorov prirulnik za kadrové). Zagreb, Informator, 1958. 240 pp. 314 WORKERS' MANAGEMENT IN YUGOSLAVIA PAVIÓ, Stjepan, KovAcié, Julije, and ALACEVIÓ, Duäan. Direktor produzeca (The director of an undertaking) (Issue No. 9 of 1956 of Informatorov priruânik za kadrové). Zagreb, Informator, 1956. 205 pp. PERISIÓ, Dobrosav, Dr. Sudska zaitita prava iz radnih odnosa u FNRJ (Judicial protection of the rights arising out of labour relations in Yugoslavia). Belgrade, Radnik, 1958. 202 pp. PESÌÓ, Ratko, Dr. Medunarodne konvencije rada (Collection of international labour Conventions ratified by Yugoslavia, with commentaries and references to measures of application). Belgrade, Nova administracija, 1957. 279 pp. Prirucnik za clanove organa radniikog samoupravljanja (Manual for members of workers' management bodies). Zagreb, Institute of Social Management, 1958. 572 pp. Priruânik za sastavljanje periodicnih obracuna privrednih organìzacija za 1960 godinu (Periodical establishment of accounts by undertakings in 1960—a handbook). Belgrade, Savremena administracija, 1960. 399 pp. Prva decenija radnickog samoupravljanja (The first decade of workers' management). Belgrade, Rad, 1960. 499 pp. RAIÖEVIC, Dragoljub, and Gué, Nedeljko J. Prirucnik za rad personalne sluíbe u privrednim organizacijama (Personnel manual for economic undertakings). Belgrade, Savremena administracija, 1958. 550 pp. Savetovanje o unapredenju induslrije (Consultation on promotion in industry). Belgrade, Rad, I960. 147 pp. Savetovanje o nagradivanju u privredi—Sednica Upravnog Odbora savezne Industriske Komore (Consultation on remuneration in industry—session of the Executive Committee of the Federal Chamber of Industry). Belgrade, Kultura, 1960. 121 pp. Savez Komunista Jugoslavie (Verbatim record of the Seventh Congress of the Yugoslav Communist League, Ljubljana, 1958). Belgrade, Kultura, 1958. 1156 pp. SIROTKOVIC, Jekov, Dr. DruStveno planiranje u Jugoslaviji (Social planning in Yugoslavia). Belgrade, Savremena administracija, 1958. 130 pp. STANOVNTK, J., and others. Driavni kapitalizam (State capitalism—a collection of essays). Belgrade, Kultura, 1959. 220 pp. árjAN, Duäan. Problemi stimulacije u privredi (The problem of incentives in the economy—an analysis of methods of remuneration, 1952-57). Belgrade, Kultura, 1957. 236 pp. SPUJAK, M., and others. Stimulativno nagradivanje (po jedinici proizvoda) u privrednim preduzecìma sa primerima iz prakse (A method of remuneration providing an incentive—by unit of output—in undertakings, with examples taken from practice). Belgrade, Rad, 1960. 310 pp. SPILJAK, Mika. Nagradivanje po kompleksnom ucinku (Complex remuneration schemes). Belgrade, Kultura, 1960. 75 pp. TiNTiá, Nikola. Osnovi radnog prava (The foundations of labour law). Zagreb, 1955. 256 pp. Tonné, Teodor. Prirucnik o licnim dohocima u privredi (The remuneration of labour in the economy—a collection of texts with commentary). Belgrade, 1958. 212 pp. TRAjKOVie, Ignjat, and others. Metodi kompleksnog nagradivanja u industriji (Complex remuneration schemes in industry: undertaking monographs). Belgrade, Federal Chamber of Industry, 1959. 368 pp. VASILJEVIÓ, Kosta, Prof. Dr. Sistem obracunapo ekonomskim jedinicima (Accountancy by economic units, remuneration and costs). Belgrade, Ekonomika preduzeca, 1960. 200 pp. VINSKI, Ivo. Nacionalno bogatstvo Jugoslavie (National wealth of Yugoslavia). Zagreb, Ekonomski Institut, 1957. 144 pp. VuKOVié, Ratko, and others. Prirucnik za procenu poslova u jugoslovenskoj privredi (Manual of job analysis in the Yugoslav economy). Belgrade, Privredni pregled, 1957. 175 pp. APPENDIX II : BIBLIOGRAPHY 315 Zbornik o radnickom samoupravljanju (Collection of essays on workers' management). Belgrade, Rad, 1957. 455 pp. Bibliography included. Contents: E. KARDEU: " The experience of workers' councils "; K. GUGOROV: " Workers' councils and our economic policy " ; S. KRAJGER : " The place and function of workers' management"; N. BALOG: "The effects of workers' management on our economic legislation "; V. RAKIC: " Workers' management in production and systems of remuneration "; Z. HAS: " From wage-earning employment to producer's association "; R. DAVTDOVIC: " What is a free association of producers? "; J. DAvico: " Relations between the workers' community and the commune "; I. BOZICEVIC: " Trade unions—one of the organs of workers' management." Zbornik radova (Collection of works: inquiries into workers' management and the commune system), Vols. I and II. Zagreb, Institute for Social Management, 1959. ZrvANCEVic, Dragomir, and CERIO, Zoran. Zbirka propisa o osnivanju, upravljanju i prestanku preduzeca i radnji (Legislation governing the establishment, management and winding up of undertakings, with commentary); second edition. Belgrade, Savremena administracija, 1959. 266 pp. Undertaking Monographs Fabrika duvana NiS 1885-1957 (The Nish tobacco factory). Belgrade, 1957. 151 pp. Radnicki saveti u Vojvodini 1950-57 (Workers' councils in the Vojvodina region: a regional survey accompanied by short undertaking monographs). Novi Sad, 1957. 477 pp. Radnicko samoupravljanje na jugoslovenskim ¿eleznicima u Vojvodini (Workers' management on the Yugoslav railways in the autonomous province of Vojvodina). Novi Sad, 1957. 128 pp. RANISAVLJEVIC, Djordje. Borski kolektiv upravlja (The Bor workers' community manages its undertaking). Belgrade, Radnik, 1957. 102 pp. Sedam godina radnickog samoupravljanja u Novosadskoj fabrici kabela (Seven years of workers' management in the Novi Sad cable works). Novi Sad, 1957. 212 pp. Articles Published in Various Periodicals 1 BALOG, Nikola, Dr. " Anketa pravnog fakulteta u Beogradu o radniCkom upravljanju " (Survey of workers' management by the law faculty of Belgrade University), in Nova administracija (Belgrade), No. 3, 1957, pp. 306-311. 1 The principal periodicals published in Serbo-Croat on subjects related to that of the present study are the following: Arhiv za pravne i druStvene nauke (Archives of legal and social science). Belgrade, quarterly review of the Union of Jurists' Associations. Bitten Savezne Narodne SkupStine (Bulletin of the Federal National Assembly). Belgrade. Bitten—Centralno Veèe Saveza Sindikata Jugoslavije (Bulletin of the Yugoslav Central Council of Trade Unions). Belgrade, monthly. Borba. Belgrade and Zagreb, daily newspaper of the Socialist Alliance of the Yugoslav Working People. Ekonomika preduzeia (Undertaking economics). Belgrade, monthly review dealing with organisation and management. Ekonomska politika (Economic policy). Belgrade, weekly dealing with economic and management questions. Informator. Zagreb, bi-weekly newspaper for the information and guidance of managerial staffs. Izbor (Choice). Zagreb, weekly dealing with the practical aspects of organisation and management. Izobrazba rukovodilaca (The training of supervisory staffs). Zagreb, monthly review of the Federal Management Training Centre. Jugoslovenski pregled. Belgrade, monthly review providing information and documentation on Yugoslavia. Komunist. Belgrade, weekly published by the Yugoslav Communist League. NaSa stvarnost (Yugoslav affairs). Belgrade, monthly review on social and cultural questions. Nova administracija (New administration). Belgrade, monthly review published by the Federal Office for the Organisation of Administration and Economic Affairs. Special numbers dealing with workers' management: May-June 1957; June-July 1960. (footnote continued overleaf) 316 WORKERS' MANAGEMENT IN YUGOSLAVIA BOZICEVIC, Ivan. " Neki problemi drustvenih odnosa u radnim kolektivima " (Some problems of social relationships within work collectives), in Socijalna politika (Belgrade), 1960, pp. 3-14. DRAGICEVIC, Adolf, Dr. " Pravo na rad i proizvod rada u teoriji utopijskog i naucnog socijalizma i praksi suvremenog druätva " (The right to work and to the product of labour in the theory of Utopian and scientific socialism and in the practice of contemporary society), in Zbornik pravnog fakulteta u Zagrebu (Zagreb), Vol. Ill, Nos. 3-4, 1958, pp. 179-197. Drugi kongres pravnika Jugoslavie (Second Congress of Yugoslav jurists). Special issue of Arhiv za pravne i druStvene nauke (Belgrade), Nos. 2-4, Apr.-Dec. 1958 (Reports, discussions and resolutions of the Congress: (1) organisation and status of undertakings; (2) legal position of productive resources as social property; (3) principles and problems of penal policy; (4) the work of government departments from the standpoint of law enforcement and the protection of the rights of citizens, organisations and institutions; (5) legal aspects of the social management of social services and public utilities). GLIGORIC, P., and NESIC, VI. " Pravna i ekonomska suätina kombinata " (Legal and economic character of complex undertakings made up of a number of different establishments, and their position in conditions of economic concentration; survey of workers' management in 13 undertakings of this type), in Ekonomika preduzeëa (Belgrade), No. 11, Nov. 1960, pp. 641-655. Jovic, Borislav. " Povrede prava iz radnog odnosa i njihovi uzroci " (Breaches of the rights arising out of labour relationships and their causes), in Socijalna. politika (Belgrade), Dec. 1959, pp. 30-41. SIMCIC, Ico. " O obracunu pò jedinici proizvoda " (Accounting based on the production unit), in Nase teme (Zagreb), No. 4, 1959, pp. 31-44. TiNTic, Nikola, Dr. " Prvi kongres radnickih savjeta Jugoslavie i neka pitanja upravljanja socijalistickom privredom (The First Congress of Yugoslav Workers' Councils, and workers' management of the economy), in Zbornik pravnog fakulteta u Zagrebu (Zagreb), 1957, pp. 207-231. TOMIC, Teodor. " Zapazanja o sprovodenju naprednijih nacina nagradivanja u privrednim organizacijama u Hrvatskoj i Sloveniji " (Remarks on the operation of new methods of remuneration in undertakings in Croatia and Slovenia), in Nova administracija (Belgrade), No. 4, 1960, pp. 344-353. VIDAKOVIC, Zoran. " Zborovi radnika kao osnovni oblik neposrednog uceäea kolektiva u upravljanju preduzecem " (Workers' assemblies—essential features in direct participation by workers' communities in the management of undertakings), in Nova administracija (Belgrade), No. 3, 1957, pp. 276-285. Statistical Material ' Indeks (Monthly bulletin of economic statistics). Belgrade, Federal Statistical Institute. Pregled podataka iz zavrsnih racuna industriskih i rudarskih privrednih organizacija za 1958 i 1959 godinu (Summary of the balance sheets and annual accounts of industrial undertakings and mines in 1958 and 1959). Belgrade, Federal Secretariats for Economic Affairs and Industry, Federal Chamber of Industry, and Trade Union Confederation, 1960. 771 pp. Nova proizvodnja (New production). Ljubljana, monthly review dealing with technical and economic progress. Privredni pregled. Belgrade, tri-weekly newspaper dealing with economic and management questions. Produktivnost (Productivity). Belgrade, monthly review issued by the Federal Productivity Institute. Rad (Labour). Belgrade, daily, published by the Yugoslav Confederation of Trade Unions. Savezna Industriska Komora—Bitten. Belgrade, monthly bulletin of the Federal Chamber of Industry. Socijalna politika (Social policy). Belgrade, monthly review published by the National Committee on Social Questions. Vesnik (Bulletin of the Yugoslav Investment Bank). Belgrade, monthly. Zbirka sudskih odluka (Collection of the jurisprudence of the supreme courts). Belgrade (three annual volumes since 1956; with summary in English). 1 French and English translations of the text and the terms employed in the year books and certain other publications of the Federal Statistical Institute are also published. APPENDIX II : BIBLIOGRAPHY 317 Statisticki bilten (Statistical bulletin, published at irregular intervals). Belgrade, Federal Statistical Institute. See in particular Nos. 35 and 38 (results of elections to workers' councils in 1952,1953 and 1954); 57 (survey of social management institutions); 77 and 137 (results of elections, composition and activities of workers' management bodies in 1956, 1957 and 1958); 112, 114 and 153 (wages in the economy in 1956, 1957 and 1958). Statisticki bilten Narodne Banke FNRJ (Statistical bulletin published monthly by the Yugoslav National Bank). Belgrade. Statisticki godisnjak (Statistical year book). Belgrade, Federal Statistical Institute. PUBLICATIONS IN OTHER LANGUAGES * BALOG, Nikola, Dr. " Associations of Undertakings in Yugoslavia ", in Annals of Collective Economy (Geneva), Vol. XXX, 1959, pp. 247-266. BICANIC, Rudolf. " Economic Growth under Centralised and Decentralised Planning: Yugoslavia—A Case Study ", in Economic Development and Cultural Change (Chicago), 1957, pp. 63-74. BOBROWSKI, C. La Yougoslavie socialiste. Paris, 1956. 237 pp. Bibliography included. BOGOSAVUEVIC, M., and PESAKOVIC, M. Workers' Management of a Factory in Yugoslavia. A monograph about the " Rade Konöar " works. Belgrade, 1960. 108 pp. BOJITCHEVITCH, Ivan. " Le droit de grève ", in Questions actuelles du socialisme (Paris), No. 53, 1959, pp. 121-154. BRKITCH, Hassan. " La place des conseils ouvriers dans notre système ", in Questions actuelles du socialisme (Paris), No. 43, 1957, pp. 69-104. BROZ TITO, Josip. L'édification du socialisme, le rôle et les tâches de l'Alliance socialiste du peuple travailleur de Yougoslavie. Belgrade, Jugoslavia, 1960. 74 pp. CASTELLAN, Georges. " La paysannerie dans la Yougoslavie socialiste ", in Revue française de science politique (Paris), 1958, pp. 336-357. — " Aspects de la politique des nationalités dans la Fédération socialiste yougoslave ", in Revue française de science politique (Paris), Vol. X, No. 1, 1960, pp. 183-206. — " Yougoslavie: Un protestantisme marxiste ", in Annales de l'économie collective (Geneva), Nos. 559-561, Jan.-Mar. 1960, pp. 71-82. i The principal periodicals published in languages other than Serbo-Croat and bearing upon the subject matter of the present study are the following: The New Yugoslav Law. Belgrade, quarterly review of the Union of Jurists' Associations of Yugoslavia. See in particular Nos. 2-4 (Apr.-Dec. 1957), dealing with the First Congress of Workers' Councils and containing the following articles: " Workers' Self-government in the Light of Scientific Socialism ", by Dr. Joie Goricar; The " Self-government of the Producers and the Political Organization of Yugoslavia ", by Dr. Jovan Djordjevié; " Workers* Management and the Constitutional System ", by Dr. Maks Snuderl ; " Workers ' Self-government in Our Legal System ", by Dr. Ivo Krbek ; " Social Ownership and Workers' Self-government ", by Dr. Radomir D. Lukic; " Economic Planning and Workers' Self-government", by Vojo Rakic; " The Right of Self-government of the Producers in the Economy and Its Constitutional Protection", by Dr. Jovan Stefanovic; "The Right to Work under Workers' Self-government", by Dr. NikolaTintió; "On Some Questions of the Relations between the Organs of the State Administration and the Organs of Workers' Self-government ", by Dr. Lado VavpetiC; " On the Interrelationship of Economic Enterprises and Their Relationship toward Third Persons ", by Dr. Pavao Rastovcan ; " The Forbidden Contracts ", by Dr. Mihailo Konstantinovic; " The Seven-Year Experience of the Organs of Workers' Self-government ", by Dr. Pavle Kovac. Annats of Collective Economy. Geneva, International Centre for Research and Information on Collective Economy. Les Nouvelles yougoslaves. Paris, non-periodical publication issued by the Yugoslav Information Centre. Statistical Pocket Book of Yugoslavia. Belgrade, handbook published annually by the Federal Statistical Institute. Questions actuelles du socialisme. Paris, quarterly review issued by the Yugoslav Information Centre; special number on workers' management—Juiy-Öct. 1957. Review of international Affairs. Belgrade, bi-monthly review published by the Federation of Yugoslav Journalists. Syndicats yougoslaves. Published by the Yugoslav Central Council of Trade Unions. Belgrade (irreg. ; quarterly since July 1960). Synthèses. Special number on Yugoslavia, Nos. 147-148. Brussels, 1958. 208 pp. Yugoslav Survey. Belgrade, monthly review published by the Jugoslavia publishing house. 318 WORKERS' MANAGEMENT IN YUGOSLAVIA DELEON, A. " L'éducation ouvrière ", in Questions actuelles du socialisme (Paris), Nos. 36-37, 1956, pp. 67-81. — 33 Questions and 33 Answers on Workers' Self-government in Yugoslavia. Belgrade, Jugoslavija, 1956. 110 pp. DJORDJEVIÓ, Jovan. La Yougoslavie, démocratie socialiste. Paris, Presses universitaires de France, 1959. 227 pp. — " The Communal System in Yugoslavia ", in Annals of Collective Economy (Geneva), Vol. XXX, 1959, pp. 169-207. DOUGONTTCH, Rato. " Les cadres économiques de l'autogestion ", in Questions actuelles du socialisme (Paris), No. 43, 1957, pp. 51-68. DUNLOP, John T. Industrial Relations Systems. New York, Henry Holt, 1958. 394 pp. See in particular pp. 264-306. GER§KOVié, Leon, Dr. Social and Economie System in Yugoslavia. Belgrade, Jugoslavija, 1960. 98 pp. JAROSLAWSKI, Jan. " Jugoslawia i aktualne zagadnienia socjalizmu ", in Nowe drogi (Warsaw), No. 8, Aug. 1957, pp. 93-108. KARDEU, Eduard. " Evolution in Yugoslavia ", in Foreign Affairs (New York), Vol. 34, No. 4, July 1956, pp. 580-602. — " Socialist Democracy in Yugoslav Practice ", in Annals of Collective Economy (Geneva), Vol. XXVI, 1955, pp. 1-39. KOVATCH and VESELINOVTITCH. " Le caractère démocratique de la gestion ouvrière " , in Questions actuelles du socialisme (Paris), Nos. 31-32, 1955, pp. 65-82. KRJICHNIK, Marko. " Organisation et méthodes de travail des organes d'autogestion ", in Questions actuelles du socialisme (Paris), No. 43, 1957, pp. 105-120. KYOVSKI, R. " Les syndicats et l'autogestion ", in Questions actuelles du socialisme (Paris), No. 43, 1957, pp. 121-140. KuBOvié, Branko, and others. Economie Planning in Yugoslavia. Belgrade, Jugoslavija, 1959. 69 pp. Le régime et les institutions de la république populaire federative de Yougoslavie— Journées d'études : 26-29 janvier 1959. Brussels, Centre d'étude des pays de l'est, Institut de sociologie Solvay, Université libre de Bruxelles, 1959. 175 pp. Includes the following contributions (among others) : Prof. B. JELIC : Le système économique yougoslave; Prof. G. FRTEDMANN: Problèmes de la participation ouvrière à la gestion des entreprises; Prof. D. Minó: La gestion d'entreprise, partie intégrante de la gestion sociale; Prof. J. DJORDJEVIO: Le self-gouvernement local ou le système communal de la Yougoslavie; G. KOULISCHER: L'assistance technique du B.I.T. à la Yougoslavie; A. DELEON: La position et le rôle des syndicats de Yougoslavie. Les syndicats yougoslaves dans les conditions nouvelles (Fourth Congress of the Yugoslav Trade Union Confederation, Belgrade, 23-26 April 1959). Belgrade, 1959. 208 pp. Loi du plan quinquennal de développement de l'économie nationale de la République federative populaire de Yougoslavie, 1947-1951. Belgrade, 1947. 136 pp. MARKOVTTCH, Moma. " La rémunération dans le système de l'autogestion ", in Questions actuelles du socialisme (Paris), No. 55, 1959, pp. 79-102. MEIER, Viktor, Dr. Das Neue jugoslawische Wirtschaftsystem. Zurich, 1956. 216 pp. Bigliography included. Mme, Dj. " The Undertakings' Income and Its Distribution ", in Annals of Collective Economy (Geneva), Vol. XXX, 1959, pp. 232-246. MOCH, Jules. Yougoslavie, terre d'expérience. Monaco, Editions du Rocher, 1953. 340 pp. PAPIC, Augustin. " Investment Financing in Yugoslavia ", in Annals of Collective Economy (Geneva), Vol. XXX, 1959, pp. 208-231. PETROVIÓ, Radivoj. L'autoadministration locale en Yougoslavie (la commune). Belgrade, 1955. 120 pp. PHILIP, André. " Une expérience de transformation des structures: La Yougoslavie ", in La démocratie industrielle (deuxième partie, chap. I) (Paris, 1956), pp. 115-180. APPENDIX II : BIBLIOGRAPHY 319 PopovrrcH, Milentje. " Planification et autogestion ", in Questions actuelles du socialisme (Paris), No. 46, 1958, pp. 3-18. PopovrrcH, Sveta. " La gestion ouvrière et le développement des forces de production ", in Questions actuelles du socialisme (Paris), Nos. 36-37, 1956, pp. 55-66. Programme of the League of Yugoslav Communists. Belgrade, Jugoslavija, 1958. 269 pp. SOUPEK, Roudi. " L'humanisation du travail et l'autogestion ouvrière ", in Questions actuelles du socialisme (Paris), No. 43, 1957, pp. 141-162. STANOJÖIC, L. " La gestion ouvrière en Yougoslavie ", in Archives internationales de sociologie et de la coopération (Paris), No. 2, 1957, pp. 166-182. STJEPANOVIC, N . " Judicial Review of Administrative Acts ", in American Journal of Comparative Law (Ann Arbor, Michigan), Vol. 6, No. 1, 1957, pp. 94-106. WARD, Benjamin. " T h e Firm in Illyria: Market Syndicalism", in The American Economic Review (Washington), Vol. XLVIII, No. 4, 1958, pp. 566-589. — " Workers' Management in Yugoslavia ", in The Journal of Political Economy (Chicago), Oct. 1957. Yugoslavia Economic Guide, Belgrade, Privredni pregled, 1959. 325 pp. Legislation 1 M A I N ENACTMENTS Basic law dated 2 July 1950 on the administration of public undertakings and associations of undertakings by the staffs employed therein. (5.X. 2 , No. 43/1950; and I.L.O. Legislative Series, 1950—Yug. 2.) Act respecting elections to workers' councils of undertakings (SX., No. 1/1952); regulations for elections to workers' councils and boards of management (Consolidated text, ibid., N o . 8/1956). Constitutional Act respecting the basis of social and political organisation in the Yugoslav Federal People's Republic (S.L., Nos. 3/1953 and 35/1953; and United Nations: Year Book of Human Rights for J953). Pension Insurance Act (S.L., 11 Dec. 1957; and I.L.O. Legislative Series, 1957— Yug. 1). Labour Relations Act (S.L., No. 53/1957; and I.L.O. Legislative Series, 1957—Yug. 2); amendments: Act dated 28 June 1958 (S.L., No. 26/1958; and I.L.O. Legislative Series, 1958—Yug. 2). Act respecting the funds of undertakings (S.L., No. 54/1957); Act respecting income tax on undertakings (ibid., No. 52/1957); Act respecting personal income tax on workers (ibid.). 3 General Act respecting People's Committees (S.L., N o . 22/1952); amendments (ibid., No. 40/1953). General Act respecting the organisation of communes and districts (ibid., No. 26/1955) ; Act defining the powers of people's committees in communes and districts (consolidated enactment, ibid., N o . 52/1957). 1 There are hundreds, not to say thousands, of laws and regulations affecting various aspects of the political, economic and social structure analysed in this report (if all the amendments and detailed orders are included). Here we have only listed the most important texts or collections of texts. For a complete list of Yugoslav legislation (federal laws and regulations classified by subject) covering the years 1945-59, see MiHAlLOVló, Mihailo, and PuziNlé, Milan: Registar pravnih propisa objavljenih u " Sluibenom listu FNRJ", 1945-1959 (Register of the laws and regulations published in the National Gazette, Yugoslav Federal People's Republic, 1945-1959) (Belgrade, Savremena administracija, 723 pp.). English summaries and titles of the main enactments are normally published in The New Yugoslav Law (Belgrade). For the titles, see also the annual supplements of the I.L.O. Legislative Series. * Refers to Sluibeni list FNRJ (Official gazette of the Yugoslav Federal People's Republic). * For an account of the purpose of these enactments relating to financial management and the system of remuneration, see Nacrt zakona o raspodeli ukupnog prihoda privrednih organisacija (Bill dealing with the distribution of the gross income of undertakings) (Belgrade, September 1957), which also contains a detailed analysis of the working of the previous system of labour remuneration. 320 WORKERS' MANAGEMENT IN YUGOSLAVIA Act respecting the workers' placement service (S.L., N o . 27/1960; I.L.O. Legislative Series, 1960—Yug. 1). Act respecting association and co-operation in the economy (S.L., N o . 28/1960). Ordinance respecting the establishment of undertakings and independent workshops (S.L., N o . 51/1953); amendments (ibid., Nos. 30/1954, 47/1954, and 19/1956); ordinance respecting the winding up of undertakings and independent workshops (ibid., No. 51/1953). Ordinance respecting commercial activities by undertakings and independent workshops (S.L., Nos. 6/1954 and 47/1954). Ordinance respecting handicraft establishments and undertakings (S.L., No. 5/1954; and I.L.O. Legislative Series, 1954—Yug. 1). COMPILATIONS AND COMMENTARIES Prirucnik o periodicnim obracunima privrednih organizacija (Periodical undertaking accounts manual). Belgrade, Sluzbeni list, 1960. 473 pp. Savezni druStveni plan za 1959 godinu (Social plan of the Federation for 1959, with detailed regulations and introduction by M. TODOROVIC), in Zbirka saveznih propisa (collection of federal enactments), N o . 166 (Belgrade, 1959). 1 259 pp. Krivicni zakonik (1951 Penal Code, with amendments and commentaries), in Zbirka saveznih propisa, No. 175 (Belgrade, 1959). Fifth edition. 272 pp. Osnovni zakon o prekrSajima (Basic law on infringements, with commentary). Belgrade, Nova administracija, 1959. 431 pp. Zakoni o dríavnoj upravi (1956 enactments on state administration, with detailed regulations; introduction by J. DJORDJEVIC), in Zbirka saveznih propisa, N o . 169 (Belgrade, 1959). 180 pp. Zakoni o sredstvima privrednih organizacija, o doprinosu iz dohotka privrednih organizacija i o doprinosu budzetima iz licnog dohotka radnika (Laws on the resources of undertakings, income tax on undertakings and personal income tax on workers, with detailed regulations and introduction by M. TODOROVIC), in Zbirka saveznih propisa, N o . 158 (Belgrade, 1957). 100 p p . ; second edition in Zbirka saveznih propisa, N o . 183 (Belgrade, 1960). 224 pp. Zakon o drustvenom knjigovodstvu (1959 Act on social accountancy, with introduction by N . MiNÈEv), in Zbirka saveznih propisa, No. 177 (Belgrade, 1959). 41 pp. Zakon o inspekciji rada (1959 Labour Inspection Act, with introduction by M. MARKOVIC), in Zbirka saveznih propisa, No. 182 (Belgrade, 1960). 34 pp. See also I.L.O. Legislative Series, 1959—Yug. 1. Zakon o invalidskom osiguranju (1958 Invalidity Insurance Act, with introduction by M. MARKOVIC), in Zbirka saveznih proposa, No. 165 (Belgrade, 1959). 191 pp. Zakon ojavnim sluibenicima (Public Service Act, 1957, with introduction by V. ZEKOVIC), in Zbirka saveznih proposa, N o . 152 (Belgrade, 1957). 191 pp. Zakon o radnim odnosima (1957 Labour Relations Act, with introduction by M. M A R KOVIC), in Zbirka saveznih propisa, N o . 153 (Belgrade, 1957). 144 p p . ; second edition (Belgrade, 1959). 126 pp. Zakon o rudarstvu (1959 Mines Act), in Zbirka saveznih propisa, N o . 178 (Belgrade, 1959). 55 pp. Zbirka propisa o raspodeli ukupnog prihoda i dohotka privrednih organizacija (Collection of enactments relating to the distribution of the income of undertakings). Belgrade, Savremena administracija, 1960. 660 pp. Zbirka zakona iz stanbene oblasti (Collection of enactments relating to housing, with introduction by Mrs. L. SENTURC), in Zbirka saveznih propisa, N o . 170 (Belgrade, 1959). 214 pp. 1 See also Nos. 180 (Federal Plan for 1960) and 154 (Social Development Plan, 1957/61).