Preview

INTERNATIONAL LABOUR OFFICE

STUDIES AND REPORTS
Series A (Industrial Relations) No. 35

STUDIES
ON

INDUSTRIAL RELATIONS
II
The Zeiss Works — The F.I.A.T. Establishments
The Philips Works — The Sandvik Steel Works

GENEVA
1932

Published in the United Kingdom
For the INTERNATIONAL LABOUR OFFICE (LEAGUE OF NATIONS)
By P . S. KING & SON, Ltd.
Orchard House, 14 GreaFSmith Street, Westminster, London, S.W.I

••

;

' - Printed by-•'
. :• G. THONE, L i e g e ( B e l g i u m )

. ,\:

:(í ,

•'.'.'.

'•:''.»

..: r.'•:..•:'•

' (;:''••..:';

'••: ;.-.•.•'

- ' v : ' - . ; t •::•: • .' V T - ; : . i - r ¡

' . ' •'.''•.*::;• • '.> Ù. .•'•;''• •/'.•"->•' '-..-i:*:.'¡ '•' ;-'~>r ..('.J i.V. i i - ' i ï n ' . i

ÎJ'TCÎO

:.c- •-.;>?- "";••'•.'»

'•{,i'.',;t

I Î - . V •;'•!•}',

: , : ? ; jv.'v.ï

i ;:•''! .fv'.r.--;'. •". •">! i" v. • *. : •.:>.•. v . ï ; ; ; , . - ' ' . ; ^ í ,v;ii-. T- t 7 : ^ : ^ ''.v.* . ' C Í Í í r í S
:
;• ••••..•i.::i" ¿•','t
; .\'->'v j . 1 . ; ; : ! - : - . - i ' : V .,'. ;:•:.'r .•,•:?'?> ..-i -¿;¡r '. '' ..v ; ; ' ÏÏÎÎ'Î
; .-J'(v.v
ír::jj(rj í ' M i i .v-ij .-Viîiî/-:c — '.;i";•'TV ; 'r.'io:. .'¡;'î .•>-'.•(.|,::.'.,;> >*:i£iííM ' ' ¡ . ' J ¿>dt
,'7ai-e'U e 'iiV; i.;.-;. .V.GÍÍ ' ; ; s ¡ ! P O I b ~ i : ,i nn'i -te*?, .»ti; i o

INTRODUCTION

The series of Studies on Industrial Relations contained in this
volume supplements those which appeared under the same title
rather more than a year ago '.
The origin and purpose of these monographs was fully
explained in the Introduction to the first volume. It might seem
unnecessary to go into the question afresh, but it may, however, be well to emphasise again that the sole aim of the International Labour Office in undertaking these studies has been to
supply definite and reliable information on the practice of
industrial relations in a certain number: of undertakings, that is
to say, on the methods adopted by these undertakings to organise
satisfactory relations between the management and the staff. No
attempt has been made to draw any general conclusions from
these studies or to compare the various methods. The object has
been merely to describe each system, to indicate the special conceptions underlying it and, if possible, to throw some light on
the circumstances which have led to its adoption or growth.
The undertakings have therefore not been selected with a view
to international comparability ; they were chosen as illustrations
rather than as patterns. It has been left to the reader to draw
his own conclusions and such lessons as he may wish from the
diverse systems of industrial relations described in these volumes.
For this reason the undertakings have been selected from
different industries and different countries. The countries represented in the first volume were Czechoslovakia, France, Germany,
Great Britain and the Saar, while the industries involved were
boot and shoe manufacture, coal mining, electrical equipment
1

INTERNATIONAL LABOUR OFFICE : Studies

on Industrial

Relations,

Studies and Reports, Series A (Industrial Relations), No. 33, Geneva, 1930.
The undertakings dealt with in that volume were : The Siemens Works,
the Lens Mining Company, the London Traffic Combine, the State Mines
of the Saar Basin, and the Bata Boot and Shoe Factory.

INTRODUCTION

and passenger transport. The present volume adds to the list of
countries Italy, the Netherlands and Sweden, and to the list of
industries the manufacture of precision mechanism, motor-car
manufacture, the manufacture of electric bulbs and wireless
appliances, and the steel industry.
As in the case of the first series of monographs, the presentation of the results of the study in each firm follows generally
similar lines *. It did not seem possible or desirable to attempt
to force the experience of the firms into the mould of any rigid
schema. In every case the study, after a brief introduction dealing with the general history of the firm, its size, the n u m b e r of
workpeople, its capitalisation, and so forth, deals with the organisation and administration of industrial relations, including the
internal organisation of the industrial relations department of
the particular firm, a history of its relations with the employers'
organisations and trade unions, and a description of the works
councils or other bodies in operation within the firm. Full information is given with regard to the functioning of the system of
industrial relations, the procedure with regard to employment,
management, training, apprenticeship and education, health and
sanitation, accident prevention, pensions, profit-sharing and copartnership, insurance, savings plans and various forms of welfare activities. In each case special reference is made to the
extent to which the active collaboration of management and workpeople is concerned in the actual organisation and functioning
of these various schemes.
No attempt is made in any of these studies to connect experience in the particular firm with the wider background of
industrial relations practice in the country as a whole. The study
of the development of industrial relations in particular countries*
is intended as the subject of the second part of the programme of
industrial relations studies, and it is hoped that a volume will
soon be published on industrial relations in the United States,
1
Those who visited the various undertakings on behalf of the Office
were as follows :
Zeiss Works : Mr. T. G. SPATES, Industrial Relations Counselors, Inc.
— Fiat Works : Mr. U. AILLAUD, Intelligence and Liaison Division,
Mr. P. HENRY, Chief of the Employers' Relations Service, and Mr. T. G.
SPATES. — Philips Works : Mr. P. WAELBROECK, Chief of Section, Adminis :
trative Division, and Mr. T. G. SPATES. — Sandviken Steel Works :
Mr. G. A. JOHNSTON, Chief of Section, Intelligence and Liaison Division,
Mr. T. G. SPATES and Mr. S. THORSSON, Intelligence and Liaison Division.

IÏNTBODUCTION

to be followed at short intervals by similar studies on Great
Britain, France, Germany and Italy.
It remains to express our sincere gratitude to the firms which
have been good enough to allow studies to be made, and to the
members of their staffs who gave their time and energy so ungrudgingly to those who undertook the investigations on behalf
of the Office.
Lastly, the Office wishes to place on record once again its
large debt of gratitude to Industrial Relations Counselors, Inc.,
New York, for the generous assistance which made it possible to
carry through the present series of studies.

:'').

•í

;•.-.)'

CONTENTS
Page
vn

INTRODUCTION

THE ZEISS WORKS
Historical Background
General Organisation
Organisation and Administration of Industrial Relations . . . .
General Financial Policy
Conditions of Employment
Health, Safety and Welfare
Conclusion

2
5
7
11
12
20
21

THE F.I.A.T. ESTABLISHMENTS
The Undertaking
Industrial Relations
Factory Medical Department and Accident, Prevention
Vocational Education
The F.I.A.T. Social Institutions
Conclusions . . . .

23
30
49
53
58
71

THE PHILIPS WORKS
The Undertaking
The Staff
Health and Safety
Wages and Other Payments
Social Services
Conclusion

75
80
116
120
132
140

THE SANDVIK STEEL WORKS
Introduction
General History of the Company
Organisation and Administration of Industrial Relations . . . .
Methods of Collaboration
Financial Relationships
Employment
Training and Education
Accident Prevention
Health and Sanitation
Welfare and Social Institutions
Conclusion

143
144
146
147
151
155
157
157
158
159
161

THE ZEISS WORKS
Industrial relations, much as we know them to-day, became
a practical reality in the world's largest optical works more than
thirty-five years ago. This long experience in the application of
the principles of social justice to a sound and successful technical
and financial structure is due to the vision and leadership of
Dr. Ernst Abbe, the son of a spinner in the textile mill of Eichel
in Eisenach, and to the loyal succeeding administrators of his
plans and policies.
It is not alone this long period of experience that excites
interest in industrial relations in the Zeiss Works, but also the
fact that the original far-sighted provisions for collaboration,
extra financial incentives, moderate hours of work, guaranteed
wages, piece-work earnings, pensions, compensation for dismissal, and other benefits were maintained throughout the most
serious economic crisis of modern times, w i t h the preservation of
the inherently sound financial structure. An additional point of
interest in the industrial relations technique of the Zeiss Works
results from the distinguished recognition accorded it in the
application of the German national law on unemployment insurance. Because of its generous provision for members of the staff
who are dismissed, the firm of Carl Zeiss is the only individual
firm in the German Republic excluded from the application of
the provisions of this law.
But however valuable these many points of interest may be
to both the student and the administrator of industrial relations,
from both the practical and the technical standpoint, they would
probably be to some degree surpassed in popular interest by the
unique manner in which Ernst Abbe assured for all time the
progressive execution of his original ideas. A brief review of
the historical development of the organisation and its work is
necessary for an intelligent understanding and appreciation of
INDUSTRIAL

RELATIONS

INDUSTRIAL RELATIONS

the far-reaching effects of his early conceptions of what are now
considered good industrial relations.
HISTORICAL

BACKGROUND

The firm of Carl Zeiss, with its far-flung commercial organisation and distribution branches in the principal cities of both
hemispheres, had its beginning in a small workshop established
by Carl Zeiss in 1846, in Jena, the well-known Thuringian university town. Carl Zeiss was the son of the proprietor of a toy
business, and prior to the opening of his own workshop was
employed as a mechanic and a repairer of microscopes at the
University. At the present time the products manufactured by
the Zeiss Works include, in addition to microscopes, appliances
for visual and ultra-violet light, lantern and projection apparatus, photographic lenses, binoculars and telescopes, and optical
measuring instruments for surveying, physical and chemical
research, and astronomical observations.
It was in the year 1866 that Zeiss sought and obtained the
collaboration, in the development of his organisation and his
scientific work, of Ernst Abbe, who in 1863 had attached himself to the University of Jena by a technical thesis on the calculation of errors in scientific observations. Closely related to the
historical development of the Zeiss Optical "Works were the
courageous and pioneer experiments of Dr. Otto Schott in the
field of glass manufacture, which resulted in the establishment
in Jena in 1884 of the technical glass laboratory of Schott and
Company, later to be intimately associated w i t h the industrial
relations programme of Abbe.
From the date of its establishment to 1875 Carl Zeiss
remained the sole proprietor of the Optical Works. During this
period he conducted by himself all the major executive functions
of superintendent, correspondent, accountant, and cashier. He
continued to carry on these functions for some time after
Dr. Abbe had joined the organisation. In 1875 Abbe became a
joint owner of the Optical Works, and from this time on certain
modifications were made in organisation procedure. In 1881 the
eldest son of Carl Zeiss entered the Optical Works as a third

1
Felix AUERBACH : Das Zeisswerk und die Carl Zeiss-Stiftung
Jena, Gustav Fischer.

in Jena.

THE ZEISS WORKS

partner. One year after the death of the founder in 1888 the
son retired from the business and left Ernst Abbe in full control.
In 1891 Abbe created an institution to be known for all time as
the Carl Zeiss Foundation {Carl Zeiss-Stiftung),
to which he
surrendered by a deed of gift his proprietary interest in the
Optical Works and his rights as a partner in the Glass Works.
Subsequently, in April 1919, Dr. Schott transferred his share of
ownership in the Glass Works to the Foundation, exchanging his
position as an owner for that of a member of the directing staff,
thereby giving to the Carl Zeiss Foundation full ownership in the
Optical Works and the Glass Works as well as certain participations in other enterprises.
The " Statute " of the Carl Zeiss Foundation, comprising 9
Chapters and 122 separate Articles, is a unique document in the
history of business organisation and industrial relations. It contains not only detailed provisions for financial structure and
operation, but a set of policies and prescribed practices in the
field of industrial relations that have stood the test of time and
severe experience and may justly be credited as the forerunner
of present-day conceptions.
The purposes of this Foundation as laid down in the Statute
are as follows 1 :
A.

Within the Works

1. To cultivate the branches of precise technical industry which
have been introduced into Jena by the Optical Works and the Glass
Works with the co-operation of the founder of the Foundation, and
thereby maintain the said industrial establishments under an impersonal title of proprietorship ; that is to say :
2. Permanent solicitude for the economic security of the above
undertakings as well as for the conservation and further development
of their industrial labour organisation — as a source of subsistence
for a large number of people and as an efficient member in the service
of scientific and practical interests ;
3. To fulfil higher social duties than personal proprietors would
permanently guarantee, towards the totality of co-workers in its employ,
in order to better their personal and economic rights.

The passages quoted from the " Statute " and the various terms used
to describe the organisation (" Special Board ", " Deputy ", etc.) are
taken (subject to the correction of a few grammatical errors) from the
English translation of the Statute printed at Jena (Statute of the Carl
Zeiss-Stiftung in Jena established by Ernst Abbe. Translated from the
Text of the Revision of 1906. Jena, printed by Vopelius, n. d.).

INDUSTRIAL RELATIONS

B. Outside the Works
1. To promote the general interests of the branches of precise
technical industry as indicated above, not only within the sphere of
action proper of the Foundation's Works but also outside of it ;
2. To take part in organisations and measures designed for the
public good of the working population of Jena and its immediate
neighbourhood ;
3. To promote study in natural and mathematical sciences both
as regards research and teaching.
The objects of the Foundation as enumerated under A are to be
carried out by the Foundation by virtue of the statutory administration
of its own industrial undertakings exclusively and within the scope
of these undertakings.
Respecting carrying out the objects of the Foundation as enumerated under B, these shall be limited to such surplus funds as may be
available after the provisions detailed under A have been provided for.
The detailed provisions of the Statute bearing upon the
special interests of this study will be outlined later under appropriate classifications.
As the firm increased the n u m b e r and variety of its manufactured products and expanded its commercial activities, the
n u m b e r of employees and workers engaged rapidly grew. In
1877, when the workshop had already existed thirty years, the
firm employed 36 persons. By 1891 the figure had risen to 500,
and before the middle of 1900 it had passed 1,000, An indication
of its further growth and the present magnitude of operations
of the Company is given below in tabular form.
STAFF EMPLOYED BY THE ZEISS WORKS, 1 9 0 0 - 1 9 2 9
End of year

1900 . . . .
1905 .
1910 .
1912.
1913 .
1914 .
1915.
1916.
1917 .
1918 .
1924 .
1925.
1926 .
1927 .
1928 .
1929 .

W a g e earners

984
1,254
2,336
3,576
4,179
3,795
5,313
7,674
10,067
5,570
3,707
4,069
3,859
3.717
4,404
5,048

Salaried employees

130
208
349
496
509
438
500
510
019
700
034
094
707
709
772
831

Total

1,114
1,462
2,685
4,072
4,688
4,233
5,813
8,184
10,680
0,270
4,341
4.763
4,566
4,41-6
5,236
5,879

On 1 April 1930 the total figure had reached 6,000.

THE ZEISS WORKS

These figures do not include the Glass Works, which employed approximately 1,650 workers and employees at the end
of 1929, and the foreign branches of the firm, in which there
are approximately 350 employees.
GENERAL

ORGANISATION

For an understanding of the general executive and administrative organisation of the Zeiss Works the reader must constantly keep in mind the existence of the Foundation and the
provisions laid down in the Statute, at the same time making
a sharp distinction between the position held by the Foundation
as a perpetual trustee, and the operating organisation. The
Foundation and the manufacturing establishments are two
distinct and separate entities. The link between the two is maintained by having in some instances the same people functioning
both as Foundation officers and as operating officials. This
feature distinguishes it from somewhat similar institutions. All
the members of the personnel engaged in the business enterprises
are contributing in their individual capacities to the success of
the Foundation, and are at the same time beneficiaries of the
Foundation.
Foundation Organisation
The affairs of the Foundation, as the perpetual and impersonal trustee of the assets of the business enterprises, are under
the direction of a " Special Board of the Foundation " (Stiftungsverwaltung) , which in turn appoints a permanent official known
as the " Deputy of the Foundation " (Stiftungskommissar), who
represents the Special Board on the " Boards of Management "
(Geschäftsleitung) of the individual enterprises. This office of
permanent Deputy appointed by the Special Board is held in an
extra-official capacity by a high official of the State or an active
high official of the Public Service. It is the duty of the Deputy
of the Foundation continually to supervise the management of
the business in all its branches, to superintend general administration, and to co-operate in all important decisions of the Boards
of Management. It is a further duty of the Deputy to keep
himself informed upon the trend of all affairs of the internal
administration as well as of the external transactions. He is
empowered for this purpose at any time to examine all com-

I N D U S T R I A L RELATIONS

mereiai books and correspondence and to inform himself completely, by personal inspection and consultation, as to all the
branches of the business. The individual Boards of Management
voluntarily submit all important matters of their respective
organisations to the Deputy for decision.
Operating

Organisation

The direction of the separate undertakings, which form the
estate and assets of the Foundation, is in the hands of the
individual Boards of Management appointed by the Special Board
of the Foundation. These Boards of Management are composed
of not more than four members. They have control over all
internal operations as well as the commercial administration of
their own enterprises. One member of the Board of Management
of the Optical Works is a member of the Board of Management
of the Glass Works. The individual Boards of Management are
required to obtain authorisation from the Deputy of the Foundation for important transactions involving the sale of real property,
expenditure of capital beyond certain limits for new business
undertakings, alterations in the Pension Statute and Sickness
Fund Statute, and certain other specific items affecting fundamental policy. It is established by the terms of the Statute that :
" In all affairs of the management of the business, besides the
members of the Boards of Management, the officials concerned
and those employees w h o are experts in the matter are to be
granted opportunity of expressing their opinions in detail and
given the opportunity of adequate collaboration. "
At the present time the Board of Management of the Optical
Works is composed of two engineers, one scientist, and one
commercial and financial executive ; one of these four members
is also a member of the Special Board of the Foundation. In
addition to this executive group there is a staff of approximately
sixty scientific collaborators and six general works superintendents, under w h o m come work masters and foremen.
Only such persons can be selected for membership of the
Boards of Management as are experts in either the scientific,
technical, or mercantile departments of the business concerned.
At least one member of each Board of Management must be an
expert with regard to the scientific interests of that business.
The members of the Boards of Management, besides their special
duties as members of the Board, must maintain a regular occupa-

THE ZEISS WORKS

tion in the scientific, technical, and mercantile affairs of one of
the enterprises.
ORGANISATION AND ADMINISTRATION OF INDUSTRIAL RELATIONS

Staff Organisation Functions
The strength and efficiency of the organisation and administration of industrial relations lie to no small degree in their
comparative simplicity. All questions affecting the personnel
— which term is inclusive of both workers and employees — are
centralised in an Administrative Department under the direction
of a single individual. The position of Personnel Director has
been occupied since 1906 by the same person. The Personnel
Director is aided in the discharge of this responsibility by
one scientific assistant, one chief clerk who interviews applicants and directs the calculation of wages, a group of subordinate
clerks engaged on routine clerical and statistical work, and a
trained social worker who conducts classes in domestic science,
physical education, and accident prevention. The Personnel
Director reports directly to one of the two chief executive
engineers, and acts as a staff representative of the Board of
Management.
The Personnel Director is a member of the Executive Committee of the factory, acting there as an adviser upon personnel
problems, and is also Chairman of the Committee of the Works
Sickness Fund, which is composed solely of members of the
Fund.
Administrative Documentation and Records
To reduce the possibility of misunderstanding to a minimum
and to ensure the execution of management policies throughout
the Organisation, all rules and regulations affecting the personnel
are distributed in printed form. The Statute of the Carl Zeiss
Foundation, which forms the basis of industrial relations, is
available to all members of the staff. In addition there is published a complete account of the system of employment in the
Works, as well as the employment contracts covering hours,
wage rates, piece-work rates, payment system, and provision for
leave, the latest of which contracts became effective on 1 October
1928.
By a visible card-index system an individual record is kept

INDUSTRIAL RELATIONS

of the personal history of everyone employed by the firm, with
details of changes in status of employment from the time of
engagement to the time of separation.
Methods of
Workmen's

Collaboration

Committee

Article 64 of the Statute of the Foundation, which it should
be recalled was written by Abbe in July 1896, reads as follows :
Workmen's committees, which are empowered to treat with the
whole body of workmen or a limited section of the same (not consisting
only of apprentices and persons under 18 years of age) or with the
Board of Management of a Works, must be elected as a body by all
the workmen over 18 years of age by ballot, such election taking
place annually, and consist of not less than twelve members ; eligibility
of election to this committee must, however, be restricted to adult
workmen, who have been at least one year in the Works and are
in receipt of the ordinary wages, and may not be subjected to any
further restrictions.
They are empowered to hold a meeting even without being convened by the Board of Management of their Works and have the right
to be heard in all matters relating to their Works upon giving due
notice to the Board of Management.
With this fundamental provision as a basis there has been,
since January 1897, a system of collaboration between management and personnel, which, through succeeding years, was modified to meet the changing conditions in a rapidly growing organisation, and was finally altered to conform to the national Works
Councils Act that became effective on 9 February 1920.
The Workmen's Committee (Arbeiterausschuss)
consisted of
representatives elected annually by the various departments of
the Works, on the basis of one representative for 15 persons, on
the lines laid down by Article 64 quoted above. As the size of
the Committee grew from the original figure of 32 in 1897 to
more than a hundred members, it was recognised to be too large
for effective administration. Consequently in 1902 the representation of the men was entrusted to a Sub-Committee of seven
members. This small Sub-Committee met once a week for the
purpose of discussing matters of immediate interest to the workmen and deciding upon appropriate policy and action. Important questions of general interest were discussed in a joint
meeting of the Sub-Committee and the Management, at which
questions were also raised by the Management group. The pro-

THE ZEISS WORKS

ceedings of all meetings were drawn up in the form of reports
that were available for inspection to all who were interested.
Matters affecting individual workmen were handled by the
Sub-Committee in consultation with the Chairman of the Committee of the department in which the individuals were employed.
Office Staff Committee
In 1908 there was organised, along lines similar to those
followed by the Workmen's Committee, a Committee representative of the various groups of technical assistants and clerical
staff (Beamtenausschuss).
This Committee was composed of
13 members over 24 years of age, on the monthly payroll, and
with at least two years of service, elected annually by direct
ballot.
Works Council
The original plans for the Workmen's Committee and the
Office Staff Committee were superseded by the works councils
plan as established by the national Act of 1920. The change,
however, was mainly one of form, as the principles of collaboration incorporated in the Act had been firmly established in the
Zeiss Works for many years, and there already existed a substantial background of practical experience. . From this experience the Management had long ago learned to view the works
council or similar methods of collaboration as :
(1) an effective means of negotiation with the workers ;
(2) a source of information and a two-way channel of expression
regarding prospective plans and policy measures ;
(3) a medium for the discussion of difficulties and grievances
before they reach the point of conflict ;
(4) a means of interesting the workers in the general purposes
of the undertaking, stimulating interest in the promotion of
technical improvements, and strengthening the organisation
and administration.
The works councils plan as a whole has taken the form of
three separate units, namely :
A. The Works Council (Betriebsrat), consisting of a works
committee, organisation committee, transfer and accident committee, social policy committee, and a young persons committee ;
B. The Workmen's Council (Arbeiterrat), consisting of an

INDUSTRIAL RELATIONS

executive committee, an engagement and discharge committee,
and a wages and piece-work committee ;
C. The Office Staff Council (Angestelltenrat), consisting of
an executive committee, an engagement and discharge committee,
and a salaries committee.
The Works Council is composed of 20 members, 15 elected
by the workers and 5 by the employees.
The Workmen's Council is composed of the 15 workers on
the Works Council and 3 additional members elected by the
workers.
The Office Staff Council is composed of the 5 employees on
the Works Council and 6 additional members elected by the
employees.
The individual committees are composed of from 3 to 6
members chosen from among the membership of the respective
Councils. The chairmen of the three Councils, and of the committees on engagement and discharge, wages, and salaries, each
devote an hour once a week in working hours for consultation
with workers and employees on any questions and problems
that may arise within the competence of their respective councils
and committees.
Elections are held and formal business is transacted in accordance with the provisions of the national Act.
Department Trustees
In addition to the Councils, which function in a rather formal
way as representatives of workers and employees in their i dations with the Management, there is a member of the personnel
called a Department Trustee appointed by each group of 15
workers and employees. The Department Trustees concern
themselves with the small day-to-day problems that may arise
between the personnel and their immediate supervisors.
As suggested by the text of the Statute quoted earlier in this
study, the spirit of collaboration is encouraged by the Management and every opportunity is afforded for individual workers
as well as their elected representatives to confer with Management representatives and chief executives.

THE ZEISS WORKS

Relations

with Trade

Unions

The trade unions are not strongly represented in the Zeiss
Works \ According to Management policy workers and employees
have the full privilege of trade union membership, but a comparatively small n u m b e r have taken advantage of the privilege.
Among the personnel of the organisation there are represented
the A.D.G.B., the Hirsch-Duncker trade unions, and the Christian
trade unions. The only collective agreement entered into by the
Company is a special wage agreement with the Hirsch-Duncker
union. The basic wage rate is set by the Works Council and
approved by the union, through this agreement.
GENERAL FINANCIAL POLICY

Among the many interesting provisions contained in the
Statute of the Foundation those dealing with financial relations, wage rates, and incentives challenge particular attention.
The essence of Dr. Abbe's philosophy and intention was that
the entire combination of undertakings being inclusive both
of the Foundation, as impersonal owner and trustee, and of the
several independent business enterprises, was a co-operative
effort that should be mutually beneficial to all concerned, with
prime consideration for economic soundness.
He made provision therefore in the Statute for general financial policy involving capital expenditure, reserves, and surplus,
with ultimate participation by the entire personnel contributing
to the final results. A portion of his general policy is expressed
as follows in Articles 42 and 101 of the Statute :
In the efforts to perpetuate and increase the effectiveness of the
Foundation from an economic standpoint, it should always be borne
in mind that, in conformity with the objects of the Foundation,
its undertakings should serve, besides the purposes of gain, also foi
the general progress of the technical arts represented in them,
increasing their efficiency and thereby indirectly the interests of scientific research, as well as the higher satisfaction of the requirements of
technology and civil life dependent on these arts. . . .
1
It should be noted that the system of industrial relations in the
Zeiss Works is considerably older than the trade unions, which even at
the end of the nineteenth century were almost negligible in Germany, and
only began to acquire their present importance towards the end of the
war.

INDUSTRIAL RELATIONS

It is the primary intention of the founder to promote . . . everything which tends to sustain the further extension of the scientific
bases [of the industry], the improvement of its technical accessories,
and increased co-operation of science and technology in its sphere
of work ; also, and none the less, all that aims at improving the economic position of the entire branch of industry and advancing the
common interests of those occupied in it.
As a further expression of the co-operative spirit and as a
safeguard to the economic rights of employees and workers, a
limitation is placed upon the annual income of officials. The
highest annual income granted to an official, including members
of the Boards of Management, may not exceed ten times the
average annual earnings of the workmen of all the enterprises
of the Foundation w h o are over 24 years of age, have been
employed for at least three years, and are in receipt of the
ordinary wage, according to the average of the last three fiscal
years. It is particularly interesting to note in connection with
the salaries of officials the following consideration relative to
the cost of living : " Additional pay granted to officials in places
where the cost of living is especially high is to be excluded "
from the provision noted above.
CONDITIONS OF EMPLOYMENT

Wages
There are three distinct elements in the wage structure :
(1) a guaranteed ( m i n i m u m ) weekly wage ; (2) the amount
actually earned ; and (3) a supplementary wage or salary payable
at the end of the financial year. Everyone from the day of
engagement is entitled to a fixed m i n i m u m weekly wage, which
increases with length of service and ability. This rate is paid
for time lost owing to stoppage in the undertaking, certain
public holidays, annual holidays with pay, etc. Actual earnings,
however, are usually considerably higher, as most workers are
on piece work, and for special work which cannot be reckoned at
piece rates it is usual to pay a weekly supplement over and
above the m i n i m u m ; payments for overtime will also be included.
In addition, at the end of the year a supplement, depending on
profits, and calculated as a percentage of total earnings, is paid
to everyone employed by the firm (except members of the Boards
of Management).
The following table gives the record over a period of years

T H E ZEISS W O R K S

of average weekly earnings of all male wage earners over 18
years old, and the rate of the supplement paid each year.
AVERAGE W E E K L Y EARNINGS O F A D U L T MALE WAGE E A R N E R S , AND

RATE OF ANNUAL SUPPLEMENT, 1903-1904 TO 1928-1929
Average weekly
earnings

Fiscal year
(1 Oct.-30 Sept.)

Annual supplement
per cent, of earnings

P.M.

1903-1904
1904-190
1909-1910
1912-1913
1913-1914
1915-1916
1916-1917
1917-1918
1923-1924
1924-1925
1925-1926
1926-1927
1927-1928
1928-1929

.
.
.
.
.
.
.
.
'

.
.
.
.
.
.
.
.
.

.
. . .
. . .
.
. . .

29.06
29.56
32.48
32.21
33.42
38.85
46.40
56.48
30.72
35.22
43.38
46.08
50.58
54.62

5
9
8
9
6
10
8
7
2
2

4
7
9
8

1 The wage data for the years 1919-1923 are not comparable owing to inflation.
No supplement w a s paid these years owing to the need for recovery from the inflation

period.

It is expressly provided in the Statute of the Foundation
that the fixed time wage or salary may not be reduced unless the
person concerned is incapable of regularly performing the work
assigned. It is also provided that on all contract and piece work
at least the fixed time wage, proportionate to the time taken
by the work, shall always be guaranteed as m i n i m u m pay.
All piece work is done under free agreement. The value of
the work agreed on has to be set down in writing before the
beginning of the work. New piece-work prices are estimated
by the foreman and the workman, the latter having the right to
call in the Department Trustee, or by the foreman and the Department Trustee.
Overtime
Ordinary overtime is compensated by an additional payment
of 30 per cent, of the basic wage (i.e. the fixed time wage).
Special compensation at the rate of an extra 60 per cent, of the
basic wage is paid for overtime between 8 p.m. and 6 a.m., or
on Sundays. If work is done on holidays that come in the
week, compensation is paid at the rate of 60 per cent, of the

INDUSTRIAL RELATIONS

basic wage, together with the payment for the holiday. Overtime
includes only the length of time that the individual actually
works in excess of his regulation working hours on one day.
Holidays
All public holidays coming in the working week, the traditional extra day at the three great festivals, and four hours on
W h i t Saturday and 1 1 ¡ 2 hours on Christmas Eve are regarded as
working hours and are paid at the rate of the basic wage plus
10 per cent.
Sickness

Payment

The firm pays the basic wage to workers paid by the week
in the following cases of involuntary absence and at the following
rates :
(1) In case o/ sickness : for the first day of sickness, for
which the Works Sickness Fund does not pay benefit.
(2) In cases of emergency in the worker's family or household necessitating his absence from work : up to one
day's absence.
(3) In case of the death of a member of the worker's
hold : also u p to one day's absence.
Annual

house-

Leave

All workers and employees over 18 years of age other than
apprentices under contract are entitled to an annual holiday of
12 to 18 working days. Workers and employees of at least one
year's service are paid the fixed time wage plus 30 per cent.
during this holiday.
Apprentices receive 12 days' leave in the first year, decreasing
by 2 each year to 6 in the fourth year.
Pensions
Pensions are included among the economic rights laid down
for workers and employees in the Statute of the Foundation.
Article 72 of the Statute reads as follows :

THE ZEISS WORKS

Claim to Pension. — Officials, clerks and workmen, who have
entered into the service of the business of the Foundation before the
completion of their fortieth year, are after five years' service entitled to
a pension, which can be upheld at law against their Firm, not only
in their own person in case of becoming incapacitated during their
engagement from following their occupation by age or permanent
illness or other circumstances not attributable to grave misdemeanours
on their own part, but also, in case of death, in favour of their widow
and children.
For the settlement of these claims with regard to all those engaged
in the business who are not under special contract, the " General
Pension Statute " of the Firms Carl Zeiss and Schott und Gen.,
dated 1 September 1897, holds good, in its main provisions.
A revision of the " Pension Statute " was made on 23 January
1930 increasing the rates. The general provisions with revised
rates are as follows :
The period of service qualifying for a pension to begin at the completion of the eighteenth year ;
Maximum amounts of the monthly wages or salaries qualifying for
a pension after five, ten, and fifteen years of service :
130 RM., 160 RM., 190 RM. for workmen,
160 RM., 215 RM., 270 RM. for foremen, clerks and other
commercial assistants ;
Invalidity pensions between the fifth and the tenth years of service, 50 per cent, of the wage or salary qualifying for a pension
at that time, from which time onward up to the fortieth year
of service increasing 1 per cent, annually to the maximum
limit of 80 per cent. ;
Pensions to widows six-tenths, to orphans two-tenths, together up
to the full amount of the invalidity pension;
Invalidity pension without disablement as retiring pay after completion of the sixty-fifth year and at the same time at least the
thirtieth year of service ;
so long as the Foundation has not undertaken more extensive responsibility.
This pension scheme came into operation long before there
was any State provision for invalidity and old age ; it goes
beyond the limits of any legal requirement, in the matter both
of the amount of the pension and of participation by widows
and orphans.
During the period of inflation the pensions were increased
to meet the increase in the cost of living according to the scale
which happened to be applicable to the respective qualifications
of the person concerned. In consequence pensions rose, as
compared with pre-war conditions, at a rate proportional to
wages and salaries.

INDUSTRIAL RELATIONS

The record of pensioners and pension payments for the past
five years is as follows :
PENSIONERS AND PENSION PAYMENTS, 1924-1925 TO 1928-1929
1925-1926

1926-1927

1927-1928

1928-1929

103

137

147

153

1924-1925

Group

Former members
of the staff . .
Widows

. .

233

240

249

261

280

Orphans

. .

226

215

198

178

164

238,542

275,598

327,187

390,707

418,903

Total cost (RM.)

At a time when, in the United States particularly, there is
discussion relative to the methods to be employed for the financing of pension schemes, it is striking to find that Abbe made a
definite decision in this regard when providing for the financial
and accounting activities in the administration of the Foundation. According to his decision annual payments made on the
basis of pension obligations under the Statute or contracts are to
be considered not as payments of the Foundation but as general
expenses of the business, and are accordingly included in the
annual balance sheets and statistical reports of the individual
enterprises.
On 1 April 1909 it was decided as a special protection for the
families of deceased workers and employees that the payment
of the undiminished rate of salary or wages would be continued
for a period of three months after the occurrence of death,
irrespective of the time of service which the deceased had to his
credit.
Compensation

for

Dismissal

In some of his writings Abbe denounced in strong terms
the characteristic of the economic system whereby large numbers
of workers are intermittently engaged and released in large
manufacturing centres without sufficient consideration of the
individual tragedies involved. To alleviate this condition in
those industries over which he had control he provided that no
-workman should be dismissed upon less than two weeks' notice,

T U E ZEISS W O R K S

and no employee dismissed upon less than six weeks' notice.
He made the further following provision for compensation at
the time of dismissal, which provision has been made the subject
of special note in the application of the German national Unemployment Insurance Act :
Compensation for Dismissal, Claim to. — After having completed
three years of service subsequent to their eighteenth year, officials,
clerks and workmen of the businesses of the Foundation holding contracts terminable at notice have claim upon their Firm, which can be
upheld at law. for compensation for loss of position, notice having been
given by the Firm, provided the persons concerned have not become
incapacitated from following their employment as per contract and
have not rendered themselves subject to the provisions of Article 79 l
of this Statute.
This compensation consists in the continued payment of the
fixed wage or salary last drawn by the person concerned for the space
of the next half-year subsequent to leaving the Firm.
For those persons who according to the Pension Statute have
become entitled to a pension, the compensation shall not amount to
less than the total amount of the pension claimable in the case of
invalidity for a period equal to the fourth part of the service run,
credited according to the provisions of the Pension Statute ; the amount
in excess of the income according to paragraph 2 above is immediately
due.
Whoever except under contract as an apprentice has entered a
business of the Foundation before completing his sixteenth year is
entitled to the first-mentioned pension, if from no fault of his own he
be dismissed after his eighteenth year.
Compensation for dismissal is to be paid after six months' service,
if dismissal be not based on reasons attributable to the person concerned, but to closing down the Works in part, introduction of
improvements into the Works, or similar measures of a technical nature.
Compensation for dismissal in these cases consists in the continued
payment of the last drawn fixed wage or salary for the sixth part of the
time the person concerned has spent in the service of the Firm, but as
a maximum up to the period of half a year.
Whoever has once received compensation for dismissal is entitled
in the case of a re-engagement in a business of the Foundation to
fresh compensation, on being discharged a second time, only after
the completion of three new years of service, and until after conclusion
of the fifth new year of service only for that amount by which the new
«claim exceeds the former payment.
On 1 April 1903 the compensation for dismissal was extended
to those who have been in the service of the firm for at least
six months and w h o are given notice of dismissal for internal
working reasons.
1

Article 79 deals with gross infringement of the contract, due to
•breach of duty, drunkenness, breach of honour, etc.
iiMtus'rniAi. nni.Anos>

INDUSTRIAL RELATIONS

The total sums paid in this way in the last five years (including also wedding dowries to women commercial employees
leaving voluntarily) were as follows :
Year

BJI.

1924-1925
1925-1926
1926-1927
1927-1928
1928-1929

29,834
46,579
199,353
24,165
33,236

This provision in the industrial relations programme of the
Zeiss Works has a most important bearing upon the whole policy
and practice of personnel management and procedure. Every
supervisor realises that the dismissal of a member of the staff
means additional operating expense, with a resulting decrease
in net profits. This means that workers and employees are
engaged with greater care than might be taken without this
provision, and the tendency towards arbitrary dismissals is
reduced. There is consequently a high degree of labour stability,
a low labour turnover and a not unimportant influence upon the
general quality of the personnel.
The following tables, giving figures for the past five years
of engagements and separations, confirm these observations on
labour turnover and stability.
ENGAGEMENTS AND SEPARATIONS, 1 9 2 4 - 1 9 2 5 TO 1 9 2 8 - 1 9 2 9
Engagements

Separations

Business year
Men

Worn eu

1924-1925

361

436

1925-1926

221

1926-1927

Total

Men

Wom*ii

Total

797

161

205

366

168

389

237

217

454

165

264

294

240

534

1927-1928

717

314

1,031

180

lit

291

1928-1929

907

311

1,218

317

143

460

THE ZEISS WORKS

ANALYSIS OF SEPARATIONS, BY CAUSES, 1924-1925 TO 1928-1929
Cause of separation
'Business
year

Total

Group
Involuntary

Voluntary

Death

Pension

Other
reasons

1924-1925

Men
Women

16
25

115
165

10
2

19
3

1
10

161
205

1925-1926

Men
Women

90
54

104
148

14
2

22
"l

7
12

237
217

1926-1927

Men
Women

133
119

104
118

36
1

5
2

294
240

1927-1928

Men
Women

26
11

118
95

15
1

6
4

180
111

1928-1929

Men
Women

60
22

218
111

12
1

7
9

317
143

Hours of

Work

The principle and the actual practice of the eight-hour day
were introduced into the Zeiss Works in 1900. At the beginning
of that year the question : " Are you willing and do you trust
yourself to accomplish in eight hours w h a t hitherto you have
achieved in nine hours ? " was put to the vote of the staff. As
the result of an overwhelming affirmative vote a one-year trial
was made, during which time production increased by about 4
per cent. The eight-hour working day was therefore made permanently effective on 1 April 1901. When in 1919 the eight-hour
day became law in Germany, the Zeiss workers concluded that
their position of advantage over other workers had ended, and
accordingly asked for a further reduction in working hours.
A 7 72-hour day was introduced in September 1919, with rather
unsatisfactory results. At the end of 1923, when the enforcement
of the national eight-hour-day law was relaxed, the Zeiss Works
returned to the 48-hour week.
The following is the schedule included in the employment
contract dated 1 October 1928 :
The weekly working hours are fixed at 48 hours.
The daily working hours, from 15 April to 14 October, are as
follows :
Monday to Friday from 6.30 a.m. to 11.30 a.m.
and trom 1.30 p.m. to 5 p.m.
Saturday
from 6.30 a.m. to 12 noon.

20.

INDUSTRIAL RELATIONS

From 15 October to 14 April:
Monday to Friday from 7 a.m. to 12 noon.
and from 2 p.m. to 5.30 p.m.
Saturday
from 7 a.m. to 12.30 p.m.
#
HEALTH, SAFETY AND WELFARE

In an organisation in which generous and progressive provision is made for the fundamental concepts of good industrial
relations, it is to be expected that similarly progressive practices
will be maintained for the health, education, safety, and general
welfare of the workers.
All applicants for employment in the Zeiss Works are
subjected to a physical examination by local doctors recommended by the Personnel Department. The staff of the Personnel Director includes a first-aid nurse, whose services are
supplemented by a worker in each department specially trained
in first aid. There are first-aid cabinets distributed at convenient
points throughout the Works, and bulletin boards containing
posters dealing with health and accident prevention.
There is a special Accident Prevention Committee, composed
of qualified workers within the Works Council, the activities of
which are aided and co-ordinated by an engineer trained in
accident prevention work. The factory is visited every four to
six weeks by the State Factory Inspector, in addition to which
frequent inspections are made by a trained man representing
the Employers' Co-operative Accident Insurance Company. The
Zeiss firm is in the lowest accident rate class in this Company.
In addition to the highly organised apprentice training courses
maintained by the Company and certain special courses designed
for the women staff, there is a large building known as the " Volkshaus ", located near the Optical Works and maintained by t h e .
Foundation, which provides means for general education. This
building houses a library of 150,000 volumes, containing magazines and periodicals in nearly all languages, and has a large
assembly hall accommodating about 1,600 persons. In addition to
maintaining the " Volkshaus " for general community use the
Foundation gives generous support to the University of Jena.
Although it might be taken for granted, it is probably worth
mentioning here that one of the fundamental policies of the
Zeiss Works is the appointment of officials, employees, and
workers without prejudice as to their parentage, religion, or
political views ; and, further, the personal liberty of all members
of the organisation is guaranteed outside of the service.

THE ZEISS WORKS

CONCLUSION

There have at times been two reservations or criticisms made
relative to the industrial relations policies and practices of the
Zeiss Works. It has been said on the one hand that these policies
and practices are possible because of the monopolistic character
of the business ; and it has been stated on the other hand that,
because of the special provisions made by Abbe, the Foundation
is in the nature of a philanthropic institution.
In contradiction to the first criticism it is fair to point out
that the only possible monopolistic characteristic of such a
business as the Zeiss Works is its standard of quality ; and it is
equally fair to say that the standard of quality and the long
period of success of the Organisation may in part be attributed
to good relations between Management and workers.
In contradiction to the second point of possible criticism, it
may be pointed out that, instead of being actuated solely by
humanitarian motives, Abbe realised first and foremost the
necessity of conducting the business in acccordance with sound
economic principles. No better way of expressing his policy can
be found than the following quotation from Article 40 of the
Statute :
In accordance with the duties ascribed to the Foundation, its
business activity shall have for its object from an economic standpoint, not only the highest possible increase of the net profits or
working surpluses of its undertakings, but rather the increase of the
economic total result which these undertakings are capable of providing for everyone connected with them, the Foundation as ultimate
employer included, with due consideration for their further continuance.
Final evidence of the soundness of the entire system of work
relationships in the Zeiss Works is the ability it has shown to
survive the post-war conditions and to meet the tremendous
changes which have taken place in Germany since the war,
while conscientiously carrying out the original ideals of the
organiser of the Foundation. Although the business as a whole
has had to forgo the substantial additions to the surplus which
characterised pre-war operations, it has maintained a sound
financial structure, at the same time meeting the heavy burdens
imposed by its advanced position in the field of industrial
relations.

THE F.I. A.T\ ESTABLISHMENTS
THE

UNDERTAKING

There is no mention of " motor-cars " in the Italian customs
statistics before 1900, in which year 199 were imported and six
exported. The latter figure records the first successful attempts
to enter the field of international competition made by an
industry that could still be said to be in its infancy in Italy,
for the first factory had been erected barely a year before on the
initiative of a group of Piedmontese gentlemen devoted to motoring and sport under the lead of Giovanni Agnelli. 11 July 1899
was the actual date of the foundation of the Fabbrica Italiana
Automobili Torino, whose monogram, formed by the initials
of its title, was intended, as the poet of the new Italy has it, to be
an " expression of will and creative purpose ". The firm took
shape as a joint stock company with a capital of 800,000 lire
divided into shares of 200 lire. Mr. Agnelli was appointed
managing director, and he has remained at the real head of
affairs ever since.
In those days the establishment covered not more than
10,000 square metres of ground, employed some 50 workers, and
developed 36 horse power. But the modesty of the equipment
was more than compensated by the vastness of the aims that the
founders had set themselves: " The manufacture and sale of
motor-carriages and wagons, and of mechanical motors on whatever system; the installation and operation of public and private
transport services using self-propelled vehicles".
The early days, however, were hard and beset with
difficulties. The company's trading account did not show a profit
until its third year of existence, 1902; but afterwards profits grew
rapidly from year to year, and this was the case not only with
the F.I.A.T. but with many other firms that had been founded

INDUSTRIAL RELATIONS

or reorganised in the meanwhile to engage in the new industry.
This industry developed at such a pace that from 1901 to 1906 the
output rose from 300 to 18,000 cars, and exports from 20 to 829
cars, by then already almost level with imports, which amounted
to 902 cars in 1906. In fact, exports were even higher if reckoned
in terms of value (the average price of the cars exported in 1906
was 11,848 lire, and that of cars imported 9,941 lire), for the
motor-car was regarded as an article of luxury and sport, and
Italy, whose daring champions had been victorious in many
famous contests, had specialised in the construction of highpowered cars.
This rapid industrial success was accompanied, as is often
the case, by rash speculation that forced u p the shares of motorbuilding firms to exceedingly high figures. In 1907, a serious
crisis arose, and this, although financial rather than industrial in
character, checked the expansion in production and compelled
the firms to overhaul their organisation and methods.
The F.I.A.T., for its part, had taken the necessary steps in
the preceding year (8 March 1906), changing its form and
raising its capital to 9,000,000 lire, divided into shares of 100 lire.
Since then the capital has increased gradually but steadily,
reaching 12,000,000 lire in 1909, 14,000,000 in 1910, 17,000,000
in 1912, and 25,000,000 in 1915.
With the advent of the war the undertaking grew to vast
proportions, for it had to be capable of turning out vehicles,
engines and arms by the thousand. By the beginning of 1916
the capital had risen to 29,750,000 lire,, and at the end of the
year to 34,000,000; in 1917 it stood at 50,000,000; in June 1918
at 100,000,000; in October, 125,000,000; and in June 1919,
200,000,000.
Then the F.I.A.T, emerging from the extraordinary stage of
development imposed by war-time requirements, entered upon
a period of vigorous adjustment of its internal structure, and of
revision of the principles and methods of organisation, so that
it could meet the new economic conditions and the special
difficulties of the transition period, which in Italy was particularly disorderly and violent. Economic and social factors were
both taken into account in the plans for the reorganisation of the
undertaking, but these plans were to some extent hindered by
revolutionary activities, which culminated in the temporary
occupation of factories in the autumn of 1920.

TUE F.I.A.T.

ESTABLISHMENTS

' When the political and economic crisis was overcome,
inorganisation was actively resumed and the F.I.A.T. took on
the form that it has to-day. By a decision of the general meeting
of 30 October 1924 the capital was raised to 400,000,000 lire,
divided into 2,000,000 shares of 200 lire each; and the life of
the firm, originally fixed at thirty years, was extended to 31 December 1980.
A few particulars extracted from the latest balance sheets
(1929) may be added to complete the financial picture: the
turnover amounted to approximately 1,200,000,000 lire; the
profits earned made it possible to distribute 50,000,000 lire in
dividend, i.e. 25 lire per share of 200 lire (nominal value) ;
300,000,000 lire were paid in wages. The reserve provided for in
the articles of association, consisting of 5 per cent, of the net
profits, is shown in the 1929 balance sheet at 32,099,876 lire.
There have also been accumulated an extraordinary reserve of
30,000,000 lire and a special reserve of 32,750,000 lire, as security
for a loan of $10,000,000 raised in the United States in 1926 and
reduced by the end of 1929, after the first seven repayments, to
$8,867,737. The buildings and machinery were valued in the last
balance sheet at approximately 68,000,000 and 58,000,000 lire
respectively. The furniture, plant and miscellaneous objects have
been fully written off.
The development of the undertaking has in every way kept
pace with the growth of capital.
The F.I.A.T. motor-car factory has removed from its first
works of 10,000 square metres to the Lingotto establishment, a
magnificent and novel building that will be briefly described in
the following pages. The area now occupied by this and other
establishments of the F.I.A.T. and associated companies, excluding property owned outside Italy, is about 20,000,000 square
metres. The 50 workers of 1899 have grown into more than
35,000. From its original purpose — the manufacture of motorcars — the F.I.A.T. has proceeded to that of aeroplanes, large
Diesel engines, railway supplies, agricultural machinery, and army
transport equipment. The firm has put itself in a position to
satisfy all its needs from its own resources, thus becoming independent of outside dealers: it makes its own machinery and tools,
founds its own iron and steel, and generates the necessary power
for running the various establishments in an imposing hydro-

INDUSTRIAL RELATIONS

electric station. In a word, it has organised itself as a selfcontained industrial unit, embracing the supply of power and
raw materials, subsidiary processes supplementary to the main
business, accessory manufactures, and the sale of its own
products either at home or abroad.
The extent of this remarkable development is shown by the
following figures of the output of F.I.A.T. cars from 1900 to 1929:
Year

1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914

Number of oars
manufactured

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

24
73
107
135
268
461
1,149
1,420
1,311
1,848
1,780
2,631
3,398
3,251
4,646

Year
-

Number of cars
manufactured

1915 . . . .
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929

7,646
12,697
19,184
16,542
12,070
14,835
10,320
10,589
15,917
24,638
40,102
51,965
47,756
47,328
45,802

The whole Italian output in 1927, 1928 and 1929 was about
55,000 cars a year, so that the share of the F.I.A.T. was over
80 per cent, of the total.
In order to complete the picture of the general conditions of
production in the F.I.A.T. works, it may be added that Italy
exports about half her total output of cars, a very large proportion,
while the purchasing power of the home market is small \
The complex industrial organisation of the F.I.A.T., as at
present constituted, consists mainly of a series of large establishments, each under its own management, called " Sections ". The
chief of these, the Motor-Vehicle Section, is the Lingotto establishment already referred to.
This establishment alone employs
over 10,000 workers and some 1,500 salaried employees. The
other sections are:
The Piedmont Ironworks Section, with two establishments in
Turin and Avigliana (near Turin). It furnishes all the supplies of iron,
coarse and fine, required for the F. I. A. T. manufactures, and is also
one of the largest sources of supply for the entire Italian industry.
1
In Italy there is 1 motor-car to every 250 inhabitants, as against
about 1 to 40 in France and Great Britain.

THE

F.I.A.T.

ESTABLISHMENTS

The Steelworks Section, mainly engaged in founding large steel
castings; the greatest part of its output is absorbed by other undertakings
owned by the firm.
The Foundry Section, consisting of two large adjacent establishments, equipped for the production of castings in iron, bronze and
aluminium, and capable of supplying parts for 200 cars in eight hours.
This section also possesses a large precision machine shop for the
machining of engine castings.
The Metal-Working Section has a huge output, the processes ranging from the forging of large steel parts to the manufacture of armour
plating for "tanks ", fronvthe stamping of sheet metal of all thicknesses
to the finishing of agricultural machines and delicate machine tools. It
provides the Motor-Vehicle Section with frames, axles, wheels, crank
shafts, and many other forged or stamped parts. It also produces for
external consumption; shafts for the heavy engineering industry;
ploughs and press troughs for agriculture; shafting, rudders, and
engine parts, for the shipbuilding industry; tank wagons and locomotive shafts for the railways; etc.
The Heavy-Engine Section was specially created for the construction of internal-combustion engines, compressors, pumps and, in
general, all equipment requiring greater precision in manufacture than
is ordinarily the case in mechanical engineering. It is mainly engaged
in the construction of heavy-oil engines of the Diesel type, for both
industrial and marine use.
The Spare Parts Section undertakes the mass production of spare
parts of industrial vehicles, agricultural tractors, engines and groups
for various uses, as well as special processes of all kinds.
The Railway Supplies Section, equipped for the annual production
of thousands of wagons and carriages, and for building electric locomotives, naphtha locomotives, etc.
The Aircraft Engines Section, engaged exclusively in the construction of engines for the various types of aeroplanes built by the Italian
Aeronautical Company (see below, page 28).
The Special Coach-building Section for the manufacture on a limited
scale of luxury and " super-luxury " cars, the construction of special
cars, and cars for exhibitions and shows.
The Industrial Supplies Section, engaged in the construction of
motor fire-engines, water-carts, tanks and similar vehicles.
In addition to the above-mentioned Sections there are several
undertakings which, although they have independent légal status,
are in fact subordinate to the F.I.A.T., having been entirely
absorbed by it. These are:
The S.P.A. Company, for the construction of army lorries and
tractors.
The Ceirano Company, for the construction of industrial lorries
and other vehicles '.
1

With the object of co-ordinating and regulating the production and

•>••' INDUSTRIAL RELATIONS

The Italian Aeronautical Company, (Società Aeronautica d'Italia),
manufactures- aeroplanes of all types — military, commercial, touring,
etc.
The Metals Company (Società Anonima Metalli), for working
brass, copper and other inoxidisable metals.
The Arms Manufacturing Company (Società Anonima Fabbrica
d'Armi), for the manufacture of small arms.
The Italian Motor Transport Company (Società Italiana Trasporti
Automobili), for the exploitation of motor transport.
The Motor Sales Company (Società Anonima Vendita Automobili),
for the sale of motor-cars on the instalment system.
The Villar Perosa Workshops (Officina Villar Perosa), near Turin,
for the manufacture of ball bearings.
The Industrial Equipment Works Company (Società Anonima
Officine Costruzioni Industriali), with headquarters at Modena, for the
manufacture of agricultural tractors.
Lastly, a third group is constituted by .the undertakings in
which the F.I.A.T. has only a controlling interest. These are:
The Metals Recovery Company (Società Anonima Ricuperi Metallici) , for••the purchase öf scrap iron, steel,,-etc.
The Aircraft Engineering Company (Società Anonima Costruzioni
Meccaniche Aeronautiche), with headquarters at Genoa, and a factory
at Marina di Pisa, for the construction of hydroplanes.
The Italian Air Transport Company (Società Anonima Aviolinee
Italiane), with headquarters at Milan, for the exploitation of air traffic
routes.
The Marcili Magnet Company (Società Anonima Magneti Morelli),
with headquarters at Sesto S. Giovanni, near Milan, for the manufacture of electric equipment.
The Commercial Shipping Company (Società Commerciale di Navigazione), at Genoa, for the sale and reconstruction of motor vessels.
It would have taken too long to visit all these establishments
and the representatives of the Office therefore confined themselves
to a few of the most important, namely, the Piedmont ironworks,
the metalworks, the steelworks, the heavy-engine Avorks, the aircraft engine works, the foundries, the Spa works, the Italian
Aeronautical Company, and the Villar Perosa shops.
To give an idea of the environment in which the F.I.A.T.
employees work, it will suffice to describe in broad outline the

sale of industrial vehicles the F.I.A.T. has established the F.I.A.T.
Industrial Vehicle Consortium (Consortium Fiat Veicoli Industriali), which
exercises a unified control over this part of the production of the F.I.A.T.
itself and the two other firms mentioned, which have joined the Consortium. Similar arrangements for unified management have been put into
force for co-ordinating the production and marketing of army and agricultural tractors.

THE F.I.A.T.

ESTABLISHMENTS

principal establishment; known as the Lingotto factory, which
constitutes the Motor-Vehicle Section, and the visit to which
occupied a full half-day.
It is composed of a group of buildings in reinforced concrete
with a frontage of about 1,000 metres. The factory buildings are
next to the offices of the general management, which house the
central services and the commercial and technical offices. The
central building, of five stories, completed in 1924, consists of
two longitudinal blocks 24.5 metres wide and with a total floor
space in use of 152,957 square metres. To the north and south
of this building are two large six-storied buildings erected in 1925
and having a total floor space equal to that of the central building.
Then come other large factories with extensive one-storied sheds
housing very heavy plant and machinery that could not be
installed in the other premises.
Each shop in these buildings corresponds to one of the
different groups of parís which, when assembled, form the complete car. In each the work proceeds, at a fixed tempo, on moving
conveyers which bring the different parts together for group
assembling, and then the groups for the final assembling.
The whole establishment may be visited in a car; indeed,
tourist trips in large " torpedo " cars built by the firm are
arranged to take place on stated days at stated times. Since the
various floors are connected one with another in the middle and
at the ends by large spiral inclines, the visitors, without once
having to get out of the car, are conveyed from one end to the
other of the wide corridors traversing the sheds; and thus, by
following the conveyer, are able to witness the building up and
gradual assembling, on successive floors, of the thousands of
pieces that go to the making of body and chassis. These two
parts are assembled on the last floor and accurately adjusted. The
cars, now complete in every detail, are carried by hoists to the
magnificent terminal track laid out on the roof of the building.
À few words only need be said on the' commercial organisation which gives employment, at headquarters and in the
various subsidiary and branch establishments, to some 500
salaried employees and over 1,100 manual workers. In their
turn these establishments, nineteen in number, direct the activities of a thousand agents, w h o form a network extending even
to the smallest localities in the peninsula. In addition to the

INDUSTRIAL

RELATIONS

subsidiary establishments and selling agencies there are F.I.A.T.
offices at Rome and Milan, which deal with the business of the
firm as a whole.
For its export business, too, the firm has a series of subsidiary
establishments, and of distribution and commercial intelligence
centres, as well as a series of agents whose field of activity now
extends to all foreign markets. Side by side with this commercial
expansion, a process of industrial expansion has been begun,
opening in Germany, where the F.I.A.T. has secured control of
the Fahrzeugwerke at Neckarsulm, for the manufacture of motorcars, motor-bicycles, bicycles and spare parts of motor-cars.

INDUSTRIAL RELATIONS

General

Characteristics

It will be remembered that Italian legislation not only
establishes systems of labour protection and social insurance,
such as obtain in the other industrial countries of Europe, but
also regulates the relations between employers and workers,
entrusting the right and duty of representing both classes to bodies
corporate (Sindacati di diritto pubblico), of which only one can
be recognised for each occupational group and each area. The
parties are represented in the conclusion of contracts of
employment, before the conciliation and judicial authorities set
up for the settlement of disputes, and on public institutions dealing
with questions of economic or general policy.
Thus in considering industrial relations in the F.I.A.T, as in
any Italian undertaking no matter w h a t its line of business may
be, it must be borne in mind that the private activities of both
employer and worker are limited by the above-mentioned powers,
in virtue of which many matters, including some of the most
general concern and highest importance, are regulated through
trade associations and corporations. Among these are matters.
leading u p to the conclusion of the contract of employment or
arising out of its execution or interpretation; and to some extent
also matters concerned not so m u c h with conditions of employment as with conditions of life and welfare, for some of which,
and in particular recreation, the whole field of cultural activities
and sport, there are general public organisations possessing supervisory and co-ordinating powers.

THE

F.I.A.T.

ESTABLISHMENTS

These introductory remarks are necessary for the proper
understanding of the spirit and the intrinsic value of the measures
taken by the management of the F.l.A.T. that bear upon relations
with the staff. These measures, which have the merit of largely
anticipating the statutory provisions, are first and foremost of a
supplementary nature, and if their scope is to be rightly apprehended, the setting constituted by the eminently judicial system
obtaining in Italy must be constantly present to the mind.
This system, and the historical and political antecedents
conditioning it, also explain what at first sight might seem to
be an omission, namely, the absence of that procedure and machinery of collaboration at the workplace itself, that is, inside the
works, which in other countries is embodied in works committees
or works councils. In point of fact, such institutions did make
their appearance in Italy at the time of the revolutionary agitation
which culminated in the occupation of the factories. It follows
that the system of workers' control, by which it was attempted to
satisfy the demands of the movement for workers' collaboration,
still seems to have expropriation rather than collaboration as its
aim. Under these circumstances any demand for workers' control
inevitably arouses the opposition of the employers, w h o deem it
incompatible with the hierarchical principle essential to the
smooth working of production. This also explains w h y no legal
recognition could be given to the practice of having in the undertakings themselves workers' delegates responsible for supervising
the contractual conditions of employment and in general acting
as intermediaries between the workshop staff and the trade
unions. " Works correspondents ", however, still exist in large
undertakings, although only de jacto; and the trade unions have
directed their efforts to broadening contacts through the institution of joint delegations for the examination of disputes in districts
in which it is not easy for the workers to get in touch with the
unions, and under the express condition that the delegates do not
belong to the management or staff of an undertaking whose
interests are under discussion.
Slajj

Management

The functions of the staff department of the F.l.A.T., which
are outlined below, should be judged in the light of the foregoing pages.
The staff department is quite distinct from the other depart-

32 .

INDUSTRIAL RFXATIONS

ments, and is placed under a " director of section ". Besides this
central department, each section, subsidiary establishment.and
undertaking controlled by the F.I.A.T. has its own offices, for
salaried employees and manual workers respectively, working
under the supervision of the central office, which alone is competent to decide questions of a general character, disciplinary
questions and, more especially, questions of relations with the
trade associations. The duties of the central department in respect
of the two groups of salaried employees and manual workers
may be defined as follows:
Salaried Employees
(1) Finding and engaging of the staff required for the various
sections and undertakings in accordance with the conditions specified.
(a) Information respecting the applicant, the members of his
family, and relationship, if any, with persons already in the employ
of the F.I.A.T.;
(b) Investigation of previous services;
(c) Examination of state of health by the medical department;
(d) Collection and examination of all documents and information bearing upon the applicant's knowledge, certificates, capacity, services to the country, which documents and information
are passed on for inspection to the department concerned;
(e) Assigning of applicants to the various offices in accordance with their capacity and wishes;
(/) Fixing of pay, in conformity with the general scheme
and with regard to the post to which the applicant is appointed.
(2) The legal and other prescribed formalities in connection
with the appointment.
(3) Through the agency of the medical department, supervision
of the state of health of the staff.
(4) Promotions and certificates of merit.
(5) Special subsidies and bonuses.
(6) Checking of absences.
(7) Enquiries.
(8) Disciplinary measures.
(9) Insurance against accidents, both occupational and nonoccupational.
(10) Life insurances contracted with the National Insurance
Institution on specially favourable terms.
(11) Supervision of the working of the staff offices of all the
F.I.A.T. sections, subsidiary establishments and undertakings, which
are required to keep to a uniform system.
(12) Negotiations with the trade unions respecting union questions involving salaried employees, for all the sections and undertakings.

THE

F.I.A.T.

ESTABLISHMENTS

Manual Workers
(1) Supervision of the working of all the manual-staff offices of
the various F.I.A.T. sections and undertakings.
(2) Supervision of the fixing of wages in conformity with the
terms of the national agreement for the metal-working industry and
with regard to the worker's category.
(3) Examination of disciplinary complaints.
(4) Negotiations with the trade unions respecting union questions
involving manual workers, for all the sections and undertakings.
In addition to supervising salaried employees and manual
workers, the staff department regulates and directs the working
of the sanitary department, the fire-prevention department, and
the surveillance and works security department; through the
legal and fiscal departments, it deals with legal and fiscal matters
affecting the staff; and, finally, it co-ordinates and supervises
the working of all the welfare schemes instituted by the F.I.A.T.
for the benefit of the staff (restaurant for salaried employees,
sale of cars at reduced prices, salaried employees' mutual-aid
fund, manual workers' mutual-aid fund, salaried employees' and
manual workers' co-operative housing society, sale of massconsumption goods on the instalment system, recreation schemes
(dopolavoro),
etc.).
The composition of the staff of the F.I.A.T. and its subsidiary
undertakings, with the exception of those in which the firm has
only a part interest, was as follows on 28 February 1930:
Sections
Salaried
employees

Í
Châssis
Motor-vehicle j
Bodies
'
Castings
Transport administration
Subsidiary Italian sales companies
Piedmont ironworks
Railways supplies
Metal-working
Steelworks
Heavy engines
Special coachbuilding
Aircraft engines
Spare parts
Iron foundry
Industrial supplies
Total

irotJSTRlAL

RELATIONS

. .)
(

Manual
workers

9
11
463
325
75
153
72
237
56
177
140
67
102

6,937
3,362
447
—
1,110
2,833
740
1,403
763
1,172
759
1,387
507
742
272

3,490

22,439

l,olw

)
/

INDUSTRIAL

RELATIONS

Subsidiary Undertakings
Salaried
employees

S.P.A. Company
Italian Aeronautical Company
Metals Company
Arms Manufacturing Company
Industrial Equipment Works Company
Ceirano Company
Metals Recovery Company
Villar Perosa Workshops
Total
Grand total
Provisions

. . . .

relating to Officials and Salaried

174
106
36
20
74
69
19
464
962
4,462

Manual
-workers

1,696
1,126
272
112
450
608
142
3,494
~7,800
30,239

Employees

The conditions of employment of private employees in Italy
are regulated by a Legislative Decree of 13 November 1924.
Section 1 of the Decree defines the contract of employment as any
contract by which the head of an undertaking engages for the
said undertaking, usually for an indefinite period, the professional
services of the other contracting party, as a member of the staff
(con funzioni di collaborazione)
as regards both the scope and
the grade of his duties, with the exception however of all exclusively manual work. The most important of the remaining
provisions are those respecting:
(1) The probationary period, which may not exceed six months
in the case of managers, agents, representatives with a fixed salary,
technical or managing directors and salaried employées with equivalent
rank and duties, and three months for all other grades of salaried
employees. During this period the contract may be terminated without
notice or compensation.
(2)

Maintenance of the post in the case of accident or illness :
(a) For a period of up to three months after not more than
ten years' service, with the right to full pay for the first month
and half pay for the next two;
(b) For a period of up to six months after more than ten
years' service, with the right to full pay for the first two months
and half pay for the next four.
(3)

Annual leave with pay amounting to not less than:
10 days for service not exceeding 5 years,
15 days for service between 5 and 15 years,
20 days for service between 15 and 25 years,
30 days for service over 25 years.

(4) The periods of notice of dismissal on grounds other than
misconduct (if these periods are not observed, the employee is entitled
to compensation equivalent to the corresponding salary), which are
fixed as follows :

THE

F.I.A.T.

ESTABLISHMENTS

(a) for not more than Ove years' service, fifteen days, one
. month or two months according to the employee's qualifications
and duties as defined in the Decree;
(b) similarly, for not more than ten years' service, thirty
days, forty-five days or three months, and
(c) for over ten years' service, forty-five days, two months
or four months.
(5) Compensation payable in the case of dismissal or death of an
employee to his near relatives, at the rate of at least one month's salary
for each year's service.
(G)

The obligation to furnish a certificate of employment.

Section 3 of the Decree lays down that if the undertaking
normally employs more than twenty salaried employees, the
employer shall have posted u p in a conspicuous place on his
premises a notice setting out the employees' duties. This notice
in the F.I. A.T. works deals with the observance of working hours,
lateness and fines, annual public holidays, absences and leave,
the obligation to accept transfers from one office or section to
another, procedure to be followed in the case of illness, mealtimes in the case of continuous processes, disciplinary rules and
penalties (oral reprimand, written reprimand, fines, dismissal).
Besides fulfilling its statutory obligations, the F.I.A.T. grants
its salaried employees the following special advantages:
(1) Free accident insurance comprising both occupational and
non-occupational risks, whether inside or outside the establishments
and offices, and covering death or permanent invalidity. Temporary
invalidity is not covered because salaried employees retain their right
to salary during illness. In the case of death the guaranteed lump
sum amounts to five times the aggregate annual salary up to a maximum of 100,000 lire; and in the case of permanent total invalidity, to
six times this aggregate, up to a maximum of 120,000 lire. As regards
permanent partial invalidity, the policy provides for proportional
payments up to a maximum of 70 per cent, of that for total invalidity,
in accordance with a schedule and fixed rules.
(2) With regard to the various forms of life insurance (ordinary,
endowment, term, lump sum and annuity, etc.), by agreement between
the F.I.A.T. and the National Social Insurance Institute the employees have secured a 5 per cent, reduction in the annual premiums.
In the case of employees with at least three years' service and aged
twenty-one years or more, these premiums, up to a maximum of one
full month's salary, are paid by the firm. The policy and the sum
total of the premiums remain the property of the firm so long as the
employee is in its service. When the contract is terminated, the employee or his legal heirs reimburse the premiums, free of interest, out
of the compensation due to them.
If the contract is terminated without any rights to compensation,

INDUSTRIAL

RELATIONS

the insurance policy and the premiums remain the property of the
firm, but employees not dismissed for serious misconduct may make
application to acquire the policy by refunding the F.I.A.T. the
amount of the premiums already paid. This application must be filed
and the premiums refunded within thirty days of the termination of
the contract.
This provident scheme was introduced in 1925, and up to the end
of 1929 the capital insured on behalf of the F.I.A.T. employees
amounted to about 10,000,000 lire; the premiums to be paid in 1930
alone were estimated at about 500,000 lire.
(3) The F.I.A.T. employees are allowed the following special
facilities for buying cars; a discount of 15 per cent, off the listed
prices; payment in twenty-four monthly instalments, with no lump
sum down and only a low rate of interest; free garaging, cleaning, and
ordinary upkeep; reduction of 25 per cent, on the cost of third-party
insurance; reduction of 15 per cent, on the cost of petrol, lubricants,
repairs, and spare parts. Buyers are also entitled to any reductions in
prices taking effect within six months after the handing over of the car.
The officials, up to the grade of head of office or head of branch,
are granted, besides all the advantages mentioned, a special rebate of
10 per cent, of the price of the car, when it is for use between the office
and home, or for the purposes of the firm. In addition, officials may
pay for the car at the end of the year without being charged any
interest.
(4) A special catering service, of great utility, especially to employees who have no family, or who are prevented by the hours of
work or the distance from going home to meals. To the cost of this
service the firm contributes over 150,000 lire a year.
The restaurant occupies about 1,500 square metres in all and
caters for 1,100 people in the building itself and 250 scattered over the
works. The diners fetch their own meals and this makes it possible
to limit the restaurant staff to 1 per cent, of the diners. There are
various dishes to choose from. A complete meal, i.e. bread, soup,
meat and vegetables and fruit, costs 2.35 lire, or about half what it
would cost in the cheapest eating houses.
The overhead charges amount to about 0.50 lire per diner per day.
Provisions

relating

to Manual

Workers

For the reasons set out above, the working conditions of the
F.I.A.T. manual workers are not peculiar to them, but are those
laid down for all workers in the mechanical engineering and
metal-working industries by the national agreement concluded
on 15 February 1928 between the two trade associations in conjunction with the general organisations of employers and workers,
namely the General Fascist Confederation of Italian Industry and
the then-existing National Confederation of Fascist Trade Unions.
For the province of Turin, the provisions of the national agreement were completed on 22 March 1929 by a supplementary
agreement mainly concerned with the fixing of m i n i m u m wages,
which was concluded between the competent provincial trade

THE

F.I.A.T.

ESTABLISHMENTS

associations, namely, on the employers' side, the Piedmont Federation of Metal-working, Mechanical Engineering and Associated
Industries (Associazione
Industriali
Metallurgici Meccanici e
Affini per il Piemonte),
and, on the workers' side, the Turin
Provincial Federation of Fascist Industrial Trade Unions
(l'Unione
provinciale
dei Sindacati fascisti dell' industria di
Torino).
The duration of the agreement as a whole is two years
from the date of publication of the national agreement (20 February 1929) \ This may be tacitly extended from year to year.
The various provisions of the agreement may now be considered in turn, with an account of how the trade unions intervene
in practice to secure their observance.
Engagement
Article 1 concerns the methods of engaging manual workers. The employers make use of the employment exchanges
attached to the trade unions. They have the right of choice,
subject, however, to preference being given to members of the
Fascist Party and of the unions, and regard being paid to the
order of registration.
This provision derives from the regulations that in Italy
govern the organisation of placing, namely the Twenty-third
Declaration of the Labour Charter, and the various Legislative
Decrees giving effect to it. These confirm the public and gratuitous character of employment exchanges ; the prohibition of
private agencies even if gratuitous; and the principles of administration of exchanges by a joint committee presided over by the
provincial secretary of the Fascist Party, and of supervision by
the higher authorities, i.e. for each province the Labour and
Welfare Section of the Provincial Economic Council and for the
country as a whole, the Ministry of Corporations. The exchanges
must be installed on trade union premises and the officials must
be selected by the committee, to which they are responsible for
the execution of their duties, from among such trade union
leaders as may be proposed by the unions themselves.
These regulations are strictly observed by the F.I.A.T.
1

It will be remembered that Italian legislation requires the registration and publication of collective labour agreements. These become
compulsory for the whole occupational group concerned, precisely from the
date of publication in the official gazettes.

INDUSTRIAL

RELATIONS

management, which when in need of manual labour has recourse
to the provincial industrial employment exchange (Ufficio provinciale di collocamento per le maestranze industriali),
attached
to the headquarters of the Provincial Federation of Fascist Industrial Trade Unions, or in the case of establishments domiciled
outside Turin, to that one of the eight district sections (sezioni
di zona) of the exchange which is competent for the locality in
question \
Naturally the F.I.A.T. management exercises its
right of choosing from the lists furnished by the exchange; the
head of the Staff Department stated that the choice depends primarily on the estimated special qualifications of the worker for
the work on which be is to be employed, since the lists of the
employment exchange are based on a broad occupational classification.
It is easy for the trade unions to check this procedure,
because the legislation referred to above makes provision for
appropriate fines to secure observance of the obligations that
it lays down, including that upon unemployed workers to
register themselves at the labour exchange within five days, and
that upon employers to report all engagements and discharges
to the exchange within the same period.
Article 2 of the collective agreement specifies the documents
to be presented by the worker. These are the documents having
legal currency (identity card, certificate of citizenship, police
record not more than three months old), and special papers
respecting the worker's career (pay-book, insurance card and
books, certificates respecting previous situations; for women,
in addition, employment book, and National Maternity Fund
b o o k ) . These documents are enumerated on the cards used by
the F.I.A.T. when requesting prospective workers to present
themselves, which also mention the compulsory medical examination, the hours of work and workshop shifts, and the working
clothes with which the workers have to provide themselves.
The F.I.A.T. further requires the counterfoil of the employment exchange certificate and, where appropriate, the trade
union card; also two photographs for the issue of the workshop
card and, to those who are members, the card of the National
Recreation Institute (Opera Nazionale
Dopolavoro).
Newly
engaged workers who are not members may be admitted to the

1
Similarly for the section with headquarters at Milan, for branches in
other parts of Italy, etc.

THE E.I.A.T.

ESTABLISHMENTS

39,

F.I.A.T. recreation organisation, the Workers' Club, which will
be discussed later.
The workers are engaged for a probationary period of one
week or, by common consent, two weeks (Article 5 ) . On the
results of this probation depends the definite engagement or
dismissal of the workers and the rate of pay applicable from the
first day of employment. If the rate of pay has not been fixed,
and no agreement is reached, a worker discharged immediately
after probation is paid at the last standard rate shown in his
pay-book, provided that it covers a period of at least three months;
or, if this is not clear, at the m i n i m u m rate laid down for the
occupational category in which he worked.
Hours of Work
The hours of work — forty-eight per week and eight per
day as laid down by law and the collective agreement — are
distributed in the F.I.A.T. establishments in accordance with
various timetables and shift systems as follows; from 7.30 a.m.
to 4 p.m., or from 8.30 a.m. to 5 p . m . (normal shifts); .from
6.30 a.m. to 3 p . m . ; from 3 p . m . to 11.15 p.m. ; and from
11.15 p.m. to 6.30 a.m. (special shifts). The extra half-hour
in the normal shifts and the first special shift is for meals; and
the second and third special shifts, the latter a night shift of
seven hours, include a fifteen minutes' break for rest. On an
average, 81 per cent, of the staff w o r k normal hours, 9 per cent.
work the first special shift, 9 per cent, the second, and only 1 per
cent, the third (departments with continuous firing).
The
F.I.A.T. also allows a Saturday half-holiday, four and a quarter
hours being worked and the remaining three and three-quarter
hours being made u p by w o r k i n g forty-five minutes longer on
the other five days of the week.
The hours of work may be reduced by two per day if the
volume of production so requires. An instance of this arrangement will be described below.
Without good cause, no worker may refuse to work overtime, which, however, should not be a permanent institution
or make it necessary for any man to work more than ten extra
hours a week, excluding Saturdays.

40
Definition

INDUSTRIAL RELATIONS

of Occupational

Categories

The most important parts of the agreement, and those, as
will be readily understood, which gave rise to the fullest
discussions, relate to the definition of the occupational categories
and the fixing of wages. The national agreement laid down
certain general principles: (a) subdivision of the industry into
four main branches — engineering, shipbuilding, metal founding, and metal working; (b) classification of the workers into
specialist workers,
skilled workers, specialist labourers,
ordinary labourers, apprentices, women, and boys; (c) minim u m basic wages, separately determined for urban and rural
establishments, to be calculated with reference to the last quarter
of 1926, a period of flourishing trade which preceded the
reductions effected as a consequence of the revalorisation and
stabilisation of the lira.
To the district agreements were left the assignment of the
workers to the different categories mentioned above and the
actual fixing of the m i n i m u m rates for each category. The wage
reductions, together with those already effected on various
grounds, were in no case to exceed 20 per cent, as compared with
the basic period, and thus almost exactly balanced the increase
in the value of the lira.
The special negotiations between the representatives of the
Piedmont trade associations to give effect to the above-mentioned
principles were laborious and occasioned various interventions
by the corporative organisations, including an enquiry carried
out, with the consent of the parties, by a representative of the
Ministry of Corporations for the purpose of ascertaining earnings
during the basic period in the establishments in question.
Agreement was first reached on the following definitions of
occupational categories :
Specialist workers are skilled workers who are employed on tasks
requiring technical qualifications only to be acquired during apprenticeship or training in a trade school, and who accomplish efficiently
all work within their province with which they may be entrusted.
Skilled workers are those who do work requiring special practical
qualifications.
Specialist labourers are employed on work requiring a short period
of training, or are assigned special duties requiring some aptitude or
knowledge.

THE

F.I.A.T.

ESTABLISHMENTS

Ordinary labourers are usually employed in cleaning, transport of
goods by hand, and the like.
Apprentices are those aged between sixteen and twenty years
employed on work that will give them a knowledge of the trade.
Apprentices cease to be so classified after three years of diligent
apprenticeship in the metal-working industry, even if they have not
reached twenty years of age. For those possessing certificates of approved trade schools, two years' apprenticeship suffices (two wage minima
have been fixed for apprentices, one for those sixteen to eighteen years
old and the other for those eighteen to twenty years old).
Boys are lads or apprentices up to sixteen years of age.
Women (over sixteen years) work as labourers or on simple jobs;
or as machine or bench hands.
This classification, however precise, might yet — and indeed
does — leave divergences in practice. But the spirit of collaboration that animates the corporative system has proved the means
of eliminating them: a special committee appointed by the
Provincial Joint Trade Committee has been empowered to settle
disputes that the trade associations cannot settle by direct conciliation. When called upon in such cases, this committee makes
enquiries on the spot. It appears from the minutes, for example,
that on 21 May 1930, in Workshop 19, Section 42, of the Lingotto
establishment, the committee confirmed the classification
adopted by the firm in respect of nine workers; while, to choose
an opposite instance, during a visit on 24 June 1930, to Workshop 3a, Section 35, of the same establishment, to investigate
the case of ten workers who had been classified as " specialist
labourers ", the committee, on the basis of work done in its
presence, maintained this classification for two of them and
decided to put the others into the next higher category, " skilled
workers ". Many other cases could be quoted to show that full
use is made of this joint body.
Remuneration
The schedule of m i n i m u m hourly rates of pay has been
fixed as follows for the urban and rural establishments in the
province of Turin:

INDUSTRIAL

RELATIONS

Urban establishments

Rural

Supple- Standard
ments
rates

Standard ' Basic
rates
rates
Lire

Specialist workers
Skilled workers
Specialist labourers
Ordinary labourers
Apprentices (18-20 years)
Apprentices (16-18 years)
Women employed on machines or benches
Women labourers, or
women employed on
simple jobs
Boys under 16

3.50
2.75
2.45
2.25
1.60
1.40

=
—
=
=
=
=

2.60
2.05
1.80
1.65
1.20
1.05

establishments
Supplements

Basic
rates
Lire

+
+
+
+
+
+

0.90
0.70
0.65
0.60
0.40
0.35

3.25
2.60
2.30
2.15
1.55
1.30

=
=
=
=
=
=

2.40
1.95
1.70
1.60
1.15
0.95

+
+
+
+
+
+

0.85
0.65
0.60
0.55
0.40
0.35

1.70 = 1.25 + 0.45

1.55 = 1.15 + 0.40

1.55 = 1.15 + 0.40
0.90 = 0.65 + 0.25

1.40 = 1.05 + 0.35
0.80 = 0.60 + 0.20

It will be seen that the relation between the basic rate and
the standard rate is fixed in such a way that the workers earn,
on an average, 35 per cent, above the m i n i m u m basic rate.
Standard rates serve for the calculation of holidays, fines,
various compensations, and the percentage increase for overlime. They also constitute the wages of workers paid by the
day, whether ordinarily or exceptionally.
As a matter of fact, nine-tenths of the F.I.A.T. workers are
paid by the piece. In accordance with the principle set out
above, their wage-scales are calculated by taking the basic wage
increased by 35 per cent. In fact, Article 9 of the collective
agreement lays down that piece rates should be so fixed that
a diligent worker of average capacity may be able to earn a
m i n i m u m wage 35 per cent, above the basic wage.
From the workers' side an attempt has been made to secure
acceptance of the view that Article 9 guarantees not only the
basic wage but also the supplement of 35 per cent. This interpretation was not admitted, since it would have defeated the
purpose of piece work, which is precisely to stimulate working
capacity: the wage a worker is " able to earn " does not mean
a " guaranteed " wage, and the Article should be taken only as
the rule to follow for fixing piece rates in such a manner that
the average worker is not prevented from earning at least the
standard wage. The workers have a guarantee, however,
inasmuch as the following Article, Article 10, provides that if

THE

F.I. A.T.

ESTABLISHMENTS

the /piece wages for any fortnight fall~ below the average, the
trade unions are entitled to intervene through the medium
of delegates specially chosen for the purpose from among the
workers in the establishments concerned. In such cases, the
corresponding employers' associations delegate authority to the
management of these same establishments, and an attempt is
made to reach agreement. If this is not possible, the way to
the corporative and judicial authorities naturally remains open.
This is another typical case of intervention of the trade
associations in the factory, effected moreover at the instance of
the workers themselves. And since the basis of grouping for
computation of the average might vary in such a way as to
render this intervention ineffectual, the workers have secured
that the percentage in question shall refer to the whole establishment when it does not employ over 1,000 persons, and to
the main sections when it does, provided that not less than
800 are assigned to any one section.
To obtain the average percentage piece wages, the hourly
basic wage is multiplied by the hours spent on piece work by
each worker and all the totals so found are added up. The
percentage difference between the aggregate piece wages and
the aggregate basic wages constitutes the average piece wage
percentage as verified by the trade association.
The F.I.A.T. management states that normally piece rate
earnings show an excess of about 80 per cent, over basic wages.
This figure appears to be confirmed by various reports to which
the representatives of the Office were given access. For example,
the Italian Aeronautical Company gives the following percentages: March 1928, 66.63; April 1928, 64.12; May 1929, 83.13;
November 1929, 100.32; December 1929, 102.82; the Aircraft
Engine Section gives: March-April 1928, 71.5; November 1929,
85.7; December 1929, 87.1; the Special Coachbuilding Section :
March 1928, 74.43; April 1928, 77.40; November 1929, 83.26;
March 1930, 78.35; and the Ironworks: March-April 1928,
77.48, and October-November-December 1929, 84.30.
For the calculation of piece rates, the F.I.A.T. has adopted
the Bedaux system. It will be remembered that the Bedaux
unit is the work that a normal man can accomplish in normal
conditions in one minute. The normal output per hour is
thus 60 Bedaux units, for which the worker is assigned a

INDUSTRIAL

RELATIONS

certain sum, which varies with the nature of the work done.
Output in excess of 60 Bedaux units per hour entitles the worker
to a bonus. The amount of Bedaux bonus is arrived at by subtracting the normal number of Bedaux units (the number of hours
on piece work multiplied by 60) from the number of Bedaux units
produced by the worker (i.e. the n u m b e r of pieces turned out
multiplied by the number of Bedaux units assigned to each piece).
The F.I.A.T. awards the workers Bedaux bonuses at 75 per cent.
of the rate for normal output, the remaining 25 per cent, being
reserved to the supervisory staff.
The statistics of output in Bedaux units of Bedaux bonuses
and of the bonus earned by each worker are recorded in special
tables posted u p daily in the works.
Piece-work accounts are settled monthly, but every week
the firm makes a payment on account corresponding to the
worker's basic wage. In order to be entitled to this advance,
a worker must have been present at least twenty-four hours in
the current week, and sixty-four hours in that and the preceding week together.
Wherever possible, the chain system of working is
employed in the F.I.A.T. Consequently, piece rates are mostly
team rates, and the earnings are divided among the individual
members in proportion to their basic wages. In the case of
work paid at individual piece rates, the machines concerned
are fitted with special output reckoners for the accuracy and
proper working of which the machine-minders themselves are
responsible. In individual piece work, if there are throw-outs
due to unskilfulness or carelessness on the worker's part, one
of the controls deducts them from the output for all the workers
concerned in the operation, between that control and the next.
Thus the unskilfulness of one worker is detrimental to all the
others, and hence the system ensures homogeneity of the team,
regularity of the tempo of working and solidarity of the whole
body of workers, who have an equal and mutual interest in
maintaining efficiency.
To conclude the consideration of wages it only remains
to speak of the payment of overtime. The schedule of rates,
as provided for in Article 13 of the collective agreement, is as
follows:

THE F.I.A.T.

(1)

ESTABLISHMENTS

Overtime on working days:
(a)
(6)

for the first two hours' overtime, 20 per cent.;
for subsequent hours, 50 per cent.

(2) Overtime on public holidays: all hours are remunerated by
an increase of 40 per cent, if worked in the morning, and 60 per cent.
if worked in the afternoon.
The percentages for holiday work are not granted for Sunday work
when compensatory rest is given.
(3) Night work is remunerated by an increase of 20 per cent.,
and for this purpose day work is taken to comprise the twelve hours
following the commencement of the morning shift.
For overtime during the night, or overtime by workers who have
been on duty during the night, the higher percentage increase is paid.
Stabilisation

Employment

Mention should be made of a special application of the
provisions of Article 6, paragraph 4, of the metal-working
agreement (which lays down that normal working hours may be
reduced by two a day if the work so requires), namely, the
introduction in the F.I.A.T. of systematic arrangements with
the object of guaranteeing relative stability of employment to
the manual workers. In the report for 1929 presented to the
meeting of shareholders, the grounds for such arrangements
were set out in the following passage:
" The outstanding cause of this depression (the reference is to the
economic depression which took shape during the last quarter of 1929,
following upon the American stock exchange collapse) is also to be
found in America, where — to keep to our own branch — the motorcar industry, which as a result of overestimating consumption had
increased its output by appoximately 32 per cent, in the first few
months of 1929 as compared with the corresponding period of 1928,
brought the year 1929 to a close with a general reduction in output
affecting all factories.
" The F.I.A.T., taking a cautious view of the market position.
contented itself with a programme of production adjusted to the
potential market, and this policy has proved completely satisfactory.
" The actual output of motor-vehicles in the course of the year
was lower than in 1928, but deliveries were higher, with the result
that the turnover for 1929 was better than that for 1928 and the stock
of vehicles accumulated during the winter of 1928 was cleared as
desired. This stock had been accumulated because production had not
been sufficiently decreased during the months of reduced sales, the
reason being the wish to keep the workers fully employed. But experience has shown that such a policy was responsible for serious
derangements in the workshops, besides entailing heavy expenditure
for the undertaking as a whole.
" Since it is now beyond dispute that the consumption of cars
during the winter is greatly reduced, and since, further, it is undesirable

INDUSTRIAL RELATIONS

to accumulate stocks both for the reasons set out above and because
the cars will no longer be brand new or up to date when business
revives, it will be necessary to continue the policy followed during the
past few months, whereby timetables and hours of work are so arranged that output is always adjusted to sales.
" To achieve this purpose it will be necessary to take appropriate
steps by means of agreements with the employers' and workers' associations, which, it is suggested, might concur in the workers' reaping
a reward for the extra hours worked in the spring and summer and so
securing compensation for the short time worked during the autumn
and winter. "
This plan was put into effect by crediting the workers
in the F.I.A.T. motor-car works employed for less than forty.
hours a week during November, December and January with
forty hours' work and paying them standard wages (basic wage
plus supplement). The amounts paid for the hours not worked
are recovered by way of deductions during the weeks in which
over forty hours are worked.
The debit items and the deductions are clearly shown on
the pay-cards. Generally speaking, the entries have not been
questioned from the workers' side, nor has the firm incurred
losses on account of the advances made.
Bearing in mind the aim of this measure, which is to gua
rantee stability of employment and thus meet the greatest need
felt by Italian workers, it can even be said that once the scheme
had been properly explained, the firm happily overcame the first
brief doubts due to the fear that the result might be to assimilate
the motor-car industry to a seasonal industry and so affect hours
of work and overtime pay.

Paid Holidays;

Other

Provisions

The collective agreement, in accordance with the declarations of the Labour Charter, also secures for the workers other
important rights. Those with at least twelve m o n t h s ' service
are allowed six days' holiday with pay, the date depending on
the requirements of the work.
A call to the colours for military service automatically terminates the contract of employment; but when the service is
concluded, the worker is entitled to preference in any future
engagements of staff, and to recognition of the seniority acquired
before being called u p . In the case of recall to the colours or
to the national militia, the worker is entitled to keep his post

THE

F.I.A.T.

ESTABLISHMENTS

without loss of seniority. This right is also enjoyed by sick
workers for three months, after which, in the case of dismissal
or inability to resume work, they are awarded the compensation
for dismissal.
In the case of the closing down or transformation of the
undertaking, the staff preserve their rights under the new ownership, unless these rights have been duly terminated by the former
owner.
The discharge or resignation of workers is subject to one
week's notice, but the undertaking may exempt workers from
continuing to work after notice. Compensation in the case of
dismissal or death (in the latter case payable to the husband or
wife, or to surviving near relatives) amounts to:
1 day's standard
2 days' standard
fourth ;
3 days' standard
fifteenth ;
4 days' standard

pay for the first complete year of service ;
pay for each year of service from the second to thepay for each year of service

from

the

fifth

the

pay for each subsequent year of service.

In addition to allowances for holidays, seniority, and dismissal, as provided for in the collective agreement, the F.I.A..T.
grants an annual seniority bonus when the establishments are
closed for stock-taking, at the rate of eight h o u r s ' basic pay for
every three years' service.
The firm also employs a system of special bonuses for
encouraging useful suggestions respecting research, improvements, simplifications, new equipment, new manufacturing
processes, etc. The workers may submit such suggestions to
the management in writing and illustrate them with sketches
and plans. For this purpose special boxes are provided in alt
the establishments. The bonus may be granted by way of encouragement, even if the suggestion is not a practical one, and in
any case the rights of the worker making it remain intact.
To judge from the documents relating to some of these
suggestions, kindly shown to the Office representatives, the
majority have been made by skilled workers, heads of sections
of workshops, etc. One of them received a premium of 1,000 lire
for an apparatus for painting lines on motor-cars without a brush.
Another received 2,000 lire for an appliance to be fitted on W h i r e
automatic presses for collecting armature discs after cutting, and
for a new type of press for cutting metal strips. The manage-

INDUSTRIAL

RELATIONS

ment has commendatory letters placed in the files of the workers
concerned and pays the greatest heed to all suggestions of this
kind.
Settlement

of Disputes

Reference has already been made to the special procedure
applicable to certain disputes. Ordinarily, complaints follow the
usual disciplinary procedure and are settled directly between
the workers concerned and their superiors.
W h e n a dispute arises out of the execution of the contract
of employment, it should be submitted before legal action is
taken to the competent employers' and workers' trade organisations with a view to conciliation. To this end the association
receiving a complaint must immediately communicate it to the
other contracting association. Disputes, as already mentioned,
are investigated and handled by the staff office.
The first step in the procedure is that the employers'
association, namely, the Federation of Metal-Working, Mechanical Engineering and Associated Industries, formally notifies
the firm of complaints against it, with which the Federation
has been requested to deal by the corresponding workers'
association, the Piedmont Federation of Fascist Industrial Trade
Unions. Complainants are allowed recourse to the courts only if
agreement is not reached by the employers' and workers' associations within two weeks after the communication of the file.
The Turin trade union journal publishes monthly statements
of disputes which it has not been possible to settle in the workshops and which in consequence are brought before the employers' and workers' associations. These statements show, for
each category, the number of individual and collective disputes
dealt with and their causes, and also the amounts recovered as
a result of favourable settlements. The metal-workers, as is
natural having regard to their numerical importance in Turin,
always loom large in the statistics. The journal also quotes
various special cases that are particularly noteworthy; they mostly
turn upon compensation due, calculation of seniority, rights to
holidays, time tables and shifts, payment of overtime, classification of occupations, and the like.
One of the most frequent causes of disputes is the status to be
assigned to a given worker — whether he is a manual worker
(operaio) or a salaried employee (impiegato) — for the purpose

THE F. I. A. T.

ESTABLISHMENTS

of deciding whether the period of notice of dismissal has been
duly observed, and of awarding the proper compensation. This
question arises more particularly in respect of heads of section
(capi reparti), team foremen (capi squadra),
foremen (capi
operai), overseers (sorveglianti), and watchmen (custodi), terms
that cover a variety of duties and require each case to be judged
on its merits.
The discussions are conducted in a perfectly loyal and cordial
spirit. Although in the F.I.A.T. works, for the reasons of principle already set out, works committees are no longer allowed,
yet it must be admitted that the broad-minded policy of Mr. Agnelli
in the matter of, industrial relations has not changed with time.
In every section of the works are to be found trade union representatives, who proceed on practical lines and are allowed full
liberty by the firm in the performance of their duties. It is well
known, in fact, that a modus vivendi in this connection was
quickly found in the Turin industrial circles, which are
dominated by the F.I.A.T., and that the question of recognition
of trade union representatives had its origin elsewhere. In
practice this question is of no interest to the F.I.A.T., because
its workers meet frequently at the trade union offices, each
category and establishment in t u r n ; and on these occasions trade
union representatives and works correspondents explain specific
problems — which are subsequently taken up officially by the
workers' and employers' organisations — and discuss them with
the leaders and with their own workmates, fully and freely, in
well-ordered and well-attended meetings.

FACTORY MEDICAL DEPARTMENT AND ACCIDENT PREVENTION

The F.I.A.T. medical department is divided in two : the
factory medical department, and the outside medical, department
for the mutual-aid funds. Only the former will be dealt with in
this section.
The factory medical department, in the charge of one of
the most renowned health experts in Turin, with the special
collaboration of an oculist, has its headquarters in the Lingotto
establishment. The premises consist of:
(a) A large waiting room, on the walls of which statistical tables
show the number of sick workers cured every month, of workers
treated for slight injuries, and of eye tests carried out.
INDUSTRIAL

REI. VTÏON.S

INDUSTRIAL

RELATIONS

(b) A consulting room equipped in conformity with the most
modern requirements, and furnished with all the necessary instruments,
including a powerful magnet for extracting metal particles from the
eye.
(c) An office in which are compiled card indexes of all workers
engaged, and of those who for some reason or another are re-examined
subsequently. On these indexes are based the summary tables already
referred to.
Eleven nurses, men and women, are attached to the
ambulance room, and thirteen others are distributed over the
five floors of the building, in touch with the medical headquarters
by telephone. The nurse on duty renders first-aid and calls the
doctor for any further treatment that may be required.
A medical department on similar lines has been set u p in
every F.I.A.T. " section ", and to secure a continuous service for
the workers a " medical guard " has been established, whose spell
on duty exactly coincides with the factory hours.
The primary duty of the factory medical department is to
make a preliminary examination of applicants for employment,
as provided for in Article 6 of the collective agreement. The aim
of the examination is to ascertain the state of health and working
capacity, the greatest importance being attached to eyes and ears,
and recourse being had, if necessary, to supplementary tests, e.g.
radioscopie or laboratory tests. When engaged, every manual
worker or salaried employee is given a medical certificate exactly
specifying his general state of health.
The general body of workers is divided into three main
categories: strong, medium and weak. This classification makes
it possible to allot workers of suitable strength to the different
jobs. For instance, w o r k on steam hammers and forges is
considered as heavy work, on which only those in the first
category should be employed; work on machine tools is
considered as average work suitable for those in the second
category, and bench work as light work suitable for those in the
third category.
A proper and thorough system of vocational guidance has
been set on foot in the F.I.A.T. trade school, which will be
described in the following section. Here the pupils are medically
examined on admission and are re-examined periodically during
the course, which lasts three years, so as to enable a continuous
record to be kept of their general state of health and of the state

THE

F.I.A.T.

ESTABLISHMENTS

of the organs most used or affected in the work for which they
show special inclination.
In addition to preliminary examinations, the medical department carries out periodical examinations (every two or three
months according to the work) of workers employed on jobs
specially dangerous to their health (sanding, galvanising, radiographing of metals, etc.). These examinations are very thorough
and include every organ. For such workers the F.I.A.T. has also
taken out special insurance policies, beyond the statutory
requirements, to cover the occupational diseases they are liable
to contract.
The health of the rest of the staff, w h o are not periodically
examined, is under the supervision of the salaried employees' and
manual workers' mutual-aid funds, which will be dealt with
subsequently. It is the F.I.A.T. manual workers' mutual-aid fund
that notifies the medical department of cases requiring special
curative measures such as clinical observation, hospital or sanatorium treatment, transfer to sections of the works more suitable
to the workers' state of health, etc.
Lastly, both slight accidents not necessitating absence from
work and those making rest essential are treated in a suitably
equipped dispensary. For more serious cases, w h e n institutional
treatment is required, agreements between the firm and the city
hospitals make it possible to arrange for accommodation and
treatment without delay. Three ambulances are available for the
transport of the seriously ill or badly injured.
The F.I.A.T. takes considerable trouble to compile statistics
of the movement of workers in the various establishments. A
record is kept of all cases coming within the purview of the
medical department, and a statement is drawn u p every day of
the number of workers present and absent, with particulars of
the causes of absence, including diagnoses of illnesses.
These statistics are published for every section with the
object of instilling a spirit of emulation into the workers; and the
firm contemplates introducing a system of bonuses for workers
who have not been absent at all during the course of the year.
The medical department is also responsible for the hygienic
condition of the establishments and the plant.
All technical plans are submitted to the factory doctor for
his opinion, and every installation is examined by him from

INDUSTRIAL

RELATIONS

the hygienic point of view. The various sections of the establishment are subjected to periodical examinations.
An intense propaganda is also carried on in the form of
pamphlets distributed to the workers and foremen, which deal
with domestic hygiene, industrial hygiene, social hygiene
(alcoholism, syphilis, tuberculosis), etc.
The F.I.A.T. belongs to the National Association for the
Prevention of Industrial Accidents (Associazione nazionale per la
prevenzione degli infortuni sul lavoro), a body with statutory
powers, and is, in consequence, bound to adopt all measures of
protection and to submit to all measures of supervision decided
upon by the Association.
When at work all workers wear suitable clothing, either
combination overalls or suits, i.e. blue jackets and trousers for
those in the machine shops and grey for those in the bodybuilding shops. The women wear black caps; in addition, those
whose work exposes them to risk wear combination overalls
instead of their ordinary clothes; the others wear a black apron.
Almost every machine is driven by its own motor, and it is
the firm's intention that this system shall be the absolutely general
rule. Transmission belts are all vertical. Reference has already
been made to the ample size of the ventilation hoods in departments in which noxious vapours are given off — in the varnishspraying department for instance.
The wearing of masks in these departments, and of goggles
in the foundries and other departments where sparks and particles
can easily fly off, is strictly enjoined and is the general practice.
Striking posters h u n g in all the workshops call the special
attention of the workers to the chief accident risks to which they
are exposed on different jobs. Frequent lectures with lantern
slides or films are given in the premises of the Recreation Association (Dopolavoro),
questions of hygiene and accident
prevention alternating with questions of sport and culture so as
to keep u p the interest of the workers, w h o come in large n u m bers and pay close attention.
The medical department also plays a large part in accident
prevention work, periodically inspecting the establishments to
see that the proper safety measures have been taken and any
changes suggested for the better safeguarding of the workers carried
out. Precise instructions have been given to the foremen with a

THE

F.I.A.T.

ESTABLISHMENTS

view to securing full and constant observation both of the general
regulations and of the special workshop rules. In addition, the
department submits detailed reports, compiled from information
acquired in investigating accidents, to the factory management,
accompanied, if need be, by a request to give effect to any
technical or disciplinary suggestions aiming at improved safety
conditions wherever possible. It was at the suggestion of the
medical department, for instance, that special exhaust plant was
constructed in the engine-testing rooms and the mudguard
spraying and drying departments; that a change was made in
the petrol and water solution used for washing motor bodies,
and that the workers employed on Bliss automatic presses were
required to use tongs when stamping small articles.

VOCATIONAL EDUCATION

Vocational education adapted to the special requirements
created by the methods and processes employed in the F.I.A.T.
workshops appeared to the directors of the firm as one of the
most pressing and essential features of the plans for the
reorganisation of the undertaking worked out immediately after
the war.
The schools were actually established in March 1922. They
cater for two distinct categories of pupils, and consequently form
two distinct institutions: a school for apprentices and an evening
school (scuola del dopolavoro) for adults. The aim of the former
is, by means of a two-year supplementary course (so called
because supplementary to the tuition given in the trade schools,
whose certificate or its equivalent is required for admission '
and a further one-year specialised course, to train staff for analysing and directing manufacturing processes — draughtsmen,
costing clerks, technicians, superintendents, etc. The adult school,
on the other hand, is intended for older workers who desire to
improve their knowledge and efficiency and so secure promotion.

The trade schools (scuole di avviamento al lavoro) form part of the
general educational machinery of the State, and have unified lower
secondary education, which follows upon the ordinary elementary education and is required of boys who intend to become skilled workers.

.54

INDUSTRIAL

School for

RELATIONS

Apprentices

Application to take the first course may be made by sons
and other relatives, between the ages of fourteen and seventeen,
of persons employed by the F.I.A.T. and associated undertakings.
An entrance examination serves to test the applicants'
ability to express themselves simply in Italian and to do easy
arithmetic quickly; and it also gives an idea of their keenness
of perception, level of intelligence, and powers of observation.
Use is made for this purpose of wall charts and pictures combined
with practical questionnaires, and of apparatus for psychotechnical analyses.
The decision as to admission is taken by the management
and is without appeal. When admitted, every apprentice undergoes an examination by the firm's medical adviser and submits
to the workshop regulations and discipline.
The school year begins on 1 September and lasts eleven
months. Every day the pupils are given theoretical tuition for
the first two hours, the remaining six of the normal workshop
time-table being devoted to practical work.
The subjects taught in the first supplementary course are
arithmetic, geometry, practical mechanics and geometrical
drawing; and in the second course, workshop mathematics,
practical physics, general technology of metal-work, and mechanical design. For the third year, the theoretical tuition comprises a course of general knowledge in which are briefly
illustrated, with lantern slides or wall charts, outstanding
achievements of modern industry, such as the damming of a
valley with hydro-electrical installations, the manufacture of
illuminating gas, etc. The course is completed by concise lessons
in industrial history and geography (lectures on new railway
lines, world navigation routes, inventions, the development of
Italian industry, etc.).
Another course comprises general
notions of the F.I.A.T. undertaking, and the different manufacturing departments and occupations.
This course, too, is
followed by special tuition relating to the occupation or department selected by the pupil.
The first year of the practical
courses begins with elementary manufacturing processes and
aims at making the pupils familiar with the use of the most
important machine tools. In the second year the pupil passes
through the various departments in turn so as to gain practical

THE

F.I.A.T.

ESTABLISHMENTS

knowledge of the chain of manufacturing processes. In the
year of specialisation, the pupils spend the first five months in
making the round of the different departments so as to accustom
themselves to the co-ordination essential in manufacture; the
other six months are spent, at the pupil's choice and subject to
a favourable report by the teaching staff, in a specific manufacturing occupation under the orders of the head of the department.
The rules that govern the framing of school reports and
examination papers are based on the notion of gradual and strict
selection. Pupils found below standard by the board of teachers
are struck off the register after the first three months. A.t the
end of the first half-year of the first course the apprentices
undergo an examination, which is the basis of a second
elimination; and similarly at the end of the course. A last
examination in every subject taught is held at the end of the
second course. No examination is held in general knowledge
subjects so as not to oblige pupils to strain their memories at
the cost of not acquiring more necessary knowledge; it is
however the teacher's duty to satisfy himself in the course of
the year that in these subjects the pupil has made notes and
sketches that will be available for subsequent use. Likewise, no
examination is held for the certificate for the specialised course.
The decision as to promotion is given by the board of teachers
ori the basis of the apprentice's work as described in the written
reports of the teachers in charge of the theoretical subjects, and
of the various heads of departments under whom the apprentice
has been placed during the course.
Evidence of the results achieved is furnished by the following
table showing the numbers of admissions and promotions from
the first year of the school's existence to 1928-1929:
1922-1923

1st course

admissions : 80
promotions : 45

1st course

admissions : 30
promotions : 15

2nd course

admissions : 45
promotions : 18

1st course

admissions : 36
promotions : 19

2nd course

admissions : IS
promotions : 10

1923-1924

1924-1925

INDUSTRIAL

RELATIONS

admissions : 37
promotions : 20

1925-1926
) admissioTis : 19
) promotions : 12
\ admissions : 32
( promotions : 17
1926-1927
{ admissions : 20
'( promotions : 16
admissions : 43
'} promotions : 25
1927-1928
admissions : 17
promotions : l'i
\ admissions : 45
'( promotions : 20
1928-1929
\ admissions : 24
( promotions : 18

The apprentices are not required to pay any school feesj
on the contrary, they are paid for all time spent in the classroom or the workshop at the minimum rates laid down in the
National Metal-working Agreement.
Adult School
The adult school course consists of a year's general tuition
covering the most important features of manufacturing, and a
second year of specialisation with practical exercises in the
various departments of the factory.
The first course is open to F.I.A.T. workers between twenty
and thirty years of age. Applicants must state the date of
joining the firm, educational certificates if any, situations held
and any other practical experience. Preference is given to those
applicants who in the course of a brief oral examination in
general knowledge are found to be the most suitable, and, in the
case of equal merit, to those with the longest service.
Unjustifiable absence is taken into account in the general
report at the end of the course, and any person is considered as
having left if he has been absent without due cause three times
running or five times altogether during the month.
The theoretical course lasts the school year of ten months
beginning on 1 October. The lessons are given immediately
before and immediately after working hours, special regard

THE F . I . A . T .

ESTABLISHMENTS

being paid to shifts. Tuition is given for one and a half hours
a day, five days a week.
The pupils undergo an examination at the end of the first
course before a special board of workshop officials. The best
are awarded special prizes and certificates. The particular
aptitudes shown by those who pass are taken into account in
assigning them to specialised courses, and if possible promoting
them in the factory.
The pupils in the second course are judged by the same
board on the basis of the practical knowledge gained in the
specialised courses, and their attainments are improved by a
spell, or by a succession of spells, in the different departments,
with a view to eventual appointment, as the needs of the undertaking allow, to more responsible and better-paid posts.
The adult school pupils, like the apprentices, pay no fees,
but naturally they are not specially paid.
To give an idea of the results achieved by the school, it will
suffice to mention that there were 240 names on the registers
for the first course, held in 1925; and of the 127 who
passed the examination, 44 were selected for posts of foreman,
examiner, etc.
In 1926 there were 86 entries and 68 passes; in 1927 no
course was held for reasons of internal organisation; and in
1928 and 1929 entries numbered 148 and 115 respectively and
passes 37 and 32. About 50 per cent, of those w h o passed
were selected for special posts.
The school premises consist of an entrance hall, two classrooms, and a larger room for drawing. During the lessons
great use is made of plans, wall charts and pictures, and lantern
slides, so as to retain the pupils' attention.
Drawing is done on special inclined desks with T-squares,
but during the year of specialisation the pupils are trained to
use ordinary tables with guide-rules and pantographs.
For workshop exercises special spaces are set aside in the
shops themselves, and here the finer processes are carried on, so
that the work from its very first stages is learnt in the actual
workshop under the same conditions as those of the ordinary
worker.

INDUSTRIAL

RELATIONS

THE F.I.A.T. SOCIAL INSTITUTIONS

Italian industrial workers are compulsorily insured against
industrial accidents and occupational diseases at the employer's
cost (conception of occupational risk) ; they are also compulsorily insured against invalidity and old age, unemployment,
and, by a recent Act which came into force on 1 January 1929,
tuberculosis. The cost of the last three schemes is borne in
equal parts by workers and employers. Their administration
is entirely in the hands of the National Social Insurance Institute,
a public body under State supervision \
Insurance against tuberculosis has been instituted as a first
step towards general insurance against sickness, which is still
under consideration with a view to legislation. In the last few
years, however, sickness insurance has spread considerably in
the form of occupational mutual-aid societies set up under
collective agreements. This is the form that it takes in the
F.I.A.T., where, with the moral and material support of the
firm, two mutual-aid funds are in existence, one for the salaried
employees and the other for the manual workers.
The Salaried Employees'

Mutual-Aid

Fund

This Fund was founded on 13 January 1921 by forty-seven
members of the F.I.A.T. Salaried Employees' Association (Associazione impiegati Fiat), which will be described below. In the
teeth of many difficulties, which the smallness of the original
membership only served to increase, the Fund has gradually
attained to considerable proportions.
Membership is voluntary. The rules provide for three
categories of members : the general category, to which all
members belong, with a right, therefore, to the usual benefits,
i.e. medical and legal aid, the grant of special benefits as
authorised by the board of management in cases brought before
it from time to time, the admission of their children to the
seaside colonies organised by the Fund, facilities for obtaining
1
Women workers between fifteen and fifty years of age are also
compulsorily insured under a maternity scheme, the employers paying
four-sevenths of the contribution and the insured persons three-sevenths.
This scheme is administered by the same Institute.

THE

F.I.A.T.

ESTABLISHMENTS

loans without interest, etc.; category A, the members of which
are entitled to daily sickness benefit; and category B, securing
a grant to heirs on the members' death. Membership of categories A and/or B is voluntary.
The monthly contributions are 1 lira for the general
category, 4 lire for category A, and 2 lire for category B. Sickness
benefit is at the rate of 10 lire a day for the first ninety days
and 20 lire a day for the next ninety days. In this the Fund has
reversed the usual practice, its view being that it is just when
illness is prolonged and income is falling off (compare the
provisions of the Act on private employment summarised above)
that extra help is needed. The amount payable to heirs in the
case of death is 1,000 lire.
W h e n a salaried employee leaves the firm he is not struck
off the Fund's books; which is a notable benefit because few
undertakings in Italy employ so many persons as to permit of
internal mutual-aid funds that will continue to grant their
benefits to employees in other undertakings.
The Fund obtained its first resources by securing from the
F.I.A.T. management control of the fines accumulated in the
previous years and amounting to 118,671.59 lire. Four-fifths of
this amount was invested with a view to using the interest to
provide extra benefits for members, for instance, in the case of
sickness lasting more than six months, chronic disease not otherwise giving the right to benefit, etc. The interest on the
remaining fifth is reserved for aid to members w h o find themselves in serious difficulties but under the rules cannot be
otherwise assisted by the Fund.
The F.I.A.T. has afforded the Fund considerable moral and
material help in other ways: it gave 150,000 lire on the occasion
of its twenty-fifth anniversary, and other grants, as will be seen,
have been made for the seaside colonies. . The firm has also
agreed to deduct members' contributions from their salaries, and
provides the Fund with free office accommodation in one of its
own buildings.
Gifts by members form another source of extraordinary
income. At the end of the last financial year, the assets of
the Fund, after deducting all liabilities, amounted to 649,402.38
lire. There are now 3,985 general members.
The following table gives for the last three financial years
the membership of categories A (sickness benefit), the number

INDUSTRIAL

RELATIONS

of members in receipt of benefit, the number of days of sickness
compensated, and the total amount of benefit paid :
1927

1928

1929

Membership of category A on 31 December . . 1,693
1,685
1,991
Members in receipt of benefit
245
515
364
Days of sickness compensated
6,504
9,795 10,284
Total amount of benefit paid (lire) . . . .
17,037.50 114,690 113,740

In addition, new forms of assistance have been introduced:
bonuses for large families, maternity benefit amounting to 200
lire payable to women who have belonged to category A. for at
least a year, refund of a percentage of expenditure on drugs.
Specially noteworthy is the creation some years ago of seaside
colonies (one month at the seaside for the children of members
and of certain ex-members or deceased members, for which the
contribution payable by the family was first fixed at 240 lire and
subsequently reduced to 150 lire). In 1927, 76 children were
sent to the seaside at a total cost of 5,554.85 lire; in 1928, the
number of children was increased to 100 and the expenditure,
partly owing to the reduction of the family contribution, rose
to 18,954.65 lire; in 1929, 113 children were accommodated at
a cost of 23,293.70 lire. The firm has contributed 35,000 lire.
The Manual Workers' Mutual-Aid Fund
This Fund has been in existence since 1923, and is thus
older than the collective agreement in force. It had its own
independent management, and membership was compulsory for
all manual workers, both men and women, employed in the
F.I.À.T. and subordinate undertakings. The monthly contribution was 5 lire for men and 4 for women, and the firm
contributed 10 lire per year for every worker on the Fund's
books. The daily sickness benefit was 10 lire for the first three
months and 5 for the next three in the case of men, and 8 and
4 lire respectively in the case of women. In addition, the Fund
allowed medical, surgical, and pharmaceutical benefit free of
charge to workers, and at reduced rates to members of their
family. The death benefit was 500 lire, and maternity benefit
200 lire. The board of management was composed of four
members appointed by the Fascist trade unions from among the
workers in the firm's employ, and four members selected by the
firm, which also appointed the director (direttore), the choice of
the chairman (presidente) being left to the trade unions.

TUE F.I.A.T.

ESTABLISHMENTS

As a consequence of the collective agreement already
discussed, the Fund was reorganised; and under the rules now
in force it exists for the following purposes:
(a) to grant members daily benefit at a rate fixed in advance
for a fixed period of sickness;
(5) to provide them with free medical treatment and drugs;
(c) to make grants to the family on a member's death;
(d) to make grants to women members who are confined;
(e) to provide members' families, at reduced rates, with
medical, surgical, and obstetrical treatment, and possibly with
drugs.
The Fund also proposes to grant special financial assistance
to any members in urgent need, and to promote all better
methods of assistance and provident schemes for the benefit
of its members.
The present monthly, contributions are 3.50 lire for men,
2.50 for women, and 1.75 for all members under eighteen years
of age. The firm pays a contribution equal to that of the
members. The daily benefit for the first three months
is fixed at 10 lire for men, 7 lire for women, and 5 lire for young
persons; for the following three months the rates are halved.
Benefit is paid weekly. Members w h o draw the full six m o n t h s '
benefit are not entitled to any further benefit for another year.
Naturally, no benefit is paid in respect of sickness due to industrial accidents, tuberculosis (in so far as the member benefits
from the statutory scheme), injuries received in affrays, sickness
or injury due to attempted suicide or abuse of alcoholic
drinks, etc. The death benefit payable to the consort or other
dependent relatives is 400 lire, and the maternity benefit 200 lire.
Half the board of management, including the director, are
appointed by the Fascist Union of Metal-Workers for the Province
of Turin ; and the other half, including the managing director
(amministi'atore
delegato), by the Federation of Metal-Working,
Mechanical Engineering and Associated Industries.
The general medical treatment granted by the Fund is
entrusted to twenty-one doctors in the city of Turin and sixty-five
in the communes of the province. There are four dispensaries
for the city and two for the remainder of the province.
Each doctor is assigned an area in which he is responsible
for attending members, either at home if they are seriously ill,

INDUSTRIAL

RELATIONS

or at the dispensary if they are able to go there. Serious cases
requiring special treatment and confinement to bed are always
treated in the city hospitals, where patients are periodically
visited by the F u n d ' s inspectors. The Fund has secured special
terms from these hospitals, and also a reduction of 60 per cent.
in the m i n i m u m rates of the Obstetrical Association. Drugs
are supplied at a large number of pharmacies, selected with
particular reference to their position for the special convenience
of members living on the outskirts of the city.
In addition to the general medical service, a group of five
specialists is attached to the Fund who treat members free of
charge. These are for : general surgery; obstetrics and gynaecology; ophthalmology; diseases of the nose, throat and ear;
skin diseases, venereal and syphilitic affections. In addition,
for particularly serious cases, there is a body of consulting
specialists, and these have all the resources of the laboratory at
their disposal for exact diagnosis. A special agreement with
the Mauriziano Hospital at Turin secures for members radiological treatment and all forms of physical treatment in a modern
building.
The report of board of management for the period ending
31 December 1929 (fourteen months, because the reorganisation
of the Fund took effect on 1 November 1928) contains the
following figures :
Membership
Men
Women
Young persons under eighteen years
Total

26,357
3,637
829
30,823

Days of Sickness
Full benefit

Men
Women
Young persons

134,619
52,822
2,851

Half benefit

Men
Women
Young persons

23,845
10,121
465
224,723

The average n u m b e r of days of sickness for which benefit
was paid, a figure affected by the influenza epidemic during the
first quarter, was 5.35 for men and 13.83 for women.
During the course of the year 173 death benefits, 150 mater-

THE F . I . A.T. ESTABLISHMENTS

nity benefits, and 295 extra benefits were paid, and a number
of members were supplied free of charge with orthopaedic
appliances. In support of the Government's campaign for a
higher birth rate, 330 special maternity bounties of 100 lire were
granted to members' wives. In 1928 201 layettes were distributed
and 400 in 1929.
The assets of the Fund at the end of 1929 were 3,488,455.88
lire, towards which the firm contributed 1,000,000 lire on the
occasion of its silver jubilee. The contributions received during
the. year amounted to 2,919,768.50 lire, and, adding interest and
other small items, the total income reached 3,113,474.89 lire.
Outgoings were as follows:
Lire

Administrative expenses
Medical and pharmaceutical benefit, ordinary
and extraordinary
Dispensary
• Sickness benefit
Maternity beneiit . . . . '
Death benefit
Miscellaneous
Balance

. . . .

206,874.26
544,715.55
59,269.51
1,891,531.00
30,000.00
69,200.00
361.85
2,801,952.17
311,522.72
3,113,474.89

These is also a reserve fund to a total amount of 292,842.90
lire, of which 137,050.75 lire is accounted for by disciplinary
fines. This fund is drawn upon for extraordinary expenditure,
which for 1929 was as follows:
Lire

Special maternity benefit
Extraordinary benefit
Orthopaedic supplies
Holiday colonies
Miscellaneous (layettes, depreciation, etc.)
Balance

33,000.00
26,078.55
767.30
181,329.65
42,069.35
283,244.85
9,598.05
292,842.90

Particular mention must be made of the seaside colony
installed at Chiavari on the Ligurian coast for members' children. It is named after Tina Nasi Agnelli, the only daughter of
the president of the F.I.A.T., who died in childbirth. In 1929,
507 children were accommodated at a cost of 221,684.90 lire. To
the expenditure borne by the F u n d should be added 30,000 lire
given by the firm, and the proceeds of the small admission fee
paid by parents.

INDUSTRIAL

RELATIONS

It is the intention of the Fund to erect a suitable building
for the colony, which grows from year to year.
The Agnelli

Sanatorium

The Agnelli sanatorium is an institution which owes its
existence entirely to the personal enterprise and munificence of
the president of the F.I.A.T. Although not reserved exclusively
for the use of the staff, it may justly be considered as an integral
part of the F.I.A.T. system of social institutions, as members of
the staff enjoy a preferential right to admission. It is on this
ground that it may claim a short description here.
The Sanatorium is situated near Fenestrelle in the Valle
Chisone district (Cottian Alps), and stands on the plateau of
Pra Catinat (altitude 18,000 metres). It is a truly model institution, and is open to persons suffering from incipient pulmonary
tuberculosis, or convalescing from other forms of tuberculosis
treated elsewhere, and enjoying good general health with little
fever and a steady pulse. Other stages of the disease are treated
in appropriate institutions.
Insurance against tuberculosis having become a statutory
matter, the Agnelli family have made over to the National Social
Insurance Institute 120 beds for the use of persons (both
manual workers and salaried employees) in the tuberculosis
insurance scheme who are in the condition described, and subject
to absolute preference being given to those employed in the
F.I.A.T. group or to the husbands of women employed in
the F.I.A.T. group.
Co-operative

Gardens and Dwelling

Houses

When, in the first years after the war, monetary instability
and scarcity of commodities brought about a precipitate rise in
prices and consequently dear living, the F.I.A.T. promoted the
foundation of an agricultural co-operative society and allowed
it the free use of a piece of ground, where the workers could
grow vegetables in their spare time. Encouragement was also
given to those seeking a way out of the difficulties created by
high rents and evictions, and in this way the first F.I.A.T.
Workers' Co-operative Housing Society was formed, which built
a group of twelve four-family houses satisfying the modern
demand for ccunfort and hygiene.

THE

F.I.A.T.

ESTABLISIIME.NTS

The site was made over by the F.I.A.T. on favourable terms,
which also helped in procuring the necessary credit so that
workers with sufficient small savings to make the initial payment might acquire ownership by the payment of instalments
covering the rent and redemption charges. The initial payment
was fixed at 10,000 lire, the monthly instalment per room at
60 lire, and the redemption period at fifteen years.
Owing to the perseverance of a n u m b e r of technicians and
employees organised on the lines of the earlier co-operative
society, a second group of houses in the F.I.A.T. village sprang
u p in 1927. It was composed of sixteen two-family villas, each
apartment of which had a small kitchen garden.
Thus the F.I.A.T. village now comprises twenty-eight
houses with accommodation for eighty families. They form
an attractive group, which will gain in appearance and value in
the near future when the town-planning scheme for this part of
ihe city is carried out.
F.I.A.T.

Workers'

Dwellings

Apart from the co-operative enterprise just described, the
F.I.A.T. has presented 170,000 square metres of land to the City
of Turin and the Institute for Workers' Dwellings (Istituto delle
case popolari) for the construction of dwellings, accommodation
in which is to be offered to its own workers in the first place.
On these plots there have already been built three groups
of multi-storied houses, each group containing about 2,000
rooms, divided into two-, three- and four-roomed dwellings
provided with a bathroom, electricity and gas. Two of the
groups adjoin the F.I.A.T. co-operative village, and a third is
in the northern district of the city near the F.I.A.T. works (steelworks, metal-works, heavy-engine works, Piedmont Ironworks).
Accommodation in the houses is allotted on the workers'
application to the staff office of their own establishments. They
must state the number of rooms required, the composition of
their family, and their present address. The lists of applications
drawn up by the staff offices of the various establishments are
transmitted to the F.I.A.T. staff department, which forwards
them to the Institute for Workers' Dwellings by which the
accommodation is finally allocated. It has also been agreed upon
with the Institute that F.I.A.T. workers already living in houses
INDUSTRIAL

RELATIONS

INDUSTRIAL

RELATIONS

owned by it shall be given preference in the allocation of
accommodation in the newly-built groups if by moving they will
be nearer to their place of work.
Workers'

Club

(Dopolavoro)

What may be regarded as the first F.I.À.T. institution to
organise the workers' spare time, the F.I.A.T. Salaried Employees' Association, was founded in June 1920 with the following
principal aims:
(a) To promote contact and friendly relations between members
by means of meetings and entertainments;
(b) To promote the education of the members by lectures,
possibly visits to industrial establishments and shipyards, and the
provision of a reading room arid library;
(c) To promote the physical education of the members by the
creation of sports clubs;
(ci) To protect and help members io the extent that the funds
allow in case of illness or straitened circonstances due to adversity;
(e) To promote, by moral support and with the means available
under the rules, the foundation of provident institutions for the members' benefit.
The activities of the F.I.A.T. Salaried Employees' Association,
which has built up a membership of about 600, have taken the
following forms:
(a) Cultural: excursions; lectures on travel, questions of hygiene,
topical questions; courses in motor-car technique, languages, shorthand,
embroidery, dressmaking, music, and dancing; educational visits to
industrial establishments, electrical plant and power stations, and
wine-growing and agricultural undertakings;
(b) Recreation: theatricals, outings, fetes;
(c) Sport: bowls, billards, chess, etc.
It would take too long to enumerate all the forms of
recreation engaged in by the F.I.A.T. staff — from s w i m m i n g
competitions to gymnastic tournaments, from mountaineering
to camping; it will suffice to say that the directors are unanimous in considering that all this sport has had a very marked
disciplinary effect.
The Legislative Decree of 1 May 1925, setting u p the National
Recreation Institute (Opera Nazionale Dopolavoro),
found the
F.I.A.T. perfectly prepared to accept and apply it. The firm
concluded agreements with representatives of the Institute, by
which the arrangements for its schools, houses and mutual-aid
funds were left unchanged, and took steps to incorporate its

THE

F.I.A.T.

ESTABLISHMENTS

semi-educational institutions (Salaried Employees' Association,
Sports Club, etc.), in the new national organisation. This
organisation, in fact, provides for various types of association,
adapted to the various forms of industrial and agricultural labour.
One, the " factory club " (Dopolavoro aziendale), is more particularly suited to workers who are grouped together in large
undertakings. In the F.I.A.T. the old sports and recreation institutions have thus been gathered together and co-ordinated in
the new F.I.A.T. Workers' Club (Dopolavoro aziendale Fiat).
The new organisation, continuing the fruitful activities
which it promises to develop and extend, has secured the collaboration of prominent members of the old institutions.
The president of the F.I.A.T. Workers' Club is appointed
by the management of the firm, subject to ratification by the
provincial recreation institute. With the help of the managing
board (Direttorio) he draws up the general scheme of activities
and the fundamental rules, and maintains contact with other
institutions set up by the F.I.A.T. at home or abroad. The
managing board, the size of which is not fixed, is also appointed
by the F.I.A.T. management on the proposals of the president
of the F.I.A.T. Workers' Club, and again subject to ratification
by the provincial recreation institute. It includes the managers
of the chief F.I.A.T. undertakings, an arrangement which allows
all groups of occupations to have a say in the discussion of
schemes, so that everyone's wishes can be taken into account in
framing them. To the secretariat are assigned administrative
and publicity duties, such as accounting, registration and classification of members by undertaking and group, reports and
statistics of various activities, subscriptions to newspapers and
magazines, etc.
The F.I.A.T. Workers' Club consists of two main divisions
(raggruppamenti), corresponding to its two main branches of
activity: the Sports Division and the Recreation Division. Each
of these is presided over by a member of the managing board.
These divisions are subdivided into groups (gruppi), each
of which is under a " group adviser " assisted by a technical
committee. Both the adviser and the committee are appointed
by the manager (direttore) of the division subject to ratification
by the president (presidente). A brief account of the activities
of these groups is given below.

INDUSTRIAL

Sports

RELATIONS

Division

T h e S p o r t s D i v i s i o n , t h e p u r p o s e of w h i c h is direct p h y s i c a l
t r a i n i n g , c o n s i s t s at p r e s e n t of t h e f o l l o w i n g g r o u p s :
Mountaineering
and winter sports group, for whose use winter
headquarters, to be described below, have been established at Bardonecchia.
Athletics group, which caters for the devotees of light and heavy
athletics, gymnastics, walking, the pentathlon, tug-of-war, etc.
Bowls group, which has the use of the special greens required for
this traditional and popular pastime, ¡aid out in the suburbs near the
workers' housing estates .
Boating group, which, with over 450 members, is one of the most
flourishing,
and includes a w o m e n ' s section. It provides for both
ordinary rowing as promoted by the National Recreation Institute, and
the training of crews to take part in races arranged by the competent
national sporting federation \
The group's headquarters are in the central offices of the W o r k e r s '
Club, described below. It owns thirty-five ordinary rowing boats and
ten racing boats.
Siüimming group, formed out of the boating group, with which it
used to be combined.
Tamburello group, which plays a game that is popular in Piedmont and has sent one of the most successful of the teams taking part
in competitions.
Rugby group, which has its own ground by the side of the association football ground near the central offices.
Fencing group, with a very large membership, increasing from
year to year.

It should be explained that the Italian sports clubs are grouped in
national federations, which, in turn, are affiliated to the Italian National
Olympic Committee. The representatives of this Committee and of the
National Recreation Institute have marked out their respective spheres as
follows : the National Recreation Institute undertakes all sports propaganda
among the masses ; it may organise events of every kind, in which its
own members as well as members of sports clubs registered with the
National Olympic Committee may take part, provided that the actual
participants are not personally so registered. Official sports contests, on
the other hand, may only be organised by the National Olympic Committee,
and none but those holding the Committee's card are allowed to enter.
The recreation institutions (istituzioni dopolavoristiche) have also important duties of selection, in that they enable members who have a decided
aptitude for sports to come under notice, and so join organisations
affiliated to the Olympic Committee when they possess the qualifications
laid down by the Committee for the various categories of sport.
The F.I.A.T. boating group, like other groups, including the athletics
group described above, makes this kind of selection, which accounts for
its division into an ordinary rowing and a racing section, as mentioned
above.

THE F.I.A.T.

ESTABLISHMENTS

Tennis group, with a membership of about 100, including 60 girls.
Clay-pigeon shooting group, which is also increasing rapidly and
has won notable victories in various national contests.
Football group, which is reviving this ancient Italian game. It
has formed teams representing the various factory sections, and has
organised matches among them which arouse keen emulation.
Recreation

Division

This division is composed of the following groups:
Excursion group, which organises outings with artistic, touristic
and educational aims, for both small and large parties. Their planning
is facilitated by consultation, in the secretariat, of card indexes and
pamphlets, which are carefully kept up to date and contain scale maps
with all necessary particulars, complete programmes for excursions,
useful hints for the journey, estimates of cost, etc. In addition, there
is a large collection of photographs and information on subjects of
natural history, art and economics.
The group has organised, among other outings, a motor-boat
excursion to the seaside colony at Chiavari, in which some thousand
members of the Workers' Club took part. It also organises holiday
camps, one of which, near the Bardonecchia establishment of the Workers' Club, offers the F.T.A.T. staff and their families healthy and
cheap accommodation, and always attracts large numbers.
Apart from the general excursion group, two special groups, have
been organised, one for motor outings and the other for motor-cycle
and bicycle outings.
Theatricals group, which also provides cinematograph and variety
entertainments. It is very active, and it has given many performances
both in the open air and in the Club theatre.
Photography group, whose business it is, inter alia, to supply
photographs illustrating all club activities. It also organises competitions, exhibitions, lectures, practical courses of professional photography, etc.
Indoor games group, at whose disposal there are several billiard
tables, chess and domino sets, etc., at the Club headquarters.
Music group, which, from good material including ex-military
bandsmen in the firm's employ, has got together a much appreciated
band that also gives concerts in the chief public squares in Turin.
Orchestra group, which has taken over the members of the mandoline group of the F. I. A. T. Salaried Employees' Association and
formed a select orchestra, which has given a most successful series of
concerts.
Facilities group, the principal purpose of which is to procure
advantages for all F. I. A. T. workers. Its activities are manifold, but
specially directed towards securing financial advantages, buying various
commodities (fuel, etc.), and concluding agreements with commercial
organisations for the allowance of discount to members of the Club.
One of its tasks is to organise the F.I.A.T. Christmas festivities, during
which the management distributes many thousands of presents to
the workers' children.
F. I. A. T. family excursion group, to which belong near relatives

INDUSTRIAL

RELATIONS

of F.I.A.T. workers, so that they can take part in the events arranged
and enjoy the special facilities granted by the National Recreation
Institute.
Local groups; liaison. Local groups were established to cater for
members of the F.I.A.T. Workers' Club in distant undertakings.
They are carried on under the direction of a manager, whose business
is to maintain contact with the parent institution.
It will be fitting to complete this account with a short
description of the headquarters of the F.I.A.T. Workers' Club.
The building, which is in one of the pleasantest parts of
the city, on the banks of the Po, consists of two stories, the
ground floor being taken u p by the offices, committee rooms,
buffet, store-rooms, boat-sheds and the boating group's dressingroom; and the upper floor, which is reached by a double marble
staircase, by a fine large hall for meetings and entertainments,
a room for billiards and other indoor games, a reading and
writing room, a room for the cups, shields, and other trophies
won in many sporting contests, and lastly the president's room.
The hygienic installations are completed by two sets, for
men and women respectively, of model hot and cold baths and
showers. The roof is laid out as a terrace for sunbathing. The
building is surrounded by an esplanade in which are laid out
tennis-courts, bowling-greens, an open-air skating-rink, playgrounds for members' children, etc.
The F.I.A.T. Workers' Club owns two other large sports
grounds, one centrally situated, and the other near the outskirts
of the town for the suburban working population. The acquisition of other suburban grounds is under consideration. All
will include a football ground with covered stands, a dressingroom, showerbaths, etc., tennis-courts, tamburello courts, children's playgrounds, and gymnasium apparatus.
Finally, a building at Bardonecchia in the Alpine district of
Val di Susa (altitude 1,350 metres) has been equipped to serve as
a summer resort or as a base for winter sports. It was erected on
the site of the former Kursaal, which was destroyed by fire, and
it has been equipped by the F.I.A.T. to provide board and lodging
for 200 persons as well as refreshment to members passing
through. Members of the F.I.A.T. Workers' Club are entitled to
special terms (bed 5 lire, meals 8 lire). The building, which is
surrounded by delightful pine woods, covers 1,136 square metres,
and contains a large assembly hall fitted with cinematograph and
wireless apparatus, etc., and seating 1,000 persons.

THE F.I.A.T. ESTABLISHMENTS

The Library
The F.I.A.T. library is not a part of the Workers' Club, but
it may conveniently be dealt with here because its aims are similar. It was founded in April 1925 at the suggestion of Senator
Agnelli to meet the repeatedly expressed wishes of numbers of
workers' representatives, and is the property of the firm. It lends
books free of charge to employees and workers of the F.I.A.T. and
subordinate undertakings.
The library aims at spreading general knowledge and technical education among the F.I.A.T. staff, and providing wholesome
entertainment for them and their families. To this end a special
juvenile section consisting of about 400 books has been formed.
The library also contains 2,550 volumes of general literature in
Italian, 350 books on various subjects, 300 technical manuals and
treatises, 2,250 books in French, 100 or so in English, many in
German, as well as 160 periodicals and a good selection of reference works. At present there are about 7,000 volumes in all,
and the number is growing rapidly thanks to annual grants from
the firm.
The library is run by a conscientious and disinterested
committee appointed by the factory management from among its
own salaried and manual staff.
The staff may consult the catalogues, which are kept up to
date, in the salaried and manual staff offices in each establishment, or in the offices of heads of workshop sections, at special
times outside normal working hours; they may also make written
and signed suggestions, which are periodically examined, for the
purchase of new books.
CONCLUSIONS

The description, as exact as possible, here attempted of the
conditions of life and work in the F.I.A.T. reveals the operation
of two principles generated out of the recent social struggles in
Italy; the principles, namely, of the hierarchical organisation of
the private undertaking, and of the recognised standardising
powers of the trade associations and their co-ordinating bodies
exercised under State guidance and control.
The principle of the hierarchical organisation of the undertaking is derived from the responsibility towards the State for the

INDUSTRIAL

RELATIONS

management of production, which rests entirely upon the employer as expressly stated in the Labour Charter, the organic law,
as it were, of the Fascist corporative system. Fascism, as will
have been seen, has excluded from the F.I.A..T., as from all other
Italian industrial undertakings, every form of so-called industrial democracy. But the principle being established, there is
no lack of practical adjustments: we need only recall the purely
practical part played by the works correspondents; the right of
entering the works enjoyed by the joint trade committees for the
purpose of checking the classification of workers; and finally the
intervention of the firm's own workers, although in the capacity
of delegates of the trade unions, for the purpose of discussing
piece-rate averages with representatives of the management.
This power of intervention, however, is strictly defined. Not
only is it confined to the cases mentioned, but it does not extend
beyond the ascertaining of facts. It is only the results of the methods
adopted by the firm for the fixing of piece rates that the workers'
representatives have the right to scrutinise, not the methods
themselves. For instance all attempts on the part of trade unions
to discuss the Bedaux or similar systems have encountered an
insuperable obstacle in the principle that the technical direction
of production, like the analysis of costs, is a matter for the employer.
This point, which has been enlarged upon in the preceding
pages, is one of the best fitted to show how the two principles of
factory hierarchy and trade union protection operate and at the
same time interact.
But while these instances, to which others could be added,
suffice to show clearly the working of industrial relations and the
form they now take in Italy, it is equally important to realise the
purpose towards which they are directed. In Italy employment
is a greater problem than wages: the abundance of labour and
the need of absorbing an ever-increasing supply due to an annual
increase of about 450,000 in the population give special prominence to questions of placing, stability of employment, mobility
of labour and emigration. In these circumstances, the methods
of industrial rationalisation to be adopted in Italy assume a special
form that cannot but be influenced by the supply of labour. The
development of the F.I.A.T., which has always had an eye to
increasing its staff, and the sleps, described above, taken to ensure
the staff stability of employment and remuneration spread uni-

TUE

F.I.A.T.

ESTABLISHMENTS

formly over the busy and slack seasons and to avoid the error of
over-stocking — steps taken in agreement with the trade associations and the Government itself — show that the management
has been fully awake to the nature of the problem.
One last consideration requires a few words. Up to this point
industrial relations have been spoken of as though they came
into being almost automatically through the mere interplay of
institutions and the application of general measures. But hierarchical discipline and the automatic interplay of institutions can
scarcely produce their full effect if they are not quickened by an
inner conviction, and if the logic of the system finds no acceptance in the minds of men. This acceptance is given only where
there is confidence that those possessing supreme authority are
fully worthy of their position. In the F.I.A.T., the continued
presence of the same man at the head of management and organisation since the very beginning shows that he possesses the confidence of those w h o have collective responsibility for r u n n i n g
the undertaking. But an incident, not yet forgotten in Turin or
indeed Italy as a whole, proves that this same confidence is no
less profound in the great mass of the workers. In the autumn
of 1920, when the tide of political and social revolt was at the
flood and the occupation of the factories an accomplished fact,
w h e n feverish attempts were being made to find a logical formula to crown the revolutionary movement and disputes were
raging between the leaders of the various parties and trade union
factions as to how far their victory could take them, the F.I.À.T.
workers, who were among the most advanced and seemed bent
on proceeding to the most extreme forms of social revolution,
offered Agnelli the direction of the collective undertaking they
proposed to establish.
An incident like this can throw more light on the life of
an undertaking than any enquiry, however exhaustive, into its
organisation and working.

THE PHILIPS WORKS
T H E UNDERTAKING

Eindhoven is in Dutch Brabant, not far from the Belgian
frontier. In 1891 it was no more than a little town of 4,500 inhabitants, deep in the Campine moors; but in that year Mr. Frederik Philips and his son, Mr. G. L. F. Philips, engineers from a
neighbouring village, Zaltbommel on the Waal, bought u p some
buildings that had been used as a small textile works and established an incandescent lamp factory. Thirty men were employed. No one could then have seen, in this event, the beginning of a development which was to make Eindhoven the
nucleus of a populous area of nearly 100,000 people and one of
the greatest centres of the production of electrical apparatus.
A few industries had already been established in the neighbourhood, but none had developed on any large scale. The
oldest, the manufacture of textiles, was giving employment to no
more than 400 workers when the cigar industry was introduced
towards the end of the nineteenth century. A match factory was
opened in 1870, and this was followed in 1883 by a woodworking
shop.
The early history of the Philips works was modest and even
embarrassed. The absence of a qualified staff and the cost of
plant and equipment held u p progress, and at the end of three
years there was question of closing down. It was eventually decided to carry on for one year more, the results in 1894 were
better, and it was possible to continue production. The balance,
for the first time, did not show a loss for the year's working, and
in 1895 the undertaking reached the profit-making stage which
was soon to lead to expansion.
From this time on, the history of the firm may be divided
into two periods. The first of these, which extends until the war,
saw the works transformed from the little family business it had

INDUSTRIAL RELATIONS

been to a potentially great undertaking, but it still produced nothing but lamps for electric lighting, adapting its equipment and
the type of article produced to the changes in demand caused by
successive inventions and the movement of public taste. The
staff increased from 42 in 1895 to 400 in 1900 and 3,100 in 1915.
At the beginning of this period Mr. G. L. F. Philips, w h o had until
then borne the full burden of the technical and commercial management, felt that the business had become over-centralised, and
his brother, Mr. A. F. Philips, the present head of the concern,
therefore took over the commercial management.
The second period, which began about 1915, is characterised
by a still more rapid growth. In 1920 the Philips works had a
staff of 6,725 workers and salaried employees ; 1921 was a year
of depression and the figures fell off somewhat, but from 1922
to 1929 progress was almost unbroken, as the following table
shows :
Year

1920
1921
1922
1923
1924
1925

.
.
.
.
.
.

. .
. .
. .
. .
. .
. .

.
.
.
.
.
.

Staff

Year

6,725
5,345
6,337
7,241
7,560
8,245

1926
1927
1928
1929
1930

Staff

.
.
.
.
.

8,172
10,998
16,877
22,487
19,197

The growth of the Philips works during this second period
was not, as was the case until the outbreak of war, due merely
to the manufacture of incandescent lamps, but also to two other
factors — the vertical concentration of production by means of the
establishment of allied undertakings, and, particularly in recent
years, the development of the trade in wireless apparatus.
The policy of concentration was adopted under pressure of
necessity. Until 1915 Philips had imported the bulbs for their
lamps from Germany and Austria. At the beginning of that year,
however, the export of glass from these two countries to the
Netherlands was suddenly prohibited. This meant a complete
standstill for the Philips works unless some other source of
supply could be discovered before existing stocks were exhausted.
Philips decided to supply themselves; on 15 August 1915 the construction of a glass works was begun; and on 5 January in the
following year the first bulbs were delivered to the lamp factory.
A second tank furnace was opened in February, and there are now
11 of these, in which mechanical blowing is being gradually
substituted for hand blowing. The glass works produces 360,000

THE PHILIPS WORKS

bulbs and a large quantity of tubes and rods daily ; and thanks
to it the Philips undertaking has made itself completely independent of foreign supplies.
Other allied processes have since been exploited. As soon as
the tungsten filament lamp was invented, Philips undertook the
extraction of the pure metal (tungsten) from the ore (wolfram).
In the same way, they adopted in 1915 a secret process for the
production of argon, the gas which they had already used to fill
their lamps but which till then had been produced exclusively by
a German firm. The other gases they require — for instance
neon, which has been so widely used in the last few years for
electrical publicity signs — have also since been produced on the
spot. In 1919 it was decided to set u p a cardboard factory, which
produces some 65,000 square metres of corrugated cardboard
daily, and this was followed in 1927 by a paper works for the
supply of the paper used in the process.
The production of wireless apparatus has been an even more
important factor in the great expansion of the Philips works since
the war, and is now so large that it alone gives employment to
about half the total labour. In 1918 Philips began to manufacture
valves for receiving and transmitting sets ; in 1924 they embarked
on the construction of transformers and anode potential apparatus ; in October 1926 they passed on to loud speakers, and in 1928
to receiving sets.
There is no room in this study for a detailed description of
the manufacture of the Philips products, and is must suffice to
note certain tendencies that characterise the production policy of
the undertaking and have a direct effect on its labour conditions.
The first of these is the tendency to mechanise production.
Circumstances alone — the inability of the little country town to
supply the necessary labour from its own population and the great
expense entailed by importing outside workers and transporting,
housing and acclimatising then — would have been sufficient to
convert Philips to the policy of mechanical labour ; but the head
of the undertaking was already, by nature and conviction, its
most fervent supporter. He was creating a new industry and was
therefore not hampered by having an established situation to consider. The glass works is the only branch of the industry in
which mechanisation tends to throw out of work men already
employed, while elsewhere growth has been sufficiently rapid to
enable workers w h o are no longer needed in one department by
reason of a technical innovation to be absorbed immediately in

INDUSTRIAL RELATIONS

another. Thus the only effect that mechanisation has had on the
size of the staff is to retard its increase in relation to that of production. The large-scale introduction of mechanical methods
induced Philips to set up a special factory, employing 900 men,
for the principal purpose of making the machinery used or to be
used in their various producing departments. This factory enables them to profit immediately by the most recent discoveries
and improvements, and to realise without delay those of their own
engineers without surrendering their secret.
Mechanisation has been accompanied and supplemented by
the greatest possible division of labour. Processes whose complexity and delicacy would seem to indicate the necessity for
highly specialised labour have been split up, after careful analysis,
into a series of actions performed by a chain of unskilled workers.
In the wireless assembling room, for instance, it is interesting to
see the empty cases, fresh from the carpentry shops, enter the hall
at one end, pass slowly down the line of workers on a moving
belt, disappear at the other end into a testing room, and, by the
action of an automatic contract, " speak " to the specialist who
has to test their tone.
Finally, the industries in which the Philips works engages
must, more than many others, constantly adapt themselves to
keep u p with technical progress and inventions which expose
them to an almost daily threat of disaster. Even before the war,
when they produced nothing but incandescent lamps, Philips had
to overcome difficulties of this sort. Over and over again, new
inventions revolutionised production and necessitated fresh apparatus. In 1907 came the substitution of metal for carbon filament,
in 1911 the appearance of the gas-filled lamp with spiral filament.
Philips soon realised that in order to beat their competitors it was
not enough to adopt inventions made elsewhere and apply them
with a m i n i m u m of delay, but that they must take the initiative
and study unceasingly, in their own works, how to perfect their
manufacturing processes. They therefore extended their laboratory, a step which has served them well, not only in research on
their principal products — lamps and wireless apparatus — but
in that on their subsidiary products, such as glass, generating
gases, etc. About 80 scientists and engineers work in this research
laboratory, and its total staff is as high as 400. Attached to it is
a large semi-industrial workshop where the inventions and new
methods of production are worked out, adapted, tested, perfected,

THE PHILIPS WORKS

and, if necessary, analysed with a view to mass production, before
they are definitely introduced into the factories.
It may be true that this phase of creation and constant change,
through which every new branch of industry must pass, is now
less marked in electric lamp manufacture than in that of wireless
apparatus ; but it is none the less, for the undertaking as a whole,
a serious obstacle to the standardisation of production, for if sales
fall off temporarily it is more than risky to accumulate stocks of
costly articles which may suffer a serious loss in value before they
are disposed of, through some new technical improvement or
change in the popular taste. It is all the more difficult to stabilise
production in view of the additional fact that the Philips works
depends on the foreign market for the sale of 95 per
cent, of its goods, and an increase in customs tariffs or a ban on
importation, such as that imposed in Australia at the beginning
of 1930, may deprive the undertaking at a blow of a large proportion of its sales.
Philips have, of course, a sales organisation, to which they
have given special attention, and they depend on this in facing
the risk of instability. They have sales offices in twenty-seven
European and twelve extra-European cities, and the principal
members of this service meet annually to study possibilities of
increased turnover and to decide, in agreement with the technical
department, on the types of product whose sales seem the most
assured and on the forms that will correspond most exactly with
the public taste. Philips can thus make an advance estimate of
the extent and nature of sales and arrange their production programme in accordance.
But, despite these precautions, they are obviously exposed to
the dangers of the loss of individual markets and a general fall in
sales. It is true that up to 1929 these risks did not prevent the
steady growth in their turnover, and that they were able on the
whole to recoup such decreases as occurred in certain lines and at
certain moments by increases in other directions ; but in 1930
the undertaking was affected, despite these efforts, by the general
depression, and between January and April of that year the staff
had to be reduced from 22,500 to 19,500 by means of a demobilisation whose economic side will be explained later \
It should be added, to complete the above sketch, that Philips
have established large factories, which apply their methods of
1

See p. 105.

INDUSTRIAL R E L A T I O N S

manufacture, in Italy, Poland and Belgium, and have acquired
a controlling interest in certain undertakings in other countries.
The following table gives an indication of the development and
the financial results of the whole business since 1920 \
Capital
(orci, shares)

1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930

Gross
profit

Net
profit

Dividends
(ord. shares)

Gulden

Per cent.

15,000,000.00
15,000,000.00
15,000,000.00
15,000,000.00
15,000,000.00
30,000,000.00
30,000,000.00
30,000,000.00
75,000,000.00
75,000,000.00
187,500,000.00

10,150,817.08
6,041,329.73
3,944,241.34
5,638,650.86
6,211,207.88
7,497,551.83
9,066,581.58
14,105,927.74
29,208,975.81
42,951,604.03
12,780,340.93

10,150,817.08
1,560,000.00
2,659,547.23
3,544,931.38
4,429,465.08
5,300,593.32
6,183,003.86
11,559,981.81
18,710,103.64
21,482,963.45

31
11
11
11
16
16
16
21
21
21
6

—

THE STAFF

In October 1930 the Philips works at Eindhoven gave employment to about 19,500 workers and salaried employees, while the
other works and offices owned by Philips in the Netherlands and
abroad employed some 15,000 more, a grand total of nearly 35,000.
The picsent study will consider only the works at Eindhoven.
The most striking characteristic of the staff of these works is
the recent date at which, on the whole, it was recruited. It quadrupled in numbers between 1921 and 1929, and more than doubled between the end of 1927 and the end of 1929. Allow for the
normal movement of staff, and it may be estimated that at the end
of 1930 nearly two-thirds of the total had been employed in the
works for less than three years ; only 1,000 to 1,200 had been in
Philips's service for more than twelve and a half years, and 18 for
more than twenty-five years.
It is a natural consequence of this recent recruiting that the
average age of the staff is relatively low — from 26 to 27 in the
unskilled grades. It was of course not always possible, in the
periods of engagement en bloc like that of 1928-29, to select only
those age groups which seemed most likely to adapt themselves
1

In 1912 the original family firm was converted into a limited company
with a capital of three million gulden.

THE PHILIPS WORKS

successfully to the modern working methods in vogue in the
Philips factory ; but young workers have always been preferred.
This is particularly necessary in certain workshops in the electric
lamp factory — those, for instance, where the filaments are
mounted, and where such keen sight, fine sense of touch and
suppleness of the fingers are necessary that as a rule only young
workers succeed in passing the preliminary tests. At present there
are 8,000 workpeople of under 18 years of age.
If the staff is grouped according to sex, it is surprising to find
that only 4,766 of the 19,500 persons employed at Eindhoven are
women, despite the circumstance that certain workshops in the
lamp factory employ almost exclusively female labour. The management makes no secret of the fact that it would have favoured
the engagement of women on a larger scale if circumstances had
allowed — if, for instance, the works had been near a large industrial town, where it could have relied more exclusively on female
labour, leaving the men and lads to find employment in such
other factories as provide work more especially suited to them.
But this was not the case at Eindhoven, where the only
other industries of moment are tobacco, with 4,430 workers, and
textiles, with nearly 1,800. Philips were therefore compelled to
collect whatever labour they could find in the region, without
distinction of sex. Further, it should be remarked that as a rule
Philips do not engage married women, and they encourage the
retirement of those who marry while in their employment.
Lastly, the distribution by sex — as also, be it noted, that by
age — of the staff at Eindhoven has been largely determined by
the recruiting policy adopted by the management when the great
expansion took place.
As far as it required skilled workers, it turned inevitably to
the industrial centres of the Netherlands, and tried to obtain from
them the necessary labour, largely through the medium of the
employment exchanges. If the required specialists could not be
found in the country, it went abroad for them, and so it is that
there are still 400 foreign workers in the undertaking, either
Belgians from the Charleroi country or Germans from the Rhineland and the centre; almost all these are metal workers, and were
brought to Eindhoven and established there at Philips's expense.
To find the unskilled workers, who, owing to mechanisation
and division of labour, compose by far the largest part of the staff,
it was not necessary to undertake such expensive long-distance
recruiting ; the management was able to cover its requirements
INDUSTRIAL

RELATIONS

INDUSTRIAL RELATIONS

in the neighbourhood. First of all, in order to reduce housing
difficulties to a m i n i m u m , as many workers as possible were
recruited within a radius which permitted them to return home
daily, by bicycle, train or motor coach. Thus, until 1929, 1,600
Belgian workers came daily to Eindhoven and returned home
at night, though they lived some 30 to 40 kilometres away. Even
to-day Philips's cars fetch 60 young glass workers from their
homes beyond the frontier and return them after the day's work.
But this methodical recruiting in the Eindhoven area was not
sufficient ; most of the new workers had to be sought out at a
greater distance and settled in the neighbourhood. Some of them
came from Dutch Limburg and a larger number from Drenthe,
a rural province which was at that time suffering from depression.
But—and this is an important characteristic of the Philips recruiting policy — the company's agents were instructed, as far as was
practicable, to bring whole families, capable each of them of supplying Philips with as many workers as possible. 700 families,
averaging eight to nine persons each, were thus transplanted, and
four or five per family were employed in the works. As has been
mentioned, Philips did not, on principle, engage the mothers,
w h o in most cases had to look after several small children. As a
social experiment it was also decided not to employ the fathers
w h o were too old, but steps were taken to find them farms where
they could continue their former profession of farming and stock
raising.
Trade unionism is not highly developed in the Philips works.
This is by no means surprising if the circumstances described are
borne in mind, namely that a large proportion of the workers are
under 18 years of age ; that a considerable number are women,
who are, all over the Netherlands, much less organised than the
men (in 1919 only 6.6 per cent, of the members of Netherlands
trade unions were w o m e n ) ; and that the large majority of the
unskilled workers — particularly numerous, as has been said, in
the Eindhoven works — are of country origin.
No exact figures concerning the organised workers employed
by Philips are available, but an idea may be obtained from the
fact that there were 5,632 organised workers in private industry
in Eindhoven in 1929, and that 2,408 of these were employed in
the cigar and textile factories. It is therefore clear that of more
than 20,000 workers employed by Philips, not more than 3,000
were then organised. Most of these belonged to the skilled

THE PHILIPS WORKS

groups, and worked in the glass works and engineering shops l .
The organised workers may be divided into three groups, in
accordance with the tendencies of the three principal workers'
federations in the Netherlands. About half belong to the Catholic
Federation (Roomsch-Katholiek
Werkliedenverbond
in Nederland) ; next in importance come the Socialist and Protestant organisations (Nederlandsch Verbond van Vakvereenigingen
; Christelijk Nationaal Vakverbond in Nederland).
It should, however, be
noted that this division of the Netherlands trade union movement
according to political or religious views by no means precludes
steady co-operation for social purposes, and that in particular the
three federations mentioned above are in general agreement on
questions of organisation and of action, if not on final aims.
Staff

Administration

The task before the Philips management was to recruit,
absorb, mould to industrial life, initiate in the newest methods
and acclimatise in the shortest possible period thousands of
workers from country districts with no industrial traditions, a
task which demanded great organising activity and the utmost
care in the selection of the methods to be used.
It was its fundamental policy in this respect systematically to .
assist the producing departments — already fully occupied as they
were with the technical development of the undertaking — in all
questions relating to the staff by assigning these to a n u m b e r of
special services. A comprehension of the relation of the latter to
the rest of the organisation may best be obtained from a review
of the whole.
The managing director of the Philips factory is Dr. A. F.
Philips, the son of the founder; he is assisted by five managers,
three technical and two commercial.
1
Since the beginning of 1930, however, the depression has caused a
large increase in the number oí organised workers. The unemployment
insurance funds set up in the Netherlands under the Decree of 1917 are
almost all directly connected with trade union organisations, so that a
worker who desires to join such a fund can only do so by becoming a
member of a trade union. When economic conditions obliged the
Philips management to reduce staff, the number of persons insured
against unemployment, and therefore the membership of trade unions,
increased rapidly. This movement was most marked among the skilled
workers, less marked among the unskilled, and still less so among the
women.

INDUSTRIAL RELATIONS

Under these five managers there are six services which specialise in questions affecting the staff and w o r k at their solution,
as they arise, in conformity with the management's general policy.
They are administratively recentralised, and responsibility for
them is not allotted severally to individual managers, though
one technical manager deals in particular with social questions.
The names of the services are : (1) economic and social department ; (2) staff department ; (3) health and safety service ;
(4) education department ; (5) recreation department ; (6) medical service. The functions of the four last-named are. clear
enough not to need further commentary ; the sections dealing
with the particular matters for which they are responsible will
describe their duties and the w o r k they have done. On the other
hand, the functions of the " economic and social " and " staff "
departments, which include the fixing of the staff's terms of engagement and working conditions, require some explanation.
The functions of the economic and social department may be
briefly distinguished from those of the staff department by saying
that the former is a research and legislative, the latter an executive, body. The economic and social department draws up the
works regulations, decides general w o r k i n g conditions and settles
standard terms of engagement, dismissal, resignation, etc., while
the staff department deals with recruiting, holds engagement tests,
transfers and dismisses individuals, and allots workers to the different shops according to their personal capacity and the requirements of the undertaking. In the same way, the former department settles, with reference to economic and social factors whose
study it carries on continuously, the general conditions of remuneration, the wage groups, and the basic rates at which workers
should be taken on, while the latter decides each m a n ' s personal
remuneration according to the rules and regulations laid down by
the sister service.
It is obvious that there must be extremely close collaboration
between these two departments ; they have, if not an organic, at
least a practical connection. The staff department must administer daily the regulations laid down by the economic and social
department, and it is therefore clearly bound to turn to the latter
for an exact interpretation of such regulations so that any difficulties in application may be solved as they arise. The economic
and social department, on its side, needs information on such
difficulties, both because it must know whether its regulations are

THE PHILIPS WORKS

correctly applied, and so that it may adapt these regulations in
accordance with their results in practice.
Each of these departments is in direct touch both with the
managers and with the staff of the workshops ; so that the latter,
if they, for instance, believe that a mistake has been made in the
determination of a worker's wage rate, may lay the matter before
the economic and social department as a question of principle
and subsequently request the staff department to rectify the error.
To facilitate such contact, there is a representative of the economic and social department in the workshops, and of the staff
department in each of the main sections of the undertaking.
In order that it may perform its various functions with constant efficiency, the economic and social department is divided
into five services. The first deals w i t h all the questions that may
be included under the heading " legal status of the workers ". It
draws u p works regulations and follows the development of
labour legislation in the Netherlands (including that on social
insurance), in order to realise their consequences for the Eindhoven undertaking. It takes the necessary steps to adapt working
conditions and existing provident institutions to new legislation 1 ; and it prepares in detail the supplementary welfare
measures provided by Philips for the benefit of the staff.
The second service deals with the same questions as the first,
for the staff employed by Philips outside Eindhoven, both in the
Netherlands and abroad. It studies the legal status of the workers
in the countries where Philips have factories.
The third service deals with all questions concerning wage
policy, systems of remuneration, methods of calculating wages,
and the determination of wage scales. It carries out all the sociological investigation required by the undertaking.
The fourth service is concerned with industrial relations proper ; it maintains contact with the trade unions and with workers'
representative organisations within the undertaking. The fifth
service deals with general questions of housing and welfare.
The economic and social department comprises in all 39 em-

1
Nevertheless, the application oí social legislation (the Labour Act,
Acts on accident insurance and safety), which requires a thorough technical knowledge on the part of the undertaking, is one of the functions of
the staff department, whose activity is purely technical, and not of the
economic and social department, which has, as its name indicates, interests
of a different sort.

INDUSTRIAL RELATIONS

ployees, a large number of w h o m have University degrees. Its
competence is not confined to Eindhoven ; though its right of
decision applies to these works alone, within the bounds set by
the management and by regulations in force, it has advisory
powers in respect of the associated undertakings, and can, for
instance, recommend the adoption by these of certain wage and
provident schemes.
The staff department comprises at present some sixty persons ; during the period of mass recruiting in 1928 and 1929 it
had more than 100. It has a recruiting office, a dismissal and
resignation office, a transport office and an office for the study
of time- and piece-rates. A psychotechnical laboratory is attached
to it, and the health and safety and medical services collaborate
closely with it as well as with the economic and social department.
Methods of

Collaboration

The history of the recent development of the Philips works
and the characteristics of its staff have been described in some
detail at the beginning of this study, because a knowledge of these
factors is essential to the comprehension of the present state of
industrial relations in the undertaking.
The two aspects to consider in this connection are the relations of the management with trade unions and the machinery
it has set up in the undertaking itself to secure and maintain
contact with its workers.
As regards its relations with trade unions, it may be noted
in the first place that the management refuses to accept the system
of collective agreements. Wishing to reserve to itself full freedom
of decision in social matters, the undertaking has refrained from
joining any employers' association with power to pledge its members by the conclusion of such agreements with the workers'
organisations. The only organisation of which it is a member
is the Federation of Dutch Employers (Verbond van Nederlandsche Werkgevers),
a so-called class organisation (standorganisatie) whose object is simply to protect the general interests of
the employer class in its relations with the public authorities and
with other classes of society.
The management puts forward two arguments in support of
this desire for independence. It observes, in the first place, that
as regards its main products, incandescent lamps and wireless
sets, the company occupies such an outstanding position in the

THE riIILIPS WORKS

Netherlands that in itself it practically represents these two industries for the whole country, thus nullifyng the argument for concerted action by employers. Secondly, it points out that the
company depends on foreign markets for the sale of 95 per cent.
of its output, and is thus obliged to reserve its full freedom of
action in order to be constantly ready to adapt itself to the changing conditions of these markets. The delays that may be entailed
by the observation of time limits for the denunciation of collective agreements and the negotiations for their renewal, together
with the possibility of having in certain sections, such as the glass
works and engineering shops, to observe the terms of agreements
negotiated by employers' associations, most of whose members
will not have to market their goods under the same conditions —
all this appears to the company to be incompatible with its needs.
It should be noted that Philips are not the only employers in the
Netherlands to adopt this attitude towards collective negotiations,
and that it is especially common among the larger undertaking
of the country.
But although the management will not negotiate collective
agreements with the trade unions, it does not entirely refuse to
enter into relations with them. Here it draws a twofold distinction. In the departments of the factory in which the percentage
of union labour employed is very small the management refuses
to recognise the unions as the authorised representatives of the
workers, and any attempt at intervention by them is simply
brushed aside \ In the other departments, such as the glass
works and engineering shops, where a larger proportion of union
labour is employed, a different attitude is adopted. It is willing
to enter into relations with the unions to which the workers
belong, but draws a second distinction, according to the nature
of the questions at issue.
It is the constant aim of the management to mark off clearly
general questions or questions of principle that concern the working class, or the workers in one occupation, as a whole, from
individual questions or those peculiar to the undertaking itself.
Only the first group of questions it considers to fall within the
competence of the workers' unions. The others are looked upon
1

During recent months such departments have been becoming
progressively fewer in consequence of the development of trade union
organisation (see footnote, p. 83), so that the practical importance of this
distinction appears to have diminished.

INDUSTRIAL RELATIONS

as domestic affairs, and no interference on the part of the trade
unions is admitted. Thus the management is willing to discuss
with the trade unions the principle of holidays with pay and the
number of days' leave to be granted, but refuses to allow them
any say in the detailed plans for the distribution of such holidays
over the year.
Generally speaking, the management carries on these conversations simultaneously with all the various unions concerned,
that is with the unions of the three tendencies mentioned above,
which have members in the Eindhoven works. Similarly, if the
unions wish to put forward a demand, they usually come to an
agreement among themselves beforehand and present it jointly.
The exchange of views is, of course, not intended by the management to lead to an actual agreement, w h i c h would be contrary
to its principle of never entering into collective agreements. Its
discussions with the trade unions, in so far as it consents to hold
them, are of a purely advisory nature, and are not true collective
negotiations.
Side by side with these relations with the trade unions, and
entirely distinct from them, the management of the Philips works
has found it necessary to organise its relations with its staff. It
considers that all domestic matters, not involving questions of
principle should invariably be settled, however small ; but it will
discuss them only with persons w h o have daily experience of
such matters, and who are therefore in its view the only persons
competent to examine them from a practical standpoint. In this
spirit the management has set up a system of workers' representation, the rôle of which should not be confused with that of the
trade unions. The trade union has, in its opinion, a special and
well-defined task : to protect the interests of the workers and give
effect to their collective demands, wherever it may genuinely be
looked upon as their representative, that is, wherever its membership is large enough. But even in an undertaking with a staff
composed exclusively of trade unionists, there would still be room
for a system of workers' representation ; it would indeed be necessary to introduce such a system, since each form of representation
has its own special object. While the community of interests
of the working class as a whole is the justification of trade union
representation, workers' representation in the factory is in its
turn justified by the community of interests that links together
employer and workers in the individual undertaking.

THE PHILIPS WORKS

" The prosperity of an undertaking is not only to the interest
of the employer, it is also in a high degree to the interest of the
workers. " " Only a prosperous undertaking can provide its staff
with favourable conditions of employment, and it is therefore
logical that the workers should be called upon, in their own interests, to maintain and increase this prosperity. " " On the other
hand, without a contented staff the employer cannot obtain a
satisfactory output, and it is therefore essential to his own interests
that he should provide his workers with the most favourable
moral and material conditions possible. " These are some of the
leading ideas developed by Mr. Evelein, head of the economic and
social department, in a speech delivered in 1926 at the Institute
of Engineers at The Hague. Similar principles inspired the management's action w h e n it decided in 1923 to set u p a system of
workers' representation in its factories, namely the works council
known as the " Nucleus " (Kern).
This council was intended by the management as an instrument to maintain between the employer and the staff as a whole
that contact which is too often lost in very large undertakings.
Through it the management would be kept informed of, and
would be able to examine, all the complaints and demands that,
if neglected, might in the long run breed dissatisfaction and affect
the workers' willingness to work. Finally, the council was to
transmit to the management the individual or collective suggestions of the workers concerning the organisation of w o r k or the
works regulations, suggestions which might often be carried out
with equal benefit to the efficiency of the undertaking and to the
workers themselves.
The present works council, or Nucleus, consists of 30 members elected by the whole of the wage-earning staff from a m o n g
its own members. All men of 21 years and over, and women of
18 years and over w h o are paid by the week and have had at
least two years' service with the firm have the right to vote. Men
of 23 years and over and women of 21 years and over with at least
three years' service are eligible for election \ Members of the
council are elected for two years, and elections for half the council
are held each vear.
1

The new rules of the council at present in preparation fix the age
at which men and women workers may vote and be eligible for election
at 21 and 23 years respectively, and the minimum length of service at
one and two years.

INDUSTRIAL RELATIONS

The principle on which the council is constituted is that of
proportional representation of the various groups of union and
non-union labour. Acting on the principle that it would be unfair
and inopportune for one or other of the trade unions to have
greater influence on the council than is justified by its membership among the staff, the rules of the council provide that before
the elections a form shall be distributed to every voter which he
must return unsigned with a statement of his trade union position. Guided by the results of this preliminary consultation, the
management apportions to each group of union members and to
the non-union group its fair share of representatives on the council. Workers w h o fail to return their form are presumed to be
non-unionists.
Every worker has the right to apply to the council on all
questions relevant to its purpose and may make his application
either in writing to the council as a whole or by word of mouth
to one of its members. In order to facilitate the latter form of
procedure, which, being less formal, is less likely to intimidate
the worker, the members of the council take turns, two at a time,
in placing themselves at the disposal of the staff for an hour every
Tuesday evening immediately after work.
The council normally meets once every three weeks outside
w o r k i n g hours. Each member, either on his own account or on
behalf of other workers, submits complaints, requests, proposals
or suggestions, which are discussed, and may be transmitted to
the management or its representatives if deemed expedient.
The management has four representatives : the three technical managers and the head of the economic and social department.
Daily contact with the council is maintained by the latter, who
deals in the first place with all matters referred to him by the
council.
Whenever it is considered expedient, the council is summoned to a joint meeting with the representatives of the management. If all four of these are present at the meeting, one of the
three technical managers takes the chair ; but if only the head of
the economic and social department or one of his assistants is
present, the chairman of the council presides.
Minutes are kept of all the meetings, and copies are circulated among the members of the council and placed in the staff
restaurants. Extracts are also distributed as soon as possible to
any persons whose affairs have been dealt with during the
meeting.

THE PHILIPS WORKS

The scope of the council's competence is very wide. It covers
all questions concerning the interpretation and enforcement of
works regulations (fines, checking of attendance, hours of work,
maintenance of order in the works, entering and leaving of workrooms, alterations in the regulations) ; the application of wage
scales (payment for overtime, holidays with pay, various bonuses,
etc.); changes in the staff (engagement, dismissals, transfers,
transport, etc.) ; hygiene and safety (drinking water, lavatories,
baths, cloakrooms, lighting, etc.); morals ; medical service and
all social insurance questions ; housing (allocation of housing
accommodation, mortgage loans, bonuses, etc.) ; all questions
connected with the institutions set up by the management for the
welfare of its staff (special terms allowed to the workers for the
purchase of the goods produced by the firm, savings funds for the
payment of taxes, relief funds for the indigent, co-operation,
sports clubs, occasional present, etc.), in short all questions that
may be most satisfactorily settled with the help of the workers
themselves.
To sum up, the works council is the instrument through
which opportunity is offered to the wage-earning staff to collaborate not only in regulating and enforcing conditions of labour in
the undertaking, but also in r u n n i n g the many social service
institutions, to be described later, by means of which the undertaking has striven to acclimatise its staff at Eindhoven and to
provide it with satisfactory living conditions.
The wide field of the council's competence is, however, subject to two reservations. In the first place, the management constantly seeks to maintain the distinction between the sphere of the
works council and that which it recognises as proper to the trade
unions. In respect of the sections in which it sanctions the intervention of the trade unions as the mouthpiece of the workers — and
this is now the case throughout almost the whole of the establishment — it avoids submitting to or discussing with the works
council the questions of principle that it has made a rule of settling with the workers' unions. The works council in its turn
refers to the unions any questions submitted to it that it considers
to be within their competence rather than its own.
The second reservation concerns the powers of the works
council. Faithful to its principle of not binding itself by any
form of collective agreement, the management requests and
accepts only opinions of a purely advisory nature. If it acts on

INDUSTRIAL RELATIONS

them, it does so by its own independent decision and not through
the medium of an agreement.
What have been the results of this system of workers' representation ? The management declares itself satisfied.
At the beginning there was reason to fear insufficient co-operation on the part of the foremen, who were afraid that their
authority would be diminished, and disliked seeing their men
elected to membership of the works council. Difficulties of this
sort were, however, successfully overcome and there is now complete collaboration between all parties. The management adds
that most of the workers have realised the services that the system
can render them and make good use of it. Its advantages to the
management itself are threefold. It has enabled it to find out the
opinions of its workers and their hopes and wishes. It has served
as a medium through which the necessity or reason for a measure
that might otherwise have given rise to misunderstanding may be
explained. Finally, it has shown up a number of mistakes unconsciously committed by the management or by its services, and
has enabled them to be corrected by a closer definition of the purpose of the instructions issued or by alterations in the works
regulations, sometimes after consultation with the council.
During 1929 the council held 16 meetings, including three
joint meetings with the representatives of the management, and
during 1930 21 meetings, including eight joint meetings. The
following list of the subjects dealt with at a meeting chosen at
random in 1930 may serve as an example :
Enforcement of regulations for holidays with pay (4 cases) ;
Refusal of request for housing accommodation ;
Compensation for injury involuntarily caused by the undertaking to one of its workers ;
Excessive severity on the part of a foreman ;
Provision of goods produced by the undertaking ;
Dishonesty on the part of a restaurant worker ;
Request for a playground for children ;
Enforcement of wage-scale ;
Deduction from wages of contributions to sickness and pensions funds ;
Enforcement of medical regulations (2 cases).

THE PHILIPS WORKS

No statistics are available of the number of questions referred
to the council by the management, nor of the n u m b e r of complaints, requests for explanation, or proposals submitted to the
management by the council. As regards the result of such complaints, it is interesting to note that in 1930, 59 per cent, were
recognised as justified, 24 per cent, were settled by friendly agreement, and 17 per cent, were rejected as unfounded.
Though the management may be satisfied with the system
of workers' representation it has set up, the opinion of the workers
on the subject is more difficult to ascertain. As has been seen,
the great majority of the workers in the Philips works are either
unorganised or have joined their organisations at a very recent
date ; and in the absence of a collective expression of opinion it
is hardly possible to gather what is thought of the system by
several thousand workers, most of w h o m have been engaged so
recently that as yet they have not even had the opportunity of
taking part in an election for the works council.
On the trade union side, opinion is definitely unfavourable.
The trade unions are undoubtedly prejudiced against the management in advance by its refusal to enter into collective agreements with them. They consider the system of representation set
up under these conditions, purely on the employers' initiative,
as a mere blind intended to combat their influence indirectly by
keeping away from them workers who are still inexperienced in
industrial life. Apart, however, from these general objections,
their criticism is levelled chiefly at the manner in which the
council is constituted. They protest strongly against the principle
of proportional representation, in which they see only a means of
restricting their own influence. Membership of a trade union is
in their eyes a circumstance quite irrelevant to the choice of
members of a works council and should not be alleged as a reason
for restricting such a choice. It is perfectly possible that a worker
who does not himself wish to join a union may yet consider that
a particular worker, who happens to be a trade unionist, is specially fitted by reason of his more extensive experience of industrial life to protect his interests on the council. To refuse h i m the
right of electing such a worker on the ground that he himself is
not a trade unionist is to place an arbitrary restriction on his
choice, perhaps to deprive the staff of an efficient representative,
and, finally, to disregard the real purpose of trade unionism,

INDUSTRIAL RELATIONS

which is not only to protect its own members, but also actively
to defend the interests of the working class as a whole l .
The trade unions further observe that in practice the part
played by the council is inconsiderable ; that the questions with
which it deals are relatively unimportant ; that only a small
proportion of the staff took part in the last elections to the council,
thus demonstrating how little the workers themselves t h i n k of
the institution ; that a council of thirty members is quite inadequate to represent the interests of nearly 20,000 workers belonging
to such various occupations as those comprised in the Philips
works ; and, finally, that it is now more than three years since an
election has been held, a fact which, in view of the great increase
in staff that took place during 1928 and 1929, robs the present
council of every claim to be representative 2 .
The management does not trouble to answer the trade union
criticisms of the rôle and practical importance of the council, and
leaves the entire responsibility for them with their authors.
On the questions of principle it replies by pointing to the distinction that it considers should be made between the sphere of
the workers' organisations and that of the works council. It
recognises the right of the trade unions to champion the interests of the working class as regards general questions affecting
the working class as a whole, such as hours of work, the number
of days' holiday to be granted with pay, the ratio of wages, etc.,
and it consents to discuss such questions with them to the extent
that they are entitled by the number of their members employed
in the undertaking to speak in the same of the staff. But it does
not consider that the sphere of the trade unions can be extended
1

To prove that the non-union workers would, if left to themselves,
prefer to choose trade union members as their representatives, the workers'
organisations quote the case of the sickness fund at the Philips works.
The ten worker members of the fund, who by law are elected by the
staff without proportional representation, are at present all trade
unionists, four Catholics, three Protestants and three Socialists. The
management nevertheless considers that the conclusion drawn by the trade
unions from this fact is hasty. It attributes the results of the elections
to the skill of the trade unions, all of which put up candidates who had
already been members of the managing committee of the sickness fund for
many years, and it considers that the workers' choice was dictated purely
by their personal confidence in these particular men and not at all by a
preference for trade union representatives.
2
Some of the trade unions are so strongly opposed to the council in
its present form that they have instructed their members to refuse to take
part in it until it is reformed.

TUE PHILIPS WORKS

to include questions in which no principle is involved and which
concern the undertaking alone or some of its departments. It
was with the object of enabling such questions to be settled with
the collaboration of the staff that the works council was set up.
To allow the election of trade unionists by non-union workers,
or to allow the trade unionists of one political tendency to gain
undue influence by means of political campaigns, would not
only mean introducing into the undertaking rivalries all the more
dangerous in that all trade unions in the Netherlands are of a
political complexion, but would also endanger the essential aim
of the works council, which is to secure permanent contact
between management and staff. Once elected to the council, a
trade union member would naturally tend to take his instructions not from the staff but from his own union, so that the
management would find itself confronted by a trade union delegate instead of a representative of the staff. This would not be a
matter of much practical importance if the trade unions all held
similar political views and if the vast majority of the staff agreed
with such views, since the opinion of the staff as a whole would
then coincide with trade union opinion. But so long as the trade
union movement remains divided and only a minority of the
workers at Eindhoven are members, the management must try
to secure an accurate picture of the state of mind and opinions
of its staff by recourse to proportional representation as a means of
preventing distortion. The management declares that by giving
up proportional representation it would in effect relinquish the
main advantage that it expects from the system of workers' representation, and would run the risk of having to discuss within
the undertaking itself, with the delegates of organisations that
are hardly represented in it, questions that do not concern these
organisations as such, and that they will therefore tend to discuss
from the standpoint of the class interests they represent rather
than from that of the common interests of the undertaking and
its staff.
Further, the management denies that proportional representation is in the long run unfavourable to the trade unions. If it
is true, as the trade unions allege, that non-union workers prefer
to have a trade union member as their representative on the
works council, to forbid them to vote for this candidate without
becoming members of his trade union is, strictly speaking, to
encourage and not to combat trade union organisation. The
management repeats its assertion that, in accordance with its

INDUSTRIAL RELATIONS

principles, it is in no way opposed to the council's consisting
entirely of trade union members ; but it considers that so long as
the influence of the unions is not naturally as dominant as they
would wish, that is through force of numbers, it would be unfair
to strengthen it artificially, and that through the action of the
firm itself.
Finally, the management emphasises the fact that it is in no
way opposed to the principle of trade unionism and that it leaves
its workers entirely free to join any organisation they may cite
without putting any obstacles in their way. If the trade unions
can persuade them to join their ranks, the problem of the proportional representation of non-unionists will solve itself automatically. But although the management looks upon trade
union organisation as a right, it does not consider it to be a
necessity. Any worker w h o is dissatisfied with his employer or
his position is naturally entitled to join a union, and it is the
u n i o n ' s duty to protect his interests and support his legitimate
claims. But it is the duty of the employer in his turn to provide
his workers with the best possible working and living conditions, and it is to the interests of the firm, as of society as a whole,
that his staff should be contented.
It is evident that two opposite conceptions of industrial relations are here in conflict over the question of proportional representation on the works council. There is the employer's view,
on the one hand, which lays all the emphasis on the community
of interests between the firm and its staff and considers the
prosperity of both to be dependent on direct agreement between
them. The other view, which is that held by the trade unions,
is based on the sense of community of the working class and
holds that direct negotiations between employer and staff will
always turn to the advantage of the employer, who is economically the stronger, unless the workers can rely on the support
of the trade union movement, which is the only agent capable
of securing for them both material prosperity and the social and
moral emancipation that is its most effective safeguard.
Although the difference of principle between the two views
is profound, in practice they do not appear to be irreconcilable.
It seems in fact as if events might develop in the direction of a
solution to which reference has already been made. The firm is
of recent growth, and the workers are young and preponderantly
of country origin ; hence the weakness of their organisation. But
the trade union movement is gaining ground, and if it were to

THE PHILIPS WORKS

attract the majority of the staff, the problem of proportional
representation would lose most of its practical significance. This
has indeed already happened in the glass works. Nearly all the
labour employed in this factory is organised ; and in consultation with the trade unions a special works council has been set
up for it. This council consists of three members, all trade unionists, comprising one Socialist, one Catholic and one Protestant,
elected by the general meetings of the local branches of their
respective unions.
The institution of the works council for the glass works
seems to be intended by the management as the first step towards
a general reform of the whole system of workers' representation.
Such a reform has already been under consideration for some
years and discussed with the trade unions, but it cannot usefully
be put into practice until the works as a whole has reached a
more or less stable size. The reform should probably be in the
direction of decentralisation. The management recognises that
although in 1923 a single works council of thirty members may
have been adequate to represent the whole staff, which then
numbered between six and seven thousand workers, the undertaking is now so large that a series of committees are necessary
if an accurate reflection of the state of opinion in each department is to be obtained, and if the very varied trade interests of
the workers employed in each branch of the establishment are
to be adequately protected. The management therefore intends
to set up a number of committees, corresponding to the various
branches of the undertaking, which together will form the
Nucleus. It further contemplates the possibility of extending the
system of workers' representation — which at present applies
only to wage earners — to its salaried employees as well, by
setting up a special committee to represent them \
1

At the moment of going to press we learn that the reform of the
system of works representation has now been decided upon, and the
principles of the new arrangement accepted by the trade unions. As was
expected, the new rules provide for the setting up for each department
of the works of a separate works council elected by the staff of the
department from among their number. The various departments are to
be delimited by the management, which will be free to make changes
subsequently. The various works councils will together form the
"Nucleus". As regards the composition of the councils, the principle
of proportional representation is maintained, but its practical application
is modified in that the number of seats allotted to each group of voters
is no longer to be proportionate to the number of workers in the various
-GTOOSTniAL RELATIONS

INDUSTRIAL RELATIONS

The imminence of this reform, which has hitherto been
delayed by circumstances, is apparently the reason why the present works council has not been re-elected since 1927. The management points out that even if fresh elections had been held since
that date, the works council would not be any more truly representative than it is at present, since the 10,000 new workers
engaged in 1928 and 1929, not having been members of the establishment for two years, would not have been entitled to vote 1 .
Under these circumstances the election which the trade unions
complain has not been held would in the management's opinion
have been a mere sham, all the more so because the rapid growth
of the works would have prevented the newcomers from successfully carrying out their duties as members of the works council 2.
Engagement and Dismissal
The steady demand for labour during the years of rapid
expansion, coupled with the very limited resources of the local
labour market, has led the management of the Philips works to
organise the recruiting of its labour with particular care. The
cost to the works of settling a foreign worker at Eindhoven is
estimated at about 500 gulden ; although the direct expense of
engaging a Dutch worker from the countryside is smaller, the
indirect expense of his training for industrial work must also be
trade unions of differing shades of opinion, or the number of non-union
workers, but to the number of votes received by the candidates of each
group. For this purpose the list of candidates will be divided into four
groups : Catholic trade unionists, Socialist trade unionists, Protestant
trade unionists, and non-unionists. The candidates of the three trade
union groups will be nominated by the unions themselves, while nominations for the non-union group must be supported by at least ten nonunion workers. The number of candidates that each group may nominate
is limited by the total number of seats to be filled. Every worker is free
to vote for the candidate of his choice regardless of his trade union position, and the number of seats allotted to each group depends on the total
number of votes received by its candidates. It is therefore evident that
this system will allow non-union workers to vote for trade union candidates
if they so desire, thus removing one of the main objections voiced in trade
union circles to the former system. The new rules come into force on
1 May 1932.
1
The new rules now being drafted reduce the length of service
qualifying a worker to vote to one year (see footnote, p. 89).
2
The management also considers that the number and nature of the
cases dealt with during 1930 prove that even under present conditions the
staff does not look upon the duties of a member of the works council as a
mere sinecure.

THE PHILIPS WORKS

taken into account. When, therefore, they have once engaged and
trained a worker at great expense, Philips have every interest in
retaining his services, since to replace h i m would nearly always
involve a repetition of the initial expense. Great care must therefore be exercised in the choice of workers, so that they may afterwords be retained without prejudice to the firm.
The recruiting of workers is left entirely in the hands óf the
staff department. None of the other services, either technical or
commercial, has the right to engage workers except through its
agency ; they may only inform the staff department of the n u m b e r
and nature of their requirements.
Every applicant for an employee's or worker's post has to undergo a medical examination for the purpose of determining his
general fitness for work. This examination is performed by the
health service. Normally it takes place at Eindhoven ; but if, as
occurred in 1928 and 1929, large numbers of workers are engaged.
from a particular district, the health service sends its examiners
to visit the families concerned at their homes. Foreign applicants
are required to send a medical certificate beforehand or, if possible, are examined by an agent of the firm with a view to reducing
the risk of unnecessary expense ; but the applicant is in any case
re-examined on his arrival at Eindhoven.
On the results of the medical examination the applicants are
divided into three classes : those wholly fit for work, those partly
fit, and those unfit. In practice, from 60 to 70 per cent, of the
applicants are placed in the first class, 20 to 30 per cent, in the
second, and 5 to 8 per cent, in the third. It has been the aim of
the health service to reduce the last percentage as much as possible
without impairing the quality of the labour engaged. This has
been achieved by studying closely the kind of defect most frequently observed, in relation to the various kinds of work performed in the undertaking. Taking into consideration the fact
that an undertaking as large as the Philips works covers varied
occupations, in some of which the presence of a particular defect
may not be a hindrance to a worker, the health service has made
out a kind of double-entry table showing the occupations in which
workers with different kinds of defects may be employed. The
purpose of the medical examination is therefore not only to discover defects, but also to sift carefully the applicants reported as
partly fit and to find them suitable employment, in which they
may earn their living without prejudice either to their own health
or to the output of the firm.

100

INDUSTRIAL RELATIONS

Special attention is paid to defects of eyesight, as much of the
work performed in the factory, particularly in the manufacture
of the bulbs, requires very good eyesight. Defective eyesight is
not, however, a very frequent ground for rejection, since the
health service endeavours to remedy it by providing the person
concerned with suitable glasses. The most frequent causes of
complete rejection are affections of the lungs, heart and kidneys,
w h i c h increase the risk of sickness and death and sometimes even
involver a danger of infection to other members of the staff.
The results of the medical examination are entered in detail on
a card index which is kept by the health service. At the same time
the examiner returns the applicant's form to the staff department
after marking it with one of the letters A, B, or C to inform the
employment office whether the applicant is wholly fit, partly fit,
or unfit for employment. In the case of workers w h o are partly
fit, a figure corresponding to the n u m b e r of the worker's defect
on the double-entry table mentioned above is also added, thus
enabling the employment office of the staff department to see at
once on what kind of work the applicant may be employed.
A medical examination is not the only test to which
applicants are submitted before their engagement. With the
exception of graduate engineers, university graduates and other
candidates for posts on the management staff, and highly
specialised workers who, if examined at all, are merely required
to pass a test relating to their particular occupation, all other
applicants have to undergo a psychotechnical examination. A
special laboratory was set up for this purpose in 1922, and the
reasons that led to its introduction are worthy of record.
It has already been noted that by the adoption of rationalised
methods, notably chain work and mechanisation, Philips are able
to employ a very large proportion of unskilled labour. The
widening of the source of supply by this means has facilitated the
recruiting of the thousands of extra workers required by the undertaking during its periods of rapid expansion, but, on the other
hand, it has made it more difficult for the employment office to
decide what kind of work to give each worker. "When the newly
engaged worker has already had some experience of a particular
kind of industrial work, this may serve as a guide to his future
employment. But 85 per cent, of the applicants in the Philips
works do not specify any particular occupation, and to distribute
them at random among the various departments would involve

THE PHILIPS WORKS

101

an endless process of subsequent readjustment and transfer, which
would slow down production. Hence arose the idea of subjecting
every applicant passed by the medical service to a psychotechnical
examination. Three sets of tests were chosen bearing on the
aptitudes needed for the chief operations performed in the works.
Further tests were also introduced for special kinds of work. This
method of selection has had such good results that the
management now has recourse to it for the engagement of nearly
all its staff, and even of its office staff.
The psychotechnical examination is intended purely for
guidance. On its results the employment office divides the
applicants into about a dozen classes, corresponding to the main
kinds of work done in the factory and ranging from cleaners to
skilled workers. The employment office is kept constantly
informed of the vacancies available in each department for each
of these twelve categories of workers by means of a large doubleentry table, so that on receiving the results of the test it is able to
ascertain immediately if, and in which department, there is a
vacancy suitable for the applicant.
Originally instituted for the purpose of examinations prior
to engagement, the psychotechnical laboratory has extended its
activities, in collaboration with the education department, to thé
selection of workers w h o wish to attend evening classes or
courses for foremen. It held a total of 8,000 examinations in 1927,
13,000 in 1928, and 15,000 in 1929.
Once he has passed the medical examination and has been
found a place in the works, the newcomer is set to work and is
given a copy of the works regulations, which he promises to
observe. He does not, however, immediately receive a definite
contract. In accordance with the law, he must undergo a period
of probation, usually lasting six weeks, though in exceptional
circumstances it may be only a week. During this period either
of the parties may terminate the connection without preliminary
notice. If his work on probation is satisfactory, the worker
becomes a member of the firm's staff. This definite engagement
is entered on the card which the staff department opened for him
on his engagement, and on which all the details of his life as a
worker in the factory, transfers, promotions, etc., are subsequently recorded.
The policy of the management as regards departures from its
staff is inspired by the same aim as that governing its careful

Ì02

INDUSTRIAL RELATIONS

organisation of recruiting. As the departure, whether voluntary
or involuntary, of any worker may entail the immediate or
eventual necessity of making a new engagement, which is
frequently both difficult and expensive, it is obviously in the
firm's interests to lose as few workers as possible, or, in other
words, to try to eliminate fluctuations in its staff.
It was with the object of preventing workers from voluntarily
leaving their employment that Philips adopted the policy of
family engagements followed in 1928 and 1929. When the firm
paid the cost of transferring a thousand families, including those
of their members w h o m it could not employ, its object was
naturally to help its new staff to acclimatise itself and thus to
make it permanent. The same purpose underlies the various
social service institutions, to be studied later, by means of which
Philips have endeavoured to attach their workers to Eindhoven.
As regards compulsory departures from the staff, that is,
dismissals, a distinction should be made between dismissals for
breaches of discipline and those for other reasons.
Order and discipline are an integral part of the production
policy and rationalised working methods laid down by the
management, and they appeared to be all the more necessary in
the Philips works in that the workers were relatively young,
inexperienced in industrial life, and recruited very rapidly, so
that they had to be trained all at once to the r h y t h m of machinery
or of chain work. Offences justifying immediate dismissal are
specified in detail, in the works regulations. They include
attempts to falsify attendance records, repeated cases of late arrival
after a first warning, failure to observe the regulations for entering
and leaving the works by particular routes, unauthorised presence
in rooms other than that in which the worker is employed, the
holding of unauthorised meetings in the factory, drunkenness or
the introduction of alcoholic drink into the factory, smoking on
factory premises, etc. Side by side with these offences, which
specially concern the maintenance of order in the workshops,
may be mentioned the case of workers " w h o have been warned
that they must work harder or better and w h o neglect this
w a r n i n g or respond to it by giving notice ".
In order to secure the uniform enforcement of discipline
throughout the undertaking, all penalties must be referred to
the staff department. Workers are dismissed only by the
employer himself or in his name. As in all other disputes

THE PHILIPS WORKS

103

arising out of the enforcement of the works regulations, the
person concerned is entitled to appeal to the management against
the notice of dismissal either in person or through the intermediary of a committee of not more than three members. He
may also appeal to the works council to support his protest, and
workers w h o belong to a union may, if dissatisfied with the
action of the works council, appeal to their union. In all these
cases, however, nothing more than conversations with the
management or with the economic and social department is
involved. In this, as in all other matters, the management
reserves the sole right of decision. The number of dismissals
for breaches of discipline was 287, or 1.27 per cent, of the staff,
in 1929 and 222, or 1.14 per cent., in 1930.
As to dismissals for other causes, Philips have tried to
reduce their n u m b e r as much as possible by giving the staff
department the sole right to dismiss workers, as to engage them.
The purpose of this measure was to prevent men from being
dismissed as unnecessary or incompetent from one of the factories
when they might be absorbed or provided with a suitable job
in another. Every possibility of transferring the worker to
another post must be explored before finally getting rid of h i m .
The staff department has thus become a kind of clearing-house
for all offers of and demands for labour in the whole undertaking : a function which is equally advantageous to the worker,
by reducing his risk of unemployment, and to the firm itself,
by saving it the expense of unnecessary engagements.
The precautions to secure stability of employment have
made it possible for the management to keep its labour turnover
within reasonable bounds. From 1925 to 1928 the proportion of
workers w h o left to the average number employed was kept at
about 20 per cent. In 1929, however, it rose to 27 per cent. In
1930, it was 33 per cent., if the dismissals due to slackness of
business are included, and 18 per cent, exclusive of such
dismissals.
The management thinks that these results may on the
whole be looked upon as satisfactory, considering the unfavourable factors with which it has had to deal. Conspicuous
among such factors are the comparative isolation of the little
town of Eindhoven and the greater force of attraction exerted on
the worker by the big industrial towns in spite of all the efforts
made to keep h i m . The large proportion of young workers

104

INDUSTRIAL RELATIONS

employed also means frequent departures, the men leaving to
perform their military service and the girls to get married, since
it is one of the principles of the firm not to employ married
women. Finally, there is the difficulty experienced by many
workers newly engaged from the country in getting used to
industrial life, to the noise of the factory, the rhythm of the
machinery, and the strict discipline which Philips enforce in
their works. All these factors have obviously had some effect
on the number of voluntary departures from the works, which,
according to the management, accounted for two-thirds of the
total labour turnover until 1929. In 1930, however, the situation
was reversed. Industrial depression, by restricting the openings
for employment in other centres of industry, put an end to
voluntary departures, which fell from 100 per week in 1929 to
under 10 at the beginning of the following year. On the other
hand, it was impossible to avoid dismissals, the number of which
had been negligible during the period of the firm's expansion.
At the beginning of the year the management was obliged to
dismiss 3,000 workers.
In effecting these dismissals, which followed so closely on
the mass engagements of the preceding year, the management
was guided mainly by the endeavour to prevent the distress to
which a sudden and violent accession of unemployment would
inevitably have given rise among a population attracted to the
district by the offers of the Philips works and unable to find
other employment there. The first to be dismissed were therefore nearly all the Belgian workers who had kept their homes
on the other side of the frontier and travelled to and from Eindhoven every day, with the exception of 300 lads employed as
assistants in the glassworks '. The workers who lived furthest
from the works were also dismissed. Finally, since the depression
had naturally slowed down their building operations. Philips dismissed a large number of workers in the building trades, who
had recently been employed at Eindhoven although they probably
did not expect to stay there permanently. The management
also took advantage of the necessity of reducing staff to raise the
general standard of its labour by making a more careful selection
among the thousands of workers recruited during the previous
1

The number of assistants employed in the glassworks has since been
reduced to about 60.

THE PHILIPS WORKS

105

months. The dismissal of these 3,000 workers enabled it to face
the reduction in output until the end of the year, and the staff
remained at a figure of about 19,500 ; on 31 December it was
18,900. But at the end of January shrinking markets brought
the management face to face with a choice of two alternatives :
to dismiss another 1,500 workers, or to reduce hours of work
to 42 in the week in a number of departments. Not wishing to
prejudice further the stability of employment in the works, and
anxious to keep available the workers on whose engagement it
had spent so m u c h and w h o m it m i g h t soon require again, the
management chose the second course. Three weeks later it was
obliged to adopt methods still more severe ; and to avoid dismissing another 500 workers, nearly all married men with
children, it reduced hours of w o r k to 40 in some departments.
At the same time, in order not to reduce the earnings of the
workers concerned too drastically, it decided to pay them the
wages due for a 42-hour week, thus m a k i n g the firm itself provisionally bear the cost of the reduction.
Thus, the policy underlying the organisation of the engagement and dismissal of labour in the Philips works is inspired
throughout by the desire to stabilise the staff; that is, by both
direct and indirect means, to endeavour during periods of
expansion to restrict loss of staff involving the necessity of new
engagements, and during periods of depression to avoid as far as
possible any break in the continuity of employment of the army
of workers attracted to Eindhoven by the firm itself. It is true
that this policy was unable to avert the necessity of following
u p the mass engagements of 1928 and 1929 by extensive dismissals during the following year ; but while readily admitting
the social disadvantages of these sudden fluctuations, the
management points out that they are particularly difficult to avoid
in new industries in which the producer is unable to
forecast accurately the limits of his market. At Eindhoven
itself the departments most seriously affected have been the
factories for wireless sets and valves and not those for incandescent bulbs. The market for the latter is older and better
k n o w n , thus enabling production to be more effectively stabilised. It is also pointed out that changes in the commercial
policy of various countries and the considerable increase in their
import duties have obliged the management to transfer some of
its branches abroad, which has entailed a corresponding reduction
of output and employment at Eindhoven.

106

INDUSTRIAL RELATIONS

Education
In order to understand the part played by the education
department in the Philips works, attention must once again be
drawn to the firm's special position in the industry of its country,
to the characteristics of its staff and to the scarcity of local labour.
For most of their unskilled labour Philips have had to go to the
rural population, while their office staff has been recruited with
great difficulty from the towns. Skilled workers and foremen
have often been unobtainable in the Netherlands and have had
to be imported from abroad. To improve the general education
of the unskilled workers and initiate them into the firm's work,
which, even when unskilled, frequently demands great dexterity
and accuracy of movement ; to train on the spot, from among
the more promising members of the staff and the youth of Eindhoven, picked workers and technical and office employees who
will eliminate the expense of recruiting the staff from a distance
in future ; in short, to create a local reserve of labour suited to its
requirements and able to provide it year by year with the necessary
reinforcements for its staff, these are the aims which have induced
the management to sacrifice such large sums to the organisation
of education.
It is not possible here to give more than a rapid survey of
the various methods adopted to meet the educational needs of
the workers at the same time as the technical needs of the undertaking. These methods may be classified under three heads :
1, general education ; 2, vocational training for office staff ;
3, technical training.
General Education

Classes for adults. — Evening classes were organised for
workers under 18 years of age in 1922 ; but in 1928, at the request
1

Although it is not strictly within the scope of this study, it may
be noted here that Philips have set up four primary schools in Eindhoven,
attended by about 800 pupils, and one nursery school, attended by about
100. Philips founded their first school in 1921. They were led to take
this step by the fact that many of the workers who came from the north
of the country could not find schools to suit them in Eindhoven, and
they considered that the children of such workers should be provided with
an education more likely to be free from religious bias than that given in
the communal schools. They set up three more schools early in 1930,
when the staff was increasing so rapidly. Although in principle the

THE PHILIPS WORKS

107

of some of the workers, they were extended to all workers in the
factory regardless of age. There are simply continuation classes
that do not specialise in any particular subject but give the worker
the opportunity of improving his general education. The course
comprises two two-hour lessons a week, one lesson being devoted
to the Dutch language and reading and the other to arithmetic and
geography or physics. For workers so little educated as to be
incapable of making a sustained mental effort, handwork classes
have been instituted, which give the least skilled workers, such
as sand carriers, wood carriers and other labourers, an opportunity of discovering whether they have any special aptitude
that may enable them to obtain a better job. The education
department states that the successful performance of their more
exacting tasks during the lessons has frequently given the
workers confidence and encouraged them to follow vocational
training courses.
The course lasts twelve months ; the fee is 0.85 gulden a
month and is deducted each month from the worker's wages.
It is one of Philips's principles that the classes shall not be
provided free, since they consider that it is a good thing from
the educational standpoint that the worker should realise the
necessity for the effort demanded by education. A second principle of their education policy is that the worker, when entering
for the course, must pledge himself to pay the fee for a whole
year and promise to attend the classes regularly unless prevented
by reasons approved as valid by the director of the classes.
Philips insist on this promise as a means of forcing the worker
to test the strength of his resolution before entering his name
for a course. They wish applications to join a course to spring
from a considered decision and not from a passing whim.
Finally, to prevent the worker from undertaking through inexperience more than he can perform and making useless
sacrifices, he is not allowed to enter for the course without the
approval of his chief, who must ascertain if he is capable of
deriving from it benefits proportionate to the effort it will entail.
There is no examination either on entering or leaving the

Philips schools were open to the whole population of Eindhoven, lack
of accommodation has for some years made it necessary to reserve them
for the children of the workers and employees of the factory.
It is also impossible to do more than mention the domestic science
schools organised for the women workers in the factory.

108

INDUSTRIAL RELATIONS

classes for adults. There are at present 34 courses, attended by
about 400 pupils, w h o are divided into two groups according
as they are under or over 18 years of age '.
Vocational

Training

for Office Staff

At the present time Philips employ an office staff of over
2,000 persons. The recruiting of this part of the staff has
proved even more difficult than that of manual workers,
and the quality of the employees obtained has not always been
adequate to the needs of the firm. The education department
has therefore directed its efforts along two main lines ; its object
is, first, to give the employees already in the firm's employment
the opportunity of acquiring the knowledge necessary for their
work, and secondly, to provide the firm w i t h the new employees
constantly needed to fill u p the gaps in its services.
Evening classes for office staff. — Evening courses of two
hours a week have been organised to give the members of the
office staff an opportunity of learning or perfecting their knowledge of various subjects, namely, Dutch, English, German,
French, w i t h commercial correspondence in these languages,
book-keeping and commercial arithmetic. Pupils are normally
allowed to attend only one two-hour course a week, since the
education department considers that a further effort in addition
to the home work which is also set might defeat its own purpose
by over-tiring the pupil. An exception is sometimes made, however, for young people of a specially studious disposition, who
may be allowed to attend not more than two classes a week.
Generally speaking, employees w h o have only had a primary
education are not admitted to the classes. The others are divided
into several parallel classes according to their previous education. There are at present 49 language and book-keeping
classes attended by over 450 pupils, of w h o m 350 are over 18
years. The fee is 26 gulden for the whole course.
When the pupils are sufficiently advanced, they may enter
for the examination held by the Netherlands Commercial and
Office Employees' Association (Nederlandsche
Vereeniging
voor
Handels- en Kantoorbedienden
" Mercurius "), which attends at

All figures given in this section of the study refer to October 1930.

109

THE PHILIPS WORKS

Eindhoven twice a year and issues a certificate
throughout the country.

recognised

Evening classes for shorthand-typists.
— Evening classes
are held for members of the staff w h o wish to take lessons in
typing, Dutch, English, German and French shorthand, handwriting or the use of calculating machines. This course, which
is divided into 11 classes, is attended by 115 pupils, of w h o m
46 are over 18. The fee is 1.75 gulden a month for typing,
2.60 gulden for shorthand and 0.45 gulden for calculating machine lessons.
Vocational school for office staff. — Every year Philips
have to engage about 150 new employees. To secure this staff
for the firm the education department has set u p a vocational
day school to train children for posts in the lower grades of
office staff. About 100 children apply for admission each year
and between 35 and 40 are accepted. They are chosen on the
results of their primary education and of an examination held in
the psychotechnical laboratory. Children are admitted at the age
of 12 and need not necessarily have finished their primary education. The classes are divided into two sections ; the course
in the average class lasts three years, but the class for picked
pupils may sometimes reach the end of the syllabus in two and
a half years. The children pay a fee fixed by the commune,
which collects it and deducts it from the grant it makes towards
the upkeep of the school. When children are entered for the
school, parents are asked to promise to allow them to attend it
for three years and to place them in employment at the Philips
works at the end of their course, but the obligation to do so is,
of course, purely moral. In order to keep the parents interested
in the progress of their children's education, they are invited
from time to time to consider its results.
At the end of the course the pupils take an examination,
and those w h o pass it successfully receive a certificate. As a rule
about 10 per cent, fail in the examination, but this does not
usually prevent them from obtaining employment in the Philips
works, owing to the large number of employees required there.
Special classes for shorthand in four languages.
addition to the lower grade employees, trained at the
described above, Philips also need a small picked staff.
to its international ramifications the firm has to employ a

— In
school
Owing
certain

INDUSTRIAL RELATIONS

n u m b e r of employees with a thorough knowledge of shorthand
and typing in four languages. The difficulties encountered in
obtaining such employees, and still more in retaining them, led
to the decision to try to train them on the spot.
This special course lasts a year and is limited to 12 pupils,
w h o must be girls w h o have spent three or four years at à
secondary school. The pupils are given an intensive training in
shorthand and typing in four languages. They do not pay any
fees, but on the contrary are paid a small salary, in return for
which they work in the offices of the Philips works for four
afternoons a week. In spite of the expense incurred by the firm
on this course (the cost of training each pupil is reckoned at
between 800 and 900 gulden) candidates for the class have so far
been few, probably because of the hard work it involves, and
possibly also because it has only recently been introduced and
is not yet widely known.
Technical

Training

The most numerous and varied courses organised by the
Philips works are those for technical training. As in the other
branches of vocational education, the purpose is twofold : on
the one hand, to give young people in the district a training
fitting them for employment as workers in the undertaking, and
initiating them beforehand into its methods ; and on the other,
to give workers already in its employment the opportunity of
perfecting and specialising their skill and thus of gradually
improving their position. An account will be given below of the
various schools and courses established by the education department, ranging from those for training unskilled workers to
those provided for the higher grade staff.
Industrial school jor girls. —= This school was set up in
June 1923 for the training of unskilled or semi-skilled workers.
From the standpoint of vocational training it is a somewhat
original institution, since as a rule thè unskilled worker is
engaged without any previous training and learns his work in
the factory itself. Considering that this process of training in the
factory disturbed the r h y t h m of the work, Philips invited all
parents w h o wished to place their daughters in the factory at
14 years of age to send them at 13 to the industrial school, where
they would be trained in the work they would later be required

THE PHILIPS WORKS

111

to do in the factory and would thus be able to earn better pay
when they were engaged \
The school hours are 40 in the week, made up of four days
of eight hours and two four-hour mornings, less two and a half
hours for recreation. The working hours are divided equally
between general education and vocational classes directed by a
picked staff of foremen and supervisors. The course lasts 8 months,
and children are admitted to it three times a year. The school
is attended by between 100 and 130 girls at a time and since its
inception has trained 1,000. No fee is charged and the children
receive 2.50 gulden a week in return for any useful work they
may do in the workrooms. Nearly all the girls who have been
through the course afterwards take employment at the Philips
works.
Vocational training courses for unskilled workers. — In
consequence of the very satisfactory results of the vocational
training of girls, the Philips works has extended the principle
to all unskilled workers. New workers engaged by the staff
department are made to attend the vocational school before being
sent into the factory, and are there trained in the work they will
have to do, so that they are able to adapt themselves immediately
to the r h y t h m of the work. The duration of this training varies.
according to the work involved from a few days to three or four
weeks. Its cost is, of course, borne entirely by the employer.
The worker is paid his full wages from the date of his engagement and is in every respect looked upon as a member of the staff.
Industrial school for boys. — This school differs from the
industrial school for girls in that its purpose is exclusively to
train skilled workers. It was set u p in 1928 during a period of
rapid expansion, when it was decided to increase the staff from
i0,000 to 20,000 workers.
The school is under the supervision of a committee recently
set up in accordance with the Act on industrial education. The
committee is a joint body whose members are nominated by the
workers' and employers' organisations. Boys are admitted to
' This institution has further the social advantage of remedying thepresent lack of co-ordination between factory legislation and education
legislation in the Netherlands. The former fixes the age of admission to
factories at 14, whereas the latter fixes the school-leaving age at 13. The
Philips industrial school thus cares for children who have ceased to.
attend school and are not yet old enough for factory work.

112

INDUSTRIAL RELATIONS

the school at about 13 years of age. The course lasts two years.
During the first year it consists of two days' general instruction
in class and four days' training in the workshop, while during
the second year the boys spend five days out of six in the workshop. The kind of vocational training given each year also
varies. During the first year it is quite general ; and unless
they intend to enter the glass works, the children do not have
to choose a special occupation (fitter, turner, electrician, etc.)
until the second year. The parents are frequently consulted on the
choice of an occupation.
It should be noted that the workshop used by the children
is not one of the factory workshops, although it is organised and
arranged in the same way. It is a special workshop used only
for purposes of instruction, in which the children do not mix
with the other workers.
After two years the pupil receives a certificate and goes to
work in the factory. His name is kept, however, on the school
register and he remains under the supervision of the education
department. He still attends the school for one half-day weekly
and also attends one or two evening classes (algebra or technical
classes). This second stage of apprenticeship also lasts two years,
after which he is given another certificate. The whole course
of technical training lasts four years, but as the school was only
set u p in 1928, none of the pupils have as yet completed it \
The course at the technical school is free. Originally the firm
even paid the pupils wages on a reduced scale ; but this proved
too expensive, and it now confines itself for the first two years
to providing them with working clothes and putting them on
the same footing as the staff in respect of the medical service.
Miscellaneous classes. — In addition to the two industrial
schools described above, the education department has also
organised á great variety of vocational evening courses, both
theoretical and practical. There are at present 65 of these courses,
intended for workers of every kind w h o wish to improve themselves or obtain a foreman's certificate, and even for foremen
w h o wish to perfect or extend their technical knowledge. Thus
anyone willing to work hard enough may gradually climb step

1
Former pupils of the communal vocational school at Eindhoven, in
which the course lasts three years, are also allowed to attend the second
half of the technical training course.

THE PHILIPS WORKS

113

by step up the ladder of the staff. A notable example of advancement is that of an unskilled worker in the bulb factory, w h o
a few years ago, when over 20 years of age, joined a book-keeping
class and after subsequently attending a foreman's class is now
in charge of 300 workers.
Faithful, however, to the principle already noted, Philips
wish advancement to be the fruit of conscious efforts and they
test the would-be pupil's resolution by making h i m pay a fee.
The only exception to this rule is made in the case of courses
which are held at the request of the technical management to
remedy some shortcoming discovered in the manufacturing
process, and which the workers are asked to attend. The management makes a special point of turning out all its instruments
as perfect as possible in every detail and, if any defect is observed,
sends the workers in the workshop concerned to the education
department to be thoroughly trained in their tasks.
The management further considers that technical training
should not stop short at foremen. A special school has been
set up for volunteers recruited from all the middle technical
schools in the country. These pupils remain for a year, during
which they receive an allowance of 10 gulden a week and work
in the factory under the supervision of the education department.
They then go back to their school for another year, after which
if they themselves wish and the management agrees to accept
them, they return to Eindhoven and are at once given posts in
the lower grades of the management staff.
Finally, the firm has also introduced a general information
course, compulsory for all middle or higher grade employees,
both in the commercial offices and social services and in the
technical services. This course is intended to give newcomers a
general idea of the works as a whole before they settle down to
their own particular job.
The extent and variety of the educational institutions connected with the Philips works is evident from the foregoing
account. With the exception of technical apprenticeship in the
works, they are all under the management of a society set u p in
in January 1921 under the name of the Philips Society for the
Organisation and Development of the People (Philips
Vereeniging voor Onderivijs en Volksontwikkeling).
The members of
this Society, w h o may not exceed 45 in number, are recruited
from among the active or pensioned staff of the Philips works.

114

INDUSTRIAL RELATIONS

It has a committee of five members, of whom three, the president, vice-president and treasurer, are nominated by the
management of the Philips works and the other two by the
general meeting of the Society. Contact with the education
department is ensured by the fact that the manager of this department is also chairman of the Society \
The education department in its turn works in close touch
with the production services and the commercial department on
the one hand and with the staff department on the other. The
former keep it informed of their technical needs and indicate the
direction it should give to its activities. They also advise it on
the expediency of allowing a particular worker to attend a course
of instruction for which he has applied. The latter keeps it
informed of the firm's general staff requirements, and its psychotechnical laboratory is occasionally used to assist in the selection
of candidates. Moreover, as soon as a pupil begins to draw any

1
Article 2 of the Society's rules reads as follows : " The aims of the
Society are to promote the education and encourage the development in
the widest sense of the term of all persons who are at present in the
service of thè Philips works or who have retired from it on account of
invalidity or old age, as also of their families, and in exceptional cases
of other persons.
" The Society endeavours to realise this aim by one or more of the
following means : (1) the establishment and upkeep of day-schools for
infants, children of school age and children over school-leaving age ;
(2) the establishment and upkeep of schools and courses of industrial,
commercial or horticultural instruction for young people and adults ;
(3) the organisation of instruction on the apprenticeship system ; (4) the
organisation and encouragement of the development and activities of young
people and adults outside the factory ; (5) the establishment and upkeep
of one or more institutions for the promotion of voluntary study, reading
and the lending of books : (6) the establishment and upkeep of one or
more institutions for the organisation of musical, dramatic or cinema
performances, lectures, etc. ; (7) the giving of advice or assistance to the
persons specified in the first paragraph, with a view to promoting their
instruction or studies ; (8) the issue of periodical and other publications :
(9) every legal means of promoting the aims specified in the first paragraph."
It may be added that the Society administers its own funds. The
general meeting passes the balance sheet and profit and loss account
once a year. The Society's funds are made up of contributions from the
members, fees, and other receipts to cover the expenses incurred by the
Society on behalf of the persons who benefit by its institutions, and
finally of grants, voluntary contributions, legacies, endowments and
miscellaneous forms of income, which may be assigned to the Society with.
the approval of the management of the Philips works.

THE PHILIPS WORKS

115

kind of pay, he must be registered in the books of the staff
department and is thenceforth subject to its supervision.
Thus, placed entirely at the service of the firm, out of whose
needs and difficulties it has arisen, the system of vocational
training at the Philips works conforms to no pre-conceived plan.
It is a living organism that has extended its ramifications in
response to circumstances ; and if it is possible notwithstanding
to describe it systematically, this is due in the first place to the
wide variety of the firm's requirements, and secondly to the
fact that the whole system of education is concentrated under
the direction of a single department, which has tried to link up
and co-ordinate each new venture with those already established.
The practical and utilitarian nature of the educational works
accomplished has given rise to certain criticisms among teaching
circles.
It has been objected, for instance, that the industrial
school for girls concentrates so exclusively on the kind of work
done in the Philips works that it practically results in giving the
firm a hold over the children who attend the school, and amounts
to the indirect engagement of the children when they are only
13 years old. In reply, the education department points out that
the fact that the school is approved by the State proves how little
ground there is for these fears on closer examination. The tasks
in which the children are trained are certainly closely related to
the work done in the factory, but if the principle is sound that
vocational training should everywhere take account of the main
industries in the district, which arc the most likely to provide
employment for the pupil later, it is only logical that the training given at Eindhoven should have some bearing on the work
done in the Philips works.
The education department further observes that the utilitarian nature of its educational institutions should cause no
surprise, since this is the reason that has induced the firm to
devote such large sums of money to them. The industrial school
for girls, which has been the target of so m u c h criticism, costs
the firm between 40,000 and 50,000 gulden a year, whereas the
work it turns out is not worth more than 500 gulden. The total
sum allotted to education each year is 300,000 gulden, half of
which is devoted to technical education. All the classes are
held in a special building with a training workshop attached, built
in 1928 and 1929 at a total cost to the firm of a million and a
quarter gulden. In October 1930 the staff of the education

116

INDUSTRIAL RELATIONS

department consisted of 176 persons, including 110 men and
women teachers. The total number of pupils attending evening
classes was 5,055, of whom over 1,500 were undergoing technical
training proper.
The management considers that these figures are significant
enough to justify the recognition that its educational work has
a social as well as a practical value. The good attendance at the
school is indeed a tribute to the desire of the staff for instruction, but in the management's opinion the results would
not have been so satisfactory without its own persistent efforts
to convince the worker of the value of education \ The firm
has indeed benefited by it, but considers it only fair to admit that
the staff has benefited too ; and it looks upon this as a further
proof that the interests of employer and worker are identical.
HEALTH AND SAFETY

A health service was set up in the Philips works at the
beginning of 1928 and is apparently still in process of development. Its present staff consists of two doctors and three
assistants, one man and two women. Its functions are purely
preventive 2 . They cover all matters relating to the health of
the staff, the supervision of the health of individuals, the
supervision of hygienic conditions in workrooms, and the
suggestion of suitable remedies to combat the causes of sickness.
Supervision over the personal health of the workers and
employees is exercised by means of a series of medical examinations. Mention has already been made of the compulsory medical
examination on engagement, the main object of which is to prevent persons who are already ill from entering the undertaking
and perhaps infecting other members of the staff.
But this measure is not sufficient, since symptoms of
morbidity already present may escape the examination or may
develop after the person has been engaged. In the latter case
it is essential that the health service should be, informed
1

Dr. Philips makes a point of showing the importance he attaches
to education by presenting the chief certificates gained, in particular
foremen's certificates, in person to the successful candidates at a public
ceremony at which he makes a speech.
2
An account of the medical service, which works in conjunction with
and in the same building as the health service and whose functions are
curative, is given below.

THE PHILIPS WORKS

immediately, since it is its duty to find out if the disease is of
occupational origin, and if so, to prescribe suitable measures
against it.
The ideal solution would of course be to submit every
member of the staff to a regular medical examination, but as
the size of the present health service is quite inadequate for such
a task it is obliged to confine itself as it were to taking soundings.
It examines, for instance, workers who are reported as having
been absent frequently or for long periods on the ground of
sickness, groups of young workers chosen at random, workers
in certain departments that appear to have a very high rate of
sickness, workers in occupations such as glass-blowing that
require some special physical aptitude, or again those in workshops where vague symptoms such as headaches, loss of appetite,
etc., have been found to prevail. These various examinations also
enable the health service to check, and if necessary to correct, the
table according to which it assigns newly engaged workers who
are only partly fit for work to the different sections of the
undertaking.
In addition to these occasional examinations made at sensitive
points with the object of ascertaining the general state of health
among the staff, periodical examinations are made every three
or six months in the case of special categories of workers employed
on unhealthy work or exposed to particular diseases such as lead
poisoning, skin diseases, or silicosis. As soon as the first symptoms
of the disease are noticed, the person concerned is kept under
observation and if possible transferred to another department.
Workers who return to the factory after an illness, and whose
powers of resistance are temporarily impaired, are also subjected
to a regular examination for a certain length of time. The health
service sometimes puts the convalescent worker on short time
and sometimes sends him for a few weeks to the vocational school,
where he can be kept under closer observation and gradually
become reaccustomed to regular work.
The health service has adopted yet another measure for
supervising the health of the staff. It has arranged a special
consultation hour for workers who wish to be transferred or to
change their work for reasons of health. The frequency of these
requests directs its attention to the departments that are most
in need of it. By means of visits and conversations with the
workers and foremen it is able to form an opinion of the

118

INDUSTRIAL RELATIONS

genuineness and the cause of the troubles complained of, and this
again provides it with information of value for its work of
vocational selection.
The health service records on three card indexes the
information it gleans from its various examinations.
The
first refers to the medical entrance examination, the second to
the occasional or periodical examinations made by the service
on its own initiative, and the third to the examination of persons
who have attended its consultations and applied for a transfer
for reasons of health.
In addition to the special enquiries that the results of its
examination of individuals may lead it to make in particular
departments, it is the duty of the health service to supervise
the enforcement of the general measures considered necessary
in the interests of the health of the staff and to suggest methods
for fighting or eliminating maladies already present. Thus it
makes sure that the necessary precautions are taken against the
risks due to poisonous substances, gas, dust, incorrect posture
at work, or overwork ; that atmospheric conditions, ventilation
and lighting are satisfactory ; and that the workers are provided
with drinking water, wash basins, baths, etc.
In order that the workers working in a very high temperature
may not ruin their digestions by drinking too much cold water,
the health service has ordered the free provision of hot drinks
such as tea, tea with lemon, milk, etc. Milk is served in all
workrooms during working hours, but unless specially prescribed for a worker by the health service it is sold at cost price.
Similarly a substantial hot meal is served free at midday, on the
health service's recommendation, to the young Belgian workers
w h o come to the works daily from the poor districts of Campine,
and appear to be insufficiently fed at home \
In order to keep itself constantly informed of the health
conditions in the various departments of the factory, to discover
the weak spots that require its special attention, and to ascertain
the effects of any measures it may prescribe, the health service
keeps two sets of morbidity statistics, one relating to the
frequency and degree of morbidity among men, women, and
young workers of under 18 years of age, and the other to the
1
Following the custom of the country, the other workers who are not
able to go home at the lunch hour only have a light cold meal at the
works canteen, for which they have to pay.

.THE PHILIPS WORKS

119

frequency and degree of morbidity in the various sections in the
factory. Both these sets of statistics analyse the most frequent
causes of morbidity. A comparison of these causes had led the
health service to observe that between 30 and 50 per cent, of the
days lost through sickness are directly or indirectly due to chill,
and it has consequently paid particular attention to the
atmospheric conditions of the workrooms, which are tested at
numerous points by means of Katathermometers.
The health service carries on its preventive work in close
contact with the technical services, w h i c h are required to report
to it any new substances before they are used, since the effects
are frequently u n k n o w n .
If possible, the health service
recommends the precautions to be taken, and if it is unable
to do so, it examines at regular intervals the workers w h o handle
such substances until it either is convinced that the substance
is harmless or has discovered means of protection against its
effects. Further, in collaboration with the technical services it
explores the possibility of substituting harmless for dangerous
substances whenever the technical conditions of production
allow \ .
The management of the Philips works pays as close attention
to safety as to health. But whereas it has entrusted the
responsibility for health conditions to a special service, it
considers that the responsibility for safety is inseparable from
that for production and should therefore be left in the hands of
the heads of departments.
Every accident, however small, in fact entails a stoppage of
production. In an undertaking where work is organised on a
more or less individual basis it may mean that only one man
or one machine is put out of action ; but in an undertaking
where w o r k is organised in large units, it may paralyse a whole
workshop. Under these conditions the cost of an accident can
no longer be reckoned in terms of the compensation paid to the
worker. In 1929, 175,000 gulden were paid in accident compensation under the Act on compensation for industrial accidents;
but the management estimates the real loss incurred by the
undertaking through accidents at several times that sum.

1
The scope of the health service's activities is not limited to the
staff, but extends in certain circumstances to the schools. Thus the pupils
of the Philips schools are examined regularly and any children showing
symptoms of rickets, tuberculosis, etc., are given treatment.

120

INDUSTRIAL RELATIONS

Accidents have, moreover, a second unfavourable effect on
production, since frequent accidents may make the worker
nervous and affect the rhythm of his work.
All these reasons have convinced the management that
safety is closely related to production, and that — as much as
order and discipline and the other factors conducing to the
regularity of work — it is one of the elements in the process of
rationalisation which it is the duty of the heads of departments
to carry out. But this responsibility does not eliminate the
necessity for supervision or the utility of instructions and advice.
In addition to the supervision exercised by the official factory
inspectors, there is also that of the safety service of the undertaking itself, which conducts enquiries into cases of serious'or
repeated accidents, draws up recommendations, and takes every
opportunity of emphasising the necessity for strict observance
of the rules. The education department also collaborates with the
heads of departments in promoting the safety education of the
staff. Safety courses have been introduced both for apprentices
and new workers and for foremen and superintendents.
The management has sometimes contemplated the setting
up of safety committees, but has not yet put the idea into effect.
It recognises the potential educative and even preventive value
of such committees, but hesitates to take any step that would
reduce the sense of responsibility of heads of departments.
Moreover, it considers that the present system works in a satisfactory manner and therefore prefers to maintain it.
WAGES AND OTHER PAYMENTS

Wages
The works regulations deal only in general terms with the
right to receive wages or challenge the correctness of the sum
paid, and with the intervals at, and the form in, which wages
are to be paid. The framing of rules concerning remuneration
is one of the special functions of the economic and social
department, and it is in accordance with these rules that the
staff department has to fix its time- and piece-rates and the
wage at which each worker is engaged.
Without giving detailed figures, we may outline as follows
the wage policy laid down by the economic and social department
and applied uniformly to the whole undertaking :
For wage-fixing purposes the workers employed by Philips

THE PHILIPS WORKS

i 21

are divided into two main groups ; (1) those employed in mass
production, and (2) those employed in the engineering shops,
technical shops, and technical repair services.
The former, most of whom are employed in production on
the chain system, comprise the large majority of the staff. Their
basic wages are fixed in the shape of curves, one for men, the
other for women. The movement of each curve depends solely
WAGE CURVE OF WORKERS EMPLOYED IN MASS PRODUCTION
(Percentages)

idO
ISO

I50

I4-0

ISO
IZO

ISO

«O

r¿H- '

.>•'

IOO

.^' *"'

90
so

so
20
10
0
- 1.4 14 % 1 ;

iE A i b 16 / . 1 r 17y, us le •A IS> ISA «3 2C^

2 /> 2 2 Z' 'A 25 2 .S/4 24.

Men
Women

on age ; the two are identical for all workers between the ages
of 14 and 18 years, but diverge subsequently, the men's basic
wage above 18 years increasing twice as fast as that of the
women ; besides this difference, the latter remains stationary
at the age of 20 7= years, while the rate for men continues to
increase until 24 years, at which age a man's basic wage is
60 per cent, higher than a woman's.
These basic wages are not the only factor in the actual
earnings of mass production workers. Those who work at piecerates can earn supplements proportionate to their output, while
those on time-rates receive bonuses that vary with the nature of
their work. These supplements and bonuses amount on an
average to about one-third of the basic wage.

122

INDUSTRIAL RELATIONS

The workers employed in the technical services are grouped
as apprentices, and unskilled, semi-skilled and skilled workers,
with a separate wage scale for each group. These too are curves,
which m o u n t with the age of the worker to reach their maximum
between 24 and 26 years, the actual point depending on the
individual worker's skill. But in this case the basic wage of all
the workers of a given age in a given group is not necessarily
the same, as in the case of mass production ; for the greater
individuality of the work makes it easier to adjust wages to
personal capacity. The basic wage of each group is therefore
expressed not by a single curve, but by a maximum and a
m i n i m u m curve, between which the wages of each worker of a
given age must be fixed in accordance with his personal ability.
The difference between these m a x i m u m curves tends to be
greater for the more skilled groups.
The economic and social department does not rely on
technical considerations alone in fixing nominal wage rates ;
it has also made an investigation into the cost of living at Eindhoven, and, on the strength of the information so obtained, the
management has fixed the m i n i m u m weekly earnings of a worker
of 23 years of age at 24 gulden. The basic wages of unskilled
workers have been fixed in relation to this figure.
The economic and social department informs the wages office
of the staff department of the curves thus fixed, and the latter
then calculates piece-rates so that earnings may average a sum
equal to that indicated on the appropriate curve — that is to say,
so that the workers employed in mass production may be in a
position to earn, on an average, one-third more than their basic
wage.
Large differences between the actual earnings of workers in
the same group may indicate either that there is great divergency
in the skill of the individuals, or that the rates have been unsuitably fixed ; and the wages office must therefore see to it that
earnings do not in practice deviate too much from the average,
on one side or the other. If, for instance, it discovers that all
the workers employed at certain work in a given shop earn much
more or m u c h less than this figure, it must ascertain whether
the rates have been wrongly calculated or whether there has been
an unreported change in technical conditions. If necessary, it
must then readjust the rates.
If there is no piece-work available for a worker engaged at

THE PHILIPS WORKS

123

piece-rates, and he is temporarily employed on time work, he
continues to receive, over and above his basic wage, a certain
supplement, which varies from group to group.
Lastly, if a worker on piece-work is prevented by circumstances beyond his control (stoppage of machinery, late arrival of
materials, etc.) from producing his usual quantity, he is
nevertheless paid for the period during which he was unable to
work ; but if he is himself responsible for the paucity of his
output, the undertaking is not bound to pay him for more than
he has actually produced.
If the earnings of a worker on piece-rates in the engineering
shops are smaller than the basic wage, this is still paid him,
and the difference is deducted from any subsequent surplus of
piece-earnings over the basic wage. This is equivalent to a sort
of current account between the wage earner and the employer,
the latter simply advancing the difference.
Such à system
obviously could not lead to a steady " overdraft " on the.part of
a worker, for if his earnings were too often below the basic rate,
he would soon be dismissed as lazy or incapable, and it would
be regarded as proved that his output did not satisfy the needs of
the undertaking.
There is no analogous system in the mass production shops.
Piece-rates are determined in such a way that a worker of
23 years of age can easily earn a wage averaging well over 24 gulden. The management would regard a worker earning less than
this sum as unsatisfactory and the result would be dismissal.
In order to ensure that the wage scales fixed by the economic
and social department are correctly and uniformly applied, wages
are subjected to a series of checks intended to eliminate errors
and consequent irregularities.
It has already been mentioned that the wages office has to
check its own rates by comparing them with the actual earnings
of the workers.
Besides this, the staff department is required to communicate to the economic and social department, every three
months, a statement of the wages at which workers have been
taken on, so that the latter department may verify the exact
application of its basic scales.
Every six months the wages of all workers who have not
attained their maximum are adjusted, in accordance with the
basic scales, to their increased age and, particularly in the case
of skilled workers, to any change in their efficiency.

124

INDUSTRIAL RELATIONS

A committee has been set up to see that the wage regulations
are uniformly applied in the whole undertaking. Its principal
members are the head of the economic and social department,
the head of the staff department, and two senior employees, one
from the technical and the other from the administrative side.
The committee examines suggested promotions and gratuities *
individually and co-ordinates their distribution in the various
sections of the undertaking. It takes this opportunity of reviewing each worker's record, so as to note which workers' earnings
are steadily low, and to enquire into the reason. It should not
be forgotten that disputes on the subject of wages may be brought
before the works council or referred to a trade union ; but the
management maintains the principle already described and
refuses to discuss basic wages with either of these bodies, though
it entertains discussion on time- and piece-rates and their application.
No detailed and exact statistics of the effect of this policy on
the movement of wages at Eindhoven are available, but the two
series of index numbers below, the one showing the nominal
wages of workers employed in mass production from 1920 to 1930
inclusive, the other the cost of living at Eindhoven during the
same period, give a general idea of this movement.
Yp„ r

Index number o
n o m i n a l wages l

1920
1921
1922
1923
1924 . . . . . . .
1925
1926
1927
1928
1929
1930 . . . . . . .
2

100
98
88
81
88
86
86
91
103
103
95

Cost-of-living
index number 2

100
86
80
80
82
80
78
79
78
78
75

W a g e s of -workers employed
duction.
Computed periodically by the economic and social department on the model of the
Amsterdam index number.

According to these figures, nominal wages increased by
nearly 25 per cent, between 1923, the year following the last
depression, and 1929, the year before that now in course, while
the cost of living fell rather than rose during the same period.
In 1930, a year of depression, nominal wages appear to have
1

With few exceptions, gratuities are given only in the case of highly
specialised workers, supervisory staff, etc.

THE PHILIPS WORKS

125

fallen more than the cost of living, but real wages were still considerably higher than they were during the whole of the period
before 1928.
Hours o/ Works and

Holidays

The normal working week in the Philips works is one of
forty-eight hours. Overtime is worked, under the supervision of
the labour inspectors, within the limits permitted by the law. It
is paid at 25 per cent, above the normal rates if worked between
5 and 7 a.m., 7 and 9 p.m., or 2 and 7 p . m . on Saturdays — that
is to say, neither immediately before nor immediately after the
normal w o r k i n g hours * ; the increase rises to 50 per cent, for
night-work (9 p.m. to 5 a.m.) and to 100 per cent, for work on
Sundays and public holidays. Only the metal and glass workers
benefit by the privilege customarily enjoyed by skilled workers in
the Netherlands, and are entitled to an increase of 25 per cent, for
all overtime worked by day during the week.
The works regulations prescribe six paid holidays, namely,
New Year's Day, Easter Monday, Ascension Day, W h i t Monday,
Christmas Day and Boxing Day. If a worker is required, for
reasons of urgency, to work on one of these days and refuses to
do so, he loses his right to payment for the day in question.
Besides these general holidays, the workers are entitled to
annual paid leave, the number of days varying with the class of
worker and his period of service. The m i n i m u m is five days
(apprentices, and unskilled workers with less than 12 7* years'
service), and the holiday rises to six days after 12 7= years' service, to eight days after 25 years and to ten days after 35 years.
The glass workers, who receive more favourable treatment because of the arduous nature of their work, are entitled to six days
in the first year of service, to seven in the second year, to eight
after two years and to ten after 35 years.
At least five of these days are collective holidays which must
be taken at certain dates, three at the beginning of July during
the Eindhoven Fair, one at Assumption, and one on All Saints'
Day. Thus, for all those workers who have the right to no more
than five days (apprentices, and unskilled workers with less than
1
Netherlands legislation does not oblige employers to pay increased
rates for overtime.

126

INDUSTRIAL RELATIONS

12 Va years' service), the whole paid leave must be taken collectively.
Apart from regular holidays, it should be noted that the
undertaking pays wages, on occasion, for days of absence due to
marriage, m o u r n i n g , confinement of the worker's wife, etc.
Social

Insurance

The management has been responsible for the establishment
of several institutions intended to insure the staff against social
risks. There is no space here to indicate more than their essential
features, which show Philips's attitude in this respect and the
amount they have done to apply and supplement State social
legislation.
Compensation

for

Accidents

The law provides that a worker shall receive 80 per cent, of
his normal wages if temporarily incapacitated, and 70 per cent, if
permanently incapacitated by an accident, all of which must be
paid by the employer.
Philips increase this benefit to 90 per cent, of the normal
wage in the case of temporary incapacity if the accident was not
due to the worker's fault. Further, they do all they can to keep
in their employment workers w h o are only partially disabled. In
such cases, the worker's compensation is reduced so that it and
the wages earned since the accident may not together exceed his
previous earnings ; but he is not deprived of the balance, for it
is to a certain extent held over for h i m until his retirement.
Sickness

Insurance

A distinction should be made here between three risks : (a)
loss of wages ; (b) cost of medical and pharmaceutical attention ;
(c) cost of special medical aid.
(a) The only compulsory State insurance is that against
loss of wages, under which the benefit amounts to 80 per cent, of
the normal wage for six months from the second or third day of
the illness. Worker and employer share the contributions equally.
In practice, the law permits a choice between insurance with a
public institution (the Labour Council) and with a trade organisation. If the latter alternative is chosen, the undertaking may

THE PHILIPS WORKS

127

set u p a branch fund and cover its own risks only. This was the
course chosen by Philips as being most in keeping with their.
general policy of tightening by all possible means the bonds between employer and employed; they point out that, with their
own fund covering all the risks, the one is as interested as the
other in keeping contributions as low as possible. The health
measures adopted by the employer, like the suppression of fraud
by the collaboration of the staff, result in immediate economy to
both. Further, Philips believed that the administrative expenses
of such a fund would be less than those of the public institution,
since several of their own services — in particular those dealing
with wages — already kept u p to date much of the information
useful for insurance.
At the moment, sickness insurance contributions at the
Philips works are 1.1 per cent, of wages, both for the employer
and for the worker. The benefits are the same as those fixed by
law, except that the waiting period is reduced to two days for
workers without dependants and to one day for those with family
responsibilities. Even this one day is paid in the case of illnesses
lasting for a fortnight or more.
In accordance with the Act, there is a joint fund committee,
composed of ten members designated by the employer and ten
elected by the staff ; the various sections of the undertaking are
represented in each of the two groups. All the ten staff representatives are at present trade unionists, four being members of
Catholic, three of Protestant, and three of Socialist organisations ;
one of the first-named represents salaried employees in particular.
This list was drawn up by agreement between the three trade
unions and obtained the majority of votes.
In order to ensure that the staff should take a still more direct
part in the strict observance of the sickness fund regulations, an
interesting experiment was made in 1930. The whole of Great
Eindhoven was divided into seven districts, and a supervisory
committee set up for each. These were composed of sixteen
(honorary) members, eight men and eight women, representing
the eight departments of the undertaking. Their task was to take
care, each in its own district, that frauds were suppressed and the
fund regulations observed. This supervision of members by one
another is, of course, no more than auxiliary, and is not intended
to replace that by doctors and nurses ; but it is hoped that such

128

INDUSTRIAL RELATIONS

direct influence exerted by the workers over their comrades will
yield satisfactory results.
(b) Ordinary medical and pharmaceutical attention is not
provided for by the State. In the Philips works these charges are
borne entirely by the undertaking, which has founded a medical
service for the purpose.
Under section 4 of the works regulations, the employer supplies the worker with free medical aid, either by sending the
doctor to his home or by giving h i m facilities for consultation at
the works policlinic. Drugs and other necessities prescribed at
these consultations are also given free. The wives of married
workers, if not employed elsewhere or earning their living in
another way, are given the same facilities, as are their children u p
to the age of 14 years. Special regulations lay down how these
provisions are to be applied.
The following figures will give an idea of the size of this
service. There are nine doctors, one sister, fifteen nurses, three
midwives and twelve assistants. The average daily number of
consultations at the works is about 200. The service's budget, not
including housing, heating, lighting and other overhead charges,
amounts to some 300,000 gulden per a n n u m . The employer has
the advantage of being able to compel a worker w h o declares that
he is suffering from any sort of accident or illness to be examined
immediately by the medical service ; the danger that an illness
may grow more serious t h r o u g h lack of care, and the worker's
absence so become prolonged, is thus avoided.
(c) The costs of special medical aid (specialists, sanator i u m , and hospital fees, artificial limbs, etc.) were also originally
supported by the undertaking alone ; but when half the burden of
the general sickness insurance scheme was placed by the State on
the shoulders of the employer, Philips set up a special sickness fund
to which the workers are bound to belong ; they pay a contribution of 0.9 per cent, of their wages, the deficit being supplied by
the undertaking. Special regulations lay down the limits within
which, and the proportion to which, the fund bears the expenses
of special medical aid, both for the workers themselves and for
their families. The fund is administered by a committee of nineteen members — the ten representatives of the staff on the sickness
insurance fund committee and nine persons designated by the
management.

THE PHILIPS WORKS

Old-Age, Invalidity

and Survivors'

129

Insurance

Workers whose wages do not exceed 3,000 gulden per a n n u m
are, by virtue of State legislation, entitled to a pension on attaining
the age of 65 years or in the case of premature invalidity of nonoccupational origin. In cas of death, a smaller pension is
payable to the widow and children.
Philips considered, however, that the provisions of the Act
were most insufficient, and established new institutions for their
staff.
As far back as 1913, they had set u p a pensions fund for their
salaried employees, financed out of contributions of 7 per cent, of
salaries paid by both employer and employee, and by certain
further payments on the part of the employer. The retiring age
was 60 years. Membership was voluntary, but subject to the
approval of the fund committee.
In 1922, a similar fund was set u p for the workers, the contributions being 3 per cent, each from employer and worker, supplemented by certain further payments on the part of the employer.
The retiring age is 65 years.
Finally, in 1929 a new salaried employees' fund was set up,
with the same resources and retiring age as under the former
scheme, but with membership open to all, as in the case of the
workers' fund, without the obligation to undergo a medical examination. The fund set u p in 1913 continues to function for
those w h o already belonged to it, but it no longer accepts new
members.
The committee of each fund is presided over by one of the
managers and comprises six other members, two designated by
the management and four elected by the members out of a list
(proposed by the management) of three candidates for each
vacancy.
The employer adds an annual contribution supplementing
the 3 or 7 per cent, paid by himself and by the insured persons in
accordance with the rules of the funds. Both in 1929 and in 1930
this contribution was equal to 6 per cent, of wages or salaries.
The benefits paid by the funds include invalidity, old-age,
widows' and orphans' pensions, the rates varying with the remuneration of the person concerned, his age on becoming a member,
and in the case of invalidity and survivors' insurance, his age on
the materialisation of the risk. The pension scales are calculated
on the basis of the contributions under the rules, the basic pension
CfDUSTRIAL

RELATIONS

130

INDUSTRIAL RELATIONS

thus determined being supplemented by a sum varying with the
size of the extra payments which the undertaking has been able
to make '. In case of death, the fund also pays the funeral
expenses.
1
The following examples will give some indication of the benefit
which may be paid to insured persons :

A. — WORKERS' PENSIONS FUND (contributions,

S per

cent.)

Example : A worker joins the fund at the age of 18 years at a weekly
wage of 20 gulden ; at 23 years he has 25 gulden and at 30 years,
30 gulden. He marries, his wife being of his own age.
Old-age pension at 65 :
Fixed rate (contributions, 3 per cent.
-f- 3 per cent.)
Increment (supplementary payment of
6 per cent, made by the employer)
. .
Maximum : 60 per cent, of the last basic
wage
.

528.48 gulden per annum
407.52 gulden per annum
936.00 gulden per annum
or 18 gulden per week

Widow's pension, if the insured person dies after completing his 39th year :
Fixed rate (contributions, 3 per cent.
-J- 3 per cent.)
257.62 gulden per annum,
Increment
(supplementary, payment of
6 per cent, made by the employer)
. .
210.38 gulden per annum
Maximum : half
pension

the maximum

old-age

468.00 gulden per annum
or 9 gulden per week
Orphan's pension : If the mother is still alive, each orphan of under
14 years receives one-eighth of the widow's pension — that is to say, in the
case under consideration, 58.50 gulden per annum, or 1.13 gulden per week,
This is payable to not more than eight orphans.
If the mother is dead, the pension of an orphan of under 14 years is
one-fourth of the widow's pension and is payable to not more than four
orphans.
B. — SALARIED EMPLOYEES' PENSIONS FUND (contributions,

7 per cent.)

Example : A man joins the fund at the age of 21 years at a monthly
salary of 125 gulden ; at the age of 22 years it is 150 gulden ; at
23, 200 gulden ; at 24, 225 gulden ; at 25, 250 gulden ; at 26, 300 gulden r
at 27, 350 gulden ; at 28, 400 gulden ; at 29, 450 gulden ; and at 30,
500 gulden. He marries, his wife being of his own age.
Old age pension at 60 :
Fixed rate (contributions, 7 per cent.
-)- 7 per cent.)
2,419.83 gulden per annumIncrement (supplementary payment of 6 per
cent, made by the employer)
. . . . .
2,322.38 gulden per annum
Total

. .

4,742,21 gulden per annum
or- 39&18 .gulden per month

THE PHILIPS WORKS

131

If the insured person ceases to be employed by the undertaking, he may recover his contribution from the fund. If he
leaves after a membership of less than five years, the total only
is returned to him ; but if he has been a member of the fund for
between five and fifteen years, he receives in addition 10 per cent.
of his contributions for every one of these years after the fifth.
After fifteen years of membership he receives therefore, when he
leaves, twice the amount paid in by him.
Women workers who leave the undertaking to be married
receive special treatment. However long they have belonged to
the fund, they are entitled to their contributions and 10 per cent.
per year of membership up to a maximum of 150 per cent. A
girl who joins the fund at 14 years and leaves the undertaking at
25 years to be married thus takes with her double the contributions she has paid. Mention has already been made oí the fact
that it is Philips's principle not to employ married women ; the
above scheme is intended to encourage their retirement, and the
repayment of their contribution is thus a sort of dowry insurance.
At the present moment half the staff are members of the
works pensions funds, and this large proportion enables the latter
to work on a sound basis. They have a capital of 20 million gulden, completely independent of the undertaking, in which they
are not allowed to invest it.
Compensation for Dismissal
Unemployment does not figure among the risks covered by
the Philips institutions. Until the middle of 1930 a dismissed
worker was given a fortnight's notice l but no compensation.
The need for a compensation scheme had in any case hardly made
itself felt, for since the end of the depression of 1921-1922 there
had been practically no reduction of staff. But, as has been seen,
Widow's pension, if the insured person dies after completing his
30th year : 2,664.48 gulden per annum, or 222.04 gulden per month.
Orphan's pension : if the mother is still alive, each orphan of under
19 years of age receives one-eighth of the widow's pension, that is,
333.06 gulden per annum, or 27.76 gulden per month.
If the mother is dead, the pension of an orphan of under 19 years of
age is one-fourth of the widow's pension and is not payable to more
than four orphans.
1
This is the custom, though the works regulations provide for a
week's notice only.

132

INDUSTRIAL RELATIONS

the state of affairs changed at the beginning of 1930, and within
a few months the undertaking was compelled to dispense with the
services of nearly 3,000 workers. It then became obvious that
something must be done for the victims of this demobilisation,
who, unless members of a trade union or other fund, were not
entitled to unemployment relief.
On 1 March 1930 the management introduced a regulation
that workers dismissed for other than disciplinary reasons, who
had worked in the undertaking for at least a year, should receive
a leaving indemnity ranging from a week's wages for workers
employed for one year to thirteen weeks' wages for those who had
been in the service of the undertaking for at least twelve years.
This indemnity is not paid in a lump sum, but in weekly instalments equal to half the weekly wage. Thus a worker who has
been employed for three years, and whose indemnity is therefore
equivalent to two weeks' wages, actually receives half his former
wages weekly for four weeks. This is, it need hardly be said, a
compensation for dismissal and not for unemployment, so that a
man does not lose the right to it if he obtains other employment
before it has been fully paid. On the contrary, Philips continue
the weekly payments until they are completed even when the
worker concerned is engaged by another employer. If he is taken
on again by Philips, the payments are suspended, but the right to
the indemnity is retained, the balance being simply held over until
a second dismissal. Workers insured against unemployment are
equally entitled to this compensation ; payment is in such cases
spread over a longer period, so that each weekly instalment and
the unemployment benefit received do not together exceed the
figure of earnings above which the unemployment insurance
funds provide for a reduction of the benefit they pay.
SOCIAL SERVICES

Eindhoven might well have been nothing but a stage in
which the workers from the country districts served their industrial apprenticeship at Philips's expense before passing elsewhere
if the latter had not made it their business to adapt local life, as
well as conditions in the works themselves, to the general needs
of their staff. Employment, sufficient pay, protection against
social risks, and possibilities of instruction and advancement in
their trade would not have sufficed to keep the workers in Eindhoven if they had not also found housing facilities, food supplies,

THE PHILIPS WORKS

133

recreation, etc. Philips decided to supply all these needs, and the
very brief sketch that follows will show the variety of the services
they have set u p .
Housing
To settle in the space of eight years about 15,000 workers and
their families in a town of only 45,000 inhabitants needed a building campaign on no small scale. Philips decided that this work
could not be left to third parties, for the undertaking was too
acutely interested in meeting the sudden demand for house-room
and, by regulating the supply, in preventing a rise in rents out of
proportion to the normal earnings of its workers. The management also saw that if it took the matter into its own hands, it
could provide its staff with hygienic and pleasant quarters at a
reasonable price. Each new expansion of the works was therefore
accompanied by a fresh burst of house-building activity ; and
when this activity was not sufficiently prompt the undertaking
soon felt the effects. In 1929, for instance, labour turnover was
as high as 27 per cent, as against some 20 per cent, in previous
years, and this seems to have been due very largely to the fact that
at the beginning of the year 10,000 workers were compelled to
lodge wiíh families in the town.
The economic and social department was given the task of
drawing up a building programme to satisfy the needs of the staff,
with reference to the various wage groups, the size of families,
and the requirements of hygiene and town planning. The same
department also administers the Philips house property, allots
quarters in accordance with the requirements of the undertaking
(length of service, proximity to a particular workshop) or with
individual factors (family, carefulness and cleanliness, nationality) ' and makes regular inspections. The building itsef is
carried out by the technical services.
The houses built by Philips compose five villages, situated
along the principal roads leaving Eindhoven, with their own
churches, schools, shops, etc. As far as possible each house has
a kitchen separated from the living room — a large room 4 metres
square — and in many cases a bathroom. Further, a n u m b e r of
farmhouses have been bought or built in the neighbourhood of
1
It will be remembered that complaints on the subject of the allotment
of quarters may be brought before the works council.

134

INDUSTRIAL RELATIONS

the town for families of country origin in which the fathers were
too old to be employed in the works. Now, after having given
most of their attention in the past to family housing, Philips are
t u r n i n g to the unmarried workers. They have advanced money
for the construction of four hostels and are themselves now
building two houses each for the accommodation of fifty persons.
The undertaking owns 3,887 houses, or 20 per cent, of all
those in the neighbourhood, and thus accommodates about half
its staff. The houses may be grouped as follows :
Workers' cottages
Small farms
Farms
Small houses for salaried employees and administive staff
Large houses for administrative staff
Total

3,312
36
11
309
219
3,887

The rents of all these houses are so fixed that they represent
an interest of 4 per cent, on the capital invested. With very few
exceptions — a dozen cases in all — Philips have not sold the
houses thus built to their staff, but have encouraged the latter to
build for themselves. With this purpose they agreed to advance
up to two-thirds of the building costs at 4 per cent., repayable in
fifteen years.
Transport
Philips have taken advantage of the development of means
of transport both to enable workers living within a certain radius
not to migrate to Eindhoven, thereby alleviating the housing
shortage, and to save workers living in the outlying suburbs
from useless exertion. Some thirty motor-coaches cover the
roads round Eindhoven four times daily ; at midday they take
home and bring back to the factory the workers w h o do not live
too far afield, while morning and evening they carry, often for
30 kilometres and more, those who cannot travel by rail.
The staff department is in charge of these transport services.
The workers pay for their transport at cost price ; only the young
Belgians w h o come from a great distance and whose wages are
low are carried free of charge.

THE PHILIPS WORKS

135

Food Supplies
When prices went up suddenly after the war, action to
prevent too great a local rise seemed called for. Eindhoven is a
relatively small and isolated market, and it may well have been
feared that retailers would force up prices and so stultify the rise
in wages already granted and necessitate constant fresh increases.
For moral as well as financial reasons Philips decided not to set
up their own stores, but in 1919, at the request of a group of
former workers, they contributed 10,000 gulden free of interest
to the foundation of a staff co-operative society. At the request
of the society's committee, the head of the economic and social
department originally assisted in its management, but two years
later he retired from the position, fully convinced that the members had sufficient experience to run their society themselves.
It is now completely in their hands and is making good progress. The turnover was 2,000,000 gulden in 1929 and rose to
some 2,600,000 gulden in 1930. The society has a bakery, two
butchers', nine grocers', and two druggists' shops, and a coal
depot.
Moreover, Philips have opened canteens in which unmarried workers and persons living at a distance may have their
midday meal. There are four of these, with a total accommodation for 3,600 persons. Cash payments are the rule, except
in the case of the young Belgian workers coming daily from
over the frontier, who are fed free on the strength of a recommendation from the health service, of which mention has already
been made.
Recreation
A special department has been established to organise the
workers' use of their spare time, a proof of the importance
attached" by Philips to this subject. This, the recreation department, comprises a head, an assistant, eight employees and a small
staff of waitresses and cleaners.
A large hall, built in 1929 in the centre of the industrial
quarter, brings most of the means of recreation under one roof.
There is a gymnasium, rooms for billiards, fencing and various
games (chess, draughts, etc.), a theatre, and a library with two
reading rooms. Cinematographic, dramatic and variety shows,

136

INDUSTRIAL RELATIONS

concerts and lectures, organised by the recreation department,
are given in the theatre, and from time to time artistes and
orchestras of the first class come from Amsterdam. Exhibitions
have also been held there in conjunction with various bodies, in
particular the great Amsterdam publishing firm, De Wereldbibliotheek, which collaborated in a campaign to popularise the
taste for reading among the staff. The library, which was
opened on 1 June 1930, had already found nearly 1,000 members
by the end of October, and from 240 to 250 books were then
being borrowed every evening.
Besides the main recreation hall, there are other smaller
buildings — club rooms, or establishments similar to cafés — in
the various residential areas \
Lastly, Philips have built a sports ground equipped for
football, athletics, hockey, cricket, tennis, etc. '.
The undertaking has thus adopted the policy of itself providing its staff with varied means of recreation, but has left it to
individuals to take advantage of these facilities or not, and even
requires a small payment for the use of each in order to put to
the test the force and sincerity of personal tastes and to carry out
a process of rational selection.
The recreation department has maintained the same attitude
in encouraging the formation of sports and other clubs, dramatic
societies, bands, orchestras, etc. It has at times given them
small subsidies, but has handed over to them the entire management of their own affairs and left them to pay current expenses
out of their members' subscriptions.
Further, the recreation department has from time to time
been asked to assist the workers in planning rural excursions
for small groups, all-day motor-coach tours or collective journeys
by special trains. As many as 4,911 workers took part in one of
the latter, organised in 1930 with the object of visiting the Antwerp Exhibition. In every case part of the cost is borne by the
workers concerned, and the small excursions are not set on
foot at all unless the workers request it of their own accord.
The organisation of all these recreations obviously costs
large sums. The undertaking itself bore the whole expense of
1

No alcoholic drinks are served in any of the recreation buildings.
Mr. and Mrs. Philips de Jongh have also presented two parks to the
Eindhoven local authorities, and these, though open to all inhabitants,
are much used by the workers and their families.
2

THE PHILIPS WORKS

137

constructing and equipping the main recreation hall (amounting to 1,100,000 gulden), the other buildings and the sports
ground. The ordinary expenses of the recreation department
are met out of current receipts (contributions, sale of tickets,
etc.) and the income from a donation of 100,000 gulden made by
Mr. and Mrs. Philips de Jongh in 1922 ; the undertaking also
grants subsidies.
Social Relief
Provident institutions cannot prevent misfortune from
plunging a worker or his family, at least temporarily, into want,
or laying over-heavy burdens upon them ; and the Philips management therefore thought itself bound to set up a social relief
fund. This is run by a committee composed exclusively of members of the administrative staff of the undertaking, w h o deal with
questions of principle and leave the daily business to a special
office. Its resources are provided by the interest on a sum of
300,000 gulden granted out of profits, the undertaking adding a
further 15,000 gulden annually. The fund committee decides to
w h o m relief shall be given, and relies on the works council to
point out deserving cases to it \ The fund may also assist in the
payment of hospital expenses incurred by workers or salaried
employees and members of their families. In cases of temporary
embarrassment, when actual relief is not necessary, the fund may
grant advances to tide over the difficult period. In this respect
the fund committee works in close collaboration with the house
inspection service. When an inspectress comes upon a family
which seems in need of assistance, she communicates with the
fund on the subject. Twenty-seven lady visitors, w h o are not
employees of the undertaking but are paid partly by it and partly
by the workers, may be sent by the economic and social department to give assistance to persons asking for it (in case of death,
illness, confinement, etc.).
Finally, there is a small fund dating from earlier days which
keeps u p an old tradition of the firm by contributing 5 gulden to
the expenses of every confinement.
1
When it was found necessary to introduce shorter hours, the
management called on all members of the staff who might be brought
into difficulties by the consequent reduction of earnings to submit their
cases to the fund committee for consideration.

138

INDUSTRIAL RELATIONS

The service in charge of social relief organisation is subordinate to the economic and social department. At its head is a
woman, with six women assistants. The latter may advise members of the staff and their families on domestic questions if asked
to do so.
Sundry Services and Advantages
This study will not be complete unless mention is made of
sundry other services and advantages introduced by Philips for
the benefit of their staff.
Knowing how the annual payment of taxes may press on a
weekly family budget, the management has established a special
fund, into which workers may pay sums deducted weekly from
their wages ; in this way they are protected against their own
lack of foresight and at the same time accustomed to the habit
of saving. The fund pays 3 per cent, interest, and settles the tax
accounts as soon as they are handed in by the workers. Further,
an employee of the fund gives members of the staff free advice
on tax declarations \
Legal advice of every kind is given outside working hours by
two members of the economic and social department who have
legal experience.
Another type of advantage is the large reduction at which
members of the staff may buy any of the Philips products.
Lastly, the undertaking gives presents of various sorts to
persons who have been in its employment for 12 1/2 or 25 years
(silver and gold watches and other articles chosen by the individuals concerned) 3 .
A glance back at all the various institutions enumerated
shows that, besides the underlying desire to procure suitable
conditions of life for the workers and make residence at Eindhoven pleasant for them — and this is based, after all, on the
need of the undertaking for a permanent and dependable staff —
1

An Eindhoven bank recently instituted a savings scheme for the
payment of taxes, and the Philips fund was then transferred to it ; the
undertaking, however, remains responsible for the sums paid in by its
staff.
2
It has been remarked (p. 125) that the number of days of paid
holiday increases with the length of service.

THE PHILIPS WORKS

139

the management has other objects in view, objects which
influence the organisation and practical working of these services.
First of all, a constant interest in education may be remarked.
The undertaking supervises and inspects the houses which remain
its property; its has set up co-operation and other societies but left
the management to the persons concerned ; it has encouraged
sports teams and collective amusements ; it has organised shows
and exhibitions and established a library and a savings bank ;
and it has exercised a quiet but beneficent influence through the
advisers and lady visitors of its economic and social department.
By these means it has sought to develop among the members of
its staff a love of order and cleanliness, initiative and experience
in administration, self-control and the team spirit, the habit of
intellectual recreation, the desire for social advancement, and even
simple foresight and thrift. All these are qualities which tend
directly or indirectly to influence for good the size and the quality
of the undertaking's output.
The objects of these same institutions, seen from the point
of view of industrial relations,, are presumably to establish permanent but completely voluntary contact between employer and
employed, to accustom the latter to regard the undertaking as
capable of satisfying all his spiritual and material needs, and
to induce him to turn spontaneously to his employer for help,
advice and protection in every emergency. And since the undertaking can only provide the worker with such service on the
strength of the financial foundations laid during the years of
prosperity, the management believes that the result will be a
strengthening of that community of interest between employer
and employed which, in its opinion, is the cornerstone of industrial peace and economic and social progress.
These various aims and considerations, all of which tend in the
last resort towards the profit of the undertaking, are responsible
also for the little illustrated review Philips Maandblad, which is
distributed gratis to the staff every month. Some of its articles are
purely for amusement, others give information on the development of the undertaking and the popularity of its products,
others again are of an educational nature ; and, in order to induce
members of the staff to read or at least to glance at the review,
the management has made it the official channel for its communications to them on the subject of sickness insurance,
education, etc., and has laid down that no one may plead ignorance of any information which has been so published.

140

INDUSTRIAL RELATIONS

The expenses entailed by all these services are large, but the
management does not regard them as out of proportion to the
objects at which they aim. If the medical service and the various
supplementary insurance schemes set u p by the undertaking are
included, the total cost for 1929 was 3,304,000 gulden, made up as
follows :
Gulden

Pensions funds
Medical service
Recreation
Education
Social relief
Sundry

1,800,000
400,000
325,000 l
520,000
80,000
179,000
Total

. . . .

3,304,000

1 This figure does not include the cost of building the recreation hall, b u t only interest
a n d depreciation thereon.

State insurance charges amounted to a further 965,000 gulden.
CONCLUSION

Eindhoven has not been called " Philips Town " without good
reason. Outside the narrow, crooked lanes of the old village,
everything — streets, houses, parks, sports grounds, and schools
—• bears the name of Philips, or owes its existence to the family.
This huge achievement, carried out in a remarkably short
space of time, needed something more than careful attention to
the technical side of the business ; it required also a correspondingly high degree of economic and social organisation. While
the technical departments built and fitted out the workshops, the
economic and social services had to collect the necessary staff,
undertake its vocational training, and find it conditions of life
and labour that would ensure stability and a satisfactory output ;
they have attended to hygiene and security, worked out equitable
payment schemes, organised social insurance, and introduced
various other benefits for the staff within the undertaking's
essential sphere of activity ; and outside this sphere they have
given the workers opportunities of general and vocational education, enabling them to raise their intellectual or material
standard, and to a large extent provided them with homes,
recreation, physical culture, education for their children, and
medical attention for themselves and their families. All these
services combined exceed by far an employer's normal responsibilities.

THE PHILIPS WORKS

141

In reply to those who interpret this wide activity as indicating a paternal attitude on the part of the management, the latter
replies that it has taken the initiative in so many ways only
because there was no one else to do so, and because such action
was essential both to the efficiency of the undertaking and to the
existence of good relations with the staff. In every field this
activity has contributed directly or indirectly to the interests of
the management's production programme ; and even if it has
made efforts to satisfy as far as possible the individual and
collective needs of the workers, the. management does not think
that it can fairly be reproached for doing so, particularly since
the content which it has tried to inculcate in the staff by these
means is, in its opinion, a further condition of workers' efficiency,
and therefore of the greatest importance to the undertaking
itself.
In any case the rapid growth of the Philips works and the
results obtained have given the management great confidence
in its own authority, and made it most mistrustful of all outside
interference. This explains its tendency to undertake public
services itself without awaiting the decisions of the local authorities, in its opinion apt to be dilatory ', and no doubt it accounts
also for its attitude towards trade unions. The management has
formally declared that it is not opposed to such organisations,
and makes no objection to its workers becoming members, but
with the unions still at an early stage of development it has
made a point of exactly defining their personal and material
competence as far as the Philips undertaking is concerned ;
within these limits it negotiates with them and does what it can
to avoid any conflict that may disturb production.
It is this mistrust, as well as the economic considerations
already mentioned, which accounts for the management's desire
to maintain its freedom of action in every sphere, and its
refusal to be a party to collective agreements either with trade
unions or with its own staff.
But though it wishes to maintain its control, the management does not believe that its authority should be absolute,
nor remain as wide as it was compelled to be during the undertaking's years of expansion. On the contrary, it considers it its
1
This was Philips's policy in building their new residential districts.
They have even organised their own police to ensure order in the factories
and in the worker's city which they have created.

142

INDUSTRIAL RELATIONS

duty to teach its workers step by step to manage their own
affairs and to bear their part in the administration of matters
that concern them as well as the undertaking. As has been seen,
it handed over the administration of the co-operative society to
the participants after assisting in its establishment, and tends to
leave the organisation of the various sport and recreation clubs
to their members after encouraging their foundation. It believes
that this collaboration in all departments of life, in conjunction
with the general education whose progress it is doing so m u c h
to further, will give its country-born workers more and more
confidence in their employers and increased experience and
initiative, so that they will participate with growing efficiency
in the solution of problems concerning them within the undertaking. With this last object in view, it has introduced a system
of representation for the workers, and gives consideration to the
opinions thus expressed in its action for the benefit of the staff.
The Philips management does not pretend that all this
educative action is disinterested. Its aim is to give the inorganic,
unorganised, confused mass of workers an esprit de corps, a
feeling of collaboration and solidarity between employer and
employed. The works review, the speeches to the workers, the
vocational schools, the social insurance and relief institutions,
the sport and recreation clubs, and the collective excursions, all
are used to develop this feeling of solidarity, for the management
wishes industrial relations to be based on it, and to ensure that
social peace, unbroken as it has been for years by any sort of
strike, shall reign in the Philips workshops in the future. It
sees in workers' representation a means of demonstrating solidarity between employer and employed, and of settling without
ill-will such social questions as arise inside the undertaking ;
and at the same time it relies on the new institution to give
the workers, besides the material satisfaction of their
needs, the feeling of spiritual satisfaction which arises out of
the knowledge that they are playing a part, by virtue of their
labour, in the greatness of the undertaking — a feeling which
itself tends to increase output, and so to contribute to the prosperity of all.

THE SANDVIK STEEL WORKS
INTRODUCTION

For an understanding of industrial relations in the Sandvik
Steel Works one must discard preconceived ideas of the " average"
or "typical" steel mill town. Situated three and a half hours by
rail north of Stockholm and fourteen miles inland from t h e Baltic
seaport of Gefle, Sandviken is unique both in its physical
environment and progressive social development. Except for the
actual plant, the setting is suggestive of a modern garden community established in lake and woodland country. The plant
itself, consisting of blast furnaces, steel works, hot rolling mills,
forging shops, cold d r a w i n g plant, wire drawing plants, cold
rolling mills, factories for the manufacture of finished products.
foundry and machine shops, steam saw mill, emergency power
plant, laboratory and storage sheds, is located on a bay of a large
lake. One of the factors determining the location of the plant was
available water power of 250 horse power obtained by the construction of a canal in 1863, which, when contrasted with the
present utilisation of 15,000 horse power, gives a rough indication
of the rapid growth and present importance of the Sandvik Works.
Above the plant, on a sloping hillside that flattens out into
an extensive wooded area, stands the community of Sandviken
with its population of approximately 13,000 people. The town is
an independent, self-governed municipality within which are
distributed certain enterprises and establishments maintained
either wholly or partly by the Company. Important among the
Company, co-operative and communal buildings are : the Company administrative offices, to which a large addition has recently
been made ; the old homestead of the son of the founder of the
enterprise, which is now used as a guest house ; a large club
house and assembly hall ; dormitories for unmarried workers ;
a community washhouse equipped with modern mechanical devices ; hospital and sanatorium ; public bath house and swim»

144

INDUSTRIAL RELATIONS

m i n g pool ; library and reading room ; homes for old people ;
and a sports field. Prominent among other buildings in the community is the Trade Union Hall.
Although the formal mention of these buildings and enterprises m i g h t be suggestive of an atmosphere of paternalism and
the familiar company-owned mill town, nothing could be further
from the real spirit and development of Sandviken. One of the
outstanding features of the entire enterprise is that, whereas some
measure of paternalism was essential during the early years of
pioneering and establishment, the fundamental Company policy
has been the development of independence just as rapidly as
changing.circumstances and conditions would permit.
Such are the general characteristics of the community that
contains one of the leading and most widely k n o w n companies
in Sweden's foremost national industry, an industry with a continuous historical background of more than two thousand years
and one which, in spite of the keenest international competition.
still holds the lead for quality production.
GENERAL HISTORY OF THE COMPANY

The establishment of the Sandvik Steel Works has its origin
in the revolutionising invention of the Bessemer steel process. In
the year 1858 G. F. Göransson succeeded for the first time in
bringing into actual practice the idea of Sir Henry Bessemer to
produce steel direct from molten pig iron. For three generations
the management and direction of the Steel Works have been in the'
hands of the Göransson family. Since 1920 Karl Frédrik Göransson, the grandson of the founder, has been the Managing Director
of the Company. From the modest beginning in 1862 in its p r e :
sent location, the Works have grown to a position of world-wide.
reputation for superior quality, with commercial branches and
selling agents, in practically all the important countries of thé
world, to which approximately 75 per cent, of the finished products are exported. The total capital and surplus of the Company
is 26,935,000 kronor ; the value of the steel products in 1929 was:.
approximately 35,550,000 kronor ; and the fire insurance value
of buildings and equipment, some 30,000,000 kronor. An indication of thé growth and present size Of the organisation is shown
by the 1 following tàblesof finance, production and personnel.

145

THE SANDVIK STEEL WORKS

SALES AND PROFITS OF THE COMPANY

1910
1911
1912
1913
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929

Profits placed at the
disposal of the
shareholders*
meeting

Company's
total
sales

Year

1910-1929

Amount paid out in
the following year
as dividends to the
shareholders

Companys
total
sales

Kr.

Tons

9,628,000
9,208,000
10,505,000
12,292,000

826,000
979,000
1,358,000
2,122,000
1,128,000
552,000 (loss)
312,000
561,000
855,000
1,056,000
1,010,000
1,398,000
1,735,000
2,146,000

240,000
300,000
360,000
480,000
1,080,000
660,000
660,000
600,000
720,000
840,000
840,000
960,000
960,000
1,080,000

24,452
23,100
26,097
28,804

31,165,000
10,715,000
12,975,000
10,768,000
17,616,000
20,193,000
19,822,000
22,103,000
26,808,000
30,498,000

19,591
6,898
14,568
11,534
18,421
22,271
26,669
24,168
27,807
33,171

(proposed by the
Board of Directors) l
i 960,000 kronor on the old share capital, plus 120,000 kronor on the newly subscribed
capital proposed by the Board of Directors.

PERSONNEL OF THE COMPANY,

2,322
1,999
1,913
1,369
2,312
2,545
2,653
2,744
3,067
3,511

6
10
11
13
13
19
19
19
23
30

154
125
73
93
188
228
194
180
251
274

—
—
2
3
5
4
4
7
9

Tota

100
103
104
100
101
103
102
105
111
117

Women
under
18 years

Men
under
18 years

61
77
82

Women
over
18 years

24
120
108
16
107 712
99
11
113 311
124
9
126
9
130
13
150
19
159
30

Men
over
18 years

49
50
49
47
53
55

Workers
a
Forem

3
3
3
3
3
3
3
3
2
.3

Women

Technit
person i

1920
1921
1922
1923
1924
1925
1926
1927
1928
1929

Office
personnel

Men

Directe

«1

Yeai

1920-1929

2,778
2,414
2,272
1,737
2,797
3,091
3,165
3,259
3,707
4,215

The Company owns, either wholly or in part, extensive
mining operations in central and north Sweden supplying firstclass iron ores, a source of water power development and sources
from which are obtained the best quality of charcoal, the almost
i-WDUSTniAL RELATIONS

146

INDUSTRIAL RELATIONS

exclusive use of which has for centuries been responsible for the
exceptionally high quality of Swedish iron products. The special
products of the Sandvik Steel Works are : hot rolled steel for
boiler tubes, chrome steel tubes for ball bearings, hollow drill
steel, solid drill steel ; hammered iron and steel for tools ; cold
rolled steel in strips for the manufacture of saws, flexible tubing,
watch springs and razor blades ; cold drawn iron and steel for the
manufacture of screws, saws, springs, safety razor blades, steel
belt conveyers ; finished boiler tubes, saws and springs ; alloy
steels. The very small sizes of watch springs manufactured at
Sandviken are worth more per pound than gold: Each year has
seen the Sandviken Works keeping pace with modern technical
developments and meeting the increasing demands of industry
and science. For this purpose additions are constantly made to
plant and equipment, and the most up-to-date facilities adopted in
their physical and chemical laboratory.
ORGANISATION AND ADMINISTRATION OF INDUSTRIAL RELATIONS

The organisation and administration of industrial relations
in the Sandvik Steel Works are characterised by the personal
interest and qualities of leadership of the Managing Director.
They are simplified by the historical development of the Company, the more or less self-contained nature of the community,
the harmonious relationships between the management and trade
union organisation and the vertical direction of the manufacturing
process. The entire organisation is divided into administrative,
sales and technical departments, the head of each reporting directly
to the Managing Director. Within the administrative department
is a staff or secretariat devoted exclusively to questions falling
under the head of industrial relations, with four sub-divisions
of: (1) employment office, (2) housing, (3) social institutions
and (4) workmen's compensation. This secretariat is under the
direction of a staff officer with direct contact with the Managing
Director. In addition to his responsibility for industrial relations,
the staff officer functions somewhat as liaison between the Company and community affairs. The employment office section of
the staff secretariat is under the direction of an assistant to the
staff officer, and handles employment records, interviews of applicants, payrolls and saving plans, and supervises the administration
of the "Intressekontor" which will be described in detail later.
The housing section is administered by three assistants with

THE SANDVIK STEEL WORKS

147

general responsibility for Company-owned houses and administration of the "Own your own home" plan. The social institutions
section is under the direction of a competent official, and includes
responsibility for work which is described below in detail under
the heading of "Welfare". Workmen's compensation is administered by the staff officer with the aid of one assistant.
Within ,the technical department, under the direct supervision
of the Technical Manager but bearing a staff relationship to the
staff secretariat, is a unit known as the "labour office". This
unit of the organisation was established some years ago in
connection with the further development of the piece rate
system. The man selected to direct this office had been for ten
years head of the saw manufacturing plant of the Company and
had in this position shown a special interest in the work for which
the labour office was designed . This office has responsibility
for the development of piece rates, in collaboration with mill
superintendents, and for the development and application of certain mental and physical tests used in the determination of the
fitness of applicants and existing workers for specific jobs.
METHODS OF

COLLABORATION

"Union-management co-operation" as a term implying a certain manifestation of industrial relationships may be uncommon
in European terminology, but the spirit and the results implied
exist in no small degree and are particularly exemplified in the
Sandviken Works. For an intelligent understanding of these relationships and methods of collaboration at Sandviken it is necessary to review to some extent the status of employer and trade
union organisation in Sweden, and their general principles of
collaboration.
Common to all industrialised countries, Sweden has gone
through a period of conflict and controversy and progressive organisation of workers and employers. As a result, there is to-day
in Sweden a General Federation of Swedish Trade Unions, including 36 labour associations, comprising a total of 520,000 members, and some 75,000 organised workers not affiliated with the
Federation, making a total of nearly 600,000 union members out
of some 800,000 industrial workers. On the other hand there is
the Swedish Employers' Association which is composed of some
2,560 members, employing approximately 300,000 workmen, and
is affiliated with the International Employers' Association.

148

INDUSTRIAL RELATIONS

The mutual respect with which the heads of these various
organisations regard each other, and the state of recent co-operative developments, are indicated by a brief review of the proceedings of an industrial conference convened in Stockholm by the
Swedish Government in December 1928 and presided over by the
Minister of Social Affairs. This conference was participated in by
responsible representatives of managements of individual firms,
representatives of the employer associations, leaders in the trade
union movement and individual workmen. At the conclusion of
the conference, during which there was a'general exchange of
views regarding industrial organisation and methods of collaboration, a resolution was adopted expressing the desirability of
appointing a Committee composed of Government, employer and
worker representatives " t o propose measures for realising the aim
of the Conference, the promotion of collaboration and industrial
peace to the benefit of industry and the community as a whole".
Late in 1929 this Committee submitted a unanimous report stressing the importance of economic education and collaboration at
the place of work, suggesting methods for the organisation of
collaboration and proposing the formation of a permanent committee to consist of two representatives each of the Swedish Employers' Federation and the Confederation of Trade Unions, and
an impartial chairman appointed by the Government together
with a secretary appointed by the Committee, which permanent
committee would follow developments in the field of collaboration and supply information and advice.
One of the foremost leaders among the employer group at
this joint industrial conference was the present Managing Director of the Sandvik Steel Works.
The formal basis for collaboration at Sandviken is the collective agreement negotiated between the Swedish Iron and Steel
Works Association and the Swedish Metal Workers' Union, dated
14 December 1929. Common to most collective agreements it
deals in a general way with m i n i m u m wages, piece rates, hours
of work and overtime, medical treatment and accident compensation, provision for housing and annual leave. Article 17 of
the agreement provides :
If a dispute arises between the parties, no action interfering with
the work may be taken before negotiations have been opened, at first
between the parties concerned themselves and, failing agreement,
between their organisations. The provisions of the law shall be
observed concerning disputes as to the interpretation or application of
this agreement. If a party to such a dispute wishes to refer the matter

THE SANDVIK STEEL WORKS '

149

to the Labour Court, the proceedings shall be begun within two months.
of the date of the termination of negotiations between the parties.
The Labour Court is a sub-division in one of the bureaux of
the Ministry of Social Affairs at Stockholm, and was established
by national legislation in 1928 to become effective in 1929. It
deals with cases arising out of collective agreements and permits
of no appeal. The Court consist of a chairman and six members.
The Government appoints the chairman and two members ; the
chairman and one of the members, who acts as vice-chairman,
must be experienced judges ; the third member appointed by the
Government must have special experience of labour conditions
and collective agreements. Of the four remaining members, t w o
are appointed on the nomination of the Council of Swedish Employers' Associations, and two on the nomination of the Swedish
Confederation of Trade Unions.
At Sandviken there is a local trade union affiliated with the
central metal workers' organisation in Stockholm, and about
300 organised workers of other unions. The total membership
of the local, of approximately 2,800, is divided into twelve workshop clubs which in turn are divided into groups corresponding
to the various sub-divisions of plant operations. Each of the
twelve clubs has a governing committee of five members, one of
w h o m is President ; and in turn each group has its governing
body of five. Negotiations upon any subject affecting individual
workers or interpretations of the collective agreement begin between the individual group and the engineer in charge of the
respective shop. If negotiations fail of agreement, they are carried
up finally through the governing committees of the union to the
President who deals with the Technical Manager of the Company.
The channels of further negotiation are indicated above in Article 17 of the collective agreement. The management of the
Company leaves the men entirely free to join the union organisations, welcomes all shades of opinion and degrees of experience
in negotiations; and includes both union and non-union workers
in the various forms of collaboration.
In addition to, and in practice of even greater importance in.
the day-to-day operations at Sandviken, are the frequent informal
meetings between the management and representatives of the
workers. It has been the practice for a long period of years for
the Managing Director to call representatives of the workers
together to discuss matters of local and general economic interest

150

INDUSTRIAL RELATIONS

and to solicit their views upon anticipated changes in the field
of industrial relations and rationalisation. Forms of rationalisation have been introduced to mutual advantage, after consultation
with representatives of the workers, coincident with business
expansion and with due consideration for the men directly
affected. When on one occasion it was found possible to replace
sixty men engaged on a hand saw filing operation with machines
operated by eight men and eight boys, the men displaced were
transferred to other suitable work, with no loss of time or
employment.
There are occasional meetings held by the Managing Director
with supervisors, foremen, the governing bodies of the clubs of
the union, and also the pensioned foremen, for the purpose of discussing such matters as finances, Company earnings and plans for
new buildings.
For the further promotion of collaboration between management and workers a private meeting was organised in 1923,
attended by persons of different status in the Company who were
interested in the idea of collaboration, then in its infancy. The club
met in a private house in a very informal and social manner, where
all could take part frankly and easily in the discussion of economic, cultural and intellectual questions. The club is still in
existence under the name of " T h e Wednesday Club" and is of great
importance for private discussions between the management and
the workers outside their work.
As indicative of the effort of the management to utilise further
means for the development of collaboration as rapidly as changing
conditions permit, it has been suggested that the formal machinery for negotiation and the informal meetings called by the Managing Director be supplemented by the establishment of a joint
body for the discussion of operating and administrative problems
arising within the various plants. The creation of this joint committee would be in line with certain of the recommendations
resulting from the Stockholm Industrial Conference held in 1928.
Measures of the success of the policies and practices of collaboration at Sandviken are found in the facts : that, with the exception of the general strike in 1909 and stoppages in 1917 and 1923
affecting the entire Swedish iron and steel industry, there have
been no serious labour conflicts in the long history of the Company, while there has been a high degree of trade union organisation under progressive and vigorous leadership ; and that the
business has grown and prospered through adverse conditions and

THE SANDVIK STEEL WORKS

151

against keen competition that have at times seriously affected the
industry as a whole.
FINANCIAL

RELATIONSHIPS

Wage Rates
The basic principles of financial relationships are provided for
in the collectve agreement previously referred to. According to
this agreement skilled workers who are 24 years of age or over and
have worked not less than seven years i n . t h e trade shall receive
a m i n i m u m wage of 80 ore per hour of work. Skilled workers
who are 21 years of age and who have worked not less than four
years in the trade shall receive a m i n i m u m wage of 73 ore per
hour of work. Unskilled workers, together with all workers engaged in skilled work who have not been employed in the trade
for four years, shall receive, after they have reached the age of
20 years, a m i n i m u m wage of 66 ore per hour of work. Workers
paid by the tonnage or by the piece shall receive m i n i m u m wages,
according to specified degrees of skill or classification of job, of
80, 73 and 66 ore per hour of work. This same m i n i m u m wage is '
paid to tonnage and piece-rate workers if they are employed by
the hour outside their ordinary occupation. There are m i n i m u m
wage rates of 55 and 45 ore according to age under 20 years.
The average weekly earnings for workers 18 years and over
are about 50 kronor, and for workers under 18 years, 28 kronor.
Time Studies and Piece Rates
An interesting development in the field of financial relationships at Sandviken has been the extensive application of time study
and piece rates, general provisions regarding which are included
in the collective agreement, and the principles of which have
existed practically since the Works were started. The extension
of the time study and piece-rate system came as a result of the
conviction on the part of the management that, with the already
long background of experience and the adoption of new mechanical equipment, general piece rates would prove of mutual advantage to men and the Company. Central administration of the time
study and piece-rate system is one of the responsibilities of the
labour office, the duties and aims of which were at one time
explained by the Managing Director, at a meeting of supervisors
and representatives of the workers. The staff of the labour office
consists of the chief, one principal assistant, five time takers,
clerical assistants and statisticians.

Ï52

INDUSTRIAL RELATIONS

The piece-rate systems in use are adapted to the nature of
the work in such a way that an effort is made to pay for less
delicate work on a purely piece-rate basis, whether piece or tonnage rates. As the work becomes more delicate a "mixed system"
is introduced, that is, a combination of piece and time rates. The
greater thoroughness and précision the work calls for, the more
influence is assigned to the time rate proportion in the mixed
rates. Certain inspection work is thus paid practically altogether
on a time basis. About 15 per cent, of the workers are on straight
time rates.
Even though the piece rates are fixed to some extent to provide
for conditions beyond control of the men, this does not mean
that, for instance, if a rolling process has to be interrupted owing
to machine defects, the payment at the piece rate for rolling work
continues to be paid during the time spent on repairs. Certain
special piece rates are fixed for changing the rolls and other regularly recurring non-productive work, and in this case the workers
are automatically transferred to such work. But if the process is
interrupted owing to circumstances that cannot be made the subject of a piece rate, the payment on 'a piece basis for the current
work is discontinued, and the workers are transferred to other
jobs with the conditions of remuneration in force for such work.
The original time studies from which the piece rates were
finally determined were conducted for a long period with emphasis upon practical as against theoretical procedure. The staff of
the labour office worked in intimate collaboration with plant
superintendents and foremen. When decisions were reached
regarding rates to be applied, they were discussed, by the head
of the labour office and the respective plant superintendent, with
the individual men and groups affected. In cases where these
informal discussions failed of agreement, union representatives
negotiated with the chief of the labour office and respective
superintendent or perhaps with the Technical Director. It has
been retained as a fundamental principle in the operation of the
piece-rate system that the individual workman is privileged at
any time to discuss the rates with the labour office, after clearing
with his foremen and plant superintendent.
Individual wage
offices are maintained in each department of the various plants,
with final records and calculations centralised in the labour
office.

THE SANDVIK STEEL WORKS

Stock

153

Purchase

From time to time the management has given consideration
to employee stock purchase plans, a movement which has had a
fairly extensive application in the United States, and has arrived
at no final conclusion regarding their adoption at Sandviken.
However, the capital stock shares of the Company have recently
been split in a way to reduce the par value from 2,500 to 100
kronor. This was done partly with a view to encourage men and
supervisors to purchase Company stock ; but the management
has at present no intention of doing more than bring the price
of stock within reach of the thrifty and interested members of its
organisation.
Pensions
In 1884 the Company established a contributory and compulsory pension scheme with varying contributions made by the
workers according to age, with a certain amount contributed by
the management. This pension plan was superseded on 1 January 1914 by the National Compulsory Scheme which requires,
with certain exceptions, that every able-bodied man and w o m a n
registered in the Kingdom, between the ages of 16 and 66, is liable
to pay a certain annual contribution varying according to income.
In return the insured person receives an annual sum payment
commencing when the age of 67 is reached, or earlier in the case
of invalidity, the amount of which is proportionate to the contributions paid according to a fixed actuarial scale.
The original members w h o have expressed their preference
for the Company pension plan have been permitted by the Company to continue in that plan. In addition the Company
joined in 1929 the Swedish Private Employees' Pensions Fund in
which many of its employees and foremen have become active
members. This Fund was formed in 1916 by groups of industries,
commercial firms and insurance companies, to supplement, for
employees, the provisions of the National Compulsory Scheme.
The premiums and conditions are based upon actuarial experience. Premium payments are divided equally between the
Company and the employee.
Savings

Plan

To provide at least a partial substitute for certain provisions
of the Company's original pension scheme a voluntary savings

154

INDUSTRIAL RELATIONS

plan was introduced in 1925. This plan had a membership at the
end of 1929 of 475 employees, foremen and workers, and a total
capital of 230,000 kronor of which 44,000 represented management contribution. The Company's normal contribution to the
Savings Society is 20 per cent, on a maximum contribution of
200 kronor per year for each member. Members may contribute
more than 200 kronor per year, but the excess does not participate
in the Company supplement. During the last few years the Company has contributed an extra 10 per cent., thus enabling the
members, in principle, to share in the Company's profits during
a period of prosperity. The rate of interest credited to the savings
has not yet fallen below 4 per cent.
The Society is administered by a committee of not less than
six members elected from different categories at an annual
meeting of active members of 21 years and over, and one member
appointed by the Company.
Criticism of the savings plan has come from two sources :
(1) interested life insurance companies objected on the grounds
that it represented a form of subsidised competition ; and (2)
certain groups among the workers objected because the funds
were deposited in a private bank. It is suggested that these two
objections are partly responsible for the comparatively small percentage of workers who have taken advantage of the plan.
The Intressekontor
The Intressekontor is a special form of organisation which
functions as an economic adviser and medium of budget control
for the individual worker. It was established in 1916. As previously stated, it is under the direction of a member of the staff
secretariat and functions somewhat in conjunction with the employment office. The individual worker authorises a certain
percentage reduction from the payroll, which is automatically
credited to his account at the ordinary bank rate of interest. At
the same time, in collaboration with the head of the office, he
makes provision whereby payments are made from his account to
meet insurance premiums and certain large items of expenditure
such as rent and taxes. The proper functioning of the office
assures the development of thrift and serves as a measure of
economic education. Approximately 1,700 employees, foremen
and workers are participating in the Intressekontor.

THE SANDVIK STEEL WORKS

Sandvik

Sickness and Funeral Benefit

155

Fund

This Fund for sickness and funeral benefits was established
in conformity with the provisions of the legislative Act of 1910
for voluntary, Government-aided sickness funds. Each fund is
free to formulate its own detailed regulations.
The Sandvik Fund is administered by a committee of seven
members. The Company appoints one member for a term of
two years, the rest are elected by the members for a similar term.
Four members of the committee may constitute a quorum if their
decisions are unanimous.
The Company pays a contribution of 1 krona per member
employed throughout the year by the Company. The Government
pays a contribution of 2 kronor per member and reimburses the
fund for certain amounts of the benefits paid during a fiscal year.
The members pay entrance fees and annual contributions
varying in accordance with age and amount of funeral benefit.
The sickness benefits range from 1 to 3 kronor a day
after the first thirty days of membership for a period of 150 days
in twelve consecutive months or 350 days for any one sickness.
The funeral benefits range from 200 kronor to 500 kronor
for members who have belonged to the Fund for more than thirty
days. Of the funeral benefits in excess of 200 kronor, one-quarter
is paid after one year's membership, one-half after two years' and
the whole amount after three years' membership.
EMPLOYMENT

The Sandvik Company has not had to contend with the problems of recruitment common to industrial enterprises in congested areas where there are occasional.periods of competition in
the labour market. The general industrial relations policies of
the Company have given it a reputation as a desirable place to
work. The children of the community follow in their fathers'
footsteps and acquire an interest in the trade in their early youth.
Progressive measures of employment and selection have reduced
labour turnover to a m i n i m u m ; and the steady growth of the
Company, combined with other factors, has produced a high
degree of labour stability. Confirmation of these points is shown
in the following table giving the numbers of workers who. on
8 May 1930, had been employed ten years or over.

i 56

INDUSTRIAL

RELATIONS

LENGTH OF SERVICE OF WORKERS WITH THE COMPANY ON 8 MAY

1930

1,777 workers employed at least 10 years

921
488
144
34
16
3

„

„
„

20
30
40
50

• „ '

„

3,383

All applicants for employment are interviewed at the central
employment office where a comprehensive application form is
filled in and retained in the central office files with appropriate
job classification card indices. W h e n a new employee is required
in the office or various plants, a responsible official makes requisition upon the central employment office. An applicant with
appropriate qualifications is sent and, if acceptable to the foreman
or responsible official, is sent to the medical office for physical
examination. If both technical and medical examinations are
favourable, the applicant is engaged. Detailed records of all
workers are kept in the department in which they are engaged,
and a central card index of all workers is maintained in the
central employment office. Foremen and office supervisors are
instructed to supervise carefully the work and progress of new
employees and workers. If they are not satisfactory, an effort
is made by the plant supervisor or the central office — perhaps
in consultation with the medical adviser — to transfer the
worker to a job in which he may have a better chance
for success. There is no arbitrary age limit for retirement.
As workers become old they are transferred to less strenuous work.
One week's notice on either side is required before dismissal
or resignation, except that the Company reserves the right of
dismissal without notice for disciplinary offences.
Tests
In recent years the Company has felt the necessity of applying
more rigid and scientific tests in selecting men for certain classifications of plant operations, and after a long period of experimentation of many varieties of psychological and physiological
tests a few comparatively simple ones were selected in each of the
two categories. These tests are applied particularly where mental
and physical alertness are essential to the execution of routine
duties. There are tests in calculation, mechanical assemblv,

THE SANDVIK STEEL WORKS

157

three dimensional observation and drawing, muscular control and
visual tests. Apart from the ready and effectual elimination of
many unqualified applicants, ihese tests have contributed to reduction of accidents in plant operations.
TRAINING AND EDUCATION

Because of the high standard of the educational system maintained by the commune, in which considerable emphasis is placed
upon vocational training, particularly along the lines of the metallurgical industry, and because of the local father-and-son tradition
for skill in metal working, the Company has not felt the need
for formalised training and educational courses. The activities in
this field are conducted in a more or less informal way by the
local trade union and upon the initiative of the Managing Director
and the Technical Manager.
The unions arrange study courses in collaboration with the
Workers' Educational Association. In consultation with the Sandvik Foremen's Association the Company helps workers to attend
courses of study at various "people's" colleges. Four or five times
a year the Managing Director and staff officer meet in a study
circle with some thirty foremen and supervisors for general discussions in the field of economic education. The Managing Director as a rule gives a lecture once a year in the Assembly Hall of
the Club House upon economic developments and general recent
phenomena affecting the Company.
About six years ago a foremen's school was organised at Domnarvet, the old historical centre of Sweden's iron industry, under
the auspices of the Swedish Iron and Steel Institute (Jernkontoret). Upon the recommendation of plant superintendents the
Company sends from three to four foremen, or men who aspire
to foremanship, to this school for a period of nine months. The
period of attendance is considered as a leave of absence, and the
full pay drawn by the men during this period is considered as a
loan. The loan is wiped off by the Company at the rate of onefifth per year for the following five years of service. The courses
pursued at this school pertain to subjects associated with the
metallurgical industry.
ACCIDENT PREVENTION

Accidents are divided into four classifications arbitrarily
defined as follows : (1) ordinary, beyond control of Company ;

158

INDUSTRIAL RELATIONS

(2) where the Company can do something to avoid; (3) outside of
the Works ; and (4) where provision has been made, negligence
on the part of the worker. There is a formal report made upon
every accident that occurs, and these reports are classified according to the sub-divisions above. These reports are summarised
for the preparation of statistical reports and resulting measurement of the success of accident prevention measures. When an
accident falls in Classification No. 2, the responsible chief must
take necessary action and report to the staff officer. There is one
man in each department, appointed by the men in that department, to report upon conditions affecting safety and to accompany the Government Factory Inspector on his periodic inspections. Plant superintendents and their immediate assistants are
responsible for accident prevention and safety measures.
Compensation for accidents is paid in accordance with the
Accident Insurance Act.
H E A L T H AND SANITATION

The health practice of the Company begins with the compulsory physical examination of all new employees and workers.
This is made by the chief surgeon in the fully equipped and up-todate polyclinic maintained by the Company. Through intimate
collaboration of the chief surgeon and the Technical Manager there
is careful supervision of the health and physical fitness of the
workers, with periodic examinations as required. Free medical
attention for all workers, their wives and children under 15 is
provided by the Company.
In the case of industrial accidents the Company provides free
medical attention, medicine and appliances. For the initial treatment of accident cases where necessary, first-aid boxes are installed throughout the plant.
As a part of the polyclinic there is a works hospital of 24 beds,
to which workers and members of their families who are ill are
admitted for care and treatment at a fee of 50 ore per day. The
total cost per day per patient is about 5.50 kronor, a figure which,
however, does not cover interest and debt charges on the premises
and equipment, which belong to the Company. Of the difference
between the fee and actual cost, 1.50 kronor are paid by the
Company and the rest by the Provincial Council. In addition
to the works hospital the Company maintains a sanatorium not
far from Sandviken, which has 22 beds and where workers after

THE SANDVIK STEEL WORKS

159

one year's service are entitled to free admission, and where members of their families may go for recuperation for a daily fee of
50 ore. The private rooms in the hospital and sanatorium are not
reserved for those paying higher fees but for those who are most
seriously ill and need quiet. Thus the daily fee of 50 ore may
give the right to a private room, if the condition of the patient
requires it.
In matters of general health and sanitation there is collaboration and supervision by the chief surgeon of the Company and
the medical staff of the Commune. The clinic, hospital and sanatorium receive subsidies for maintenance from the county and
the Government.
WELFARE AND SOCIAL INSTITUTIONS

Housing
In establishing a steel mill in w h a t was forest and wilderness
it was necessary for the Company in the early years of its development to construct practically all those buildings, including
workers' homes, that were essential to community life. However
as the mill and town have grown and community life become
stabilised, the Company has made every effort to promote
individual freedom among the workers.
To this end there has been organised the Sandviken Own
Home Company, Ltd., which is a subsidiary of the Steel
Company and which is designed to aid in an independent way
the individual worker to establish his own home. Company land
is placed at the disposal of the Own Home organisation, and formal purchase is made at very reasonable prices. The funds of the
Home Company are secured from the Government, and lent to the
worker on terms which permit repayment within a maximum of
25 years. The worker arranges for these payments through the
Intressekontor. The worker is free to select his own piece of land,
and is given seven or eight standard home plans from which to
make his selection. He is aided by the housing section of the staff
secretariat, and puts in a considerable amount of work himself
in the construction of his home. The Company provides the
necessary material at cost price. In May 1930, 519 workers
owned their own homes.
The Company has approximately 1,700 dwellings in which
about 50 per cent, of the workers live at the present time. These
houses rent for 16 to 17 kronor a month for one room and a

160

INDUSTRIAL

RELATIONS

kitchen, for about 25 kronor for two rooms and a kitchen, and 6
to 7 kronor for each additional room. The Company has set aside
about two hundred small dwellings in which old workers and the
widows of old workers live without charge. About 150 of these
homes are occupied by widows. For old persons who are unable
to support themselves even in the free dwellings set aside by the
Company, there is the home for the aged maintained by the local
commune.
In addition to the individual homes owned by the workers
and the Company-owned individual homes, there are Company
dormitories for the unmarried men, in which rooms are available
at 15 kronor a m o n t h , which includes heat, light, hot and cold
water, shower baths, cleaning and access to the reading room.
Bath House
In 1897 the Company erected a bath house which includes facilities for steam, electric and tub baths and a swimming pool. The
Company provides fuel, light, hot water and maintenance, and
turns the operation of the bath house over to a manager who
charges nominal fees of from 10 to 25 ore for the use of the bathing
facilities. In 1929 the facilities of the bath house were used a
total of 70,000 times.
Public

Laundry

For the purpose of simplifying the washing for the workmen's
wives, the Company erected in 1912 a public washhouse where the
family washing is done for the payment of a nominal fee, with all
the modern labour-saving devices. Across the road from the laundry is a children's playground where the children can be left
under proper supervision while mothers are working.
Library

and Reading

Room

A substantial building not far from the centre of the community contains a library and reading room maintained by the
Company. The reading room contains newspapers of all political
opinions. The circulating library of some 3,000 books is under
the direction of a committee composed of two members of the staff
secretariat, a foreman and a worker. A charge of 25 ore for three
months is made for the use of the circulating library.

THE SANDVIK STEEL WORKS

161

Publication
The Company does not pubish a workers' magazine but utilises
the local newspaper, the capital stock of which is in the hands of
responsible workers, as a medium for expression of Company plans
and policies and news regarding Company operations. Through
the Company an arrangement has been made whereby workers
may subscribe to a group of newspapers and periodicals at onethird the regular price. Approximately 90 per cent, of the workers
have taken advantage of this opportunity, which has been in
effect for about twenty years.
Recreation

and Social

Activities

Several years ago the Company set aside a site for the development of an athletic field. The Company has contributed
about 35,000 kronor in the development of this site, and during
a period of national unemployment in Sweden received a grant
from the Government of about the same amount which contributed to further development. The various sports clubs are members of an Athletic Union, under whose direction all athletic activities are held, and which is administered entirely by the workers.
From profits made from games and contests the Athletic Union
has repaid to the Company the money advanced for the development of the sports field.
In addition to the athletic grounds there is a large gymnasium
hall erected by the Company in 1905. Recreational activities are
held here in the winter, and the social activities and entertainments are held in the Assembly Room of the Valhalla Club House.
Boys'

Club

Ten years ago one of the men in the Company, with a particular interest in boys, organised a Boys' Club which through the
winter holds a series of meetings in the Assembly Hall of the Club
House and during the summer in a camp on the lake.
CONCLUSION

On their final evening in Sandviken the representatives of the
International Labour Office were dinner guests in the home of the
sister of the Managing Director of the Company, under whose
direction is the Social Institutions Section of the Staff Secretariat.

162

INDUSTRIAL RELATIONS

Although not strictly a part of this technical report, the experiences of this evening would seem to form an appropriate conclusion, because : (1) they characterised so completely the fundamental spirit of industrial relationships in this steel mill town ;
and (2) they expressed so genuinely the various principles and
philosophies, the none too simple integration of which forms the
composite of community interests.
The dinner was attended by a plant foreman ; the president
of the local trade union, who is á worker in the cogging mill ; the
union treasurer, who is also president of the local Socialist Labour
Party and was formerly a tube roller ; the two local clergymen ;
the president of the Municipal Assembly, formerly a worker in
the cold rolling mill ; the chairman of the Municipal Board, who
is at the same time a member of the National Parliament and a
grinder of plugs for tube rolling ; the Managing Director of the
Company ; the head of the administrative department; the staff
officer ; and the head of the labour office. For purposes of
illustrating the points of this conclusion it might be said that here
were members of the community of Sandviken, representative of
company management, trade union organisation, local and
national government, each contributing on equal terms their fund
of varying experience and conviction in the interest of advanced
h u m a n relationships in industry.
The evening was devoted to discussion of trade union organisation, works councils, unemployment insurance, rationalisation, and many allied subjects. The absolute freedom from restraint, with which everyone participated in these discussions,
emphasised both the common and conflicting views and objectives
that form the mainsprings of action ; and reflected, as no other
experience could, the following predominant features of industrial
relations in the Sandvik Steel Works : (1) encouragement of the
progressive independence of the working community, with retention of the best elements of the family tradition ; (2) recognition
of mutual economic advantage of industrial peace ; (3) acknowledgment of trade unions as constructive assistants in the work
relationship ; and (4) adoption of new methods to meet changing
conditions.