Against the context for the period 1914–39 provided by the previous chapter, this chapter explores in depth the four major concepts of workplace employee representation examined in the book. They are ERPs, Whitley works committees in the UK, German works councils and union-management cooperation committees. Both ERPs and union-management cooperation were developed in the US. Whitleyism was an influence on union-management cooperation, while union-management cooperation can also be seen as an AFL response to ERPs. This chapter analyses the origins of each of these ideas and the principles underlying them in terms of their structure, power, legal status, relationship to management and their impact on trade unionism. The chapter examines some of the reactions to these ideas, both critical and supportive. It will conclude by comparing the ideas according to a number of dimensions including the relationship to unions. Later chapters focus on the impact of these ideas in the US, the UK, Germany, Canada and Australia.

Employee Representation Plans

There had been interest in the idea of ERPs in the US from at least the 1870s. Stratton & Storm, the largest manufacturer of cigars in the US by 1883, had established a board of arbitration in 1879, which comprised four elected delegates of workers, four management representatives appointed by management and a neutral selected from another branch of the company, to adjudicate matters relating to wages or working conditions that were disputed. While founder George Storm did not oppose his workers belonging to unions, he believed that unions were irrelevant to the company. The Storm the Concepts scheme was predicated on “political equality as a justification for enfranchisement in the workplace; it assumed a common interest between workers and employers, and it was designed to reduce the level of adversarialism within the firm.”

This chapter provides the broad context for understanding Australia, Canada, Germany, the UK and the US during the interwar period. It first examines explanations of historical patterns of employee representation. Building on this discussion, the chapter then focuses on economic issues, industry scale and structure, the division of labour and technology, trade unions and politics, employers and the role of the state in these five countries. The chapter provides a basis for understanding the development of ideas of employee representation and the success or failure of their implementation.

Explanations of Historical Patterns of Employee Representation

There have been a number of explanations for fluctuating patterns of interest in workplace employee representation. The complexity of these empirical trends has not always been well accounted for in theoretical explanations of the historical trajectory of representative employee participation. Harvie Ramsay's influential “cyclical theory” argues that support for industrial democracy grows in periods of economic expansion, when employees’ bargaining power rises and employers search for alternative means of employee voice located outside the collective bargaining relationship. Conversely, support for industrial democracy wanes when economic conditions decline and employer bargaining power is strengthened. This economic determinist theory is not a sufficient explanation as it fails to account for the continuous expansion of legislation for employee representation in occupational health and safety over the past 30 years, notwithstanding major economic fluctuations. There are a variety of factors that affect interest in ideas relating to workplace employee representation and their implementation.

The scale and structure of industry can impact on workplace employee representation. Larger firms are concerned about the growing communication gap between management and employees and have the resources to deal with the problem, particularly where there is limited competition in the industry. There was a general move to bureaucratise employment so as to ensure uniformity and coordination in a growing enterprise. As Jacoby has argued, while “size mattered” there is no “lockstep relation between how big a company was and how its employment system was organised.” Some medium-sized companies can be innovators because they are not inhibited by the rigid bureaucratic control of employment practices.

This chapter examines the extent and impact of ideas about workplace employee representation in the UK during the interwar years. Despite the promise of Whitleyism, Whitley works committees were not extensive and had limited impact. There were some employers, however, who persisted with Whitley works committees or variations on them, such as John Lysaght & Co., Rowntree Confectionary and ICI. There was also some interest in overseas developments, such as ERPs, union-management cooperation and German works councils.

The Extent of Whitley Works Committees

In the UK, attempts to develop Whitley committees at the workplace level had limited impact, while JICs did not develop at the industry level. Initially there was some degree of enthusiasm for JICs: 74 were created between 1918 and 1921 and it has been estimated that they covered over 3.5 million workers by the end of 1920. Whitleyism was irrelevant for much of private manufacturing, such as the iron and steel industry, where collective bargaining and trade unionism were well established. JICs tended to flourish in industries where unions were weak, but in the case of the wrought hollow-ware trade, which produced metal tableware and already had a statutory Trade Board, the JIC lapsed after increased powers conferred on the Trades Boards in 1918 led parties to believe the JIC to be superfluous. JICs generally fell into abeyance in the wake of the First World War, the Civil Service being a notable exception. Many JICs only met a few times or very infrequently. The construction JIC survived until 1922, and the paper industry JIC was active until 1924. Only 42 JICs still functioned in 1930 and only 20 survived to 1939. Employers feared that union militants would use the scheme for “class war” rather than “constructive collaboration,” while unionists feared that employers would use the scheme to eliminate union presence in the workplace.

There are a number of reasons why the JICs failed to develop during the interwar period. The post-war economic boom broke in 1920 and there followed a severe economic recession in 1921–22. The British economy remained sluggish throughout the 1920s and was hit severely by the Great Depression. Trade union membership declined and employers became more belligerent and determined to reassert managerial prerogative in the workplace and to do what was necessary to challenge overseas competition.

Overall, this study generally supports the historical cycle approach to industrial democracy and notes a general wave of interest across all five countries from 1916 to 1922 and later a specific surge of interest in the US during the early 1930s. Labour unrest during and immediately after the First World War and concerns about the economic issues relating to post-war reconstruction fuelled interest. Some promoters of schemes believed that workplace employee representation could be part of an effective response to the threat of Bolshevism following the Russian Revolution. The period during and immediately after the First World War was very rich in experimentation with industrial democracy in the form of ERPs, union-management cooperation, Whitley works committees and German works councils, but all these ideas failed to sustain themselves significantly for the duration of the interwar period as wartime labour unrest subsided and the deterioration of several of the economies studied weakened labour. This was particularly notable in the UK, where government and employer interest in Whitley workplace committees diminished as the post-war boom broke in 1920 and the economy remained sluggish in the 1920s. There was a second wave of interest in ERPs in the US during the early 1930s as the New Deal encouraged labour organisation and employers looked at alternatives to trade unions.

Legislative intervention in the US, where ERPs were viewed as undermining legitimate trade unions, and in Germany, where the Nazis perceived works councils as an obstacle to their seizure of power, saw the banning of two of the ideas of workplace employee representation examined in this book during the 1930s. While the German works councils were re-established in West Germany in 1952, they were not seen as an improvement on the Weimar works councils, particularly from the perspective of the German trade union movement.

As Poole, Lansbury and Wailes note, though there may be macro conditions that favour industrial democracy, the adoption of employee participation at the level of the firm is subject to organisational choice by actors. It also reflects on the power of these actors and the organisational structures and processes at the level of the firm.

Industrial democracy offers workers the promise of greater control over their working lives. Employers have also supported forms of industrial democracy to improve worker morale and productivity. Industrial democracy can have a variety of implications for capitalism. Workers’ control of businesses through ownership by workers’ cooperatives challenged the traditional notion of the capitalist firm and could ultimately supplant it. Other forms of industrial democracy are less challenging for capitalism. Representative or indirect forms of industrial democracy include works councils and joint consultation, where representatives of workers and managers sit and discuss problems. They can take the form of non-union employee representation (NUER), such as in employee representation plans (ERP) or German works councils, or involve unions, such as union-management cooperation. In the US and the UK, the term “industrial democracy” also refers to collective bargaining, in which employers recognise unions and negotiate a collective agreement that covers wages and working conditions. Direct forms of industrial democracy focus on the way work is organised at the workplace level: these can include team-focused work and semiautonomous work groups. Financial forms of industrial democracy focus on the way financial rewards are distributed through employee stock ownership and profit sharing. The terms “employee democracy,” “employee involvement,” and “employee consultation” are used interchangeably with “industrial democracy.”

This book will focus on the debates and practice relating to four versions of indirect industrial democracy in the interwar period at the workplace level – ERP, union-management cooperation, Whitley works committees and German works councils. It will examine what we can learn from the interwar period to inform contemporary debates about industrial democracy and the “representation gap” of workers without union coverage in the workplace. The book will explore the interwar experiences of these ideas in Australia, Canada, Germany, the UK and the US. ERPs and union-management cooperation emerged in the US, while the UK provided the context for the development of Whitley works committees. The German interest in works councils dates back to the mid-nineteenth century, and culminated in works council legislation in 1920. While Australia and Canada were not the source of these approaches, they are examples of economies that were looking for ideas overseas to ensure labour harmony and industrial productivity in the uncertain world that accompanied the end of the First World War.

This chapter explores the German experience with works councils. It will assess the extent of the works councils in Germany during the interwar period and German interest in alternatives such as ERPs and union management. The chapter will explore issues such as the disclosure of information to works councillors, access to the board of directors and the role of works councils in dismissals, welfare, safety, collective agreements, the promoting of productivity and engagement in broader political issues. It will also examine the impact of works councils on trade unionism, women and management. Like their ERP counterparts in the US, the German works councils were legislated out of existence. The chapter will conclude with a discussion of their demise.

The Extent of German Works Councils

Unfortunately there are no surviving data on the number of works councils in Germany between 1920 and 1933. Using dated data from the last German industrial census of 1907, Guillebaud estimated in 1926 that there had been 108,789 agricultural, industrial and commercial establishments employing 8,379,200 workers that could have had works councils. At the industry level, in 1922 there were 32,565 wage-earning and 7,219 salaried employees who were works stewards or members of works councils in 11,557 establishments in the highly organised metal industry. In the same year, there were also 25,239 works councillors in 7,219 textile factories.

The number of workplaces with works councils fluctuated with economic conditions. Following the hyperinflation of 1923, the move towards stabilising the German economy led to dismissals and increased unemployment, which weakened the power of trade unions and works councils. These circumstances made employees reluctant to stand for positions on works councils due to fears of victimisation and an unwillingness to be involved in the dismissal of fellow employees. With the resurgence of the economy, and thus trade unions, in 1925 and 1926, there was a revival of interest in works councils among employers.

Significant numbers of eligible workplaces did not have works councils. The decline in fortune of works councils in 1923–24 can be seen in the context of growing numbers of eligible workplaces without works councils.

This chapter explores the Australian experience with the various ideas of workplace employee representation during the interwar period. As in the other four countries, there was interest in exploring ideas of employee participation in the Australian workplace against a background of industrial and political unrest at the end of the First World War and during its aftermath. While Australians were interested in German works councils, Whitleyism, union-management cooperation and ERPs, they had very little impact in practice. The union movement was particularly hostile to the concept of ERPs and there were doubts about the relevance of the various forms of employee representation in an industrial relations system of state tribunals.

Influences

As in the other countries examined in this book, the industrial and political turmoil during the last years of the First World War and the immediate post-war period heightened Australian interest in ERPs and other management labour strategies. A major strike in NSW in 1917 centred on the state railways and tramways. In 1919–20, there was an unprecedented wave of strikes that included maritime workers and Broken Hill miners. The Russian Revolution and the movement towards the OBU led to conservative hysteria over a possible Bolshevik challenge to Australian capitalism. Some conservatives argued that the Bolshevik threat could be neutralised by raising workers’ living standards through increasing productivity and allowing employees to participate in management decisions. Fears also arose that Australian industry would not survive international competition in the post-war world unless reforms were introduced. While the Bolshevik threat declined in the 1920s, international competition remained an issue.

The Australian state played an important role in promoting new ideas to deal with these issues. The British government communicated directly with the Australian government highlighting the benefits of Whitleyism. In 1919–20, the Commonwealth Advisory Council of Science and Industry published reports on industrial cooperation and welfarism, which included a discussion of Whitleyism and examined case studies of employee representation such as that at Rowntree in Great Britain and Filene's Sons & Co. in the US.

This chapter explores Canadian experience with the prevailing ideas on forms of employee representation. Given the importance of US capital and the coverage of US international unions, Canada saw the extension of ERPs and union-management cooperation into its industrial relations system, the former dominating. The chapter will focus particularly on the experiences of the steel plants at Sydney, Nova Scotia and the CNR.

ERPs – The Extent and Impact

The Rockefeller Plan directly affected Canadian industrial relations in two ways. MacKenzie King, who helped John D. Rockefeller Junior (JDR Jr.) frame the Rockefeller Plan, was Canadian Prime Minister from 1921 to 1930 and from 1935 to 1948. As Prime Minister he delayed the introduction of legislation similar to the NLRA that favoured collective bargaining between employers and unions. The Wartime Labour Regulations Act of 1944, which was modelled on the NLRA, did not explicitly ban non-union forms of representation. The Rockefeller family also had the controlling interest in the Imperial Oil Company (IOC), which adopted the Rockefeller Plan in 1919 to reduce labour unrest and prevent unionisation. As with the CF&I plan, while the IOC claimed its plan did not discriminate against individuals who were union members, the plan aimed to maintain an “open shop.” It was part of a package that included pension benefits and a share purchase plan. By February 1921 there were 14 IOC plant councils and the company claimed that 235 issues had been settled satisfactorily, including 35 relating to wages and 58 relating to questions of sanitation, housing and social matters.

Wartime labour shortages enhanced the power of Canadian unions and their membership grew from 160,000 in 1916 to 378,000 in 1919. There was a surge of industrial unrest in 1917 with 1,123,916 striker days lost. The reasons for the discontent included inflation and demands for shorter hours. The popularity of the appeals for labour solidarity and mutual support encouraged employers to seek forms of workplace organisation that would insulate workers in each establishment from those in others, such as ERPs.