Employee
Representation Plans in North America and Australia, 1915-1935:
An Employer Response to Workplace Democracy
By Greg Patmore*
Can workers be represented without trade unions? Trade union density fell in the US to 13.5 per cent in 2000 from 20.1 per cent in 1983, the first year for which comparable data is kept. The declining union density in the US has rekindled interest there in the notion of employee representation plans to allow workers a voice in unorganised workplaces. During the Roosevelt administration Congress passed in 1935 the National Labor Relations Act, which through Section 8 (a) (2) banned Employee Representation Plans or company unions. They were viewed as attempts to deny workers the rights to independent representation of their own choosing.
An argument developed in the 1990s that Section 8 (a) (2) should be reconsidered to allow industrial democracy to thrive particularly in the non-union sector. The Commission on the Future of Worker-Management Relations established by the Clinton administration recommended in December 1994 that while the ban on company unions established by employers for purpose of frustrating independent labour organisation remain, non-union employee participation programs should not be unlawful. There was a minority report by a labour representative on the Commission who argued that 'real industrial democracy' is not possible without an independent trade union movement.(1) Several US academics such as David Fairris and Bruce Kaufman have reinforced the majority recommendation of the Commission. The academic literature to support the liberalisation of the National Labor Relations Act draws heavily upon a historical re-examination of the period prior to the legislation when employee representation schemes were legal in the US.(2)
A major impetus for developing these Employee Representation Plans was the 'Colorado Industrial Plan' or the 'Rockefeller Plan'. The plan involved employees directly electing their own representatives to committees to discuss employment issues without union involvement. The Rockefeller family had a substantial number of shares in the Colorado Fuel and Iron Company, which owned coalmines and the Pueblo steel plant in Colorado. J. D. Rockefeller Jr. developed the plan following a strike at the Company's coal mines. The company established the plan at the Company's mines in October 1915 and at the Pueblo steelworks in 1916. The plan was adopted by other iron and steel companies in the US and Canada. It became a movement that spread throughout the US to range of industries and 2,500,000 workers by 1935. The plan continued to operate at the Pueblo steelworks in the US until 1942. The Rockefeller plan even influenced debates in Australia concerning employee representation following the First World War but did not gain a foothold.(3)
This paper examines the concept of Employee Representation Plans, highlighting the impact on trade unions and workers' wages and conditions. It then examines the US experience until the mid-1930's, focusing on explanations for their growth and decline before the impact of the Wagner Act. The paper will then examine the development of the plans in Canada, where there were no legislative bans. The paper will conclude with a discussion of why Employee Representation Plans had a negligible impact in Australia.
Concepts and Issues
The promoters of Employee Representation Plans viewed them as alternatives to both individual contracts and independent trade unions. The Rockefeller Plan involves workers from a particular mine or workshop electing representatives to a district conference, where they meet with senior representatives of the company at least three times a year. The district conferences elect joint committees on employment issues, which consist of three representatives of the employees and three representatives of the company. The joint committee on industrial co-operation and conciliation dealt with issues such as wages and conditions. There can also be joint committees on safety and accidents, sanitation, health and housing. Workers could appeal to various levels of company management and there was even a provision for appeal to an external court if mediation failed. The company paid for all costs associated with the plan, including reimbursement for the loss of work time by employee representatives. While there was no place for unions in the plan, the original Rockefeller Plan prohibited discrimination against employees on the grounds of union membership.(4)
There were variations on the Rockefeller Plan. The Leitch plan was a reflection of the US political system. Workers elected delegates to a House of Representatives. Management appointed a Senate from the ranks of supervisors and a Cabinet, which consisted of company executive officers. The Cabinet could veto initiatives coming from the Congress. One major US company that adopted the Leitch plan was Goodyear Tire and Rubber in 1919. From Great Britain there was the Whitley Scheme. In 1916 the British Government appointed a committee to examine the improvement of labour relations. J. H. Whitley, Liberal MP and former chair of the Ways and Means Committee of the House of Commons from 1911 to 1914, presided over it. In its first report in March 1917, the committee discussed industries where labour was well organised and proposed Industrial Councils composed of employer and employee representatives. Similar committees at a local and workshop level would supplement the Industrial Council's activities. The Industrial Council could deal with or allocate to ancillary committees questions such as methods of fixing and adjusting earnings, technical education and training, and proposed legislation affecting industry. Whitleyism influenced the North American debates. While US and Canadian employers adopted elements of the Whitley Scheme, they rejected the concept because it presupposed unionism.(5)
The supporters of Employee Representation Plans claimed that they were more effective than trade unions in raising employee grievances and contributing to firm productivity. The plans countered the growing gap between senior management and workers in large scale enterprises. They provided a communication link, through which workers could bring minor grievances to management's attention and management could make workers realise that improved working standards depended upon reducing overheads and increasing efficiency. Trade unions, unlike the employer and employees, were 'outside organisations', who were antagonistic to the firm and did not have as their primary interest the good of the company.(6) Since the membership of Employee Representation Plans or company unions was limited to the firm, one commentator noted that employees 'develop an interest in and a loyalty to that organisation which tend to increased efficiency'.(7) David Fairris, in a recent reappraisal of US company unions using industry data, argues that these schemes 'marked a definite improvement for the worker as well as the firm' in the 1920s by reducing labour turnover, fostering worker loyalty and allowing workers a voice in determining shopfloor conditions.(8)
The critics of the representation plans argue that they do not provide an independent voice for workers as employers established and managed the plans. The company generally has the right of veto over shopfloor initiatives in Employee Representation Plans. Workers and their representatives are unwilling to raise grievances as they could lose their jobs. The plans also generally deal with minor matters and do not negotiate the general wage-scale for the company or the plant. Without trade unions workers are deprived of expert outside advice in putting their case and conducting their negotiations. Workers cannot call upon outside help if employers decide to reduce wages and working condition. As the plan only covers a particular plant or company workers' knowledge of outside wages and conditions are limited.(9)
Against of the background of the debates concerning the value of Employee Representation Plans for employers and employees and their relationship to trade unions, this paper will now examine the US experience. The next section will chart the fluctuating fortunes of employee representation from the establishment of the Rockefeller Plan at Colorado Fuel and Iron in 1915 and assess the impact of the Wagner Act.
Employee Representation Plans in the United States
While there were earlier examples of Employee Representation Plans in the US, the Rockefeller Plan of October 1915 is the watershed in their development. The Colorado Fuel and Iron Company established the plan in the wake of the Ludlow massacre. This incident occurred on 20 April 1914 during a violent coal miner's strike in Colorado against the company and other coal firms. There was a gun battle between Colorado National Guard and the miners at the Ludlow strikers' camp that left ten men and one child dead. Eleven children and two women were also asphyxiated in a tent fire after the National Guard overran the camp and put the tents to the torch. There was public outrage against Colorado Fuel and Iron and the Rockefeller family, which had the largest shareholdings in the company. It was possible that the Wilson federal administration would intervene and establish grievance procedures to settle disputes. If grievances were not settled by local committees chosen by the miners, then they would be referred to an arbitration board selected by the President. John D. Rockefeller, Jr. recruited W. L. Mackenzie King, a former Canadian Minister for Labor, to help him frame the plan. While Rockefeller and Mackenzie King did not publicly condemn trade unions, the plan was a substitution for collective bargaining with the United Mine Workers. With the union defeated in the strike, the miners gave their support to the plan in a secret ballot, where 84 per cent of the 2,846 votes endorsed the scheme. The company extended the plan to its non-unionised Pueblo steelworks.(10)
The Rockefeller Plan spread to other companies. In the decade after the Colorado strike John D. Rockefeller Jnr. promoted his plan through publications and public speaking. He also encouraged the extension of the plan to companies where the Rockefeller family had substantial interests such as Standard Oil, which had a major strike at its Bayonne, New Jersey, Refinery in 1915. Clarence Hicks, who had played an important role for Rockefeller in implementing the plan at Colorado Fuel and Iron, transferred to Standard Oil to implement the plan there. The Standard Oil plan adopted in 1918 was part of an elaborate program of personnel management that included extensive company welfare benefits and the assumption of many of the supervisors' powers by industrial relations specialists. Although a Standard Oil executive, Hicks acted as a consultant to other oil companies interested in introducing similar plans. Other companies borrowed and modified the Rockefeller Plan. Arthur Young, a former employee of Colorado Fuel and Iron, and Mackenzie King drew up a modified plan for International Harvester. William Dickson, vice-president of the Midvale Steel Company in Pennsylvania, consulted with Colorado Fuel and Iron management before borrowing it with modifications in September 1918. The Bethlehem Steel Company also in 1918 employed Mackenzie King and Ivy Lee, Rockefeller's former publicity agent, to develop and promote a plan.(11)
The US entry into the First World War in April 1917 assisted the spread of Employee Representation Plans. War production and a decline in net immigration led to labour shortages. There was labour unrest due to inflation and a deterioration of shopfloor conditions. Labour turnover doubled and strikes dramatically increased. Union membership grew from 2,716, 900 in 1914 to 3,508, 400 in 1918 and 5,110,800 in 1920, with the American Federation of Labor (AFL) undertaking major organising drives. President Wilson established the National War Labor Board (WLB) in 1918 to settle industrial disputes that could hamper war production. It upheld the right of workers to organise trade unions without interference from employers. However, it only compelled management to negotiate with shop committees consisting of company employees and not independent trade unions. The Shipbuilding Labor Adjustment Board, the US Railroad Administration and the US Fuel Administration also encouraged shop committees. The wartime sentiment that favoured making the world 'safe for democracy' led to an increase in public opinion favouring industrial democracy at home. Management wanted to obtain employee goodwill and minimise the intervention of the state and trade unions. Business also feared the growing appeal to workers of radical alternatives such as socialism and the IWW. Management's reliance on the drive system, where supervisors motivated workers with the fear of dismissal in a climate of labour oversupply, was no longer effective. Workers resigned or struck.(12)
Employee Representation Plans flourished during 1918-19. Of the 225 plans surveyed in 1919 by the National Industrial Conference 120 were created through the intervention of the federal government and 125 were voluntarily introduced by companies. Employers saw employee representation as a welcome substitute for collective bargaining with unions. The Midvale Steel company introduced its plan after the International Association of Machinists began organising its employees in April 1918. It rejected a proposed union contract and intervention by the WLB. The federal government also applied pressure through the Secretary of Navy Josephus Daniels, who was 'surprised and somewhat 'disturbed that Midvale Steel had refused to co-operate with the WLB. The Midvale plan, which was ultimately sanctioned by the WLB, thwarted the Machinists organising campaign and frustrated any attempt by WLB to force the company to negotiate with the union. Labour concerns over the Midvale plan were heightened in August 1919. A convention of 93 Midvale employee representatives in Atlantic City condemned worker demands for shorter hours and higher wages to meet the high cost of living as 'uneconomic and unwise'. The Bethlehem Steel Company introduced a plan in its Bethlehem, Pennsylvania, plant following a WLB ruling that its employees be provided with a 'direct voice in determining their working conditions'. The WLB accepted the Bethlehem plan and prevented the unions from gaining recognition. The company also voluntarily introduced the plan to two other plants that were not under the jurisdiction of the WLB.(13)
The end of the First World War did not inhibit the further growth of Employee Representation Plans during the 1920's. As Table 1 indicates that while the number of companies with plans or a company union declined in the late 1920s, the number of employees covered by the plans continued to increase. Although state intervention in US industrial relations was wound back and the trade union challenge diminished with an economic downturn in 1920-1, employers continued to see employer representation plans as a valuable union avoidance device. The Open Shop Campaign or the American Plan, particularly during the early 1920's, targeted the weakened labour movement through patriotism by claiming it was a continued threat to the American spirit underlying the Declaration of Independence. There was a radical shift in the relative strength of the plans compared to trade unions. Plan employee coverage as a percentage of trade union membership grew from 10 per cent in 1919 to 45 per cent in 1928. Alongside this there was also a greater interest in more sophisticated personnel management practices to improve worker commitment, morale and productivity. The founders of the personnel management movement called for a recognition of the 'human factor' and a more systematic approach to labour management. This was particularly true of large firms, where Employee Representation Plans tended to be found. These firms were concerned about the growing communication gap between management and employees and had the resources to deal with the problem. These larger companies also had significant number of university-educated managers who were steeped in the principles of scientific management and personnel management. Some large companies, such as US Steel, rejected Employee Representation Plans and favoured share ownership, believing that representation of any kind would ultimately lead to a union closed shop.(14)
Table 1 (15)
Employee Representation in the US, 1919-1928
| 1919 | 1922 | 1924 | 1926 | 1928 | |
| Companies with Plans | 145 | 383 | 421 | 431 | 399 |
| Employees Covered | 403,765 | 690,000 | 1,240,704 | 1,369,078 | 1,550,000 |
| Average No. of Employees per Co. | 2,785 | 1,792 | 2,710 | 3,169 | 3,879 |
What did these Employee Representation Plans do? Some were little more than advisory bodies with no authority or little power. Others had a final say over dismissals and seats on the board of directors. As Kaufman notes the 'great bulk' of plans 'however, were located somewhere in the middle of this spectrum'.(16) One study of an unidentified 'large manufacturing company' for the years 1918-1925 noted there were 2,664 items for discussion. The most frequent items were employment and working conditions (24 per cent), wages (23 per cent), safety (14 per cent) and production (10 per cent). This plan settled two-thirds of grievances in favour of the employee. The plans played a significant role in dealing with grievances particularly in regard to supervisors. At the Bethlehem Steel Co. the plan settled 1,682 out of 2,316 grievances in favour of the employee. Some companies such as the Bethlehem Steel Company and the International Harvester Company used them to suggest ways to reduce costs by saving labour and materials.(17)
There were complaints by employees about the effectiveness of the plans in dealing with their grievances and consulting them. While there may be examples of grievance procedures that favoured workers, in most cases representatives and managers were unwilling to challenge the decisions of supervisors. Management rarely allowed the representatives to meet on their own and restricted what they could discuss with the company. The Rockefeller Plan allowed workers to receive the same rates of pay as the company's competitors. Pueblo steelworkers felt that management denied them any real participation in wage determination. The steelworkers did not know the wage rates at competing companies anyway as the focus of the plan was on the company rather than the industry. In January 1921 the company asked workers to accept a 20 per cent wage cut due to a recession. Employee representatives argued that this was too severe and requested a 15 per cent cut, which management accepted. The company proposed a further 10 per cent cut in wages in December 1921, which was rejected initially by the employee representatives. Only after management began to issue dismissal notices and threatened to place the remaining staff on short time, did the employee representatives agree.(18) As John Hogle has argued 'Without a union, they could not strike. They had no independent treasury or strike fund'.(19)
While there was some hope by the AFL during the War that the plans could be a springboard for union organising, this was not the case over the next decade. The United Mine Workers initially accepted the Rockefeller Plan at the Colorado Fuel and Iron Company, believing that the clause banning discrimination against union members would eventually lead to full recognition. Union members participated in the plan. The union, however, ultimately saw the plan as undermining its chances of gaining a contract with the Company and banned participation in 1918. Three unionists resigned in 1920 as a result of the rule and the union expelled another who refused to resign in 1921. Unionists at the Company's Pueblo steelworks, who were also representatives, organised employees during the AFL's steel campaign of 1918-19. The organising was so successful that the plant was initially shutdown by management during the 1919-20 national steel strike. In the wake of the union defeat in this strike management did not rehire a number of union activists. They also asked rehired steel workers to sign cards stating that they knew that the plant 'was an open shop under the Plan of Representation of Employes'. These cards reinforced management's policy that unions would not be dealt with at the Pueblo steelworks. The AFL's organising strategies also weakened their position in dealing with the plans. It generally showed little interest in organising unskilled and semiskilled workers in mass production industries. Many unions also were remote from the shopfloor since they relied on a business agent rather than workplace organisation to represent the unions interests in the company.(20) As Kaufman notes 'this tended to isolate union officials from the day-to-day concerns of the employees and the needs of the company.'(21)
Employee Representation Plans had mixed fortunes during the 1930s. Between 1928 and 1932 there was a 18 per cent decline in the number of workers covered by the plans as the economic depression hit and employers abandoned the plans to cut costs. However, the stimulus provided for the economy provided by President Roosevelt's National Industrial Recovery Act of June 1933 encouraged a resurgence of plans. Section 7(a) of the Act 'primed the pump' by recognising that workers had the right to bargain and organise collectively through their own representatives without employer interference. Unionism took off and employers rushed to set up plans to stop unions organising in their workplaces. The number of workers covered by these plans grew from 1.8 million in 1934 to 2.5 million in 1935. Critics condemned these plans as 'sham organisations' that impeded economic recovery and they were outlawed in the National Labor Relations Act of 1935. The National Labor Relations Board (NLRB), the agency of the Act, moved against the company unions after the legislation was upheld by the Supreme Court in 1937. In 1939 the Board won a major case against the Newport News Shipbuilding and Dry Dock when the US Supreme Court ruled that a plan in existence since 1927 was illegal. The plan was illegal even though the employer no longer funded employee representatives' expenses and workers had voted for it in a secret ballot in preference to independent trade unions. The decision spelt the effective end of the movement inspired by the Rockefeller Plan.(22)
The various plans collapsed or were absorbed by AFL and CIO affiliated trade unions. In 1936 the Steel Workers Organising Committee (SWOC), which was a joint venture between the CIO and the Amalgamated Association of Iron, Steel and Tin Workers, explicitly targeted plan representatives to organise union members through 'friendly contact'. At the Duquesne plant of the Carnegie-Illinios Company, Elmer Maloy, an in-plant organiser, won a seat on the representative committee and tried to force changes in the plan's rules. He chaired a meeting of employee representatives from 42 steel plants at Pittsburgh in December 1936 that declared support for the CIO and called on representatives to use their influence to enrol steelworkers. This campaign ultimately led to US Steel recognising SWOC on 2 March 1937. (23)
Some recent positive reassessments of the Employee Representation Plans have highlighted that there were workers who supported the retention of the plans. Representatives from the Industrial Assembly at the Goodyear Tyres Akron, Ohio, plant and the Co-operative Association at Leeds & Northrup gave evidence against the National Labor Relations Act before Congress. Carnegie-Illinios employees sympathetic to their representation plan formed a Defence Committee, which obtained company endorsement, retained legal counsel and published an anti-union publication. At the Gasden, Alabama, plant of Goodyear Tyres, management had established an Industrial Assembly in 1933. The Assembly leaders waged a war against union organisers and members that included beatings. Following the Supreme Court decisions the Assembly leaders created an 'independent union', the Etowah Rubber Workers' Association, which continued the ant-union campaign into the 1940s. Kaufman notes that significant numbers of workers voted to retain the plans in preference to trade unions. During 1933-5 one-third of workers voted to keep them in elections conducted by the National Labor Board and the NLRB. From 1935 to 1941 company unions and derivative independent trade unions won 50 per cent of the NLRB supervised elections against AFL and CIO unions. To what extent these votes are an accurate reflection of worker opinion is difficult to determine. Employers were willing to dismiss union activists, use spies and deploy company police to prevent unionisation.(24)
The Pueblo steelworks highlights the conflict between the Employee Representation Plans and trade unions. In February 1938 the company asked its employees to ratify the plan and designate the representatives as their collective bargaining agent. The subsequent vote was 2,246 votes in favour and only 198 against the plan. Many of the employees who voted for the plan, however, believed that the continuation of their insurance, pension and medical plans depended on a positive vote. The Company changed the name of the plan to the Employees' Representation Organisation to indicate a break with the past, but most of the officers administering the plan were the same. Despite the vote and the changes, the full NLRB ruled on appeal in March 1940 that the representation plan was company dominated. At the first ballot in March 1941 the employee representatives and their lawyer circulated a publication to undermine support for the union. It noted that while Pueblo workers supported Roosevelt in the 1940 Presidential elections, the CIO supported Wendle Wilkie. The representative organisation made a strong appeal in the local newspaper for workers to vote against any outside representation. There was also a mysterious Western States Steel Products Union that appeared on the March 1941 ballot and then disappeared. The supporters of the plan were victorious as 2,670 workers out of 4,772 voted for no representation. The Employees' Representation Organisation reorganised itself again following a decision by the Tenth District Court of Appeals to order the Company to stop dealing with it. It became ERO Inc., which the company identified as the collective bargaining agent for its employees on December 1 1941. The Tenth District Court of Appeals ordered the company in July to withdraw recognition from ERO Inc. ruling that it had given it a slight advantage over the union. During the final representation election in July 1942 ERO Inc. tried to persuade workers to vote against the union and hinting that the CIO was led by Communists and un-American. They were unsuccessful, however, in saving the final vestiges of the Rockefeller Plan and the result was 58 per cent in favour of the union. The major reason for the defeat of the plan was a major influx of new employees as steel mill production expanded to meet wartime demand.(25)
While the employee representation movement may have died in the US following the passage of the Wagner Act, it continued in Canada. There was no equivalent of the legislative ban on ERP in Canada. The next section of the paper will examine the impact of the movement there.
Employee Representation Plans in Canada
The Rockefeller Plan directly impacted on Canadian industrial relations in two ways. John D. Rockefeller, Jr. recruited W. L. Mackenzie King, a former Canadian Minister for Labor, to help him frame the plan. MacKenzie King was Canadian Prime Minister from 1921 to 1930 and again from 1935 to 1948. As Prime Minister he delayed the introduction of legislation similar to the Wagner Act that favoured collective bargaining between employers and unions. The Wartime Labour Regulations Act of 1944, which was modelled on the Wagner Act, did not explicitly ban non-union forms of representation. The Rockefeller family also had the controlling interest in the Imperial Oil Company, which adopted the Rockefeller plan in 1919 to reduce labour unrest and prevent unionisation. The plan was part of a package that included pension benefits and a share purchase plan.(26)
As in the US, Employee Representation Plans flourished in Canada in 1918-19. Union membership grew from 160,000 in 1916 to 378,000 in 1919. There was a labour revolt during 1919 with general strikes in Winnipeg, Toronto and Amherst. The reason for the discontent included fears of unemployment, inflation and demands for shorter hours. The Mathers Royal Commission appointed by the federal government to investigate the industrial unrest praised both the Rockefeller and Whitley schemes as a means of reducing unrest. The Rockefeller schemes were primarily adopted by large employers, particularly Canadian branches of US firms, as part of a welfare programme. In addition to Imperial Oil, these firms included International Harvester, Proctor and Gamble and Bell Telephone. The plans also tended to found in mass-production or continuous process industries with large numbers of semi-skilled workers. While there were weak traditions of craft unionism in these industries, management had to communicate with workers because a small group of them could halt production at strategic bottlenecks. These plans generally played a limited role in grievance handling and were largely concerned with working conditions and welfare programs. The Massey-Harris council attempted unsuccessfully to act as means for soliciting workers' suggestions on how to improve productivity. By 1920 the percentage of workers covered by employee representation schemes in Canada about was twice that in the US.(27)
While there some attempts by unionists to use the plans to organise and raise grievances, the plans diminished militancy and forestalled unionism. At the Sarnia, Ontario, plant of Imperial Oil, the Employees Federation, a coalition of trade unionist activists elected a union member to the joint council. The activist raised union wage demands and management subsequently dismissed him. Management only reinstated the activist after the threat of a walkout and union membership grew at the plant. The company ultimately pre-empted union organisation by granting an eight hour day and significant wage increases. When workers at the Armour Packing Company in Hamilton, Ontario, struck for higher wages, management signed an agreement with the worker representatives of the plant 'Conference Board'. The agreement gave an increase in wages that was less than what was being demanded. The strike collapsed and the company did not re-employ union members.(28)
During the 1920's and early 1930s the Employee Representation Plans had varying fortunes. During the 1920s the Canadian Department of Labour promoted the plans through its Labour Gazette. Management's interest in the schemes fluctuated according to the economic climate. The Massey-Harris council ceased to exist when the company shut down in the 1921-2 recession and was revived by the company when the economic climate improved in 1923. The council ceased to exist in 1931 during the depths of the Great Depression but management resuscitated it during the Second World War in 1943. Canadian employers, like their US counterparts, also conducted an open shop campaign against unions. They continued to see the plans as useful anti-union tools. At the Sydney, Nova Scotia, steel plant of the British Empire Steel Corporation (BESCO) in August 1923 management introduced the employee representative plan in the wake of their victory in a major strike. State repression through the military, police and courts had helped defeat organised labour. The company destroyed the union leadership by blacklisting activists and saw the plans as a way of winning worker allegiance. Workers had little choice but to support the plan as the strike had highlighted the high cost of collective action.(29)While one former steelworker remembers that the plan was not beneficial because 'you had no strength' (30) , former union activists were elected on the plan's council and pushed for the same demands as they pursued through the unions. In 1929 the council embarrassed BESCO by persuading the Social Service Council of Canada, a Protestant churches reformist body, to investigate the twelve hour day at the Sydney plant. Sydney workers employed on continuous production such as the blast furnaces and open hearth furnaces gained the eight hour day in 1930. Workers in other parts of the plant had their hours reduced from twelve to ten. There were compensating wage increases for workers on hourly rates.(31)
One exceptional case of an Employee Representation Plan occurred in the state-owned Canadian National Railway (CNR). There was a strong union presence and management could not break them. Management established a plan for its employees in its major workshops and roundhouses, which built on its collective bargaining with unions. There were local committees and one central committee of employee and management representatives. The company allowed union officials to represent employees on the committees, which promoted increased efficiency and dealt with grievances. The AFL, whose international affiliates covered both the US and Canada, favoured the plan and hailed it as an alternative to the open shop because it was based on union strength. The plan, however was linked to the style of Henry Thornton, the president of CNR. He had a good relationship union officials and viewed as radical by other business leaders. The AFL invited Thornton to be a guest speaker at its 1929 Toronto convention. When Thompson left CNR, however, the plan lapsed, highlighting that the presence of these plans can be a question of management style as much as reflection of the economic climate.(32)
As the Canadian economy recovered from the Great Depression there was an upsurge in labour militancy and trade unionism. While there was no national Wagner Act, workers rushed to join new industrial unions, initially organised by the Communist led Workers' Unity League and later by the CIO. There was a much higher levels of strike related violence, particularly in Ontario and Quebec, with workers engaged in sit-ins. Management again established Employee Representation Plans to try to stop unionisation. A large steel plant in Hamilton, Ontario, Steelco established a plan at the first sign of a union. As in the US some steel workers used the plans as a platform for organising unions. At the Sydney steel plant several activists came to the conclusion that could use the council to build a 'real union'. Some of them successfully stood for the plant council, which gave them some freedom to move around the plant. When management rejected a request for a wage increase, four plant council employee representatives formed a workers' committee. The committee became the basis for the independent Steelworkers' Union of Nova Scotia, which became an affiliate of the SWOC in December 1936. The union soon organised the majority of workers at the Sydney plant. It successfully lobbied with other workers the Nova Scotia provincial legislature to pass a Trade Union Act in April 1937. This legislation forced employers to recognise and bargain with the trade union representing the majority of workers and fined companies for discriminating against trade unionists. This was the first Wagner influenced legislation in Canada and contained provisions for a vote on a union check-off if employers already had a system of checking off deductions for any other purpose. Within a week of the passage of this legislation the plant council employee representatives, all of whom were union members, resigned on mass. The plant council held its last meeting on 22 April 1937 and the steelworkers' union subsequently won a ballot for a check off system for union subscriptions.(33) Ron Crawley notes, 'As with many SWOC locals in the United States, SWOC steel workers at Sydney had essentially occupied and subverted the plant council'.(34)
The Canadian experience reinforces certain points concerning Employee Representation Plans. While employers may have a genuine desire to bridge the gap between management and workers in larger companies, they view the plans as a union avoidance strategy. The presence of plans is linked to the economic climate and the style of particular company managers. Where unions are successful in using them as a platform for organising, they require both a favourable legislative climate and workplace activism. The final section will look at the Australian experience, where the impact of these plans was negligible.
Employee Representation Plans in Australia
Employee Representation Plans had a negligible impact in Australia compared to the US and Canada for several reasons. There was a propensity for the plans to appear in large firms. Compared to Canada and the US industry was on a smaller scale. In 1929 the average number of wage earners per establishment in Australia was 15.6, compared with 25.3 and 41.9 for Canada and the US respectively. Due to the smaller domestic market in Australia manufacturing was based on batch production rather than mass production, which Canadian evidence suggests also favoured the plans. Australian employers had also to deal with labour movement that had significantly higher levels of unionisation than the US and Canada. There was also a Labor Party, which had won majority government both in the state of NSW and federally by 1910. The federal and state systems of compulsory arbitration assisted trade unions. Whereas the later Wagner Act in the US was concerned with whether workers would prefer union representation or not, the Australian legislation assumed that workers would prefer union representation. Compulsory arbitration aided union growth through legal recognition and gave unions a role in the determination of legally binding awards covering wages and conditions.(35)
Like the US and Canada, the industrial and political turmoil during the last years of the First World War and the immediate post-War period heightened interest in employee representation plans and other management labour strategies. There was a major strike in New South Wales in 1917 centred on the state railways and tramways. In 1919-20 there was an unprecedented strike wave that included maritime workers and Broken Hill miners. The Russian Revolution and the movement towards One Big Union led to conservative hysteria over a possible Bolshevik challenge to Australian capitalism. Some conservatives argued that the radical 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.(36)
The state in Australia played an important role in promoting new ideas to deal with these issues. In 1919-20 the Commonwealth Advisory Council of Science and Industry published reports on industrial co-operation and welfarism. George Beeby, by 1918 a Nationalist Minister for Labour and Industry in New South Wales, amended the New South Wales Industrial Arbitration Act to empower a Board of Trade to establish 'mutual welfare committees', 'industrial councils', and 'shop committees'. Following an overseas trip to the US and the United Kingdom, Beeby issued a report that recommended the introduction of Whitleyism to defeat worker militancy and increase productivity. While Beeby did review the Rockefeller Plan of employee representation, he noted that there was 'smouldering resentment' by US labour over the non-recognition of trade unions. Beeby did not include it in his proposals for reform. J. B. Holme, the Deputy President of the New South Wales Board of Trade, also published reports in 1919 and 1920 on Whitleyism.(37)
Despite this interest in Whitleyism, it was to have minimal impact. Beeby argued that state enterprises, such as the railways, should be the initial starting point for the introduction of Whitleyism. With Beeby's encouragement, the New South Wales Government Railways tried to establish Whitley committees in 1919. They were supposed to deal with all matters relating to 'staff well-being and comfort', but exclude award matters. However, the bitterness between management and the railway unions following the 1917 General Strike prevented co-operation. Eveleigh workshop employees rejected the scheme at a time when management was trying to introduce an unpopular Halsey bonus scheme. Workers saw the proposed committees and the bonus scheme as part of a 'speed-up'. The Labor Council of NSW condemned the committees for being an objectionable form of 'labour exploitation'. The Australian Socialist Party published a pamphlet entitled The Danger of the Whitley Scheme, which claimed that the scheme was against workers' interests. It widely circulated the pamphlet among railway workers. Eveleigh workers adopted their own scheme for shop committees and a works committee, which had no management representatives and elected worker representatives. By August 1920 the works committee had dealt with issues such as superannuation, holidays and faulty drains. Nevertheless, it was defunct by June 1921. The Railway Commissioners were more successful at the Randwick tramway workshops, where a committee was still operating in 1924. The federal Department of Defence did not share the enthusiasm of the NSW Government Railways for Whitleyism. In November 1921 an internal memo concluded that Whitley committees were not needed in the defence factories due to the existence of arbitration courts, wages boards and a 'powerful' trade union movement.(38)
There was some interest in employee representation in the private sector. In the New South Wales bootmaking industry, employers and unions did agree to introduce Whitleyism in 1919. This scheme was little more than an attempt to formalise collective bargaining and it broke down in 1920 over the issues of the forty-four hour week and unemployment. Joint committees also existed at Broken Hill Associated Smelters (BHAS, Port Pirie), Farmers (Sydney), the Electrolytic Zinc Works (Risdon, Tasmania) and Pelaco (Melbourne). From 1917 BHAS at Port Pirie had several committees, with elected workers' representatives, to manage welfarist programmes such as a co-operative store. The decisions were subject to veto by the General manager. There was labour criticism that the Co-operative Council was undertaking legitimate functions of trade unions and the employee representatives were too close to management. Workers did elect unionists to the council. These representatives believed that a union voice was necessary if works-based unions were to remain relevant and secured some improvements in company benefits.(39) As Erik Eklund has argued the committee system at BHAS 'gave workers a sense of participation without significantly altering management authority'.(40) The Electrolytic Zinc Company in Tasmania established a works committee in 1920 that discussed wages and conditions and included worker representatives. The Tasmanian wages board legislation provided for a wages board to cover the plant but did not allow for trade union representation. The wages board ratified works committee decisions concerning wages. Management saw the works committee, the wages board and it various welfare programs as a substitute for trade unions. The company also used the works council and wages board to justify exemptions from federal arbitration awards . As at the Pueblo steelworks in the US, management used the works committee to legitimate wage reductions during the post World War 1 recession. By 1931, however, a study of 78 Australian private establishments revealed only two had works councils.(41) The study concluded 'that management sharing... has scarcely come within the imagination of Australian business leaders'.(42)
Employers also experimented with an Australian version of company unionism, whereby workers would form unions with management encouragement and obtain registration within the arbitration system. Company unions could minimise outside intervention in the enterprise by unions with a wider coverage and the arbitration courts. They also reduced the gap between management and workers in large scale enterprises. These unions were significant in New South Wales following the 1917 General Strike. Employers took advantage of the deregistration of over twenty unions during the strike to encourage the formation of company unions. These unions appeared at Arnotts Biscuits, B.H.P.'s Newcastle steelworks, Elliot Brothers Chemicals, the New South Wales Government Railways, Schweppes Mineral Waters, the Riverstone Meatworks and the Vacuum Oil Company. In the Newcastle steelworks and the New South Wales Government Railways these unions failed to gain worker support, despite management concessions to them. Arbitration also provided the company unions with greater independence than management desired. The Newcastle steelworks management eventually persuaded the company union to amalgamate with the moderate Australian Workers' Union rather than the militant Federated Ironworkers' Association. In the New South Wales Government Railways the company unions eventually amalgamated to form the National Union of Railwaymen.(43) Ironically at least one official of a company union saw Whitley Committees as a rival. The general secretary of the workshops union in the NSW Government Railways protested that the committees were a waste of time and money as 'we are already doing the work which it is claimed that the Whitley Scheme would do'.(44)
Conclusion
The concern about representation for unorganised workers has prompted a re-examination of the employee representation plans or company unions in the United States prior to the passage of the Wagner Act. Some employers may have seen the plans as a way of improving communications with employees and heightening worker commitment to the firm. The major motivation for most Canadian and US employers was the avoidance of unions and state intervention in the internal affairs of their companies. While the Rockefeller plan did not discriminate against union members, the Colorado Fuel and Iron Company and other enterprises saw the plans as a substitute for unions. For employees, however, the plans did not provide an alternative to unions as workers were denied an independent voice. Management exercised a veto over the decisions of the committees and had the power to disregard protests of the committee. The plans also tended to be found in large scale industries with continuous or mass production, where communication problems were intensified and strategic groups of workers could create bottlenecks in the production process if alienated. Employee representation plans generally did not provide a long term alternative to trade unions. The employer's commitment to plans generally depended on the economic climate. The plans may be tied to the fortunes of particular individuals within management such as J. D. Rockefeller Jnr. in the case of Colorado Fuel and Iron and Henry Thornton in the case of Canadian National Railways. While some positive reassessments have highlighted the support of workers for the retention of the plans, it is difficult to determine whether the votes in elections conducted by the NLRB and its predecessors after 1933 are an accurate reflection of worker opinion given employer intimidation and divisive tactics. Steelworkers in Sydney Nova Scotia had a little choice but to support their company plan introduced by management in 1923. The plan followed the defeat of unionism in a major strike marked by state intervention in favour of the employer.The strike highlighted the high cost of collective action against management.
Can employee representation plans be a platform for trade union organising? The evidence suggests that this very difficult except in exceptional circumstances. The Union requires both a well-resourced organising campaign and a favourable political and legal climate. Steelworkers in both Canada and the United States in the late 1930s successfully used the plans as springboard for unionisation. There was the determined campaign of the SWOC. The Wagner Act underpinned the organisation of US Steel, while the Nova Scotia Trade Union Act assisted the workers at Sydney steel plant in Canada.
Why did the plans not have a similar impact on Australian industry? Australian industry was on a smaller scale than either Canada or the United States. Policymakers viewed the Rockfeller plan and its North American variants as inappropriate because of the strength of the labour movement in Australia and presence of a compulsory arbitration system to determine wages ad conditions. Even the preferred Whitley Scheme, which incorporated unions, was dropped in the NSW Government Railways Eveleigh workshops in face of worker resistance. At least one employer, Electrolytic Zinc Company in Tasmania, saw the potential of works councils and implemented them as an union avoidance strategy in a legal enviroment that did not explicitly favour trade unions.
* Dr Greg Patmore, Associate Professor, Work & Organisational Studies, University of Sydney