PROFIT-SHARING.

New Zealand Herald, Volume LVI, Issue 17336, 6 December 1919, Page 1 (Supplement)

PROFIT-SHARING.

ITS CHEQUERED HISTORY. BY H. W. SEGAB, M.A., F.N.Z. INST. Many business managers, are giving their attention to the idea of profitsharing. They are led in some cases by altruistic motives. They are doing well, and they are willing, even anxious, to share their prosperity with all who assist lin maintaining the business. In other ! cases it is looked upon as a promising ; idea in the present state of labour unrest It is thought that the prospect of a share of the profits will steady labour, will create an added interest in the business on the part of the worker, and will lead to application and economy. It is not always remembered that unrest is no new thing. It can be traced back through the centuries. The saying, When Adam dolve, and Eve span. Who was then the gentleman? goes back at least to the fourteenth century. When conditions are favourable unrest develops in excess of the normal. The industrial and financial confusion following a great war, and the deprivation which the working classes generally cannot escape, lead inevitably to an abnormal dissatisfaction. Nor is it always remembered that profitsharing is no new device. Essentially it is only a special form of the most general economic principles, that the work done will depend on the interest of the worker in the result. Even the Romans discovered that slave labour exacted by force was careless and inefficient and established a system by which the cultivator became directly interested in the amount and quality of the produce. The more recent share, or melayer, system of land cultivation, in which the landowner provides the capital and gives the cultivator an agreed share, of the produce, has the same objeci. An arrangement of sharing the catches has existed among fishermen from time immemorial. Successful applications to modern industry were achieved towards the middle of the last century. It seems remarkable, then, that such a promising principle is not in more general u#e. But the truth is that, in spite of some great successes, it has had a very chequered history, and the vast majority of businesses that have embarked on profit-sharing schemes hav e been led to abandon them from one cause or another. The result is that, at the present time, an extremely small percentage of the manual labour of the world is rewarded in any other way than by simple wages. Profit-sharing would appear too often to ■ have played the part of an ignis-fatuus that has ied the individual seeker after peace only into trouble. Labour Standpoint. A year or moTe ago the cables announced that the Labour Council in Sydney had warned the workers of New South Wale* against encouraging any profit-sharing proposals that employers might advance. A day or two ago the cables from England also informed us that the Carpenters' and Joiners' Union had sent an ultimatum to its members employed by Lever Brothers stating that they will be expelled if they continue to participate in the firm'n co-partnership scheme. Lever's employees, we are told, declare that they will resist the ultimatum. The reason of the ultimatum is that trades union leaders are mostly opposed to tho principle of profit-sharing schemes on the ground that workers under such schemes achieve a different economic basis from others. Moreover, it is urged, >f the profit-sharing also involve copartnership, then, as shareholders, they assist in furthering privately-controlled industry against Labour's aim of complete nationalisation. v This opposition of Labour itself is the main cause of the relaflvely-small advance the principle of profit-sharing has made Numerous failures which it has brought about do not encourage other attempts. Nor is the suspicion widely felt by trade unionists merely empty prejudice. Substantial reasons are urged to justify their attitude. When there is an object on the part of employers, that object will include the discouragement of strikes. Although the more-prudent trade unionists may dislike the use of the strike and resort' to it only in the last extremity, they pqefer that this weapon should be kept efficient, and that their power in a strike should not be weakened by some of their number being so attached to their employers that they refuse to act with their fellows. It is a question of the solidarity of labour. It is desired by the unions to maintain the complete independence of their members to strike, whether for higher wages or for shorter hours, or for other improvements in conditions, and to resist any inducement that, will pat a restraint on leaving any particular employer. In fact, on the part of the employer efforts have often been made to keep the men out of the trade union as a condition of participation in the benefits of the scheme. Sonle of tho stronger,trusts hav* aimed at this, and the attempt is more likely to be successful where there is a monopoly and all members of the trade are included. Partly for this reason profit-sharing has been most successful among gas companies. Where only a portion of the trade participates, its effect on th fi struggle for the standard or minimum wage is deemed of such importance that Labour's opposition makes it difficult to maintain a system which tends to weaken the workers' position. Other Difficulties.

The opposition of tiade unions as a whole is not the only difficulty met with I in establishing a system of profit sharing. | The workers, when they do agree to the < principle, prefer to havn a definite, under- i standing as to what they shall receive, so j that their share will come to them as a i matter of business, and not as a matter of i charity. But then arise differences of ! opinion as to what the profits really are. j This difficulty is met with in particular j when new shares are issued to shareholders j and when reserves are accumulated and employed in the business, j From the point of view of the owner or j shareholder objections may also be urged, ! Th e efficiency of th e use and management , of capital is so important in modern in- I dustry and business that there may be great differences in profit between one concern and another, and in the same concern between one time and another, quite ! independent of the work mid energy of the j operatives One man may happen to be I engaged in a firm where large profits are ' mad,, as a result of efficient management. I Ought he to get much better wages than I another, perhaps an equally good or better ! workman, who is employed by a firm I whoso management is comparatively in- | efficient? Then, again, if for a time a ! system of profit-sharing is maintained, the ' successful firms will tend to monopolise ' The services of the best workmen, leaving : only the less-efficient for the less success- • ful firms that cannot, offer the same terms. ' Thus the weaker firms are still further j handicapped. The profits that come to the workman I are uncertain and at long intervals. He ' commonly prefers a weekly payment and • to know what he is going to get. Even • many salaried men are what they ar e be- , cause they prefer a steady income to the uncertainty of business. The wage system has its advantages. Wages, though" they fluctuate, are steadier than profit*. Even if the workman's share of the profits be set aside for social purposes, pensions and insurance for example, he would be more : prudent to depend on benefit and insur- : ance societies than on an industrial con- ! rem. Profit-sharing furnishes no guarantee against instability of earnings and fluctuations in employment. In fact, when earnings are low. the share in the profits is likely to be absent : when it is likely most to be appreciated, it Is not to be bad. K.fly years ago Jevoiis wrote that " th,. sharing of profits is one of those apparently simple inventions at the simplicity of which men will wonder in an after age " So far time has not justified Professor Jevon.*. It would appear there 1 is no royal road to industrial peace. ' i