Toward Industrial Democracy

...Have they worked...

...each member has learned to assemble an engine individually...

...Yet as a group they seem to represent a marked tilt toward democracy in economic life...

...The new model did increase labor peace in the German coal and steel industries—and ulti-mately, too, the distance between union leaders and members...

...Though employe partieipation in management has been discussed since the turn of the Century, the push to implement it came in the immediate aftermath of World War II when "works Councils" and plant committees were established by law or by collective bargaining in many Western European countries...

...I don't believe in the possibility of revolution here, though revolution may be necessary in developing countries," says Johansson, reflecting the radical reformist tradition of the Swedish labor movement...

...Whatever the precise outcome, there is little doubt that changes in power on the job will'ultimately be reflected in changes in ownership...

...And since January 1, 1977, the Employe Participation Act has required management to inform employes and to initiate negotiations with the union local on all matters of major importance...

...Often initial disagreements are converted into agreement through these discus-sions...

...At Volvo's Kalmar plant in Southern Sweden, this principle has been extended to all aspects of assembly...

...They are a little more critical...

...In 1969, there were wildcat strikes in the German coal and steel industry and in the state-owned iron mines at Kiruna in northern Sweden...

...We take up almost every-thing: the company's economic Situation, product development, conditions in the fac-tory, lots of things that are not questions for negotiations as the law defines them," says Lindblom...

...For example, a three-week plant shutdown at SKF to re-duce excessive Stocks resulted in three extra weeks of paid vacation for production workers by the time Johansson had finished negotiating...

...The act Struck down the concept of managerial prerogatives...

...This forces employers to consider things more carefully...

...Well-educated manual workers express extreme discontent with Jobs their parents were happy to hold...

...But they do so in an atmo-sphere of open debate...

...All aspects of a firm's business are now subject to collective bargaining...

...Swedish managers still manage, despite democratization on the shop floor and in the board room...

...Our interest is seeing that capital is used to provide more Jobs...

...Lindblom does not question that employe influence is here to stay...

...What we've achieved, we've achieved in spite of capital...

...State enterprises and private firms were both targets of the demand for worker influence...

...I would go so far as to say that it has had a positive effect on the decision-making process...

...job safety...

...Lindblom argues that it now takes longer to make decisions, but that this has some advantages as well as disadvantages...

...Outside, you are a Citizen...

...These strikes played a highly symbolic role because they were directed against firms in which wages were high (though wage differentials were eroding) and in which the union hierarchy had been incorporated into management's deciKATHLEEN VOLP sion making...

...Workers' representatives, called "safety Stewards," are entitled to shut down production that poses immediate danger and to initiate negotiations on long-term dangers...

...UPension fund investment: The largest Single source of new capital in Sweden is the Supplemental Pension Fund, which is a contributory pension plan supplementing the basic social security pension, as Company pension plans do in the United States...

...And for many employers, the push for workers' influence on the job is just a covert form of socialization, the more insidious for its democratic aura...

...Owners of capital find their prerogatives in-creasingly circumscribed, without ownership itself being threatened...

...It also provides a fine public platform for union dissent with management policy, as Johansson and his white-collar colleague demonstrated in proposing to halve the 1977 stockholder dividend in response to Sweden's economic downturn...

...A look at what has happened in Sweden gives some sense of the potential of economic democracy...

...But, he says, "The consequences are unknown...

...Though employe militance ebbed in the early 1970s, the institutional march continued as worker representatives were added or the existing number increased on Company boards in half a dozen countries...

...It was the result of the high turnover and absenteeism that plagued the auto industry...

...Workers and students made common cause only in France, but the spirit of rebellion infected the new generation of manual workers who had grown up during the boom of the 1950s and 1960s in other countries as well...

...Johansson sits as one of two employe representatives on the company's board...

...Democratizing the economy requires a change in the way we think, employers and employes alike...

...increasing worker influence on the shop floor...

...expanding the scope of collective bargaining to encom-pass organizing work, investment policy, and other managerial prerogatives...

...Unions had some influence, but their members feit that they themselves had none...

...In-volving employes in some management tasks, they decided, was out of keeping with their more customary adversary role...

...At Saab's Sodertalje plant south of Stockholm, engine assembly has been taken over by teams of three who set their own pace...

...In a way, both radicals and con-servatives are correct: Cooptation and backdoor socialization are both parts of the process...

...All major policy decisions— production, economics, sales—are submit-ted to a labor-management commission," explains Johansson...

...It also gives a sense of the contra-dictory forces involved...

...Unlike American Company plans, it en-compasses all workers and allows employes to move freely from one firm to another without losing pension rights...

...Although the job security act has made it more difficult for young people to find work, it has protected older workers and it has stimulated employers to distribute work loads more evenly...

...It could change most of the rules of the game, altering the behavior of Supervisors and Company investment planners alike...

...The late 1960s brought a reradicalization of the European labor movement...

...USafety: The initiative on job safety has passed from employers and understaffed government agencies to those most imme-diately concerned—employes...

...Substantial worker influence could well make the proposed wage-earner funds an economic necessity...

...In France, employe directors are nonvoting...

...Most other European and American unions looked at the model and rejected it...

...Inside, you are a subject of managerial absolutism...

...Then, in 1974, job security was mandated in Sweden...

...For a variety of reasons the Scandina-vians, particularly the Swedes, have taken these reforms further than elsewhere...

...Democracy stops at the Office door and the factory gate...

...The two are an-tagonists at the bargaining table, but their general agreement on the meaning of employe participation says a great deal about the evolving democratic culture in the economy...

...You speak your mind, vote as you see fit, run for office...

...The fear is not groundless...

...It was profitable, and taxpayers picked up the tab by paying social welfare benefits to the older workers...

...Unions find that taxes take most of their members' wage increases...

...Both Lindblom and Johansson see the new law not as a radical departure, but as one further step in the continuing development of employe influence...

...SKF has gone through the same process of democratization as other large Swedish firms...

...To some on the Left, the Swedish reforms seem a sophisticated form of cooptation, a clever managerial ploy to incorporate unions in management...

...New measures required management to consult employe representatives on a variety of matters, including personnel policy, layoffs, plant location, workingeon-ditions, and managerial appointments...

...The first institutional achievement of the new radicalism—once union leaders had rushed from the back ranks to put themselves in frontof their members—was reviv-ing and broadening the powers of the works Councils...

...In Germany, the model of equal employe and share-holder representation was extended from the coal and steel industry to all other major firms inl976...

...Employes and employers share a common interest in overhauling the structure of economic authority...

...The effects of economic demoeratization are only beginning to be feit, but the balance of power on the job between capital and labor is already shifting in fundamental ways...

...Previously, management's interpretation prevailed until court action, which could take several years...

...People ask more questions...

...Automation and plant closings brought a wave of strikes in Britain, Italy, and France in which the demand for worker control played a major role...

...The law on job security cir-cumscribes Lindblom's freedom to hire and fire...

...The Solutions chosen to these individual problems are combined in the current definition of economic or industrial democracy...

...Both Lindblom and Johansson point to it in different ways...

...Industrial democracy represents a continuation of this trend...

...Employes and shareholders split the board seats fifty-fifty, and unions were given veto power over the appointment of personnel managers...

...It is a democratic cultural revolution...

...Individually, none of the reforms can be described as revolutionary...

...All appointments to heads of departments have been agreed on between the workers' and management's representatives...

...Here is what happened in Sweden in the 1970s: f Job redesign: While management's experiments in redesigning Jobs have been numerous—the employers'/ federation has published a summary of some 500—the most notable departure has been the aboli-tion of the assembly line where it origina-ted, in the auto industry...

...But is it...

...We can't trust management to do that...

...Besides pro-viding much of the capital for housing con-struction, the Supplemental Pension Fund has gradually moved into buying stock with a limited portion of its assets...

...They used to be able to decide themselves, though they had to be responsive to the stockholders," says Lindblom...

...It seats public representatives on boards of directors when its shares entitle it to a seat...

...But their presence, Johansson says, "provides us both information and influence—influence because it gives us a better factual basis for our arguments...

...These employe committees never played their ex-pected role in management at the plant level, and their influence declined further with economic stabilization and the beginning of the Cold War...

...The exception was the German coal and steel industry, where union demands for in-creased influence were coupled with denazification...

...The more information the Union has, the more it understands the limits of its demands," says Lindblom...

...Thus, under union and government pressure, the right to fire capriciously or to pollute air and water has been surrendered...

...Employe representatives have voting rights...

...job security...

...If not, then we negotiate...

...Johansson says the increase in influence has indeed changed his members' views...

...The old adversary roles are apparently alive and well in the new context, but the balance of power has shifted...

...Yet real worker influence in management could be a quantum leap in this process...

...Lindblom is more urbane...

...It's quite possible that in the long run employe pressure will reduce the rate of return on share capital, and that the resulting shortage of investment capital will have to be made up with collectively owned capital...

...But else-where they r?nge from a numerically pow-erless voting minority in Sweden and Den-mark to a substantial minority of one-third in Luxembourg and Norway...

...The idea of running for your boss's Job seems ludicrous...

...put-ting employe representatives on Company boards, and redistributing stock ownership...

...Representation on boards of directors: A 1976 act provided employe representation on the boards of all companies employ-ing more than twenty-five workers...

...Both Saab and Volvo have replaced assembly lines with team assembly in their newest plants...

...The same law makes the union's Interpretation of the contract legally binding in some fields, such as safety, until a labor court decides otherwise...

...Decisions by the Company board, however, are a different matter...

...The cumulative impact of these changes promises to be a redistribution of authority on the job as revolutionary as the centrali-zation that resulted from the imposition of the factory System in the last Century...

...There is no simple definition, but the concept includes a variety of reforms: rede-signing Jobs to fit workers rather than vice versa...

...It's dangerous for us just to pay attention to raising wages today...

...Konsultation at work: The Employe Participation Act, in effect since 1977, re-quires that Swedish managers inform employes and initiate negotiations on all important matters...

...Both Johansson and Lindblom are artic-ulate Speakers for their constituencies...

...This has always been the fear of American unions—that they will find themselves saddled with responsibilities that will imperil their role as workers' representatives...

...A quiet revolution in Western Europe is extending democracy into economic life...

...That gave them considerable control over hiring and firing...

...Many ask 'How much can we ask in wages without it keeping us from export-ing...

...A gradual expansion of the scope of collective bargaining, increasing employe influence on the shop fioor and in the board room, and collective stock purchases have all con-tributed to opening up the workplace...

...Hob security: Like their American counterparts, Swedish companies had a streng tendency to dump older workers in favor of younger ones...

...This proposal has generated bitter debate in Sweden...

...Now they have to achieve a balance between different aims, those of stockholders and those of employes...

...Employers were re-quired to consult these groups before mak-ing decisions, but they were rarely required to pay any attention to the advice...

...High rates of absenteeism and employe turnover plague employers...

...Fearful of becoming hostages to management, unions gave this legislation low prior-ity, but they have found board seats a source of reliable information...

...Johansson is blunt, critical of management, the current nonsocialist government, and past Social Democratic governments alike...

...SKF, which employs 4,500 people at the Gothenburg plant and 60,000 internation-ally, is typical ofthe export-oriented, tech-nologically advanced firms that are the backbone of the Swedish economy...

...There is not any question that the deci-sion-making process in the Company has become more highly qualified since it has become necessary to justify the decision...

...For example, to what extent should the union take responsibility for Company decisions...

...At that rate, the wage-earner funds would gain a Controlling interest in the Swedish economy in about twenty years, starting with the most profitable firms first...

...A works Council has existed since the 1940s...

...Lindblom and Johansson meet on a weekly basis...

...But their motivations are as divergent as the problems they face...

...This has compli-cated life for employers...

...The reforms actually are consistent with the Scandinavian Social Democratic prac-tice of "functional socialism"—the socialization of some functions of ownership without transferring the title of ownership...

...John Logue, a specialist in Scandinavian affairs, teaches political science at Kent State University in Ohio...

...But if we show restraint and don't make the wage demands that we could, then the price will have to be more influence on what is going on...

...The Common Market's Com-mission officially endorsed employe board representation in 1975...

...I put this question to Goran Johansson, chairman of the metalworkers' local, and Staffan Lindblom, personnel director at the Gothenburg plant of SKF, the Swedish multinational ball-bearing manufacturer...

...Free speech is insubordination, and the only way to vote is with your feet, which is an expensive sort of ballot...

...A portion of each company's annual profits—20 per cent is the figure the unions suggest—would be converted into employe share capital in-vested in the Company...

...The two employe representatives can be voted down with ease...

...Even more controversial than the measures already enacted is the proposed wage-earner fund, which would divide the growth in invested capital between employes and shareholders...

...While this has not made mass production an outlet for individual creativity, it'has reduced the deadening repetition of the assembly line...

...The coal and steel barons had played a prominent role in Hitler's rise, and workers' partieipation in management seemed to offer some guarantee that demo-cratic forces could hold in check the barons' nondemoeratie instinets...

...But I believe in gradual and continual change...

...The abolition of the assembly line was not motivated by a desire to make production Jobs meaningful...

...In 1951, a new kind of board of directors was created in German coal and steel firms...

...Their Jobs, after all, will depend on employe as well as stockholder support...

...The pattern clearly will be evolu-tionary, not revolutionary...

...If the group reaches a unanimous decision, the policy is carried out...

...In time, such goals as guaranteeing job security, improving occupational health and safety, and making work more pleasant will become as much a part of managers' calcu-lations as improving profit margins...