PROFIT-SHARING AND CO-PARTNERSHIP. (To THE EDITOR Or THE SPECTATOR."1 SIR,—In
last week's issue you published a letter from Mr. Jukes on the above subject, which I have rend with greet interest, end as he invites criticisms and hints, I venture to hope that the experience of the company with which I am connected may be of interest, as we have had a profit-sharing scheme working for eight or nine years. It is impossible within the limits of a letter to deal properly with the merits of any scheme of this kind. I can only, therefore, briefly giro particulars of our profit-sharing scheme and the reasons which influenced us.
,Originally we divided every six months 10 per cent. of the profits among all employees in prop3rtion to their wages. This proved in practice to be an insufficient incentive, as it only represented in a goad year about 5 per cent. on to their wages. About eighteen months ago, it being quits clear that the worker must have a bigger proportion of the profits of his labour, we decided to go to whatwe considered the limit, and give them a quarter of the whole profits after providing for Income Tax and ordinary depreciation. This means that in the ordinary way the workers' share is about equal to the divi- dends paid to the shareholders, because it is obviously unwise to divide the whole of the profits. Owing to the abnormal state of affaire during the war, it is impossible to say whether the scheme is a complete success, and how much the very large inerease in turn-over and profit which happened to coincide with the starting of the scheme was due to the scheme itself or to the particular type of work we were turning out. One thing, however, it did produce, and that was peace. I should add that the share of profits is only divisible amongst the time workers. Practically all the boys and girls are paid on a premium bonus syetem, which gives them their increased share weekly.
Profit-sharing and co-partnership schemes have, I think, hitherto failed (1) because the share was too small; (2) because the younger workers cannot look as for ahead as six or twelve months, and most be paid immediately on the results of any increased effort. Although co-partnership may be a higher ideal, it is necessary to take things as they are and not as they ought to be. It is hardly likely that a 9 per cent. dividend on din is going to make very much difference to the feeling. or efforts of a worker. It should also be borne in mind that the great object of any profit-sharing scheme is to increase production, otherwise, taking industry as a whole, it is impossible that the earnings of the worker can be appreciably increased; since, if all the dividends were paid to the worker instead of the shareholders, it would not increase the former's earnings by more than 5 or 10 per cent. The real teat therefore of the success of any scheme is (1) whether it has increased produc- tion; (2) the attitude of the worker during bad years.
In our scheme, we do not insist first of all on capital getting a dividend, because it might mean that in a great many years the workers would get nothing at all, supposing the profit corned was insufficient to pay the agreed dividend on capital, whereas, under our scheme, if any profit at all is made, the worker gets his share. In connexion with the scheme we run o Works Committee, which consists of the directors, certain members of the staff, the shop steward, and certain members elected by the workers. The Committee may bring up any conceivable subject. The chief difficulty encountered has been, not the number of complaints or seggeetions, but the lack of same!
I fear that this letter is already too long. I shall be very pleased to give Mr. Jukes any further information he may
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