WORKERS AS PARTNERS
BY W. HOWARD HAZEL.t."
IN a recent article in the Spectator several suggestions were made which might improve the relations of capital and labour, and lead to greater efficiency in our industries. One proposal was that the employers might " make it possible for workmen to invest on specially easy terms in the company or firm for which they work." It is• evident that this proposal can only apply to corn. panies where reasonable profits are being made, as no one, and particularly a working man with small savings, would care to invest in a company where the dividends are small or non-existent.
Some persons may consider that if a working man wished to invest his savings in the business where he works he should purchase the shares in the open market like anyone else. The methods of dealing in shares through a stockbroker are a sealed book to the average working man, and the low yield on the shares of many sound companies and the fear of a loss of capital if he should want to sell his shares when the market price was low would deter many men from investing their small capital in the usual way. Many schemes have been sug- gested by which the savings of the workers may be depo- sited with the company at rates of interest varying with the dividend paid on the ordinary shares. This sug- gestion is simple and effective, but it has the drawback that, at a time of serious depression or a great trade dispute, there might be a " run " upon the deposits which would cause considerable financial embarrassment when the company was least able to pay out a large amount of capital. Even three or six months' notice of withdrawal might be insufficient to overcome this diffi- culty, as the capital, in order to earn the high rate of interest, would have been locked up in the plant and development of the company.
These obstacles can be overcome effectively if the workers are allowed to become sliareholders on special conditions. The following scheme has stood the test of time in the very competitive industry of printing. Its success has proved that it is highly appreciated by the workers, and the last twenty years of peace and war, and the aftermath of war, have shown that it overcomes the many difficulties that might arise.
The scheme is suitable for any company whose shares normally stand at a premium. A special class of Em- ployees' Ordinary Shares should be created which can only be issued at par to, and held by, the employees of the company. When the shares are issued they can be pur- chased for cash, or by weekly instalments (of threepence, sixpence or more per share) deducted from the wages. The shares are not allotted to those who purchase by instalments until the payments are completed. No interest is paid on the instalments, but, instead, the com- pany can agree, on the death of a purchaser, to make a gift of the amount of the unpaid instalments to his heirs, so that the shares can be allotted. This method of insurance is appreciated by the employees, and experience has proved that the expense is negligible. When an employee shareholder wishes to sell, or when he leaves the employment of the company, heorMist offer his shares to the directors, who find aiiothevr employee willing to purchase at par—the price that was originally paid. If for any reason no employee be willing to buy at par, the holder can sell to any person at any price, but all holders, whether employees or not, must offer the shares to the directors when they wish to sell. There are many advantages in this scheme. The offer is framed to meet the financial position and outlook of the workers, who do not understand-the usual -Methods of dealing in shares, but are accustomed to-weekly de- ductions from their wages. As long as the company pays fair dividends the employee can obtain his capital when he wishes, and if he lose his job he receives his savings when fie probably is in need of money. The directors can control the amount of additional dividend bearing capital according to the requirements of the company, and can prevent the shares being pnrchased gradually by a few well-to-do employees. The employees receive a high rate of interest and an imposing certificate as a proof of their part ownership of the business where they work. They have the same dividends, rights of voting, &c., as the ordinary shareholders, with the exception of the restric- tions on their powers to sell.
The great need of the present day is to increase the efficiency of our industries. Greater efficiency must lower the costs of production, which will enable us to meet the fierce competition with which we are faced. Lower costs will bring more trade and lessen unemploynient, and add to the prosperity of our industries: The workers desire to share hi the prosperity of the businesseS in which, they work. When they know that any economies they make, any higher outputs, any saving of time or material, must help to increase the profits in which they share, they will have a new outlook upon their responsibilities, and there will be a great and valuable stimulus to higher efficiency.
This method of share-purchase *by employees also has the great advantage of encouraging the invaluable qualities of thrift and self-reliance. A man appreciates more something he has purchased with his own savings, than something %Ant has been given to him without any effort on his part. Shareholding by employees is not a panacea for all our industrial ills. It does, however, give to the workers, on generous conditions, an opportunity of sharing in the profits, and in the control of the business, like any other shareholder, according to the amount of their investment. This scheme is suggested as a means of bridging to some extent the gap which too often separates .capital and labour, and of meeting some of the industrial difficulties of to-day.
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