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12. The matters to be considered by the councils must inevitably differ widely from industry to industry, as different circumstances and conditions call for different treatment, but we are of opinion that the suggestions set forth below ought to be taken into account, subject to such modification in each case as may serve to adapt them to the needs of the various industries.

13. In the well-organized industries one of the first questions to be considered should be the establishment of local and works organizations to supplement and make more effective the work of the central bodies. It is not enough to secure cooperation at the center between the national organizations; it is equally necessary to enlist the activity and support of employers and employed in the districts and in individual establishments. The national industrial council should not be regarded as complete in itself; what is needed is a triple organization-in the workshops, the districts, and nationally. Moreover, it is essential that the organization at each of these three stages should proceed on a common principle, and that the greatest measure of common action between them should be secured.

14. With this end in view, we are of opinion that the following proposals should be laid before the national industrial councils:

(a) That district councils, representative of the trades-unions and of the employers' association in the industry, should be created, or developed out of the existing machinery for negotiation in the various trades.

(b) That works committees, representative of the management and of the workers employed, should be instituted in particular works to act in close cooperation with the district and national machinery.

As it is of the highest importance that the scheme making provision for these committees should be such as to secure the support of the trades-unions and employers associations concerned, its design should be a matter for agreement between these organizations.

Just as regular meetings and continuity of cooperation are essential in the case of the national industrial councils, so they seem to be necessary in the case of the district and works organizations. The object is to secure cooperation by granting to workpeople a greater share in the consideration of matters affecting their industry, and this can only be achieved by keeping employers and workpeople in constant touch. 15. The respective functions of works committees, district councils, and national councils will no doubt require to be determined separately in accordance with the varying conditions of different industries. Care will need to be taken in each case to delimit accurately their repsective functions, in order to avoid overlapping and resulting friction. For instance, where conditions of employment are determined by national agreements, the district councils or works committees should not be allowed to contract out of conditions so laid down, nor, where conditions are determined by local agreements, should such power be allowed to works committees.

16. Among the questions with which it is suggested that the national councils should deal or allocate to may be selected for special mention:

(i) The better utilization of the practical knowledge and experience of the workpeople.

(ii) Means for securing to the workpeople a greater share in and responsibility for the determination and observance of the conditions under which their work is carried

on.

(iii) The settlement of the general principles governing the conditions of employment, including the methods of fixing, paying, and readjusting wages, having regard to the need for securing to the workpeople a share in the increased prosperity of the industry.

(iv) The establishment of regular methods of negotiation for issues arising between employers and workpeople, with a view both to the prevention of differences and to their better adjustment when they appear.

(v) Meams of insuring to the workpeople the greatest possible security of earnings and employment, without undue restriction upon change of occupation or employer. (vi) Methods of fixing and adjusting earnings, piecework prices, etc., and of dealing with the many difficulties which arise with regard to the method and amount of payment apart from the fixing of general standard rates, which are already covered by paragraph (iii).

(vii) Technical education and training.

(viii) Industrial research and the full utilization of its results.

(ix) The provision of facilities for the full consideration and utilization of invertions and improvements designed by workpeople, and for the adequate safeguarding of the rights of the designers of such improvements.

(x) Improvements of processes, machinery, and organization and appropriate questions relating to management and the examination of industrial experiments, with special reference to cooperation in carrying new ideas into effect and full consideration of the workpeople's point of view in relation to them.

(xi) Proposed legislation affecting the industry.

17. The methods by which the functions of the proposed councils should be correlated to those of joint bodies in the different districts and in the various works within the districts must necessarily vary according to the trade. It may, therefore, be the best policy to leave it to the trades themselves to formulate schemes suitable to their special circumstances, it being understood that it is essential to secure in each industry the fullest measure of cooperation between employers and employed, both generally, through the national councils, and specifically, through district committees and workshop committees.

18. It would seem advisable that the Government should put the proposals relating to national industrial councils before the employers' and workpeople's associations and request them to adopt such measures as are needful for their establishment where they do not already exist. Suitable steps should also be taken, at the proper time, to put the matter before the general public.

19. In forwarding the proposals to the parties concerned we think the Government should offer to be represented in an advisory capacity at the preliminary meetings of a council if the parties so desire. We are also of opinion that the Government should undertake to supply to the various councils such information on industrial subjects as may be available and likely to prove of value.

20. It has been suggested that means must be devised to safeguard the interests of the community against possible action of an antisocial character on the part of the councils. We have, however, here assumed that the councils, in their work of promoting the interest of their own industries, will have regard for the national interest. If they fulfill their functions they will be the best builders of national prosperity. The State never parts with its inherent overriding power, but such power may be least needed when least obtruded.

21. It appears to us that it may be desirable at some later stage for the State to give the sanction of law to agreements made by the councils, but the initiative in this direction should come from the councils themselves.

22. The plans sketched in the foregoing paragraphs are applicable in the form in which they are given only to industries in which there are responsible associations of employers and work people which can claim to be fairly representative. The case of the less well-organized trades or sections of a trade necessarily needs further consideration. We hope to be in a position shortly to put forward recommendations that will prepare the way for the active utilization in these trades of the same practical cooperation as is foreshadowed in the proposals made above for the more highly organized trades.

23. It may be desirable to state here our considered opinion that an essential condition of securing a permanent improvement in the relations between employers and employed is that there should be adequate organization on the part of both employers and workpeople. The proposals outlined for joint cooperation throughout the several industries depend for their ultimate success upon there being such organization on both sides, and such organization is necessary also to provide means whereby the arrangements and agreements made for the industry may be effectively carried out. 24. We have thought it well to refrain from making suggestions or offering opinions with regard to such matters as profit sharing, copartnership, or particular systems of wages, etc. It would be impracticable for us to make any useful general recommendations on such matters, having regard to the varying conditions in different trades. We are convinced, moreover, that a permanent improvement in the relations between employers and employed must be founded upon something other than a cash basis. What is wanted is that the workpeople should have a greater opportunity of participating in the discussion about and adjustment of those parts of industry by which they are most affected.

25. The schemes recommended in this report are intended not merely for the treatment of industrial problems when they have become acute, but also, and more especially, to prevent their becoming acute. We believe that regular meetings to discuss industrial questions, apart from and prior to any differences with regard to them that may have begun to cause friction, will materially reduce the number of occasions on which, in the view of either employers or employed, it is necessary to contemplate recourse to a stoppage of work.

26. We venture to hope that representative men in each industry, with pride in their calling and care for its place as a contributor to the national well being, will

come together in the manner here suggested, and apply themselves to promoting industrial harmony and efficiency and removing the obstacles that have hitherto stood in the way.

We have the honor to be, sir, your obedient servants,

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The following questions were addressed by the reconstruction committee to the subcommittee on the relations between employers and employed in order to make clear certain points which appeared to call for further elucidation. The answers given are subjoined.

1. Q. In what classes of industries does the interim report propose that industrial councils shall be established? What basis of classification has the subcommittee in view?-A. It has been suggested that, for the purpose of considering the estab lishment of industrial councils or other bodies designed to assist in the improvement of relations between employers and employed, the various industries should be grouped into three classes (a) industries in which organization on the part of employers and employed is sufficiently developed to render the councils representative; (b) industries in which either as regards employers and employed, or both, the degree of organization, though considerable, is less marked than in (a) and is insufficient to be regarded as representative; and (c) industries in which organization is so imperfect, either as regards employers or employed, or both, that no associations can be said adequately to represent those engaged in the trade.

It will be clear that an analysis of industries will show a number which are on the border lines between these groups, and special consideration will have to be given to such trades. So far as groups (a) and (c) are concerned, a fairly large number of trades can readily be assigned to them; group (b) is necessarily more indetermined. For trades in group (a) the committee have proposed the establishment of joint standing industrial councils in the several trades. In dealing with the various industries it may be necessary to consider specially the case of parts of industries in group (a) where organization is not fully developed.

2. Q. Is the machinery proposed intended to be in addition to or in substitution for existing machinery? Is it proposed that existing machinery should be superseded? By "existing machinery" is meant joint conference and discussion between employers and employed.-A. In most organized trades there already exist joint bodies for particular purposes. It is not proposed that the industrial councils should necessarily disturb these existing bodies. A council would be free, if it chose and if the bodies concerned approved, to merge existing committees, etc., in the council or to link them with the council as subcommittees. .

3. Q. Is it understood that membership of the councils is to be confined to representatives elected by employers' assocaitions and trade-unions? What is the view of the subcommittee regarding the entry of new organizations established after the councils have been set up?-A. It is intended that the councils should be composed only of representatives of trade-unions and employers' associations, and that new organizations should be admitted only with the approval of the particular side of the council of which the organization would form a part.

4 (a). Q. Is it intended that decisions reached by the councils shall be binding upon the bodies comprising them? If so, is such binding effect to be conditional upon the consent of each employers' association or trade-union affected?-A. It is contemplated that agreements reached by industrial councils should (whilst not, of course, possessing the binding force of law) carry with them the same obligation of observance as exists in the case of other agreements between employers' associations and trade-unions. A council, being on its workmen's side based on the trade-unions concerned in the industry, its powers or authority could only be such as the constituent trade-unions freely agreed to.

4 (b). Q. In particular, is it intended that all pledges given, either by the Government or employers, for the restoration of trade-union rules and practices after the war shall be redeemed without qualification unless the particular trade-union concerned agrees to alteration; or, on the contrary, that the industrial council shall have power to decide such question by a majority vote of the workmen's representatives from all the trade-unions in the industry?-A. It is clearly intended that all pledges relating to the restoration of trade-union rules shall be redeemed without qualification unless the particular trade-union concerned agrees to alteration, and it is not intended that the council shall have power to decide such questions by a majority vote of the workmen's representatives from all the trade-unions in the industry.

SECOND REPORT ON JOINT INDUSTRIAL COUNCILS BY THE BRITISH MINISTRY OF RECONSTRUCTION.

SIR: Following the proposals made in our first report, we have now the honor to present further recommendations dealing with industries in which organizations on the part of employers and employed is less completely established than in the industries covered by the previous report, and with industries in which such organization is weak or nonexistent.

2. Before commencing the examination of these industries the subcommittee came to the conclusion that it would materially assist their inquiries if they could have the direct advantage of the knowledge and experience of some representative employers who were connected with industries of the kind with which the committee were about to deal; and it was arranged, with your approval, that Sir Maurice Levy, Mr. F. N. Hepworth, Mr. W. Hill, and Mr. D. R. H. Williams should be appointed to act with the subcommittee while these industries were under consideration. This arrangement made it possible to release from attendance at the earlier meetings of the committee Sir Gilbert Claughton, Sir T. Ratcliffe-Ellis, Sir George J. Carter, and Mr. Allan Smith, whose time is greatly occupied in other public work and whose experience is more particularly related to the organized trades covered by our former report.

3. It is difficult to classify industries according to the degree of organization among employers and employed, but for convenience of consideration the industries of the country may be divided into three groups:

Group A.-Consisting of industries in which organizations on the part of employers and employed is sufficiently developed to render their respective associations representative of the great majority of those engaged in the industry. These are the industries which we had in mind in our first interim report.

Group B.-Comprising those industries in which, either as regards employers and employed, or both, the degree of organization, though considerable, is less marked then in group A.

Group C.-Consisting of industries in which organizations is so imperfect, either as regards employers or employed, or both, that no associations can be said adequately to represent those engaged in the industry.

The present report is concerned with groups B and C.

4. So far as groups A and C are concerned, a number of industries can be definitely assigned to them. Group B, however, is necessarily more indeterminate. Some of the industries in this group approach closely to industries in group A, while others verge upon group C. Further, most industries, in whatever class they may fall, possess a "tail," consisting of badly organized areas, or sections of the industry. These facts we have borne in mind in formulating our further proposals.

5. So far as industries in group B are concerned, we are of opinion that the proposals of our first report should, in their main lines, be applied to those which, on examination by the ministry of labor in consultation with the associations concerned, are found to be relatively well organized. We suggest, however, that where in these industries a national industrial council is formed there should be appointed one or at most two official representatives to assist in the initiation of the council, and continue after its establishment to act in an advisory capacity and serve as a link with the Government. We do not contemplate that a representative so appointed should be a member of the national industrial council, in the sense that he should have power, by a vote, to influence the decisions of the council, but that he should attend its meetings and assist in any way which may be found acceptable to it. By so doing he would acquire a continuous knowledge of the conditions of the industry of which the Government could avail itself and so avoid many mistakes that under present con-ditions are inevitable.

The question of the retention of the official representatives should be considered by the councils in the light of experience gained when an adequate time has elapsed. We anticipate that in many cases their continued assistance will be found of value even after an industry has attained a high degree of organization, but in no case should they remain except at the express wish of the councils concerned.

6. It may be that in some group B industries in which a national industrial council is formed certain areas are well suited to the establishment of district councils, while in other areas the organization of employers or employed, or both, is too weak to be deemed representative. There appears to be no good reason why in the former areas there should not be district industrial councils, acting in conjunction with the national industrial councils, in accordance with the principles formulated in the committee's earlier report on the well-organized trades.

7. An examination of some of the industries coming within group B may show that there are some which, owing to the peculiarities of the trades and their geographical distribution, can not at present be brought readily within the scope of the proposals for a national industrial council, though they may be quite well organized in two or more separate districts. In such a case we think there might well be formed one or more district industrial councils. We anticipate that in course of time the influence of the district councils would be such that the industry would become suitable for the establishment of a national industrial council.

8. In the case of industries in group B (as in the industries covered by our first report), we consider that the members of the national councils and of the district councils should be representatives of the employers' associations and trade-unions concerned. In the formation of the councils, regard should be paid to the various sections of the industry and the various classes of labor engaged, and the representatives should include representatives of women's organizations. In view of the extent to which women are employed in these industries, we think the trade-unions, when selecting their representatives for the councils, should include a number of women among those who are appointed to be members.

9. It does not appear to us necessary or desirable to suggest any fixed standard of organization which should exist in any industry before a national industrial council should be established. The case of each industry will need to be considered separately, regard being paid to its particular circumstances and characteristics. In the discussion of this matter we have considered whether it would be feasible to indicate a percentage of organization which should be reached before a council is formed, but in view of the great diversity of circumstances in these industries and of the differing degrees to which several sections of some of them are organized, we have come to the conclusion that it is more desirable to leave the matter to the decision of the ministry of labor and the organizations concerned. Whatever theoretical standard may be contemplated, we think its application should not be restrictive in either direction.

10. The level of organization in industries in group C is such as to make the scheme we have proposed for national or district industrial council inapplicable. To these industries the machinery of the trade boards act might well be applied pending the development of such degree of organization as would render feasible the establishment of a national council or district councils.

11. The trade boards act was originally intended to secure the establishment of a minimum standard of wages in certain unorganized industries, but we consider that the trade boards should be regarded also as a means of supplying a regular machinery for negotiation and decision on certain groups of questions dealt with in other circumstances by collective bargaining between employers' organizations and trade-unions. In order that the trade boards act may be of greater utility in connection with unorganized and badly organized industries, or sections of industries, we consider that certain modifications are needed to enlarge the functions of the trade boards. We suggest that they should be empowered to deal not only with minimum rates of wages but with hours of labor and questions cognate to wages and hours. We are of opinion also that the functions of the trade boards should be extended so as to enable them to initiate and conduct inquiries on all matters affecting the industry or the section of the industry concerned.

12. If these proposals were adopted there would be set up in a number of industries. or sections of industries, trade boards (consisting of representatives of employers and employed, together with "appointed members") who would, within the scope of their functions, establish minimum standard rates and conditions applicable to the industry or section of the industry which they represented, and consider systematically matters affecting the well-being of the industry.

13. Where an industry in group C becomes sufficiently organized to admit of the institution of national and district councils, we consider that these bodies should be

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