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set up on the lines already indicated. Where it appears to a trade board that an industrial council should be appointed in the industry concerned, they should have power (a) to make application to the minister of labor asking him to approach the organizations of employers and employed, and (b) to suggest a scheme by which the representation of the workers' and employers' sides of the trade board could be secured. 14. Whether in industries in group C the establishment of works committees is to be recommended is a question which calls for very careful examination, and we have made the general question of works committees the subject of a separate report.

15. We have already pointed out that most of the industries in groups A and B have sections or areas in which the degree of organization among the employers and employed falls much below what is normal in the rest of the industry, and it appears to us desirable that the general body of employers and employed in any industry should have some means whereby they may bring the whole of the trade up to the standard of minimum conditions which have been agreed upon by a substantial majority of the industry. We, therefore, recommend that on the application of a national industrial council sufficiently representative of an industry the ministry of labor should be empowered, if satisfied that the case is a suitable one, to make an order either instituting for a section of the industry a trade board on which the national industrial council should be represented, or constituting the industrial council a trade board under the provisions of the trade boards act. These proposals are not intended to limit, but to be in addition to, the powers at present held by the ministry of labor with regard to the establishment of trade boards in trades and industries where they are considered by the ministry to be necessary.

16. We have already indicated (par. 9) that the circumstances and characteristics of each of the several industries will need to be considered before it can be decided definitely how far any of our proposals can be applied in particular instances, and we have refrained from attempting to suggest any exact degree of organization which would be requisite before a particular proposal could be applied. We think, however, that the suggestion we have made in the preceding paragraph to confer upon a national industrial council the powers of a trade board should be adopted only in those cases in which the ministry of labor is satisfied that the council represents a substantial majority of the industry concerned.

17. We are of opinion that most of the chief industries of the country could be brought under one or other of the schemes contained in this and the preceding report. There would then be broadly two classes of industries in the country-industries with industrial councils and industries with trade boards.

18. In the former group the national industrial councils would be constituted either in the manner we have indicated in our first report, carrying with them district councils and works committees, or on the lines suggested in the present report, i. e., each council coming within the scope of this report having associated with it one or two official representatives to act in an advisory capacity and as a link with the Government, in addition to the representatives of the employers and employed.

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19. It should be noted that in the case of industries in which there is a national industrial council, trade boards might, in some instances, `be associated with the council in order to determine wages and hours, etc., in certain sections or areas. is possible that in some allied trades, really forming part of the same industry, both sets of proposals might, in the first instance, be in operation side by side, one trade having its industrial council and the other its trade board. Where these circumstances obtain, we anticipate that the trade board would be a stepping stone to the full industrial council status.

20. It may be useful to present a brief outline of the proposals which we have so far put forward:

(a) In the more highly organized industries (group A) we propose a triple organization of national, district, and workshop bodies, as outlined in our first report.

(b) In industries where there are representative associations of employers and employed, which, however, do not possess the authority of those in group A industries, we propose that the triple organization should be modified by attaching to each national industrial council one or at most two representatives of the ministry of labor to act in an advisory capacity.

(c) In industries, in both groups A and B, we propose that unorganized areas or branches of an industry should be provided, on the application of the national industrial council and with the approval of the ministry of labor, with trade boards for such areas or branches, the trade boards being linked with the industrial council.

(d) In industries having no adequate organization of employers or employed, we recommend that trade boards should be continued or established, and that these should, with the approval of the ministry of labor, be enabled to formulate a scheme for an industrial council, which might include in an advisory capacity the "appointed members" of the trade board.

21. It will be observed that the policy we recommend is based upon organization on the part of both employers and employed. Where this is adequate, as in group A industries, there is no need of external assistance. In group B industries we think that the organizations concerned would be glad to have the services of an official representative who would act as advisor and as a link with the Government. In unorganized sections of both groups of industries we believe that a larger measure of Government assistance will be both desirable and acceptable, and we have therefore suggested the adoption of the machinery of the trade boards act in this connection. In group C industries we think that organization will be encouraged by the use of the powers under the trade boards act, and where national industrial councils are set up we recommend that the "appointed members" of the trade board should act on the councils in an advisory capacity. Briefly, our proposals are that the extent of State assistance should vary inversely with the degree of organization in industries.

22. We do not, however, regard Government assistance as an alternative to the organization of employers and employed. On the contrary, we regard it as a means of furthering the growth and development of such organization.

23. We think it advisable in this connection to repeat the following paragraph from our former report:

"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. In considering the scope of the matters referred to us we have formed the opinion that the expression "employers and workmen" in our reference covers State and municipal authorities and persons employed by them. Accordingly we recommend that such authorities and their workpeople should take into consideration the proposals made in this and in our first report, with a view to determining how far such proposals can suitably be adopted in their case.

We understand that the ministry of labor has up to the present circulated our first report only to employers' and workpeople's associations in the ordinary private industries. We think, however, that both it and the present report should also be brought to the notice of State departments and municipal authorities employing labor.

25. The proposals we have set forth above do not require legislation except on three points, namely, to provide-

(1) That the trade boards shall have power, in addition to determining minimum rates of wages, to deal with hours of labor and questions cognate to wages and hours. (2) That the trade boards shall have power to initiate inquiries, and make proposals to the Government departments concerned, on matters affecting the industrial conditions of the trade, as well as on questions of general interest to the industries concerned, respectively.

(3) That when an industrial council sufficiently representative of an industry makes application, the ministry of labor shall have power, if satisfied that the case is a suitable one, to make an order instituting for a section of the industry a trade board on which the industrial council shall be represented, or constituting the council a trade board under the trade boards act.

26. The proposals which we have made must necessarily be adapted to meet the varying needs and circumstances of different industries, and it is not anticipated that there will be uniformity in practice. Our recommendations are intended merely to set forth the main lines of development which we believe to be essential to insure better relations between employers and employed. Their application to the several industries we can safely leave to those intimately concerned, with the conviction that the flexibility and adaptability of industrial organization which have been so large a factor in enabling industry to stand the enormous strain of the war will not fail the country when peace returns.

27. Other problems affecting the relations between employers and employed are engaging our attention, but we believe that whatever further steps may be necessary to accomplish the object we have in view the lines of development suggested in the present report and the one which preceded it are fundamental. We believe that in each industry there is a sufficiently large body of opinion willing to adopt the proposals we have made as a means of establishing a new relation in industry.

INDUSTRIAL COUNCILS AND TRADE BOARDS.

In order to make clear the relations between industrial councils and trade boards and to suggest certain modifications which the Government believes is necessary before the recommendations of the second report of the committee can be put into operation, the minister of reconstruction and the minister of labor have prepared a memorandum which was issued under date of June 7, 1918, and is here reproduced in full:

"1. The proposals contained in the first report on joint standing industrial councils (Cd. 8606) of the committee on relations between employers and employed have been adopted by the Government. The steps which have been taken to establish industrial councils have enabled the Government to consider the proposals of the second report on joint standing industrial councils (Cd. 9002) in the light of experience. This report, which deals with industries other than those which are highly organized, follows naturally upon the first report of the committee and develops the line of policy therein proposed. It has not been found possible from the administrative point of view to adopt the whole of the recommendations contained in the second report, but such modifications as it seems desirable to make do not affect the principles underlying the committee's proposal for the establishment of joint industrial councils. They are designed to take advantage of the administrative experience of the ministry of labor with regard to both industrial councils and trade boards. In view of the growing interest which is being taken in the establishment of industrial councils and of the proposed extension of trade boards, it appears desirable to set forth the modifications which the Government regard as necessary in putting into operation the recommendations of the second report, and also to make clear the relations between trade boards and industrial councils.

"2. The first report on joint standing industrial councils referred only to the wellorganized industries. The second report deals with the less organized and unorganized trades, and suggests the classification of the industries of the country into three groups:

"Group A.-Consisting of industries in which organization 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, employed, or both, the degree of organization, though considerable, is less marked than in Group A.

"Group C.-Consisting of 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 industry.'

The proposals of the committee on relations between employers and employed are summarized in paragraph 20 of their second report as follows:

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(a) In the more highly organized industries (group A) we propose a triple organization of national, district, and workshop bodies, as outlined in our first report.

"(b) In industries where there are representative associations of employers and employed, which, however, do not possesss the authority of those in group A industries, we propose that the triple organization should be modified, by attaching to each national industrial council one, or at most two representatives of the ministry of labor to act in an advisory capacity.

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(c) In industries in both groups A and B, we propose that unorganized areas or branches of an industry should be provided, on the application of the national industrial council, and with the approval of the ministry of labor, with trade boards for such areas or branches, the trade boards being linked with the industrial council. "(d) In industries having no adequate organization of employers or employed, we recommend that trade boards should be continued or established, and that these should, with the approval of the ministry of labor, be enabled to formulate a scheme for an industrial council, which might include, in an advisory capacity, the "appointed members" of the trade board.'"

"It may be convenient to set out briefly the modifications of the above proposals, which it has been found necessary to make.

"(1) As regards (b) it has been decided to recognize one type of industrial council only, and not to attach official representatives to the council, except on the application of the industrial council itself.

"(2) As regards (c) and (d) the relations between trade boards and industrial councils raise a number of serious administrative difficulties due to the wide differences in the purpose and structure of the two types of bodies. It is not regarded as advisable that a trade board should formulate a scheme for an industrial council, nor is it probable

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that trade boards for unorganized areas will be set up in conjunction with a joint industrial council.

"(3) It is necessary at the outset to emphasize the fundamental differences between industrial councils and trade boards. A joint industrial council is voluntary in its character and can only be brought into existence with the agreement of the organizations of employers and workpeople in the particular industry, and the council itself is composed exclusively of persons nominated by the employers' associations and trade-unions concerned. The industrial council is, moreover, within very wide limits able to determine its own functions, machinery, and methods of working. Its functions in almost all cases will probably cover a wide range and will be concerned with many matters other than wages. Its machinery and methods will be based upon past experience of the industry and the existing organization of both employers and employed. Industrial councils will, therefore, vary in structure and functions as can be seen from the provisional constitutions already submitted to the Ministry of Labor. Financially they will be self-supporting, and will receive no monetary aid from the Government. The Government proposes to recognize the industrial council in an industry as the representative organization to which it can refer. This was made clear in the minister of labor's circular letter of October 20, 1917, in which it is said that 'the Government desires it to be understood that the councils will be recognized as the official standing consultative committees to the Government on all future questions affecting the industries which they represent, and that they will be the normal channel through which the opinion and experience of an industry will be sought on all questions in which the industry is concerned.'"

"A trade board, on the other hand, is a statutory body established by the minister of labor and constituted in accordance with regulations made by him in pursuance of the trade boards act; and its expenses, in so far as authorized by the minister of labor and sanctioned by the Treasury, are defrayed out of public money. The regulations may provide for the election of the representatives of employers and workers or for their nomination by the minister of labor, but in either case provision must be made for the due representation of home workers in trades in which a considerable proportion of home workers are engaged. On account of the comparative lack of organization in the trades to which the act at present applies, the method of nomination by the minister has proved in practice to be preferable to that of election, and in nearly all cases the representative members of trade boards are now nominated by the minister. The employers' associations and trade-unions in the several trades are invited to submit the names of candidates for the minister's consideration, and full weight is attached to their recommendation, but where the trade organizations do not fully represent all sections of the trade, it is necessary to look outside them to find representatives of the different processes and districts affected.

"A further distinction between trade boards and industrial councils is, that while industrial councils are composed entirely of representatives of the employers' associations and trade-unions in the industry, every trade board includes, in addition to the representative members, a small number (usually three) of appointed members,' one of whom is appointed by the minister to act as chairman and one as deputy chairman of the board. The appointed members are unconnected with the trade and are appointed by the minister as impartial persons. The primary function of a trade board is the determination of minimum rates of wages, and when the minimum rates of wages fixed by a trade board have been confirmed by the minister of labor, they are enforceable by criminal proceedings, and officers are appointed to secure their observance. The minimum rates thus become part of the law of the land, and are enforced in the same manner as, for example, the provisions of the factory acts. The purpose, structure, and functions of industrial councils and trade boards aret herefore fundamentally different. Their respective areas of operation are also determined by different considerations. An industrial council will exercise direct influence only over the organizations represented upon it. It will comprise those employers' associations with common interests and common problems; similarly its trade-union side will be composed of representatives of organizations whose interests are directly interdependent. An industrial council therefore is representative of organizations whose objects and interests, whilst not identical, are sufficiently interlocked to render common action desirable. The various organizations represent the interests of employers and workers engaged in the production of a particular commodity or service (or an allied group of commodities or services).

"A trade board, on the other hand, is not based on existing organizations of employers and employed, but covers the whole of the trade for which it is established. As the minimum rates are enforceable by law, it is necessary that the boundaries of the trade should be precisely defined; this is done, within the limits prescribed by statute, by the regulations made by the minister of labor. Natural divisions of industry are, of course, followed as far as possible, but in many cases the line of demarcation

must necessarily be somewhat arbitrary. In the case of industrial councils difficult demarcation problems also arise, but the considerations involved are somewhat different, as the object is to determine whether the interests represented by given organizations are sufficiently allied to justify the cooperation of these organizations in one industrial council.

"4. The reports received from those who are engaged in assisting the formation of joint industrial councils show that certain paragraphs in the second report of the committee on relations between employers and employed have caused some confusion as to the character and scope of joint industrial councils and trade boards, respectively. It is essential to the future development of joint industrial councils that their distinctive aim and character should be maintained. It is necessary, therefore, to keep clearly in mind the respective functions of the joint industrial council and the trade board, in considering the recommendations contained in the following paragraphs of the second report:

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(a) Paragraphs 3, 4, and 5, dealing with the division of joint industrial councils into those that cover group A industries and those that cover group B industries. (b) Paragraph 7, dealing with district industrial councils in industries where no national council exists.

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(c) Paragraphs 10, 13, 15, and 16, dealing with trade boards in relation to joint industrial councils.

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(d) Paragraphs 11 and 12, dealing with trade boards in industries which are not suitably organized for the establishment of a joint industrial council.'

"5. Distinction drawn between joint industrial councils in group A industries and group B industries.-In paragraph 9 of the second report it is implied that the ministry of labor would determine whether the standard of organization in any given industry has reached such a stage as to justify the official recognition of a joint industrial council in that industry. It is clear, however, that it would be impossible for the ministry to discover any satisfactory basis for distinguishing between an industry which falls into group A and one which falls into group B. It is admitted in paragraph 9 of the second report that no arbitrary standard of organization could be adopted, and it would be both invidious and impracticable for the ministry of labor, upon whom the responsibility would fall, to draw a distinction between A and B industries. The only clear distinction is between industries which are sufficiently organized to justify the formation of a joint industrial council and those which are not sufficiently organized. Individual cases must be judged on their merits after a consideration of the scope and effectiveness of the organization, the complexity of the industry, and the wishes of those concerned.

"The experience already gained in connection with joint industrial councils indicates that it would be inadvisable in the case of industries in group B to adopt the proposal that 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.' It is fundamental to the idea of a joint industrial council that it is a voluntary body set up by the industry itself, acting as an independent body and entirely free from all State control. Whilst the minister of labor would be willing to give every assistance to industrial councils, he would prefer that any suggestion of this kind should come from the industry rather than from the ministry.

"The main idea of the joint industrial council as a joint body representative of an industry and independent of State control has now become familiar and the introduction of a second type of joint industrial council for B industries would be likely to cause confusion and possibly to prejudice the future growth of joint industrial councils.

"In view of these circumstances, therefore, it has been decided to adopt a single type of industrial council.

6. District industrial councils.-Paragraph 7 of the second report suggests that in certain industries in which a national council is not likely to be formed in the immediate future, it might none the less be possible to form one or more 'district' industrial councils.

"In certain cases the formation of joint bodies covering a limited area is probable. It would, however, avoid confusion if the term 'district' were not part of the title of such councils and if the use of it were confined to district councils in an industry where a national council exists. Independent local councils might well have a territorial designation instead.

"7. Trade boards in relation to joint industrial councils.-The distinction between trade boards and joint industrial councils has been set forth in paragraph 3 above. The question whether an industrial council should be formed for a given industry depends on the degree of organization achieved by the employers and workers in the industry, whereas the question whether a trade board should be established depends

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