Hard-hat jobs on corporate boards
Having watched Washington for a long time, I find any change in our form of government of interest. By "government" I don't mean just politicians and bureaucrats. Americans govern themselves in a vastly broader democracy: school boards, industrial councils, trade unions, and things like that. A potentially important experiment in one of these fields has recently begun.
Let me go back a bit. Suddenly American industrial productivity growth has spectacularly fallen. Formerly it was one of the highest in the world; now it is at the bottom of most industrial countries. Causes are attributed to various economic factors: inflation, underinvestment, aging factories, taxation disincentives. But there may be also human factors such as plant morale and worker relationships.
In West Germany, Sweden, and Japan the employees, through collective organizations, have a voice in management. This is true in other countries. Most of these countries are highly unionized. Sometimes there is a share- investment program. It provides employee stock ownership plans (ESOP). The latter is a hobby, curiously enough, of Sen. Russell B. Long (D) of Louisiana, chairman of the Senate Finance Committee. He has been an ESOP enthusiast for years. There are other devices to smooth relations between employers and workers. In Japan it is almost a feudal system.
Consider the big Volvo automobile company in Sweden; it gives workers representation on its corporate board. Sweden did this by law in the early '70 s: every private company above a certain size must allow workers to name two board members. Bo Henning is such a board member, picked by the union in a firm making air-powered drills. At the board meetings he and his labor colleague give the view of the shops. They vote, too. When it comes to wages and hours Mr. Henning leaves the room. On the other hand, he helped persuade the board at one time not to lay off certain workers: it would cost more, he argued, to recruit skilled workers than it was worth. He and his fellow unionist have explained worker reaction to the board and, on the other hand, interpreted the board to the workers. (Sweden adopted the system experimentally in 1973; made it permanent in 1976.)
All very cozy and quaint, most American employers will say. But Sweden is a little country; it has only 8 million people. (Its living standard is above America's.) The system would hardly work here.
The point is that an attempt at this system has begun in America under very unusual circumstances. Congress approved $ 1.5 billion in loan guarantees for collapsing Chrysler in the largest bail-out in history. Part of the deal was that the union (United Auto Workers) would help, too. In a desperate situation, 110,000 UAW members yielded some $ 462.5 million out of their estimated $1.3 billion in wages in the next three years.
With Senator Long helping, Congress wrote an agreement that workers should get Chrysler stock as part of their compensation. A pipefitter will keep his job, help keep Chrysler afloat, and get some company stock- payments under an ESOP agreement. There is a qualification about the stock: he gets it as part payment in a kind of advance retirement pay.The pipefitter won't be allowed to sell the stock until he leaves the company.
Another startling development is that Douglas Fraser, president of UAW, gets a seat on the company's board of directors. There he sits, a labor man, with the executive brass on the board of the 10th largest industrial company in the country. He doesn't expect to have a voice on policy and, perhaps, bring workers and management closer together. If they do it elsewhere, why not try it here? The move has gone almost unnoticed. It is only a modest step compared with West Germany, Japan, Sweden, and the rest. Maybe it won't work. On the other hand, who knows? It may be like that first step on the moon in the barren landscape of America's system of industrial government. It might even help raise productivity.