INDUSTRIAL RELATIONS
Assured Annual Pay Industry Goal Stabilizing plans guaranteeing steady work prove better than those promising steady pay by James W. Irwin
TN this alphabetized economy to which ·* management, employees, and the general public have become so acclimated, a new, three-letter symbol soon will be as commonplace in headlines and text as many others which have cast mystic spells on our everyday lives. The new one is GAW—mid-twentieth century for "guaranteed annual wage," possibly one of the most important problems which industry will face in the next few years. At the winter meeting of the Manufacturing Chemists' Association and at a meeting late in January of the National Industrial Conference Board, GAW was one of the most important items discussed. The GAW problem cuts across almost the entire field of economics and all of management. From the standpoint of the rank-and-file public, GAW will become a symbol of popularityone that the man on the street and the woman in the home will discuss at length and probably be for by an overwhelming majority. In our own special industries—the chemical and chemical process—our employment in most instances is so stable that we have been paying an annual wage, although not guaranteed, for many, many years. And certainly with the vacation policies which the chemical industry pioneered without union pressure for hourly as well as salaried employees, it can be said that our industry is on a 52-week pay basis. Employees of the chemical and chemical process industries probably need a guarantee from their employers of annual income about as little as almost any group of employees in American industry. But the fact that they don't need the guarantee will in no way discourage labor organizers and walking delegates and bargaining committees from touting the subject and pressing to have such provisions written into contracts. One of the most thorough and stimulating pieces of research into GAW was made by Milton M. Olander, director of industrial relations for Owens-Illinois Glass Co. His findings were disclosed at both the MCA and NICB meetings. "Across the industrial horizon looms an issue with great magic to its name— the annual wage," Olander told his auPublic and Industrial Relations Counsellor to Management, 19101 Van Aken Blvd., Shaker Heights 22, Ohio, and 65 West Jackson Blvd., Chicago 4, III.
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diences of industrial executives. "It has a strong, deep appeal to wage earners because it implies security of status similar to that supposedly enjoyed by salaried employees. "The people who want it most strongly are those who feel most insecure in their jobs. Consequently, pressure for it will continue as long as any substantial number of people feel threatened from day to day by layoff or discharge. In the background is great public moral support." Olander, like most industrial and public relations executives, knows that it doesn't take much probing not too far back in our industrial life to find many things to criticize. But he also stresses that a really searching look at the changes that have come about in our own lifetime reveals a number of accomplishments from which management can take a measure of satisfaction. "In 50 years, the number of people on salaries in manufacturing industries has multiplied almost five times. This growth reflects in part the granting of a more secure status to a large number of foremen and clerical people who had formerly been on hourly or day rates. But regularity of work for hourly employees has been improving for many years by hardly noticeable degrees. It was only a few years ago that wholesale layoffs for prolonged periods were a normal part of the automobile business at the time models were changed. "In glass container manufacturing, it was customary in my boyhood for every glass factory to close for the summer. Today such a shutdown would be unthought of. That change was a result of progress on a broad front. A fundamental influence was the mechanization of the industry. Decreased costs, improved quality, and continued research opened new markets for glass containers which helped level off the seasonal peaks and valleys." This gradual march toward steadier work in industry, Olander points out, is not what people usually have in mind when they talk about the annual wage. "They are thinking about something more dramatic and abrupt," he believes, "and often they are thinking about something that they expect to achieve only by outside force—by law or by union contract." Two types of formal plans for guaranteeing employment include ( 1 ) plans guaranteeing steady work, and (2) plans guaranteeing steady pay.
Although that of steady work is by far the sounder plan, this is not the type favored by several unions pressing for guarantees. The three most highly publicized plans for year-round employment are those of Procter and Gamble Co., NunnBush Shoe Co., and George A. Hormel and Co.—chemical process, shoe, and meat packing companies. Each is built around the principle of steady work. Significant features of these plans: 1. These companies did not guarantee work and then find ways of meeting this obligation; instead they worked hard for years at the task of regularizing sales and production, and then, having accomplished a high degree of stabilization, extended a formal plan. 2. In each of these cases the top man in the company pursued the ideal, directing every resource of his company toward the accomplishment of it. In the case of Hormel this meant the development and merchandising of products that had never been manufactured before. In the case of all three, it meant renouncing the certainty of immediate profits for the hope of longterm gains. In short, it meant the wholehearted endorsement of a new Hianagement philosophy. Forecasting that militant union pressure for guaranteed annual income will mount in 1954 and probably accelerate in 1955 he suggests two major steps in a campaign of preparation: 1. Stabilize employment by leveling off the peaks and valleys of production. Job security depends on constant readjustment to changing demands. It is shortsighted leadership to be pressured into contracts at crises moments which may later collapse being unworkable. Production for stock, selling in off seasons, transfer of employees, and development of new products that dovetail with present production are suggested. 2. Let's tell the people what we are doing to make possible steady work and steady pay. If management is honest, sincere, and is really putting out the extra effort to make jobs possible, by and large employees will cooperate to the utmost. People don't ask the impossible. They know there are no jobs if customers refuse to buy. Most people are eager for security, but short of that, they want to feel that company leadership understands the hazards of unemployment and is doing everything possible to attain security. People want to be kept "in the know" and be told of problems facing management that affect them. Often, too, they can be of real help. Olander stresses that if telling the story waits until the bargaining table, it is much too late.
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