started since 1918, but as out of the 42 firms only eight have a pay-roll of over 1,000, while ten employ less than 100, it would seem that the proportions would not be materially altered if they were all included. Neither do all the smaller firms include by any means all their employees in their profit-sharing schemes. The proportion varies from case to case, falling as low, in the case of one firm of manufacturers, whose scheme dates from 1889, as 50 out of 1,500, or 3⅓ per cent. It is clear that in this and similar cases the co-partnership is really a tiny experiment carried on with a few picked employees and is of infinitesimal significance in the industrial life of the country. Nor is it only the successful experiments that are of this type; the abandoned schemes tell the same tale, except that the number of participants is lower.
Apart from the gas companies, then, co-partnership in British industry has been confined, with one or two exceptions, to small firms, and these for the most part in minor industries. The food trades, such as cocoa, confectionery, jam, chocolate, etc., and the distributive houses provide a large number of experiments; tailoring, dress-making, boot and shoe manufacture, and printing and stationery are also considerable groups. In the great basic industries of the country, (mining, cotton, engineering and shipbuilding) and in transport, co-partnership has made practically no progress, nor does it seem to be making any.
What is the reason of this? An analysis of the reasons given for the abandonment of dead schemes may provide part of the answer. Forty-nine schemes were abandoned “for financial reasons,” i.e. because there had ceased to be any profit to be shared. In 16 cases no cause can be assigned; and in about 40 the abandonment was due to changes connected with administration. There remain 91 schemes which were abandoned owing to the dissatisfaction of owners or men with their results. The men's dissatisfaction can generally be traced to a simple cause—the smallness of the dividend distributed. The average rate of bonus paid to workmen under all schemes varies within narrow limits and is generally about 5% per annum on the total of their wages. Translated into cash, this meant in 1918 that 105 firms paid to their workmen an average of £3 13s. 3d. per head, or, if the firms which paid nothing at all be excluded, of £5 15s. 2d. In 1919, the average bonus paid per head was £4 18s. 10d. It will readily be understood that so exiguous a cash benefit causes considerable disappointment to the worker who has been led to expect material advantages from being provided with an interest in the business; and this fact may also go some way towards explaining the failure of schemes which employers gave up owing to the “apathy” of their workmen. £3 13s. 3d. per annum, especially when paid in a lump at the end of twelve months, during which the workers have been working at ordinary rates, is hardly likely to provide a very strong incentive to better work.
This may account for the high mortality among profit-sharing schemes which have actually come into existence. More reasons, however, are needed to explain the smallness of their numbers and their comparative insignificance. This is undoubtedly due in part to the hostility of the consuming public, which tends to regard profit-sharing schemes as designed to keep within the industry money which should be used to reduce the price to itself. Thus the distributive Coöperative Movement, which is an association of consumers, has done very little in the way of profit-sharing or co-partnership, and that little is steadily growing less, and the English and Scottish Coöperative Wholesale Societies have both abandoned their schemes of profit-sharing, the former in 1886, and the latter in 1915.
The gas companies, to which reference has already been made, are not open to this criticism owing to their peculiar statutory position. All gas companies are regulated by Act of Parliament, and in most cases they are not allowed to increase their dividends unless the price of gas is correspondingly reduced. (In the other cases the dividend is limited to a fixed maximum percentage.) Thus the gas companies have never been able to make enormous profits at the expense of their customers, and moreover, since their accounts of capital and dividend must be regularly rendered to the Government, there is little or no cause for the suspicions which occasionally develop in co-partnership concerns, of “watered” capital and the like. Further, there was frequently before the war a considerable surplus which the companies did not wish to use in reduction of price, which, therefore, not being available for shareholders' dividend, could be distributed among the employees. This, by keeping up the workers' dividend, served to render the profit-sharing scheme popular. Since the war, surpluses have largely disappeared.
But the greatest bar to the success of the co-partnership movement has undoubtedly been the hostility of the organized labour movement. The trade unions are almost uniformly opposed to it as a policy, and in some cases even expel any member joining a co-partnership or profit-sharing scheme. This was the case in 1920 with the Amalgamated Society of Woodworkers, whose right to expel members joining Lord Leverhulme's scheme at Port Sunlight was contested in the courts, though the decision finally went against them. The earliest firms to adopt profit-sharing did little to allay the suspicions of the unions. They were generally as unfavourable to the unions as the unions were to them. The well-known experiment of Messrs. Henry Briggs & Co., which was launched in 1865, was avowedly intended to draw the men away from their union,and came to an end ten years later, after a somewhat stormy career, because the employees chose rather to uphold their union in resisting an attempt by the employers to reduce wages than to remain in the firm's employ and get what they could. The scheme of the South Metropolitan Gas Co., which nearly came to grief in its first year owing to the company's insistence that every workman should sign a yearly contract, dating from different days in each case (which would have rendered any concerted strike punishable at law), also required, until 1902, every workman to sign a declaration that he was not a member of the Gasworkers' union. Recently this attitude has been modified, and the most distinguished advocates of co-partnership, such as Mr. Aneurin Williams, now insist on the recognition of trade unions: but the unions nevertheless hold that it gives the workers in a single firm a sectional interest and so tends to divide them from their fellows in the same trade, and, further, that there is always a danger that workers in a profit-sharing firm may, in return for the profit-sharing, be induced to accept less than the rates of wages which it is the unions' business to maintain. As far as one can see, this attitude is not likely to be easily changed in the near future, and the co-partnership movement, therefore, is unlikely to spread beyond the small firms and the minor industries in which trade unionism is weak.
Bibliography.—The Ministry of Labour's Report on Profit-Sharing and Labour Co-Partnership in the United Kingdom (Cmd. 544. 1920.) is indispensable. It contains nearly all the available information, and has an exhaustive bibliography. The best book giving the case for co-partnership is Charles Carpenter's Industrial Co-partnership. A useful book is Co-partnership and Profit-Sharings, by Aneurin Williams (Williams and Norgate, 1913); a good analysis is to be found in Methods of Industrial Remuneration, by D. F. Schloss (Williams and Norgate, 1907). Later Edition. The Labour Co-partnership Association, 6, Bloomsbury Square, London, W.C.1., published a number of brochures dealing with particular aspects and particular experiments.
For the Labour point of view the best works are two pamphlets by Edward R. Pease: Profit-Sharing and Co-Partnership; A Fraud and a Failure? (Fabian Soc., 1913) and Co-Partnership and Profit-Sharing (Labour Party. 1921). See also chapters in The World of Labour, by G. D. H. Cole. (M. I. C.)
United States.—Profit-sharing, strictly defined, is a plan for increasing the ordinary remuneration of labour by amounts varying with the profits of the business. Popularly, the term is loosely used to describe a great variety of methods of wage payment. In this article it is used to describe an arrangement by which employees, other than managerial employees, receive, in addition to wages or salaries, a share of the net profits of the business, such share being distributed at the time of the declaration of dividends to stockholders. The arrangement may be expressed either by a formal agreement or an oral promise. Although the profits are contingent, the percentage of profits to be distributed is fixed and known in advance, and, like dividends,
