Nov 4, 2002 - establishment of rail transport as a solely public business, and the evolution ..... Commissioner was Richard Speight, recruited from the Midland.
HUMAN RESOURCE MANAGEMENT PRACTICES AND LABOUR MARKET STRUCTURES IN THE VICTORIAN RAILWAYS 1864-1921
ANDRÉ SAMMARTINO
SUBMITTED IN TOTAL FULFILMENT OF THE REQUIREMENTS OF THE DEGREE OF DOCTOR OF PHILOSOPHY
NOVEMBER, 2002 DEPARTMENT OF MANAGEMENT THE UNIVERSITY OF MELBOURNE
ABSTRACT:
This study represents the first substantial investigation of the human resource management practices within the Victorian Railways over the period 1864-1921. The employment and management strategies of the organisation are examined using a range of models and theories drawn from labour economics, new institutional economics and human resource management. Constructing and analysing a longitudinal data set of over 6000 employees, a sophisticated set of employment policies are identified.
These include job
hierarchies, consistent career paths and entry points and formalised remuneration practices. These policies led to lengthy tenure and low turnover of employees over the period. It is argued that there was an underlying efficiency rationale for the adoption of these human resource management strategies. Furthermore, the employment practices and outcomes bear all the hallmarks of an internal labour market, or in fact, several internal labour markets.
The rationale for these practices is
examined within a framework that highlights transaction costs, agency issues and implicit contracting. The argument presented is that the need for a large workforce, trained in very firm-specific tasks, drove the Railways to establish an implicit employment contract that offered secure and lengthy careers in return for a mutual commitment to invest in the necessary training and skill acquisition. This contract sought to motivate employees through remuneration and promotion. These inducements also acted as partial remedies to the substantial monitoring difficulties inherent in employing upwards of 10,000 employees across over 700 workplaces. Analysis of remuneration policies and outcomes is undertaken using the personnel data as the primary records of the Railways’ management strategies
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and the Railways employees’ experiences. Various models of remuneration are tested against the data. These models are found to be under-specified and unconvincing in their applicability to the available data.
The remuneration
patterns are found to be consistent with a contract that valued and rewarded loyalty to the organisation, the accumulation of firm-specific human capital, and progression up (or across) the job ladder. In developing such a package of human resource management practices, the Victorian Railways was acting as an innovator. The practices introduced in this organisation had far-reaching effects on the Victorian labour market, in terms of creating precedents and expectations, particularly among blue-collar workers, that would shape the actions of trade unions, employers and regulatory bodies for the next century.
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This is to certify that i)
the thesis comprises only my original work towards the PhD
ii)
due acknowledgement has been made in the text to all other material used,
iii)
the thesis is less than 100,000 words in length, exclusive of tables, maps, bibliographies and appendices
André Sammartino November 4, 2002
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ACKNOWLEDGMENTS
I would like to thank everybody who has supported and encouraged me over the past six years. I thank Dr. Andrew Seltzer who has supervised this work from the very beginning and continued to provide valuable insights from across the sea.
I thank Professor Stephen Nicholas who has managed to juggle
supervisor and manager roles with incredible dexterity and generosity. I thank Associate Professor David Merrett for sharing his encyclopedic knowledge of Victorian and Australian business history. I thank Janine O’Flynn, Ben Jensen and Yvette Petersen who entered data with ample diligence and accuracy, and have been great friends, colleagues and supporters through this all. I thank my colleagues in the sadly departed Department of Economic History who inspired me as an undergraduate and welcomed me as a comrade.
I thank my
colleagues in the Department of Management and the Australian Centre for International Business who have kept me busy and sane.
I thank both
Departments, the Faculty of Economics and Commerce and the University of Melbourne for the financial support I have received.
I thank a range of
participants at conferences in Australia, New Zealand and the United Kingdom who showed a startling level of interest in the topic and asked many difficult questions. I thank my family and friends for their patience and interest. And last but not least, I thank my partner Catherine for her unending love, encouragement, feedback and laptop.
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TABLE OF CONTENTS
CHAPTER ONE:
INTRODUCTION TO HUMAN RESOURCE MANAGEMENT PRACTICES AND LABOUR MARKET STRUCTURES IN THE VICTORIAN RAILWAYS 1864-1921
1
CHAPTER TWO:
THE VICTORIAN RAILWAYS - AN ECONOMIC, ORGANISATIONAL AND INSTITUTIONAL HISTORY
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CHAPTER THREE:
A REVIEW AND SYNTHESIS OF THE THEORETICAL AND EMPIRICAL LITERATURE ON INTERNAL LABOUR MARKET PRACTICES
42
CHAPTER FOUR:
THE DATA
79
CHAPTER FIVE:
ON THE TRAIN – AN INVESTIGATION OF SPECIFIC POSITIONS WITHIN THE LOCOMOTIVE BRANCH
89
CHAPTER SIX:
AT THE STATION - AN INVESTIGATION OF THE CAREER STRUCTURES WITHIN THE TRAFFIC BRANCH
110
CHAPTER SEVEN:
A REVIEW OF MODELS OF REMUNERATION AND IDENTIFICATION OF TESTING METHODOLOGIES
150
CHAPTER EIGHT:
TESTING MODELS OF REMUNERATION
171
CHAPTER NINE:
CONCLUSION TO HUMAN RESOURCE MANAGEMENT PRACTICES AND LABOUR MARKET STRUCTURES IN THE VICTORIAN RAILWAYS 1864-1921
246
BIBLIOGRAPHY:
255
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LIST OF TABLES AND FIGURES
TABLES: Table 2.1: Table 2.2:
12 13
Table 2.3: Table 2.4: Table 2.5: Table 2.6:
Miles of railway track in Victoria Passenger journeys and rollingstock on Victorian Railways Number of railways employees The structure of the Railways Department 1856-1921 Distribution of workers by Branch, as at 30th June, 1895 Membership figures for Victorian Railways unions
Table 4.1: Table 4.2: Table 4.3: Table 4.4: Table 4.5:
Comparison of sample to total The top twenty-five position codes by frequency Age and tenure for overall sample 1864-1921 Reasons for exit 1883-1902 Wage and salary distributions 1864-1921
81 82 86 87 87
Table 5.1: Table 5.2: Table 5.3: Table 5.4: Table 5.5: Table 5.6: Table 5.7: Table 5.8: Table 5.9: Table 5.10:
The Locomotive sample Distribution of sample by entry year Entry positions where entry data is available First observed positions for Locomotive subset 1881-1921 Positions held over career Time spent in position before promotion Tenure Tenure by highest position reached Exit behaviour Exit behaviour by final position
92 93 95 96 98 98 101 102 103 104
Table 6.1: Table 6.2:
Official rates of pay for clerks The number of Stationmasters (by grade) in 1912 and the benchmarks for station grades The Traffic sample from the Government Gazette The Traffic sample from Parliamentary Papers Distribution of sample by entry year Entry positions where entry data is available First positions (combination of starts and first positions with tenure less than three years) First observed positions by entry year Path to stationmaster Path to stationmaster by entry year Time taken to become stationmaster Various combinations of positions
118 120
Table 6.3: Table 6.4: Table 6.5: Table 6.6: Table 6.7: Table 6.8: Table 6.9: Table 6.10: Table 6.11: Table 6.12:
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14 26 27 35
122 123 124 125 126 127 129 130 130 132
Table 6.13: Table 6.14: Table 6.15:
Time spent in position at point of promotion (in years) Tenure levels at point of promotion (in years) Exit behaviour by final position, 1884-1901
141 142 145
Table 7.1: Table 7.2:
The Supply and Demand models The Incentive models
160 168
Table 8.1: Table 8.2: Table 8.3: Table 8.4: Table 8.5: Table 8.6: Table 8.7: Table 8.8: Table 8.9: Table 8.10: Table 8.11:
The two data sets Tests by Observation Transition of workers between observations, 1902-21 Demotions by levels Most common demotions by positions Distribution of changes in earnings 1902-21 Tests by OLS regression on earnings data OLS regressions on log of real earnings Coefficients on Branch variables from Models 7 & 8 Coefficients on Position variables from Models 4-8 OLS regressions on log of real earnings with level dummies Disaggregated OLS regressions on each observation year OLS regressions - testing for year and cohort effects Tests by Regressions on entry earnings data OLS regressions on the log of real entry earnings Coefficients on Branch variables from Models 3, 4 & 6 Coefficients on Position variables from Models 5 & 6 Coefficients on Entry year variables from Models 4-6 Tests by Regressions on change in earnings data OLS regressions on change in the log of real earnings Estimated intra-positional and inter-positional change in earnings returns Tests by Probit analysis Probits on Promotion Probits on Position Change Probits on Promotion by position on the earnings distribution Findings from tests of Supply and Demand models Findings from tests of Incentive models Findings from tests of Rule-based models OLS regressions on log of real earnings by Branch
172 180 183 184 185 190 192 193 199 201 203
Table 8.12: Table 8.13: Table 8.14: Table 8.15: Table 8.16: Table 8.17: Table 8.18: Table 8.19: Table 8.20: Table 8.21: Table 8.22: Table 8.23: Table 8.24: Table 8.25: Table 8.26: Table 8.27: Table 8.28: Table 8.29:
206 210 212 213 215 217 218 219 221 223 225 226 228 229 231 234 238 240
FIGURES: Figure 2.1:
The path of union amalgamations in the Victorian Railways
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Figure 4.1:
A Government Gazette record
80
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Figure 5.1:
Distribution of wages by position
106
Figure 6.1: Figure 6.2: Figure 6.3:
Movements of employees around the Traffic ILM Distribution of salary by position Official nominal salary rates by position (1896, 1912, 1919) Real official salary rates (1896, 1912 & 1919) The tenure distribution for employees entering before 1901
134 135 136
Figure 6.4: Figure 6.5:
138 144
Figure 7.1:
Stylised returns to tenure in Deferred Compensation model
163
Figure 8.1.1:
The transition matrix for employees in the Locomotive Branch The transition matrix for employees in the Traffic Branch The transition matrix for employees in the Existing Lines Branch The transition matrix for employees in the Locomotive workshops The transition matrix by levels Median real wages by position 1883-1921 Median real wages by position 1902-1921 Tenure-earnings profiles for all employees Tenure-earnings profiles for employees entering before aged 19 Tenure-earnings profiles for entrants age>35 Predicted returns to tenure taken from OLS regressions Predicted returns to outside experience taken from OLS regressions Predicted returns to tenure taken from year-by-year OLS regressions Predicted returns to outside experience in entry earnings from OLS regressions Predicted returns to tenure taken from branch-by-branch OLS regressions
175
Figure 8.1.2: Figure 8.1.3: Figure 8.1.4: Figure 8.2: Figure 8.3: Figure 8.4: Figure 8.5: Figure 8.6: Figure 8.7: Figure 8.8: Figure 8.9: Figure 8.10: Figure 8.11: Figure 8.12:
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175 176 176 179 181 182 186 187 188 195 196 207 214 241
CHAPTER ONE: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT PRACTICES AND LABOUR MARKET STRUCTURES IN THE VICTORIAN RAILWAYS 1864-1921
Railroads were the first big businesses in many 19th century economies. Chandler (1977, p.80) has described them as “…the pioneers in the management of modern business enterprise.” The Victorian Railways played just such a role in the late 19th and early 20th century. At a time when the Australian colony of Victoria was still establishing rudimentary economic, political and social infrastructure, the Railways was developing a sophisticated management system.
This system represented a response, in part, to the
technological and logistical intricacies of the industry. An equally substantial challenge faced by the Railways was the need to attract, retain, develop, monitor and motivate the large and diverse workforce vital to the operation of a burgeoning, and ultimately bloated, transport network. These challenges do not seem out of the ordinary when viewed through 21st century eyes.
Modern management theory has examined these issues at
length, and much has been written about the important role of modern corporations in shaping what is now seen as the traditional employment relationship. But, for an organisation engaging upwards of 10,000 employees in over 700 workplaces, in a small economy with little experience of industrial work it was a major undertaking.
The employment and management strategies
adopted would have significant effects on the expectation of workers, trade unions and regulators within the Victorian and Australian labour markets throughout the 20th century. It would provide lessons and a template for other industrial enterprises to follow and adapt. This dissertation explores the employment relationship as it developed in the Victorian Railways during the period 1864-1921. The employment and
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management strategies of the organisation are examined through the lens of a range of models and theories drawn from labour economics, new institutional economics and human resource management.
In seeking to identify and
explain the labour market outcomes within the Railways, this dissertation also assesses the relevance and applicability of these models and theories. This introductory chapter argues for the role of the Victorian Railways as a pioneering organisation. It explores the importance of the employment relationship and human resource management practices in general, and specifically within this particular historical context. The research framework and research questions are presented, and the structure of the dissertation is outlined. The Railways was an organisation of unprecedented size within the colonial Victorian economy.
The establishment of a viable and efficient transport
infrastructure was crucial to the development of a cohesive and modern economy.
After brief flirtations with private ownership, the responsibility for
developing such a network soon lay in the young colonial government’s hands. Under government control, the geographical spread of the network over the ensuing decades reflected some necessity and clear thinking, a portion of misguided enthusiasm about closer settlement, and a substantial dose of political opportunism that would hamper the Railways’ capacity to achieve economic sustainability for the next century.1 The development of the Railways, while clearly capital intensive,2 necessitated a substantial labour force.
By 1863, the Railways employed over 1,500
permanent staff. In 1884 this workforce numbered 9,300, and by the close of 1
Eggleston (1932, p.44) described the machinations of political involvement in the operation of the Victorian Railways in the 1870s and early 1880s as “…an orgy of nepotism and political appointments; intrigue, sectional influence and sectarian bitterness flourished.” These issues are discussed at greater length in Chapter 2. 2 New railway capital formation by the Victorian Railways averaged around £470,000 per annum during the 1860s, £820,000 per annum during the 1870s and £2,370,000 per annum during the 1880s (Figures calculated from Butlin 1964, p.322, Table 69).
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this study in 1921, permanent employment was over 19,000.3 This made the Railways the single largest employer in the colony.
Eggleston (1932, p.113)
described the organisation as “… one of the few instances in Australia of largescale industry.” As large-scale employers of the 20th century were to find, such size required significantly different employment practices to those of their smaller counterparts. Railways employees faced an employment relationship quite unlike their equivalents in the wider labour market. The Railways had a substantial geographical spread with workplaces, in the form of stations, workshops, yards, sidings and the lines themselves, littered throughout the countryside and urban environment. The breadth of functions performed by the Railways was immense. While ostensibly acting to transport passengers and goods, this task involved a range of activities including scheduling and logistics, maintenance, some construction, communications, service provision, record keeping, financial management and, of course, human resource management. It was the Railways employee who took on these tasks. This array of functions translated into a diversity of jobs beyond the typical business of the day. Employees were engaged in manual, clerical, artisan and technical roles, many of which had no precedent outside of rail work. The size of the organisation, the range of functional areas and the geographical dispersion of activities, coupled with the role of the government as employer and operator, required the building of a complex managerial structure. Unlike the typical worker of the time, employees of the Railways had no visible master. New strategies were developed for enforcing discipline, imparting skills and motivating employees. The responsibility for monitoring and administering the day-to-work was, by necessity, delegated to paid employees also. This was pioneering activity, with managers in a hierarchical and bureaucratic structure. This was Chandler’s “…multiunit enterprise administered by a set of salaried middle and top managers [that] can… properly be termed modern.” (1977, p.3)
3
Further employment counts are provided in Table 2.3 in Chapter 2.
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The employment relationship that developed was uncommon for the period. In the broader Victorian labour market, as described by Serle (1971, p.91), Railway workers were among the few with job stability: “Only a minority of workmen could regard their employment as ‘permanent’; most payment was by the day and the job security of the public service was hence very attractive.” The Railways offered a potential career, a new experience for working class men who previously may have chosen work as a yeoman farmer, an artisan, or a labourer. Unlike other workers, Railways employees’ livelihoods were not typically dependent on the vagaries of nature, the whim of business cycles, or the success of entrepreneurial owners of capital.
The Railways offered
employment security, with a trade-off of acquiring skills that generally would have been poorly transferable to other occupations or employers. Potential candidates for this new form of employment relationship were not hard to find. Butler-Bowden (1991, p.10) describes the fervour with which a Railways job was pursued: “...people clamoured to establish a career in the railways. Getting a job was a feat in itself. The number of applications was far greater than the number of positions available. In the 1880s there were between five and ten applicants for each vacancy; in May 1891, with economic crisis looming, there were 11,176 applicants for 624 positions.” The practices of establishing low-level ports of entry into an organisation, providing consistent wages, training and promoting internally have been stylised into the concept of an internal labour market (ILM) (Doeringer and Piore 1985). ILMs have been presented as a crucial element in the development of the modern business organisation (Jacoby 1985). The process of harnessing and maximizing the skills and productivity of employees is a key tenet of human resource management (HRM) as a function, a profession and an academic endeavour. ILMs were not typical in the 20th century, let alone the 19th. Jacoby (1985) argues that ILMs were a post-World War I phenomenon in the United States,
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although a range of studies support an earlier adoption date for some organisations (Carter & Carter 1985, Seltzer & Merrett 1996, Sundstrom 1988). Given the small size of most firms in Victoria in this period, and their lack of sophistication, the Railways was an innovator in terms of human resource management practices, particularly the creation of ILMs. These practices had a powerful demonstrator effect for both employers and employees. Much trade union agitation and many Arbitration Court decisions over the following decades reflected the battle of non-Railways workers for similar conditions to those outlined above. In examining the practices adopted and developed by the Railways, this study represents a response to Green’s clarion call that “…labour economists should learn about the evolution of specific institutions, including evolution that occurred far in the past.” (1994, p.32) It also fills a gap in the Australian labour and business historiography, as identified by Fox (1991, p.xi): “If there is one aspect of Australia’s history which needs a little light and air, then it is surely the workplace.” Using theory and quantitative approaches, this dissertation explores the employment relationship as it develops within the Victorian Railways. The focus is on identifying and analysing the HRM practices and strategies. The available data sources are several. The Railways’ stated policies and regulations provide information about the basic processes, although they rarely provide any insight into the rationale or impact of their application. As such, the study also relies on personnel data on 6,171 employees over the period 1864-1921. These data are longitudinal with employees reappearing over several observation points, and includes information such as age, position and remuneration rates. These data allow observations of not just the stated intentions of the Railways Commissioners, but also the employment outcomes.
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By utilising these personnel data, a range of theories about, and models of, the employment relationship, employment strategies and particularly remuneration are tested. The following key research questions are tackled: (i)
How was the employment relationship structured in the Victorian Railways over the period 1864-1921?
(ii)
What did a career in the Victorian Railways look like?
(iii)
How can these career structures and employment practices be explained and rationalised by theory drawn from the economics and management disciplines?
(iv) What remuneration practices are observable within the Victorian Railways over the period? (v)
Which remuneration model(s) best explain the earnings outcomes observed?
In effect, the study represents a quantitative slant on Licht’s (1983, p.xiv) examination of “…what it must have been like for pre- and early industrial workers to enter and be employed in these new kinds of work institutions.” The structure of this dissertation is as follows. Chapter 2 provides a history of the Railways as an economic, organisational and institutional entity.
It chronicles the growth of the rail network, the
establishment of rail transport as a solely public business, and the evolution of the Railways as a statutory body, notionally independent of government influence. The Acts of Parliament and regulations that shaped and informed employment practices are examined. The structure of the organisation is outlined, with a particular focus on the three largest administrative Branches. Finally, the collectivisation of rail employees into trade unions is recorded, with the first comprehensive chart of the path to a unified union structure. Chapter 3 examines, critiques and synthesises models and theories regarding the employment relationship, and specifically the roles of internal labour
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markets (ILMs) and careers. Many of these models present the employment relationship and employment contract within the context of uncertainty and asymmetric information, and in situations where employees are asked to acquire firm-specific human capital. An analytical framework is established and the extant literature surveyed. Chapter 4 introduces the data used in the study. It outlines the various sources and the information taken from each. Data collection procedures are discussed and data constraints are acknowledged.
The methodological intentions are
presented, as are a range of summary statistics. Chapter 5 investigates the career structures facing those employees generally romanticised as the personification of railway work: the engine drivers and firemen. The tasks involved and the skill formulation process are analysed. Drawing together evidence on entry, career patterns, tenure, exit behaviour, and aspects of the wage structure, a distinct ILM that operated in this part of the Locomotive Branch is revealed. This ILM is warranted by the specificity of the skills involved, the cumulative nature of the skill formation process and the incumbent motivational and aspirational imperatives. Chapter 6 tackles a more complex group of employees: those responsible for management of the day-to-day station activity and the manoeuvring of traffic around these facilities. This work involved a much broader range of tasks than in the Locomotive Branch. The range of positions varied from blue- to whitecollar roles, technical, manual and administrative in nature.
Data on entry,
career patterns, hierarchical transitions, tenure and exit are collated and examined.
The picture that emerges is of a much more complex set of
employment and human resource management strategies.
The ILM that
developed involved at least two distinct, but not mutually exclusive, streams of employees.
These streams, it is argued, still facilitated the necessary skill
acquisition, particularly the understanding of routines and protocols necessary
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to ensure efficient station operations. The complexity of these structures also provided flexibility through job-matching procedures. Chapter 7 surveys models of remuneration. The focus is on organisation-level theories of wages, rather than individual-level theories of lifetime income. A distinction is made between supply and demand, incentive and rule-based models. Various tests to differentiate between each model are offered, with a particular focus on quantifiable outcomes. Using the personnel data, Chapter 8 investigates the issue of remuneration practices within the Victorian Railways. A variety of analytical techniques are adopted including the examination of a range of summary statistics, estimation of earnings equations through OLS regressions on several different sets of data, and estimation of marginal probabilities through probit calculations. Observable outcomes of the Railways’ remuneration practices on employee earnings are identified. The explanatory power of the models from Chapter 7 is assessed. The findings point to a mix of policies and practices aiming to reward skill formation and to encourage long tenure. These management tools are blunted by the budgetary constraints placed on the organisation. The models themselves are found to be under-specified and unconvincing in their applicability to typical earnings and employment data. Chapter 9 summarises these findings within the context of the research questions. It argues an efficiency rationale for the adoption of such human resource management strategies. The organisation, faced with idiosyncratic skill demands and a need for a large, stable workforce, chose to internalise its labour supply.
The resultant system of entry ports, hierarchical levels,
promotions and wage patterns is typical of the ILMs later adopted by many modern business enterprises. These strategies establish the Victorian Railways as a pioneer of modern management within the Victorian context.
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CHAPTER TWO: THE VICTORIAN RAILWAYS - AN ECONOMIC, ORGANISATIONAL AND INSTITUTIONAL HISTORY
Introduction Throughout at least the first seventy-five years of Victoria’s development the Victorian Railways was an organisation of unprecedented political and economic importance.
The railroad was consistently viewed as a major
instrument in the quest for economic growth and colonial pre-eminence. This chapter examines the trials and tribulations involved in establishing Australia’s largest rail network, from the brief flirtation with private ownership, to the relatively swift shift completely into government hands and the subsequent boom in construction, usage and employment levels. The sheer size of the burgeoning rail network represented a major management task, while its large share of government expenditure and economic significance made it a political football. Employment practices represented just one aspect of the organisation’s overall management task. This chapter investigates the origins and evolution of management processes within the Railways, noting the influence of various Acts of Parliament, especially the push to reduce the cries of excessive patronage and introduce modern managerial processes, and the ongoing battle between the Government and the Railway Commissioners over the separation of their powers. Management strategies also require structures, so the Railways’ departmental schema is outlined. The functions of each area are described, as are the roles and responsibilities of some of the key jobs and careers that receive closer attention in Chapters 5 and 6. Management strategies on labour issues are generally shaped by an organisation’s relationship with the representatives of its employees. The final section of this chapter provides a history of the activities and influence of organised labour in the Victorian Railways, from the relatively tranquil mutual
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associations of the Railway’s early decades to the monolithic national railways unions of the 1920s. This growth is placed within in the context of the wagesetting mechanisms that slowly develop over the period, illustrating the limited history of industrial involvement of collectivised rail workers in Victoria until the early 1920s. The origins and evolution of the railways in Victoria Proposals for railway construction sprung up almost as soon as European settlers arrived in the region soon to be named Victoria. Although the eventual state capital of Melbourne was only founded in 1835, plans to run a line from Port Melbourne to Melbourne Town were being drawn up by March 1839 (Harrigan 1962, p.1). Further plans were suggested over the next decade, but not followed through. Only with the discovery of gold in 1851 and the resultant influx of people, traffic and capital did these schemes become realistic options. Like several Australian colonies, Victoria’s first launch into railway construction and operation sprang from the efforts of the private sector. Commencing in 1853, a succession of companies sought and gained government approval to establish lines and run rollingstock.
The Melbourne, Mount Alexander and
Murray River Railway Company was established in February 1853, slowly commencing construction of a line from Melbourne to Williamstown, with plans to also run to Echuca.
The progress was very slow, however, due to
inadequate funds, and on March 19, 1856, the project was placed in government hands (Harrigan 1962, pp. 10-13). The Geelong and Melbourne Railway Company was also granted approval to began construction in February 1853, and successfully completed and opened its 38½ mile track from Geelong to Newport in June 1857. Heavy competition from steamers saw poor financial results for this private company however, and in June 1860 the government also purchased this company (Harrigan 1962, pp.31, 17, 284 & 37).
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The Melbourne and Hobson’s Bay Railway Company was one of several operations that sprung up in the metropolitan area.
Established in January
1853, it was followed in 1857 by both the Melbourne and Suburban Railway Company and the St. Kilda and Brighton Railway Company. By December 1865, these three concerns had been amalgamated into the Melbourne and Hobson’s Bay United Railway.
The organisation operated as a financial
success with an average annual dividend of 7½ percent until July 1878 when it was finally acquired by a government keen to avoid ongoing negotiations over routes for country lines into the various central Melbourne stations (Harrigan 1962, pp. 8, 46, 51, 43 & 62). A further metropolitan private endeavour was the Melbourne and Essendon Railway Company, established in February 1859 and opened to public traffic by October 1860. It failed financially and closed in July 1864, with public outcry forcing government acquisition in August 1867 (Harrigan 1962, pp.65-7). The outcome of government purchasing of private lines was the creation in March 1856 of the Victorian Railways Department, under the auspices of the Commissioner of Public Works. The first employees were principally concerned with surveying and engineering, and this new department was responsible both for construction and operation of the transportation and communications network. Government-run trains were in operation by January 1859, and the whole of the colony’s rail network was government owned and operated by mid1878. As shown in Table 2.1, the initial period of construction was followed by relatively slow growth in the number of miles of track open. After the first lines from Melbourne to Echuca via Bendigo, from Melbourne to Ballarat via Geelong, and a basic suburban structure, there was minimal expansion until the mid-1870s. The subsequent boom in construction over the next two decades was driven by a variety of forces.
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Table 2.1: Miles of railway track in Victoria Year 1855 1861 1862 1867 1871-2 1877 1882 1886-7 1891-2 1896-7 1901-2 1906-7 1911-2 1916-7 1921-2
Miles open at year end 2 114 214 271 313 931 1,355 1,880 2,903 3,129 3,302 3,396 3,622 4,123 4,317
Source: Testro (1971) p.106, Butlin (1964), p.324, Victorian Railways Annual Reports
The railways were seen as a tool to open up rural Victoria and boost its economic development.
The newness of the region, in terms of European
settlement, meant that policy makers were weighing up the costs and benefits of rail versus alternative transport road infrastructure such as roads. Furthermore there was an explicit desire to suck trade from the Murray River region to Melbourne rather than the capitals of other colonies, so as to establish Melbourne’s port as the great entrepôt of Australian commerce (Rimmer 1975, pp.192-4). The biggest impetus for this growth in track mileage was far less economically sound. The political environment of the day was based on loose coalitions of parliamentary members. With no pressure to tow party lines, these individual representatives engaged in numerous acts of political logrolling and opportunism. Construction bills were introduced to Parliament and enacted that paid scant regard to the fiscal duties of responsible government, choosing instead to sate the appetite of a political system based on ravenous localism. The prime example of such dubious legislation was the 1881 Railway Construction Bill drawn up by the infamous Railways Minister Thomas Bent that
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committed £2,433,194 to the construction of, among other projects, fifty-seven new lines. Not coincidentally the number of lines was slightly more than the number of constituencies in the Legislative Assembly of the Victorian Parliament, and distributed appropriately.4 The Bill was thus rushed through Parliament with little scrutiny, despite serious doubts as to the legitimacy of the costs estimates that accompanied the Bill (Glass 1993, pp.51-2).5 As a result, Victoria developed a complex network of branch and spur lines significantly larger than any other Australian colony, and far in excess of actual needs. Table 2.2: Passenger journeys and rollingstock on Victorian Railways Year 1871-2 1877 1882 1886-7 1891-2 1896-7 1901-2 1906-7 1911-2 1916-7 1921-2
No. of Passenger Journeys 1,508,671 3,395,709 22,646,489 41,856,404 55,148,122 42,263,638 57,465,077 70,170,089 104,234,732 108,341,540 142,456,924
Engines in Use 92 139 228 346 462 517 542 497 623 812 799
Note: Passenger journey totals before 1880 do not include suburban journeys. Source: Victorian Railways Annual Reports
This growth in track mileage impacted on all other areas of the railways operation. As shown in Table 2.2, the number of passenger journeys per year grew steadily through the period up to the early 1890s until curbed by a severe economic downturn and competition from tramways in the urban areas. Rollingstock also increased, although not to the same degree, as the higher journey numbers reflect the economies of increasing frequency in timetabling.
4
There were substantial short-term economic benefits, particularly in rural communities, from line construction. As Serle (1971, p.80) put it, “[t]owns waxed fat when fortunate enough to be the terminus the line for a few years, and waned sadly when the line moved on.” 5 There have been suggestions that the estimates were not drawn up by the responsible party the Engineer-in-Chief, but rather the ministerial staff of Mr. Bent (Glass 1993, pp.51-2).
13
The numbers of greatest interest to this study concern employment levels. Twenty staff members were appointed to the newly formed Railways Department in the five months following its establishment in May 1856 (Harrigan 1962, p.14). As Table 2.3 shows, this figure had leapt to approximately 200 by 1859, and continued to increase in the ensuing decades. The Railways were employing upwards of eight thousand permanent workers by the mid-1880s, plus a thousand or more on a temporary basis. In contrast, the very largest private employers in the colony had no more than 1000 staff. Railway staff dominated government employment. In 1903, rail employees made up roughly two thirds of State employees (Butler-Bowden 1995, p.25), and as late as the 1930s, the railways were still being described as “…one of the few instances in Australia of large-scale industry. The Victorian railways are by far the biggest industry in the state” (Eggleston 1932, p.113). Table 2.3: Number of Railways employees
1859 1863 1882a 1884 1887 a 1891-2 1896-7 1899-1900 1902 a 1905 a 1908 a 1911 a 1914 a 1918 a 1921-2
Permanent -Total 200 1520 6600 8690 9300 11,801 8,678 8,981 9800 10000 9800 9900 13600 12300 19,273
Temporary - Total n/a n/a n/a n/a n/a 1,309 1,199 2,684 n/a n/a n/a n/a n/a n/a 7,688
Total
13,110 9,877 11,665
26,961
Note: a denotes estimates from Government Gazette data Source: Harrigan (1962, p.139), Parliamentary Papers (1884), Victorian Railways Annual Reports & Government Gazette
14
The sheer size of this organisation made it the target of much political, legislative and public attention. The octopus construction bills6 noted above were just one example of parliamentary decisions that had a significant impact on the operation and administration of Railways Department.
Acts and Bills that shaped an organisation Most of the legislation passing through the Victorian Parliament regarding the Railways Department concerned the allocation of land for railway construction, the Board’s control over opening of new lands, and other matters such as the rules for carrying dangerous goods. Few of these documents dealt with the exact structure of the emerging department, and the rail employees were rarely mentioned. Those Acts that did refer to employees, such as 1863 Act for the better management of Railways (No.186), only covered such generalities as the power of the Board of Lands and Works to regulate “…the conduct of the officers and servants employed in the department of railways” (s.14); the scope for punishment of “…persons employed on railways guilty of misconduct” (s.42); and the provision of railways staff with recognised length of service entitlements in other Government departments (s.48). This latter section referred to railway employees’ rights under the Civil Service Act (No. 160, 18th June, 1862). This Act regulated the conditions of all government employees, providing for various levels of job classifications with salaries attached (s.1-16) and outlining appointment and promotion procedures (s.17-26). Penalty processes were also spelt out (s.27- 35). Another significant part of the Act imposed a retirement age of sixty and entitled retiring workers to a superannuation payment (s.39-49).
6
The Bills were labeled as such as they resulted in a map of Victorian rail lines that looked like the tentacles of an octopus spreading out from Melbourne (Wettenhall 1961, p.8).
15
Throughout this period the Railways were emerging as a distinct organisation. Various branches were created. The relationship between the Board of Lands and Works and Parliament remained vague, as the Board of three to five members was allowed to contain only one Minister of the Crown as a member, yet “…the Minister would accept full responsibility before Cabinet and Parliament” (Wettenhall 1961, p.5).
By 1861 there was a parliamentary
Commissioner (read as Minister) of Railways and Roads, yet it took until 1880 to separate these two areas (Wettenhall 1961, p.5). This was a period of considerable political turmoil. Between 1857 and 1883, twenty Ministries held office, there were twenty-four Presidents of the Board of Lands and Works, and thirty-two Ministers were appointed to oversee rail activities (Harrigan 1962, p.119).
Wettenhall (1961, p.12) noted that the
structure had no recognised Permanent Head, but rather “…a number of branch heads reporting to a Minister who himself had to co-ordinate to the best of his abilities.” This structure saw considerable scope for, and numerous claims of, political patronage.
Allegations of bribery and incompetence were levelled
against the first Engineer-in-Chief in 1860, forcing his resignation (Wettenhall 1961, p.7).
Later Ministers also found their actions countermanded by
Parliament, such as J.G. Francis (July 22nd, 1865 to July 18th, 1866) who was forced to revoke an order for English locomotives in preference for Victorian built models (Wettenhall 1961, p.9, Harrigan 1962, p.273). This sort of government interference in the business affairs of the Railways had escalated by the 1880s, with claims of patronage raised with respect to tendering processes for a wide variety of inputs, including braking systems, locomotive construction, coal, and even the ballast used in laying new lines. Further questions were asked about surveying decisions and land purchases (Glass 1993, pp.55-66). The overwhelming majority of these accusations were directed at Minister Bent, a future Premier of Victoria.
16
Evidence also points to ministerial interference in appointment and promotions of staff. Turner (1904, p.244) describes how J. B. Patterson, Minister from August 3rd, 1880 to July 9th, 1881, “…had been so hunted by his fellow members of Parliament to find places for their friends and supporters that he formally handed overall appointments and promotions to the Engineerin-Chief and the Departmental Secretary, and firmly declined to have any voice in the matter.” Glass (1993, pp.54-5) chronicles a dispute between the next Minister, Bent and the Engineer-in-Chief over the appointments of gangers and the confusion of the capacity of the Minister to refuse the Engineer-in-Chief’s recommendations. Turner (1904, p.242) claims that by the early 1880s the Railways, along with the rest of the Civil Service were “…becoming close preserves for members of Parliament, their friends and supporters.” From its inception in 1856 the Railways Department had struggled financially. The Government-operated railways generated an overall deficit of £4,862,728 for the period 1858-1883 (Harrigan 1962, p.281). Coupled with the excessive logrolling of the early 1880s, financial losses have generally been assumed to be the impetus behind the shift towards a more independent management system.
Wettenhall (1961, p.13) pointed out, however, that calls for such
moves had been voiced as early as 1876, a point when most lines were still viewed as sound long term investments.
It did take, however, the flagrant
actions of Thomas Bent’s Ministry, plus several fatal collisions on metropolitan lines, before the key 1883 Act was pushed through Parliament. The Railways Management Bill, officially titled An Act to make better provision for the Construction, Maintenance and Management of State Railways (Act No.767, 1st November 1883), sought to shift the power balance away from the Minister for Railways to a body corporate by the name of “The Victorian Railways Commissioners” (s.4).
These Commissioners were appointed on
seven year contracts on an annual salary of £1,500 except for the Chairman who had a salary of £3,000 and also had veto power (s.8, 10). The Act gave
17
the Commissioners the power to appoint “...officers” to senior positions such as engineers and traffic managers as they saw fit (s.16). It also outlined a clear method of appointing general permanent employees. Examiners were to be appointed to deal with candidates for hire or promotion (s.24).
All new
permanent positions required public advertisement, a ballot process for examination if there were excessive applicants, and a subsequent ballot of successful examined applicants if numbers still exceeded available positions (s.25, 27).
Appointments were to be made to the lowest grades, with a
probationary period of six months (s.28). Promotions were to be based on examination criteria and merit (s.30-1).
This replaced a situation where
professional and administrative staff had been hired according to the Civil Service Act, and any artisan and other daily staff had been appointed by recommendation of departmental management. Workers employed at the time of the passing of the Act retained the superannuation rights from the Civil Service Act (s.72). Any new workers were required to take out a life insurance policy.
This move attracted ongoing
criticism over the years. The first Annual Report of the new Commissioners praised the role of a superannuation entitlement in “…increasing the interest of every individual member of the service in the performance of the duties entrusted to him”, and criticised the lack of certainty for the insured workers (V.P.P. 1885(2), no.64, p.xii). They called for the creation of a superannuation fund for all rail workers, a plea they and rail unions would make for the next forty years. A State Superannuation fund was finally established in 1926 (Harrigan 1962, p.144). A further section of the 1883 Bill required the Commissioners to publish in the Government Gazette a triennial list of all permanent employees (s.38). These lists serve as a prime source of data for this study. The remainder of the Act spelt out the power of the Commissioners over day to day running of the Railways, such that all power had been removed from the Board of Land and Works.
18
This Act is viewed as groundbreaking in that it represented a “…great administrative revolution which was to make the device of the public corporation so popular in this country” (Wettenhall 1961, p.12). The argument put forward for the shift was that “[w]ith railways removed from such political complications, Parliament could now determine relevant issues on their merits alone.” (Wettenhall 1961, p.21) Parliament still maintained a significant level of control as all funds were provided via the Legislature, and all regulations required Parliamentary approval. The first Chief Commissioner was Richard Speight, recruited from the Midland Railway Company in England (Rimmer 1975, p.206).7 The Commissioners quickly revamped the organisation, creating what Wettenhall (1961, p.31) described as a “…well-disciplined and effective staff”.
The Commissioners
explained their actions as follows: “…material alleviation has been afforded, either by re-arrangement of hours of duty, the granting of additional pay, or the recognition, by the granting of bonuses, of special services where such services have been performed, and which have not been previously recognised.” (V.P.P. 1885(2), no.64, p.xii) The persistent deficits were turned around by 1885-6, despite reductions in the fare and freight rates. The Commissioners were still burdened, however, with an expanding network of unprofitable lines. In fact, the Commissioners came under fire for the blowout in construction costs of the numerous new lines forced upon them by further octopus bills in 1884 and 1890. Wettenhall (1961, pp.334) claims the Commissioners were harshly treated, given the difficulties in generating accurate estimates during a land boom and the poor state of quantity surveying at the time.
These failings, an unexpected payout of
£125,000 in accident compensation, plus the onset of a significant economic 7
There were at least three more Chief Commissioners with overseas experience: John Mathieson (1896-1901), “…an Englishman who had had experience in both the New Zealand and Queensland Railways”; Thomas Tait (1903-10), formerly of the Canadian Pacific Railway; and Harold Clapp (1920-39) from the US (Wettenhall 1961, p.69, Harrigan 1962, p.123 & Churchward 1989, p.10).
19
depression saw persistent deficits return from 1890 onwards.8 Increased focus from the political sphere saw breaches of the supposed separation of powers, with the Commissioners becoming the “…political buffer between the Government and the public...” such that “…their time was taken up with “…political work” to the detriment of their managerial functions.” (Wettenhall 1961, p.37) By 1891, there was significant tension between the Government and the Commissioners, derived originally from the tendency of the Rail Minister, William Shiels to bypass the Commissioners and communicate directly with Branch heads, and also disagreements over the reappointment of certain Branch heads (Wettenhall 1961, p.42).
The major dispute soon became
finances. Shiels expressed a Government desire to reduce the large deficits and suggested a scheme he believed would achieve this end: “...an annual reduction of one million train miles, the retirement of all officers over 65, the suspension of all increments, the adoption of public service leave and retiring allowance regulations, the reorganisation of the Traffic Branch, the abolition of certain senior positions, and the adoption of an improved system in the Finance Branch.” (Wettenhall 1961, p.43) The Commissioners objected to the harshness of such measures, particularly given that they had already agreed to withhold workers’ increments for the next year. They felt that the emphasis on making the railways pay in the short-term was incompatible with the recent levels of construction, and their implied duty to the public to provide an adequate level of service and low fares. The perceived intransigence by the Commissioners led the Government to draft a new piece of legislation that would seriously alter the structure of the Railways and the power of the Commissioners. Apart from shifting the responsibility for 8
The Railways’ net earnings rarely fell below £1m per annum between 1885 and 1921, that is revenue always substantially exceeded working expenses. Railway construction had been financed by large amounts of overseas borrowing, however, such that net earnings struggled to match the annual interest bill that hovered around the £1.4-1.5 mark during much of this period (Harrigan 1962, p.281).
20
construction off to the Board of Lands and Works, the Government sought a long list of interventionary powers. The majority of these related to finance issues, plus the power “…to limit the number of officers and employees, and their rates of remuneration; also power to discontinue any office, and to govern the retirement of employees.” (as quoted in Wettenhall 1961, p.46) Also no staff receiving an annual salary exceeding £500 could be appointed or promoted without ministerial approval. In effect the Bill sought to facilitate the various measures Shiels had been denied by the Commissioners.
While
certainly limiting the managerial discretion of the Commissioners, the new Bill would have made their actions more visible to the public and, as the Government was quick to point out, the scope for patronage was limited, as the Government could only decrease, not increase, expenditure. The proposed Bill was debated fiercely in Parliament, and after much deliberation, a version was passed that removed much of the specifics regarding issues on which the Minister could intercede (Act No.1250, 29th December, 1891). Now in instances where the other Commissioners differed in opinion from the Chairman the Minister was entitled to decide the issue (s.22). Also the Minister could request policies that would increase income or reduce expenditure, and if the Commissioners’ recommendations were unsatisfactory he could impose his own scheme (s.24). Efforts were made by a new Rail Minister to introduce Shiels’ cost cutting measures.
When the Commissioners again refused to do so they were
suspended from their duties, and on February 16th, 1892 replaced with Acting Commissioners. These new managers, on one-year contracts, complied with the Government’s wishes. “They effected numerous economies and reorganisations. In the first year they reduced train miles by 800,000, and there were more reductions in following years. They retired all sexagenarians without replacing them, they amalgamated various branches and offices, they curtailed the working time of staff (in addition to the salary reductions imposed directly by Parliament), they postponed new works and adopted an increase scale of fare and freight charges.” (Wettenhall 1961, p.59)
21
Even with the introduction of these policies the deficits continued, fuelled by the ongoing economic depression. Further attempts were made to change the Railways’ management structures, including a legislative proposal to establish the organisation as Trust, separate from the public service (Wettenhall 1961, p.59).
Again, the eventual act
(No.1439, 6th March 1896) that was passed failed to achieve its original end. The only significant change was the reduction of the number of Commissioners to one (s.5). There was a return to three Commissioners in 1903 (Act No.1825, 6th April, 1903). 1903 also saw a bizarre episode in Victorian electoral history, where Parliament enacted a piece of legislation that removed rail workers, along with public servants, from the general voting franchise. Claiming that the minority of public employees in each electorate carried undue influence over their respective members, all public servants were put onto a separate electoral roll to elect one representative in the Legislative Assembly. Rail workers elected two members in the Legislative Assembly, other public servants one (Wettenhall 1961, p.80). This Separate Representation Act (No.1864) contributed to the unrest that brought on the 1903 strike, discussed below. Once the Act was repealed by July, 1906 Wettenhall (1961, p.82) declares that “…the Victorian Railways organisation settled down to a stable if not always happy existence…” and that the management structures and practices established by the 1903 Management Act remained unchanged for the next five or so decades. The party chiefly affected by these Parliamentary-Commissioner(s) struggles was the Railways employees. The desire to reduce the deficits invariably saw hours, wages or staff numbers cut. Annual pay increments were suspended in 1891, and again in 1902, while percentage reductions in pay across the public service impacted on rail employees on at least one occasion during this period. For most of the first half of the 1890s no new permanent employees were hired.
22
There was a paucity of mechanisms for employee interaction with management. Only with Commissioner Mathieson’s appointment in 1896 were staff recruitment and increments resumed (Wettenhall 1961, p.69).
He also
produced the first organisation-wide classification scheme, which coupled with the Appeals Board established by Act. 1439 may have appeased the complaints of some of the nascent railway unions.9 Throughout much of the period of this study the formal wage setting mechanisms for Railway employees were confused at best. Churchward (1989, p.50) attempts to explain them: “The Commissioners were responsible for drawing up a general classification scheme to determine railway employees’ wages, but Parliament designated the total amount available for wages, and determined the ‘basic wage” of the railways, namely that of the unskilled worker. On the basis of this wage level, the whole classification scheme could be built up.” This resulted in a situation where the Estimates debates in Parliament each year were the determinants of the leeway the Commissioners would have in the forthcoming year. Any significant changes to the status quo were unlikely, as Parliament felt a constant need to rein in the Railways’ expenses and also claimed it could not interfere with the Commissioners’ decisions.
From the
Commissioners’ perspectives, the uncertainty of outcomes made it difficult to promise the employees changes from year to year. The rail unions were very unsatisfied with this system. Pleas for inclusion under the Wages Board system established in Victoria in 1895 were to no avail as the Parliament claimed it served as the railwaymen’s Wages Board, and that it could not tolerate the loss of control over the budgetary purse strings that recourse to such a system would represent.10
Attempts to shift into the new sphere created by the
establishment of the Federal Arbitration Court in 1905 also failed, as the 9
The Traffic Union protested the lack of a classification system on numerous occasions in its journal, The Victorian Railway Gazette, the latest instance being September 1893 (pp.1-2). 10 In 1912 the Victorian Railways Union continued to complain to the Commissioners that “They have been told that Parliament was the railway workers’ Wages Board. If so, it had sadly failed to give even a living wage to its employees, and it was high time an independent tribunal was appointed to enquire (sic.) into the conditions of work and decide the monetary value of their labor.” (The Railways Union Gazette December 1912, p.5)
23
Railways Servants Case (1906) declared State employees to be outside the Court’s jurisdiction (Churchward 1989, p.67). The Commissioners remained responsible for the remuneration system until very late in the period of this study when, in 1917-8, a Classification Board was established to provide recommendations with regard to changes in salary and wage structures. The Board was disbanded for a period due to the economic imperatives of the war effort. These classifications were eventually introduced under the auspices of the Railways Classification Board Act (Act No.3006, 1919), in an Award (No.1) handed down in March 1920. Further juggling of the Board’s make-up and scope occurred in the next few years. Its role was soon usurped, however, by the successful claim of the Railways unions to access the Federal Arbitration system. The unions registered federally in 1921, signifying what
Churchward
(1989,
p.186)
labels
“…a
new
age…for
the
railwaymen…[where n]o longer was the control of their wages and conditions solely in the hands of their employers: the Commissioners and the Victorian Government.” This milestone serves as the end point for this study. For the period prior to the introduction of the Classification Board, documentation regarding official remuneration rates is relatively scarce.
An
Abstract of Departmental Regulations published in 1883 is far from comprehensive, only providing the pay rates for stationmasters, cleaners, firemen, drivers and apprentices in the Locomotive workshops.
The
Regulations of the Victorian Railways Commissioner (1896) record Mathieson's classification system, with 116 different positions and their respective pay rates listed. In contrast the Victorian Railways Regulation No.56 (1912) lists over 600 positions and rates, and is comparable in coverage to the 1920 Award. While these documents provide some insight into the changes in pay rates and relativities over almost four decades they do not include many changes alluded to in the secondary literature.
In particular, Wettenhall (1961, p.69) notes
across-the-board salary reductions imposed by Commissioners in 1892, and
24
another public-service-wide cut in the mid 1890s. On other occasions (1891 and 1902) all annual increments were suspended, and there were supposedly classification revisions in 1909, 1911, 1912 and 1915.
Departmental structures The immense size of the Railways in terms of employee numbers, the large number of workplaces and range of duties performed by the Railways Department’s workers in its offices, workshops, stations, track-side, and on the rolling-stock, meant there needed to be a clear and workable administrative structure. This structure evolved over time with new departments emerging, while others passed into history. The employees of the railways were involved in a very wide variety of tasks, but the Railways Department was not involved in the construction of most of the rail network, at least not in terms of employing the workers clearing the land, laying the ballast, sleepers or rail. Contracted construction companies undertook this work.
The surveying, planning and design of the new lines lay with the
Railways Department until 1892, under the auspices of the Engineer-in-Chief’s Branch. Ongoing problems with excessive construction even after the 1883 Act led to the surveying and design responsibilities and the Engineer-in-Chief’s Branch shifting back to the Board of Land and Works. Also a Parliamentary Standing Committee was established to examine and report on all lines to be constructed where the cost of work exceeded £20,000 (Act. No. 1177).
25
Table 2.4: The structure of the Railways Department 1856-1921 Branch Secretary’s Engineer-in-Chief’s Stores Locomotive Rollingstock Traffic Transportation Accountant’s Audit
Existing Lines
Dates of Existence 1856 1856-1891 1857 1858 - 1902 1903 1858 - 1902 1903 1858 - 1895 1896 1859 - 1866 1866 - 1868 1869 - 1872 1872 - 1903 1903 - 1905 1905 - 1931 1878 - 1891 1892 - 1902
Way & Works Telegraph
1903 1878 - 1919
Traffica
1903 -
Printing Electrical Engineering Refreshment Services
1912 - 1921 1913 -
Notes Transferred to Board of Land and Works in 1892 Name changed to Rollingstock in 1903. Name changed to Transportation in 1903. In Secretary’s Branch. As distinct branch. In Secretary’s Branch. As distinct branch. In Accountant’s Branch. As distinct branch. In Accountant’s Branch. As distinct branch. As adjunct of Engineer-in-Chief’s Branch. As distinct branch. Name changed to Way & Works in 1903. Absorbed into Electrical Engineering and Way & Works in 1919 Previously an adjunct to the Traffic Branch. Changed name to Commercial Branch in 1950. Absorbed into Stores in 1922.
1920 -
Source: Harrigan 1962, pp.276-80 Note: a To avoid confusion the Traffic Branch (1903-) will be referred to as the Commercial Branch.
As Table 2.4 chronicles, the history of branch structure was riddled with name changes and shifts in responsibilities. The Audit Branch alone underwent six distinct phases of existence between 1859 and 1931.
As indicated by the
employment figures in Table 2.5, several of the branches were relatively small, and as a result are not investigated at any depth in this study.
Stores,
Accountant’s, Secretary’s, Audit, Telegraph and Engineer-in-Chief’s all had less than 100 employees in 1895, a typical year. In 1921, the newer small branches had low numbers also, with Electrical Engineering the largest (300 staff), and
26
Commercial (54), Printing (35), and Refreshment Services (25) much smaller.11 Several of the branches’ titles are self-explanatory such as Accounting and Printing.
Stores were responsible for the purchase and distribution of, and
accounting for, materials. The Secretary’s Branch concerned itself with policy and administrative matters, personnel, and legal affairs. As mentioned above, the Engineer-in-Chief’s key areas were the surveying, planning and design of the new lines.
The Refreshment Services Branch ran the on-station retail
outlets, advertising space and other sundry food production facilities the railways acquired over time. The Commercial Branch was responsible for “[g]oods, livestock, and parcels rates and passenger fares; weighing; solicitation of traffic and meeting competition; claim prevention and correct packaging; settlement of claims; [and] action against by-law offenders” (Harrigan 1962, p.126).
Table 2.5: Distribution of employees by Branch, as at 30th June, 1895 Branch Secretary's Accountant's Stores Audit Traffica Telegraph Locomotive Engineer-in-Chief’s Existing Linesa Total
Permanent 18 92 34 49 3486 92 2707 38 2941 9457
Temporary 3 15 141 39 80 14 420 712
Total 21 92 49 49 3627 131 2787 52 3361 10169
Source: Report of the Victorian Railways Commissioner for the year ending 30th June 1900, Appendix 15 Note: a The Traffic figure includes 142 wives of employees in charge of stations, and the Existing Lines figure includes 314 wives of employee in charge of gates as permanent staff. These women were not generally considered to be permanent employees.
As Table 2.5 indicates, the Railways Department had three very large branches: Locomotive, Traffic and Existing Lines. The former two of these three are the branches under investigation in subsequent chapters.
11
These figures are of permanent employees. The Refreshment Services also had 469 temporary staff (Report of the Victorian Railways Commissioner for the year ending 30th June, 1921).
27
The Locomotive Branch The Locomotive Branch was established in 1858.
Although renamed the
Rollingstock Branch in 1903, for consistency’s sake it will be hereafter referred to as Locomotive. The branch was responsible for the “[d]esign, construction, operation and maintenance of all locomotives and rolling stock”(Harrigan 1962, p.126). Workers in this branch either manned the trains themselves, as drivers or firemen, or were workshop employees “…responsible for constructing, repairing and cleaning virtually everything that rolled on the rails, and a good deal else as well.” (Butler-Bowdon 1991, p.57) These workshops were the largest workplaces in the organisation. The first was set up in Willamstown in 1858 and by its closure in 1889 had a workforce of about 500 men (Harrigan 1962, pp.204).
A larger site was established in
nearby Newport in 1882, and like the Willamstown workshops it saw the construction of carriages and wagons, as well as servicing the aging rollingstock.
Butler-Bowdon (1991, p.72) notes that in time the workshop
manufactured “…virtually all the rest of the hardware required to run a railway, from the spikes that held the track in place to the tarpaulins for goods trucks.” Engines were produced here also, firstly in competition with a private supplier, The Phoenix Foundry Company of Ballarat and, from 1905, as sole Victorian manufacturer. By 1913-4 the workshop was constructing an engine a week (Harrigan 1962, pp.206-7). Newport employed around 5000 staff at its height in the 1920s (Butler-Bowdon 1991, p.72). Smaller sites existed for a time in Port Melbourne and Yarra Bank, and specialised Signal Shops also opened in Newport in 1895.
To relieve the
pressure on the enormous Newport concern further workshops were established in Jolimont (in 1917 as part of the suburban electrification scheme), and the rural locations of Ballarat North and Bendigo North (also 1917). Locomotive depots also sprang up at strategic points along the railway system,
28
to undertake routine inspections and running repairs. These were of crucial importance as steam engines requiring washing out, cleaning, fuel supplies, water and lighting-up. The principal suburban depot was in North Melbourne, and other large sites were located on major country lines (Harrigan 1962, pp.208 & 212). Along with the drivers and fireman on the rollingstock, and the engine cleaners in the depots, the employees in the Locomotive Branch covered a wide variety of trades and occupations. Harrigan (1962, p.207), writes of “[p]ainters, fitters, sailmakers, carpenters, moulders, turners, boilermakers, patternmakers, blacksmiths, coppersmiths, welders, [and] upholsterers”. Alongside these more skilled trades were carriage builders, carriage cleaners, apprentices of all kinds, skilled labourers and labourers.
The Traffic Branch The Traffic Branch was established in 1858, and earned a new moniker of Transportation Branch in 1903. The Traffic tag will be used throughout this study. This branch was responsible for the “[o]peration of passenger, goods, livestock, and parcels traffic by rail and road” (Harrigan 1962, p.126). ButlerBowdon (1991, p.57) describes the Branch as encompassing “…all the jobs that revolved around the timetable, such as station staff, guards and signalmen…” with the exception of drivers and their assistants. The tasks of the station staff will be spelt out at further length in Chapter 6. It is worth noting that this branch saw a mix of blue-collar jobs such as shunter alongside prestigious white-collar positions like stationmaster. There were 779 stations listed in Appendix 17 of the 1900 Report of Victorian Railways Commissioners. While fourteen of these stations saw in excess of a million passengers each over the year ending June 30th 1900, and 77 saw more
29
than a hundred thousand, 355 had less than two thousand passengers.12 As such, the staffing needs varied dramatically from station to station.
These
smaller stations had one employee performing all the duties. The huge centres of passenger and/or goods traffic such as Flinders St., Spencer St., Port Melbourne, Williamstown Pier, Geelong, Ballarat and Bendigo also had a large number of employees working in goods yards, loading and unloading wagons of “…every description of box, crate and sack” (Butler-Bowdon 1991, p.68). All this work was performed manually, as was the humping and stowing of crops at country sidings and the Melbourne docks. The workers performing these tasks were employed casually, in the seasonal country locations, or permanently in the large yards as labourers, goods porters or good checkers. These workers were typically seen as lacking promotion prospects. Many of the employees had been transferred from clerical work due to a perceived lack of aptitude (Butler-Bowdon 1991, pp.62, 69).13
The Existing Lines Branch The third large branch was the Existing Lines Branch, charged with the responsibility for the “[m]aintenance of tracks, bridges etc.; construction and maintenance of station buildings and other works; installation and maintenance of signalling, interlocking, telephone and telegraph equipment” (Harrigan 1962, p.126).
From 1878-1891 these tasks were performed by the Engineer-in-
Chief’s Branch, before the separation of the branch into The Board of Lands and Works. The Railways Department maintained responsibility for the existing lines, and as a result created a branch of that name. Again, this branch was renamed Way and Works in 1903, but this study will use the Existing Lines title. The workers in this branch were organised into track gangs responsible for “…keeping a stretch of track in general good repair and patrolling it daily to 12 13
For further discussion of station sizes see Chapter 6. These transfers are examined in Chapter 6.
30
check for obstructions, buckled rails or anything else likely to imperil the safe running of trains.” (Butler-Bowdon 1991, p.80) Given the majority of track miles were in rural areas, so were these gangs. The track gangs were made up of a ganger (the boss or overseer) and three or so labourers or repairers. The lengths for which they were responsible were generally ten to twelve miles and, when possible, the workers lived in the closest town. There were also special gangs responsible for major repairs and installations of new signals, sidings and the like. These gangs were much larger, thirty to sixty in number, and tended to live in trackside tents (Butler-Bowdon 1991, p.80). The work here was arduous with little prospect of advancement beyond ganger.
The emergence of a trade union presence Railway employees have long been considered the archetypal representatives of industrial work, and the unions representing them have a proud history of industrial strength. In Australia, railways unions are seen as the first industrial, as distinct from craft, unions (Turner 1965, p.12).
The path of union
organisation within the Victorian Railways has remarkable parallels with the experience of U.S. and English railways (Ducker 1983, pp.104-5, Kingsford 1970, pp.82-5), with various sectional/vocational societies emerging that would take many years to join as a cohesive bargaining force. A number of areas of the workforce had competing unions, and a long-running battle was fought over the value of sectionalism versus unification. The historical accounts of these processes are sketchy. The quasi-official Victorian Railways history spends little more than a page on the unionisation process (Harrigan 1962, pp.145-6), and the various histories of the surviving unions show little interest in chronicling the experiences of their forebears or rivals (Butler-Bowdon 1991, AFULE 1975, De Pomeroy & Gilbert 1992). Churchward (1983 & 1989) focuses her attention on the post-1900 experiences and as such makes some glaring omissions of apparently large early unions. The flow chart in Figure 3.1 represents a drawing together of information from these sources plus the surviving journals of the
31
larger unions.
The arrows denote amalgamations or name changes that
represent expansion of coverage. The dotted line represents an unofficial flow of members from a defunct organisation. The chart makes mention of more unions than the following discussions, as a number of the non-surviving unions’ histories have not been documented. Industrial organisation began in 1861, when “…in an attempt to sort out some standards of employment and to protect themselves, a group of about 20 drivers met at the James Watt Hotel and formed the Locomotive Drivers’ Association.” (De Pomeroy & Gilbert 1992, p.3) This union, which grew to include firemen in 1871 and engine cleaners in 1906, lays claim to being the oldest continuous railway union in the world, two years ahead of their U.S. counterparts (De Pomeroy & Gilbert 1992, p.3, AFULE 1975).
The U.S.
Brotherhood of Locomotive Engineers has been described, from the outset, as conservative, exclusive and with a craft-based outlook (Richardson 1963, chapters 6-7). The Victorian Railways Engine Drivers’, Firemen’s and Cleaners’ Association (EDFCA)14 similarly had a motto of ‘Defence not Defiance’, and even the union’s official history claims “…its success encouraged isolationist and conservative feelings among enginemen.” (De Pomeroy & Gilbert 1992, p.12) Turner (1965, p.13) also describes the union as “…generally moderate both in their demands and in their methods of action.” Benham & Rickard (1973, p.23) label this union “… the aristocrats of the railway service”.
These attitudes
represent another distinctive characteristics of these workers – their attachment to their jobs. Most of the members of these unions were career railwaymen, and as Turner (1965, p.13) explains “…they often thought of themselves first as public servants with an interest and a pride in keeping the trains running”.
14
While EDFCA was only the acronym after the cleaners joined in 1906 it shall be used throughout the paper to denote the various precursors of the Victorian Division of the Australian Federated Union of Locomotive Enginemen.
32
Figure 2.1 - The path of union amalgamations in the Victorian Railways Enginemen’s Association (1861)
Engine Drivers’& Firemen’s Association (1871)
Australian Federated Union of Locomotive Enginemen (1921)
Engine Drivers, Firemen & Cleaners’ Association (1906) - EDFCA
Mutual Service Association (1884)
Loyalist Engine Drivers’ and Firemen’s Association (1903)
Amalgamated Society of Railway Employes (1900)- ASRE
Locomotive Workshops Union (before 1891) (July,1906)
(May, 1907)
Casual Employes Union
Permanent Way Association (April, 1906)
Gangers’ Society (after 1893?)
Victorian Railways Union (1911) - VRU
Clerical Association (after 1893?)
Australian Railways Union (1921)
Carriage Builders’ Association (prior to 1904)
Guards’ & Shunters’ Association (1882)
Transportation Employees Association (1904) - VRTEA
Signalmen’s Society (1890)
Locomotive Institute of Engineers (started 1893-1904) - LIE
?
Traffic Union (1890)
Amalgamated Rollingstock Society (before 1892)
Daily Paid Employees Union (before 1904)
?
Victorian Railways Association (1917) Adminstrative Officers and Clerks Association (1920)
?
Leading Hand Artisans Association (1919) ?
33
Australian Transport Officers’ Federation (1922?)
As Table 2.6 shows, the EDFCA grew to have 1000 members by 1902.15 De Pomeroy & Gilbert (1992, p.12) claim the sharp rise between 1900 and 1902 occurred because “[t]he men felt that as they had done their part in suffering poor conditions and retrenchment during the depression, they were entitled to some extra consideration.”
This dissatisfaction manifested in the only
significant instance of industrial action by Victorian rail employees during the period of this study. In July 1902 the Irvine government announced a stoppage in increments and, in August, percentage reductions in salaries across the public service, including the railways. This move almost brought industrial action but, reluctant to strike, the EDFCA agreed to a one-year period of reductions, as long as a railway classification scheme was introduced. Union dissatisfaction grew however, with the introduction of the Separate Representation Act, cuts to hours and policy changes disallowing pay increases to temporarily promoted staff. When the EDFCA reaffiliated with the Trades Hall Council (THC), the Government objected claiming the act to be a form of political association that contravened Railway regulations. An ultimatum was delivered to the four THC-affiliated rail unions to sever the ties or face the dismissal of their executives.16 The EDFCA countered with strike action on May 9, 1903. The union was successful in pulling all but twelve drivers off work by May 11 such that a total of 650 drivers, 500 fireman and 250 cleaners were out on strike (Benham & Rickard 1973, p.13).
15
Union membership numbers are hard to uncover for much of the period of this study. Even when union publications have survived, it is apparent that the unions were reluctant to disclose their size to rivals or the employer. 16 The three other affiliated unions were the Carriage Builders Association, The Amalgamated Association of Railway Employees, and the Daily Paid Employees Union.
34
Table 2.6: Membership figures for Victorian Railways unions Unions Year
EDFCA
1861 … 1892 … 1895 … 1900 1901 1902 1903 1904 1905 1906 1907 1908 … 1910 1911 1912 1913 1914 1915 1916 1917
20
Traffic Union
VRTEA
ASRE
797 1250 1644 1650
2000 2900
VRU
1382 600 850 940 1000 500 500 500 500 700
5600 8128 1000 1200 1400 1400 1400 1650
8000 8511 9098 10256 10528
Source: EDFCA figures - De Pomeroy & Gilbert (1992, pp.3, 13, 22) & Churchward (1983, p.105f) Traffic Union – calculated from revenue figures in Victorian Railways Gazette (Oct. 1892, p.3) & Butler Bowdon (1991, p.21) VRTEA – The Railway Gazette, (Nov. 1907 p.1 & Sept. 1908) p.1 ASRE – Victorian Railway News (Feb. 1906, p.4, May 1907, p.14 & July 1911, p.4) & Churchward (1983, p.94) VRU – The Railways Union Gazette (May 1915, p.22) & Churchward (1983, p.105f)
The strike saw a vociferous response from the government and the press. Irvine responded quickly with engagement of strikebreakers, and a Strike Suppression Bill that threatened loss of all entitlements. The Melbourne papers were quick to paint the workers as traitors of the public good, stirring up middleclass fears about ongoing threats to civil order (Benham & Rickard 1973, pp.189). The strike was called off after eight days, and the workers reappointed, although the members of union’s executive were denied their positions, and Butler-Bowdon (1991, p.26) claims 60 were never re-employed. This was a major blow to the strength of this union, and it took almost a decade for
35
membership numbers to return to pre-strike levels.
The union had been
generally considered the most powerful of the rail associations, as it had the ability to cripple the transportation network immediately and because its members considered themselves difficult to replace. Churchward (1983, p.22) notes that “[b]efore the strike, the EDF[C]A, though not the largest union, had led the railwaymen in industrial matters. In the period that followed, it could no longer play this role.” A rival union also emerged during this period as the EDFCA refused to permit entry of any of the scab labour from the strike period. Only when the Australian Federated Union of Locomotive Enginemen was formed in 1921 and sought registration under the Federal Arbitration Act were the Loyalist Engine Drivers’ and Firemen’s Association accepted into the fold (Churchward 1983, pp.21-2).17 Other position- or section-specific unions emerged through the 1880s and 1890s, such as the Guards’ and Shunters’ Association, the Clerical Association, the Carriage Builders’ Association and the Signalmen’s Society. No records remain of the membership of these unions, although Churchward (1983, p.27) claims that by the 1900s apart from the EDFCA no sectional unions had more than a few hundred members.
By 1911 all of these organisations had
amalgamated into the all-grades Victorian Railways Union (VRU). Branch-wide and all-grades unions emerged from, or operated alongside, these more craft-like organisations for several decades before the VRU’s birth. The Victorian Railways Service Mutual Association was formed in 1884, aiming “…to enrol all railwaymen from senior executives, through engine-drivers, clerks, fitters, porters, signalmen, to labourers in the goods yards and on the permanent way.” (Turner 1965, p.12) In 1900 it merged with a sectional union, the Locomotive Workshops Union to form the Amalgamated Society of Railway
17
This acceptance may have only occurred at the executive level. Benham & Rickard (1973, p.24) cite the “…reminiscences of a railwayman” that “…as late as 1946 three ageing blacklegs of 1903 were still being sent to Coventry by their fellow workers.”
36
Employees (ASRE).
The union had 2900 members by the time two other
unions, the Casual Employes Union and the Permanent Way Association had joined in 1907. The ASRE used the VR management structure as a guideline to its own parameters: “…to be employed by the Commissioners was the prerequisite for eligibility.” (Churchward 1983, p.27) As such there were no qualms enrolling supernumerary and salaried staff alongside the more typical waged members. The ASRE was a strong advocate of the concept of one rail union, and as early as 1892 had participated in discussions with the other large unions on this issue (Victorian Railways Gazette June 1892 p.10). At a similar meeting in 1904, it had argued for amalgamation of all the unions, but faced opposition from amongst others the EDFCA, the Locomotive Institute of Engineers (LIE), the Guards’ and Shunters’ Association and the Signalmen’s Society (Victorian Railway News October 1904, pp.5-7).
These unions, along with the pro-
amalgamation Carriage Builders’ and Clerical Association chose instead the establishment of a Grand Council of Victorian Railway Societies. The EDFCA lost interest in the council by 1909, and the Council’s magazine, The Railway Gazette, became the mouthpiece of the Victorian Railways Transport Employees Association (VRTEA). The VRTEA was itself the result of an amalgamation between the Guards’ and Shunters’ Association and the Signalmen’s Society in 1904. It claimed to be “…the strongest both financially and numerically, of any of the legitimate Railway Associations in Victoria” (The Railway Gazette May 1906, p.5), although the figures in Table 2.6 cast doubt on this assertion. The VRTEA was a strong opponent, at least in its early years of the ASRE’s crossing of branch boundaries, claiming that the work and the key issues were too different across the railways. The ASRE proved much more successful at attracting members however, particularly in country areas, where workers were more conscious of their attachment to the Railways in general, and also appreciated the social aspect of the union. Recruitment was so successful that membership increased
37
2500 between July 1910 and July 1911 (Churchward 1983, p.94).
The
VRTEA’s view of the benefits of a single union thus changed over time, and by 1911 without any explicit repudiation, it joined with the Clerical Association, the Carriage Builders’, and the ASRE to form the VRU, which itself helped establish the Australian Railways Union in 1921. The 1911 mass amalgamation left only the EDFCA and the LIE as sectional unions. The LIE appear to have represented the tradesmen in the workshops, and listed its members as “…Fitters, turners, boilermakers, blacksmiths, pattern-makers, moulders, coppersmiths, machinists, and apprentices.” (The Railway Gazette May 1906, p.9) While it still existed in 1918 (Churchward 1983, p.162), many workshop employees joined the VRU and “…the Newport tradesmen tended in any case to join outside unions rather than the purely railway unions”. (Churchward 1983, p.150) A further branch-based union operated through the 1890s, known as the Traffic Union. It described itself as “…compris[ing] employés of all grades in the Traffic and Telegraph branches in the service…” (Victorian Railways Gazette September 1891, p.4). As indicated in Table 2.6, it had in excess of 1300 members in 1892, and it produced a monthly journal for its members. The only mention made of this union by historians of Victorian Railway unionism is in Butler Bowdon (1991, p.21), who notes a membership of 600 in 1895, and the journals of the post-1900 unions make no mention of this organisation. The wash up of all this is that for the first half century of the Railways’ existence there seem to have only been pockets of unionism. The 1903 strike, while damaging to the EDFCA, appeared to spark greater interest in unionism in other areas of the Railways. Churchward (1983, p.183) describes the pre-strike union environment as follows: “In 1903, the Victorian railway unionists still exhibited nineteenth-century attitudes towards industrial organisation. The multitude of small railway ‘societies’ were essentially benefit and friendly societies, whose methods of operations
38
were to intercede for members with their employers, the Commissioners.” The strike and the harsh response it brought from the government and the public in general, appears to have changed the mindset of the workers. Benham & Rickard (1973, p.23) claim that, as of 1903 “…the railwaymen had class consciousness thrust upon them.” Churchward (1983, p.184) contends that the strike “…weakened their loyalty to their government employer and correspondingly increased their awareness of themselves as part of the working class.” The journals of the respective unions of the post-strike period certainly reflect this with numerous articles on socialism and the desire to produce a labour newspaper.18 The role of unions in the Railways was always ambiguous. Given the lack of recognised arbitration process, the unions could only achieve things via lobbying.
Issues were taken up both through Parliament and also in very
regular delegations to the heads of the branches and the Commissioner(s). The union journals spent much of their time chronicling the various issues raised in these meetings, and management’s response. Many of the matters taken up related to individuals’ pay levels, overtime, or hours, but bigger issues such as general pay levels, hours and classification structures were also discussed. On the individuals’ grievances the unions were quite successful, as they tended to be pointing out oversights, inconsistencies or bureaucratic bungling.
Management was far less forthcoming on the issues that would
involve substantial costs such as across-the-board pay increases or changes in classifications. There is some evidence that union strength grew with amalgamations, as threatened strike action over the lack of significant pay rises in Regulation 56 18
The socialistic tendencies of the VRU lead to the emergence of several breakaway unions: the Victorian Railways Association (established in 1917); the Leading Hands Artisans Association (1919) and; the Administrative Officers and Clerks Association (1920). These unions later joined the Australian Transport Officers’ Federation (Churchward 1983, pp.148-51, p.187).
39
did see some concessions (The Railways Union Gazette October 1912, pp.1-4, Churchward 1983, p.115). Likewise the ongoing demands for a wages board undoubtedly influenced the 1917 establishment of a Classification Board. All this action happened very late in the period of this study, however. It is quite clear that for much of the first 65 years of the Victorian Railways, the role of trade unions did not stray far beyond a mechanism for airing individual workers’ grievances and voicing, in vain generally, employee dissatisfaction with certain aspects of management practices.
Conclusion The history of the Railways’ birth and growth is a story of interaction between a variety of groups. The Government chose to take ownership of the network to ensure its viability and harness its huge developmental benefits. They soon found it a highly complex managerial task that was complicated further by the scope for interference from players across the political sphere. As Chandler (1965a, p.97) explains with regards to US railways: “No existing business required so many, so varied, and so intricate short term operating decisions, and none called for such difficult long-term decisions as to pricing and allocation of resources.” These problems led to the delegation of increasing levels of responsibility to professional managers, and the eventual separation of the powers of the management away from the influence and demands of the Rail Minister. This process was far from smooth and in many instances the meat in the sandwich was the huge rail workforce. These employees, themselves the largest part of the managerial task, were a unique group in the economy, part of the largest organisation in the state, and constantly told they worked for the public, a nebulous employer at best. Rail workers did not have recourse to the typical industrial relations structures. Furthermore the breadth of tasks in which they engaged made collectivisation a difficult concept, and it took more than five
40
decades for them to join as a unified bargaining force and start to have a substantial impact on the conditions under which they worked. The Victorian Railways from its inception through to 1921 represents an organisation that was tackling some major managerial and contracting issues. The management was constantly asked to justify their position financially while burdened with an overextended network of non-viable lines.
They were
required to manage and motivate a workforce while constrained by the same financial pressures.
This required a consistent and well thought out labour
market structure. The following chapters identify the nature of these structures, conscious of their historical background.
41
CHAPTER THREE: A REVIEW AND SYNTHESIS OF THE THEORETICAL AND EMPIRICAL LITERATURE ON INTERNAL LABOUR MARKET PRACTICES Introduction This study integrates across several schools of labour market and human resource theory to provide a conceptual and analytical framework.
The
traditional neoclassical approach to labour markets is sketched and dismissed, due to its failure to realistically analyse the long-term employment relationships prevailing in many organisations in many historical periods. The concept and basic defining characteristics of an internal labour market (ILM) is then introduced as a more useful tool in conceptualising historical employment relationships in large-scale organisations.
The economic arguments put
forward for the existence of such markets are outlined, drawing principally on the work from new institutional economics, principal-agent theory, and transaction cost economics.
The decision to adopt an ILM structure is
presented as a decision on how best to transact for labour services given various informational and behavioural constraints. The characteristics of the ILM structure are examined in terms of their contribution to an efficient contracting construct. Alternative explanations of ILMs and criticisms of the new institutional approach are discussed, particularly those of radical political economists.
Several
attempts to reconcile and synthesise alternative viewpoints are surveyed, and useful taxonomies of ILM structures are also drawn from theorists in human resource management. This chapter also provides a literature review of empirical studies using similar personnel records to those of the Victorian Railways to analyse ILMs. Studies that use personnel data, even if not to examine ILMs, are discussed when they introduce important methodological examples or tools for understanding the
42
organisation of Railways’ work in Victoria. Particularly important are the findings of these and other historical works as to the timing of ILM development. The goal in this chapter is the development of an integrated model to be tested in the subsequent empirical analysis. As such, the chapter concludes with an outline of how the data under examination may challenge or reinforce the existing theoretical and empirical literature.
Traditional theory Traditional neoclassical economic theory treats labour markets as just another case of the interplay of supply and demand producing an optimal outcome in a static world.
Labour market interaction is viewed as workers and firms
continually renegotiating employment in a spot market. The usual neoclassical assumptions apply, including perfect information, many buyers and many sellers, zero transaction costs, and utility maximising players striving as individuals to achieve the most efficient outcome.
Further, all terms and
conditions of employment including remuneration rates are assumed to be infinitely flexible.
Such a vision has proven difficult to reconcile with the
observed situation of a labour market with rigid wage structures, stable working conditions and low worker turnover rates. There appear, in fact, to be many labour markets with varying levels of wage rigidity and employment stability. This has led to a line being drawn between structured and structureless labour markets. Traditional neoclassical wage-competition theory does a reasonable job of explaining outcomes in the latter, but falls well short in the former. These structured labour markets include what have been labeled internal labour markets (ILMs).
ILM structures In their seminal work Doeringer and Piore (1985, p.2) make a distinction between an “...internal labor market, governed by administrative rules” and
43
“...the external labor market of conventional economic theory where pricing, allocating, and training decisions are controlled directly by economic variables.” ILMs are viewed as having several key defining characteristics. There tend to be distinct ports of entry and exit into an organisation, such that “...the pricing and allocation functions of the market take place within rather than outside the establishment....[with] a set of rules that limits hiring to certain occupations, or ports of entry, and reserves the remainder of the jobs to those already employed” (Osterman 1984, p.2). Wage structures and promotion policies are determined, at least in part, by a set of administrative rules or customs. These explicit or implicit rules outline an expected career path, usually encompassing seniority, and a wage structure that reflects the career path. All these factors act to insulate the workers within the ILM from the vagaries of the external labour market. ILMs may encompass a whole firm, or perhaps a whole industry. Alternatively the ILM may represent only a segment of a particular firm. A given firm may consist of several different ILMs, particularly in a situation where a variety of distinct functions are being performed or where there are geographically dispersed work locations.
Osterman (1984, p2) notes that “...some rules,
particularly those covering procedural justice” will stretch across the various ILMs within a firm, or as he dubs them, “...families”. By its nature an ILM requires some level of administrative structure or bureaucracy. Indeed, Jacoby (1985, p.2) regards the key features of a bureaucratic organisation to be “...stability, internal promotion, and impersonal, rule-bound procedures”. Why these ILMs have developed and how they operate, are crucial questions. On a macroeconomic level the temptation is to view ILMs as anomalies or “...random events which cancel out in the aggregate”. Doeringer and Piore (1985, p.8) go on to warn, however, that “...what is trivial on a macro level can turn out to be central on the micro level, where an understanding of the underlying market machinery is essential.”
Given the failure of traditional
neoclassical market theory to explain the existence and persistence of such
44
market structures, it is necessary to examine the work on labour markets in the field of transaction cost economics and contracting theory.
A new institutional approach to ILMs The school of new institutional or transaction cost economics has emerged from traditional neoclassical economics. Individual economic agents in this world still act to maximise their outcomes. These agents face some constraints however, as several crucial assumptions from the traditional theory have been lifted. Information is no longer costless nor are agents infinitely wise. As a result, modes of transacting produce differing costs, and agents are faced with the responsibility of choosing contractual structures that best match their needs. Fine (1998, p.7) has described this theory as “… treating optimising individuals as if they were the source of social structures”. The differences between the underlying assumptions of the new institutional and the traditional neoclassical approaches are both informational and behavioural. Information in the new institutional model is neither perfect nor costless. Parties have different levels of information. A distinction is made between moral hazard, or hidden action, and adverse selection, or hidden information.
Hidden action refers to the asymmetry of a situation where “[t]he
agent knows the action chosen, but the principal is unable to tell from observing the outcome alone which combination of action and state of the world has occurred.” (Strong & Waterson 1987, p.23)19 Such a scenario arises in labour markets in any instance where output is not directly attributable to a given worker and/or where performance is difficult to observe. Hidden information is explained as follows: 19
The terms principal and agent derive from the economic concept of a principal-agent relationship, in which “the principal commands the agent to take actions on the principal's behalf, motivated by a monetary reward” (Osterman 1984, p.18). In the employment relationship the principal will tend to be the employer/manager and the agent(s) the employee(s).
45
“The simplest form of adverse selection arises when the principal is not privy to some information which is relevant to the action, whereas the agent can make use of this information in selecting an action. Then, even if the agent's action and the outcome are jointly observed, the principal cannot know whether the action was optimal given the agent's private information.” (Strong & Waterson 1987, p.21) In an employment relationship hidden information is a problem from the outset as an informational asymmetry with regard to the ability, experience, motivation levels and intentions of a potential employees exists prior to the contract being agreed. The model also recognises some human behavioural characteristics that pure neoclassical economics tends to assume away.
On the informational front,
parties are constrained by bounded rationality, namely the “...limited ability of human agents to receive, store, retrieve, and process data” (Williamson 1979, p.234f). The analysis of interaction between parties must therefore discuss the mechanisms used to garner information from each other and recognise the uncertainty that may exist about future contingencies. These informational issues allow a further aspect of human nature to enter the equation. There is now the potential to disguise the truth, withhold information and reap rewards from doing so.
Such actions fall under the heading of
opportunism, which McGuinness (1987, p.44) has defined as “...a devious kind of self-interested behaviour...[whereby] at least some people might behave in strategic, guileful ways, if they can do so undetected and thereby promote their own interest. This might involve representing their position (abilities, preferences, intentions) in a way that is less than completely honest, or even perhaps downright dishonest.” The introduction of these complications means that market interaction via supply and demand curves pose costs to transactions. Alternative institutions may allow less costly transacting than the market. Transaction cost economics is a comparative institutional undertaking matching the nature of the transaction to the contractual mode.
For efficiency reasons, long-term contracting
46
relationships between distinct parties or firms or a hierarchical authority relationship such as occurs within a firm, will be less costly than markets in particular situations. Determining which contractual form will prevail requires recognition of the type of good or service being exchanged, the costs involved in transacting in that good and the contractual mechanisms required to produce the most efficient outcome. The costs associated with transacting can be broken down into ex ante costs of arranging a contract and the ex post costs of monitoring and enforcing it (Eggertsson 1990, p.14). The costs of arranging a contract include the cost of searching for information about prices and quality of products or services, potential buyers or sellers, and reliable and relevant information about their behaviour, quality and past performance. Given contracts require bargaining, and competition is less powerful in a world of costly information, price becomes endogenous in many situations. As a result the process of bargaining gives rise to transaction costs, as does the writing up the contracts (or arriving at a verbal form). The ex post issue of monitoring the contract is costly due to asymmetric information, adverse selection and moral hazard. Enforcement of the contract is costly as it involves recourse to the legal system, the establishment of and involvement in third party arbitration mechanisms, or lengthy renegotiation or termination processes.
Less than perfect information also means greater
opportunity costs due to poor decisions resulting from deficient coordination or transactions being avoided due to parties’ concerns about opportunistic behaviour (Milgrom & Roberts 1992, pp.29-30). The nature of the good or service being exchanged affects the transaction costs incurred and the choice of contractual form. Williamson (1979, p.239) identifies “...three critical dimensions for characterizing transactions...(1) uncertainty, (2) the frequency with which such transactions recur, and (3) the degree to which durable transaction-specific investments are incurred.”
All three dimensions
bear a positive relationship to the cost of transacting in the market. In a labor market situation employers are purchasing labour services from workers. In
47
terms of Williamson’s dimensions, labour services may involve high uncertainty due to adverse selection and moral hazard issues, which are most problematic when the input to output relationship is difficult to identify. Also uncertainty may exist with regards to employer needs, such that exact job requirements will be difficult to state explicitly. The frequency issue was described by Coase (1937, p.21) as a decision between a series of clearly defined task-by-task contracts and a single incomplete contract where a worker is employed to follow the orders of the employer (within certain limits). The third dimension of an exchange that impacts on the transaction costs is asset specificity. Milgrom and Roberts (1992, p.604) define asset specificity as “… measured by the loss in value entailed in shifting the asset to another use.” If the good or service being exchanged would have a lower value in the second best transaction, or if entering into the exchange will involve an investment that will only reap lower returns elsewhere, then there is increased potential for opportunistic activity, as the parties bargain over the quasi-rents involved. A contract involving transaction specific investments will require greater safeguards from such opportunism than contracts with mixed or non-specific assets. As Williamson (1984, p.90) postulates, “…the greater the degree of human asset specificity, the more carefully crafted the governance structures within which jobs are located.” Labour services can be very specific in their nature. Workers will carry some general human capital - skills that are applicable from workplace to workplace, task to task. Most jobs require the development of firm-specific skills also. This specificity derives from the idiosyncrasies of the tasks at hand. Williamson et al. (1975, pp.256-7) identify four distinct types of task idiosyncrasies: “(1) equipment idiosyncracies, due to incompletely standardized, albeit common, equipment, the unique characteristics of which become known through experience; (2) process idiosyncracies, which are fashioned or “adopted” by the worker and his associates in specific operating contexts; (3) informal team accommodations, attributable to mutual adaptation among parties engaged in recurrent contact but which are upset, to the possible detriment of group performance, when the membership is altered; and (4)
48
communication idiosyncracies with respect to information channels and codes that are of value only within the firm”. These idiosyncrasies are learnt over time, in many instances through some onthe-job training process. This is an investment decision made by the employee but paid for by both employer and employee. These investments are specific to the transaction with the given employer and will have a lesser value elsewhere. As the absolute cost levels of firm specific skill acquisition are also higher, due to the failure to reap economies of scale, it is in the employer’s interest “...to stabilize employment and reduce turnover so that they can capture the benefits of the training.”(Doeringer & Piore 1985, p.39) Attempting to write complete arms-length-style market contracts for labour services incurs high transaction costs especially when the exchanges require firm-specific human capital investments.
Employers who can formulate a
contracting mechanism that deals with uncertainty, informational difficulties, the potential opportunism and under-investment in the desired skills will achieve a better outcome then their competitors.
The decision to structure the
employment relationship as an ILM represents just such a contracting solution. The firm reduces its attachment to the external market for labour services, and introduces an element of internalisation in the form of hierarchical authority. This authority tends to manifest itself as incentive mechanisms in the employment contract that aim to align workers’ goals to that of the organisation so as to reduce moral hazard and adverse selection. Following Coase (1937), Milgrom and Roberts (1990, p.132) note that employment contracts by their nature are usually incomplete contracts, acting to “…delegate authority to the employer to direct the employee’s action rather than describing the work to be done in every contingency… within certain bounds that may be quite clearly defined.”
An ILM extends beyond this to include a number of structural
mechanisms that create expectations both for the employer and employee. The ILM can be analysed from the perspective of its function as a contract or structure that aims to reduce transaction costs between the transacting parties.
49
For example, the ILM monitors employees’ work efforts and human capital investments.
Employees will be monitoring the employer’s adherence to the
conditions of the contract, including the maintenance of the ILM. Furthermore, the ILM establishes incentive mechanisms that reduce monitoring and align employer and employee goals attenuating adverse selection and moral hazard. Low-level common ports of entry are a typical characteristic of an ILM, and have several contracting functions. Employers are keen to avoid large search costs in finding employees, but suffer from an asymmetry in regard to information on workers abilities. While the firm may know the overall distribution of abilities, only the individuals know their own abilities.
As such, the firm may use
education levels as an initial screening mechanism, with entrance (and later) examinations as supplements. Firms may discount any experience in working elsewhere due to difficulties in generating an effective inter-firm experience rating. Williamson et. al. (1975, p.274) view much of this difficulty as a result of the inability to communicate such ratings.
They also acknowledge the
potential for opportunistic behaviour by one firm misleading others to rid themselves of substandard workers.
Their emphasis is however on the
bounded rationality issues of not having a common language with which to describe highly idiosyncratic work experiences.
It becomes easier and less
risky to the firm to bring most new employees in at a common low-level point.20 Workers at this low-level point will then receive training in the skills required by the employer.
A high level of skill specificity may necessitate on-the-job
training due to the lack of alternative learning mechanisms. Such training bears two direct costs to the firm: wages being paid to the trainees and the lost output of trainers.21 A process of learning-by-doing may be the more efficient option, 20
The firm will be reluctant to take the risk of new employees, whose abilities are not fully known, undertaking tasks which, if performed poorly, will lead to losses, financial or otherwise. Low-level positions will tend to involve less risky work. The risk here is in terms of risk to the firm’s bottom line, rather the risk of injury to the individual that may actually be higher for these lower level jobs. 21 These trainees’ wages may be lower than their productivity however, as part of a deferred payment scheme, such that the training costs are effectively shared.
50
as the instructional costs will be lower and the trainer’s lost output somewhat offset by that of the trainee. If firm-specific skill acquisition is a cumulative process then a common low-level port of entry becomes most cost effective mechanism in insuring the necessary investments are made. Common career paths are another characteristic of ILMs.
They facilitate
appropriate investments and are an incentive mechanism for workers to reveal hidden information, thereby reducing monitoring costs. A clearly defined job ladder with seniority generally rewarded encourages the transfer of firm specific knowledge from worker to worker. Incumbent workers are willing to train lower level workers “...without viewing them as a threat to their position.”(Osterman, 1984, p.12) This also reduces bargaining costs, as Williamson et. al. (1975, p.257) describe the alternative, whereby “...incumbent employees will hoard information to their personal advantage and engage in a series of bilateral monopolistic exchanges with the management”. If the skills acquired are highly task idiosyncratic in any of the four areas discussed above, they may be difficult to formally recognise. As a result, experience may become a proxy for the level of skill acquisition, thereby reinforcing the role of seniority in promotion. Presuming the skills transmitted are necessary to the jobs at hand, then performance of the requirements of current jobs and successful promotion of employees can be taken as an indication of appropriate human capital investments by employees. In examining the role of career paths as incentive mechanisms the need to screen employees is revisited. Given the significant subsequent investment resulting from hiring, the employer is keen to avoid not only employees who are unsuited to the requirements of the job, but also those who will resign in the short-to-medium term.
Employee intentions are very difficult to gauge,
however. A useful method of screening is to provide a contract that will attract those candidates who are likely to stay with the firm, and discourage the more mobile. Salop and Salop (1976) suggest that an upward-sloping experience-
51
wage profile meets such a criterion. Lazear (1993, p.8) explains such a wage profile, the norm in ILMs, as follows: “Young workers are paid less than they are worth with the promise that they will receive more than they are worth when old. Workers continue to put forth effort in order to capture the rents associated with being an older worker in the firm.” To ensure that neither party receives greater net rents over time, there must be a mandatory retirement date implicitly or explicitly stated at the commencement of the contract (Lazear 1979, p.1265).
The remuneration profile may also
include a pension scheme as a further form of deferred compensation. The potential to break the nexus between a worker’s wages in a given period and productivity in that period is thus greater within the ILM.
What effectively
happens is that this timeframe or period is expanded to become the entire working life of the individual, such that it is necessary only that “...discounted lifetime (or employment time) wage [or remuneration] equals the discounted lifetime productivity” (Osterman 1984, p.7). As the discussion of enforcement mechanisms below investigates, reputation, particularly with respect to the ongoing contracts of existing workers, acts to prevent employers from cheating on such contracts. The
problem
of
informational
asymmetries
continues
throughout
the
employment relationship. From the employer’s perspective there will continue to be difficulties in verifying the levels of workers’ effort and determining any individual’s maximum effort.
Milgrom and Roberts (1992, p.373) argue that
ILMs, in particular a set career path, represents a unified response to these problems. Workers, they argue, face a job ladder, with each rung representing a particular job title or level, and an expected wage range. They assert that “[i]f the number of rungs on the job ladder, the pay and performance levels attached to each job, and the promotion standards at each level are all set properly, employees will be motivated to work for promotions until each reaches a level that is
52
“appropriate” in light of his or her (privately known) abilities” (Milgrom & Roberts 1992, p.374).22 By drawing information out of employees and providing motivation to work hard, career paths reduce the monitoring costs incurred by the employer. This is, however, reliant on the appropriate types of performance being rewarded. Each rung on the job ladder also serves as a further screening point, and the employer may develop more efficient methods or criteria for advancement, effectively reducing search costs. The discussion of career paths introduces wage structures. An upward-sloping experience-wage profile screens out more mobile potential employees. The steepness of the wage curve has also been linked to employer efforts to overcome employee opportunism or cheating. Lazear (1979, p.1267) claims “...a firm which withholds payment until the end of an individual’s work life is less likely to experience worker cheating than one that pays workers more at the beginning and less at the end of the worker’s career.” In an ILM withholding payment is generally extended to beyond the employee’s working life, in the form of a lump-sum retirement or pension – a practice known as deferred compensation. Goldberg (1984, pp.132-3) presents an argument that deferred compensation and other practices that make exit costly for an employee, such as above market-clearing wages, fringe benefits and internal promotion ladders, will be of benefit to an employer in any situation where there is scope for workers to perform their tasks in a deleterious fashion. Firm specific skills or turnover costs are not seen as necessary for such an outcome. Again the threat of damage to reputation, as much as third-party enforcement, works to preclude employer opportunism vis-à-vis deferred compensation. Williamson et.al. take the notion of employee opportunism beyond some act of mischief on a worker’s part. They identify the linking of wage rates to jobs 22
Furthermore, the firm will procure rents on all employees except those who have achieved their highest point, as those seeking promotion will be “working to a higher level than are other people in same job but are paid no more” (Milgrom & Roberts 1992, p.375).
53
rather than workers in an ILM as a means by which to remove the potential for the opportunistic bargaining that would occur on the part of workers in an individual contracting system. The potential for this opportunism results from the idiosyncratic nature of human capital accumulation. Further, incremental gains in such capital will not result in a re-negotiation of the employment contract, thereby in transaction costs are reduced further (Williamson et.al. 1975, pp.270-1). This wage structure is praised as reflecting “...objective longterm job values rather than current bargaining exigencies” (Williamson et.al. 1975, p.276). The ILM contract, as presented thus far, aims to increase the tenure of appropriate workers within the firm. Doeringer and Piore (1985, p.29) describe the ILM development process as labour becoming “...a quasi-fixed factor of production”, not unlike capital. As human capital theory tells us, “...[i]ncumbent employees who have received specific training become valuable resources to the firm.” (Williamson et al 1975, p.253) This is reflected by the increased costs incurred when a worker leaves - “...the cost of replacement and the cost of termination.”
These replacement costs are effectively the costs of entering
another contract for labour services - the costs of recruitment, screening, monitoring and training. A further cost is that of enforcing the terms of the contract. Given that both parties in this relationship are reluctant to rescind the contract due to transaction specific investments, the goal is not to create penalties for noncompliance or severance mechanisms. Rather the aim is to ensure rules and expectations are adequately communicated, and a mechanism developed that allows change to be introduced. Customary law serves such a function. Transaction cost theory states that “[g]enerally, when similar transactions occur frequently over a long period of time involving some of the same parties, the one who interacts repeatedly may find it valuable to design and introduce low-cost routines to manage the transaction. ... The parties can also develop understandings and routines that reduce
54
the need for explicit planning to coordinate their actions.” (Milgrom & Roberts 1992, p.31) Therefore it is in the interest of both the employer and employees to develop implicit understandings of how the workplace will function. Doeringer and Piore (1985, pp.6-7) argue that the psychological behaviour of work groups, particularly the development of “...interdependent utility functions”, leads to “...the formation of relatively fixed customs and traditions with respect to wage structures, promotion arrangements, and other work rules affecting groups of workers.” These customs are described as an “...unwritten set of rules based largely upon past practice or precedent...” and viewed as “...an outgrowth of employment stability within internal labor markets.” This stability leads to the formation of social groups or communities that generate rules which “[e]ventually...assume an ethical or quasi-ethical aura.” (Doeringer & Piore 1985, p.23)
Lazear (1993, p.12) refers to “...organizational norms” in the
workplace. Focusing on employer driven feelings of shame or guilt about effort levels, he claims that “...organizations may try to instil guilt, euphemistically called “...loyalty”, in their workers to encourage performance when others cannot observe shirking.” Casson (1991, p.17) sees this sort of “...moral mechanism” as a superior means of overcoming monitoring difficulties caused by information asymmetries. He contests that “...[u]nder the moral mechanism, people punish themselves for anti-social behaviour”, thereby becoming “...self monitoring agents.” Williamson et.al. (1975, p.271) describe group discipline and also promotion ladders as disincentives against resistance to authority. Custom also represents the long-term expectations current and prospective employees will have about their future working conditions with the firm. As such, custom forms the basis for the implicit employment contracts these workers face. It therefore facilitates many of the features of ILMs that require long-term commitments, such as the upward sloping wage-age curve and firmspecific human capital investment.
55
The development and functioning of ILMs is a dynamic and time-sensitive process. Customary law in the workplace, if only implicit, can still be subject to significant change, including changes made in work processes or practices at the margin.
In instances where the production process requires, or allows,
workers to modify their routines, work practices may in fact be quite dynamic. The training system may act to disguise recent adaptations to work processes as long-held customs or norms. A further dynamic aspect of an ILM is that codification of customary rules may occur over time.
Doeringer and Piore (1985, p.36) see such formalisation
resulting from a union presence in the workplace or from the existence of “[l]arge hierarchical management organizations”. Jacoby (1985, p.277) avers, attributing the development of the modern bureaucracy, embracing many of an ILM’s defining properties, to “...the growing power of the unions and ascendance of the personnel department over other branches of management.” Osterman (1984, p.5) also points out that “...the concept of internal labor markets is in no sense limited to the union sector...”and that “[m]any nonunion firms have fully developed internal labor market rules”. He does characterise the union sector as “...the cutting edge” in the formalisation process, however, “...with the nonunion sector firms following and imitating to avoid unionization.” This view is challenged by this study, as the development of ILMs in the Victorian Railways occurred independently of, and prior to, unionisation of the workforce. The impact of this codification may vary.
It may “...limit whatever flexibility
custom derives from its dependence upon past practice and memory.” (Doeringer & Piore 1985, p.36) In particular, Doeringer and Piore (1985, p.35) express concern that “[a]fter union organization, the threat of organized, deliberate economic reprisal results in raising the cost to management of changing customary procedures.” Nevertheless, they go on to acknowledge that a trade union may “...provide an organized channel for deliberate change in customary practices through collective bargaining.” (Doeringer & Piore 1985, p.36) There is an efficiency argument for codification, as having contracting
56
precedents or norms reduces the need to for bargaining over conditions each time a new employee is taken on. Custom codified or otherwise, can be seen as significantly reducing the uncertainty aspect of a transaction. Synthesising neoinstitutional economics and more traditional neoclassical labour market theory does not represent any major paradigmatic shift. Merely introducing transaction costs due to informational difficulties and opportunistic tendencies does not attack the basic tenets of the neoclassical viewpoint. Individuals in this environment are still making efficiency optimisation decisions based on marginal relativities.
Challenges to the new institutional approach A number of criticisms have been levelled at the transaction cost analysis of the development of ILMs.
Osterman (1984, p.8) claims that the view that
“…internal labour markets developed because they are efficient solutions to problems of management in complex environments”, while attractive on a pointto-point basis, is tautological as an overall explanation. He claims that any feature of an ILM can also be viewed as equally efficiency-limiting, and criticises the lack of data showing cost-benefit comparisons of alternative contracting mechanisms.
Indeed he views the opposition of many employers’ to ILM
development, and significant differences in ILM proliferation between the preWorld War I and post-Great Depression periods as evidence that ILMs may not represent maximising behaviour. He concludes that these models are at best “…post hoc rationales, not explanatory theories.” (1984, p.10) Doeringer and Piore also question the transaction cost analysis. In the preface to the 1985 reprint of their original study they express doubt that “… any of the major strands of conventional research will prove capable of assimilating the internal labor market into conventional theory in a useful and meaningful way.” (p.xxi) Conventional approaches are criticised as generating a vocabulary rather than a theory. Descriptions of ILMs are translated into the jargon of economic
57
theory, at the expense of an explanation of the origins and operation of the ILM. Doeringer and Piore suggest that only when theorists move beyond the individual as the basic unit of analysis will a coherent theory emerge. They believe that ILMs represent a fundamental departure from the general model of a neoclassical firm, and that “[t]he actual process through which internal labor markets emerge and evolve over time clearly involves the formation and interaction of cohesive social groups.” (p.xxii) Outside the theoretical mainstream, labour process authors view the development of labour structures in a different light. Reflective of their classbased, radical or Marxist bent, they adopt a more group-based analytical framework. Employment practices and organisation of the firm are considered “… the outcome of a struggle (albeit an unequal struggle) between capital and labor over the rate of exploitation of labor.” (Gintis 1976, p.36) Much of this work springs from investigations of the differences in labour market outcomes for different social and ethnic groups and the persistent problems of poverty and unemployment. The radical political economists focus on the concept of labour market segmentation – “…the historical process whereby political-economic forces encourage the division of the labor market into separate submarkets, or segments, distinguished by different labor market characteristics and behavioral rules.” (Reich, Gordon & Edwards 1973, p.359) In this framework, labour market contractual structures are segmented, with the primary labour market offering stable employment, high wages and job ladders. In contrast, the secondary market is characterised by unstable and casual employment, with low pay, virtually no job security, few prospects for advancement and little reward for seniority in the form of either high pay or a better job (Reich, Gordon & Edwards 1973, p.360, Edwards 1979, pp.167-8). The radicalness of the hypotheses and arguments in this literature varies. Generally the employers, or owners of capital, are presented as the more powerful party in the equation. Capitalists fear the labour conflicts that would
58
arise from a united homogenous proletariat opposing capitalist hegemony. Segmentation is a divide and conquer strategy aimed at securing strategic control over product and factor markets.
Segmentation is deemed to have
arisen and perpetuated due to its functionality from the capitalists’ perspectives. By reproducing capitalist hegemony, segmentation limits the aspirations and perceptions of workers thereby reducing the pressure on social institutions such as schools and family to reproduce the class structure, and it legitimises inequalities in authority and control (Reich, Gordon & Edwards 1973, pp.360-4). Marglin (1974) takes a similar stance, viewing the organisation of production via hierarchies as the action of capitalists who are aware they bring nothing of value to the production process other than their capital. Specialisation is the epitome of such action, removing workers from the end product or knowledge of the complete production process, and interposing capitalists between the producer and the market. This is evidenced, in part, by the lesser reliance on hierarchy and specialisation in areas where the establishment costs or the natural scarcity of possible work-sites limits the scope for workers to usurp the capitalist’s role. Marglin’s analysis is based on the removal of the assumption that players in economic markets do not possess any economic power. Specialisation means the extreme narrowing of a market for a worker’s labour output.
Powerful
capitalists, rather than technological progress (in this case of administrative or organisational ilk) based on economic efficiency, bring about changes in production methods.
This reversal means that the choice of technology is
based on capital’s capacity to facilitate the exercise of this power. Production or organisation decisions then, are viewed not as “...exogenous and inexorable” shifts in technology, but rather “...endogenous and resistible” exercises of power. Marglin asserts that “…a lack of discipline and supervision could be disastrous for profits without being inefficient.” (p.91) Discipline and supervision are not viewed as necessarily producing a more economically efficient outcome, as any increased output will generally be through greater input of labour (p.94).
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The characteristics of an ILM are explained in a different fashion in radical political economy literature. The organisation of work itself is treated as less the outcome of a contract, and more the imposition by the employer on a powerless workforce. The nature of work is no longer determined by worker preferences (Gintis 1976, p.38). Gintis (p.43) treats the capital-labour relation as a power configuration constituted of three organisational factors, all at least partially under the capitalist’s control: (a) the extent and character of workers’ accountability; (b) the manipulation of worker consciousness; and (c) pay scales and criteria of promotion and dismissal. The above market rate wages that may be paid in an ILM are a means of restoring the threat of dismissal as a profitmaximising tool. Dismissal would represent a severe penalty if wages are lower elsewhere, and as a result the capitalist’s ability to extract surplus value from the labor power is increased dramatically. Internal promotion is justified by the argument that to not do so, that is bring workers from outside the firm, “…eliminates the second major instrument of the employer for extracting labor from labor power – the control over advancement in the organization.” (p.43) Lengthy tenure is a by-product of such policies. Gintis also acknowledges that, given the ongoing nature of the employment relationship, the actions of employers shape the consciousness of workers. He describes a production process where labour is not only an input but also effectively an output, with production processes shaping worker consciousness into the future. The outcome is that “… forms of work organization which tend not to reproduce worker consciousness appropriate to further profits will not be introduced, however strongly desired by workers and however materially productive.” (p.44) Radical political economists define the organisational structure decisions differently to mainstream ILM theorists. Hierarchies insure information flows, but also reduce solidarity both vertically and horizontally. Vertically, jobs are structured to ensure little common experience between hierarchical levels and
60
prestige is granted to superiors. The potential for promotion assists in shifting the process of social identification from horizontal to vertical, although only if there is a reasonable probability of advancement (Gintis 1976, p.47). Employers are mindful of the legitimacy of their actions. Legitimacy refers to worker perceptions of the ILM processes in terms of consistency and justness, notions that are shaped by societal norms and also the standard practices of the firm – a variation on the custom argument (Gintis 1976, pp.48-50). The radical political economy analytical structure is difficult to test for, since the ILM structures described do not differ in an observable fashion from those defined by neoclassical and neoinstitutional economics.
The workers’
bargaining power, which employers are attempting to constrain in the radical model, is generally derived from skill specificities, as are some of the contracting problems in the more mainstream version.
Employer fear of
proletariat unrest finds a corollary in uncertainty. The presence of some power imbalance is difficult to quantify, as is the level of dissatisfaction of workers with their predicament. The efforts of workers to change existing structures may indicate dissatisfaction, but if successful would seem to undermine the powerlessness argument. Williamson’s criticism still holds also, that “[t]he main problem with power is that it that the concept is so poorly defined that power can be and is invoked to explain virtually anything.” (1984, p.103)23 Attempts have been made to reconcile the apparently conflicting transaction cost and radical frameworks. Marginson (1993) argues that it is possible to present a case within the neoinstitutional framework where, using its own assumption of self-interested behaviour, it is recognised that “…employers will use the authority vested in them by the incomplete nature of the labour contract to pursue their own interests, in which case employers may select forms of work organization that maximise 23
Malcomson (1984, pp.125-6) questions Williamson’s position, however, presenting a strong argument that power can be defined within a transaction costs framework, as it is derived from the nature of the market in which an economic party operates. That is to say the removal of perfect market assumptions and the acknowledgment of bargaining costs require recognition of bargaining power.
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their own private returns and are consistent with maintaining or enhancing their authority.” (p.158) He claims that Williamson and others have failed to satisfactorily handle the interplay of the bargaining power, both employer and employee, derived from firm-specific skills.
The assumption of counterbalancing bargaining power
positions is described as highly questionable. He sees much more scope for opportunism from employers, as the authority relation is “…tailor-made for the unilateral pursuit of self-interest.” (p.140) An alternative to the efficient institutions proposition is offered where “[e]mployers select that means of work organization consistent with the objectives of maximising their own return and maintaining or strengthening their own authority.” (p.142) The proposition that workers possess bargaining power only insofar as they possess firm-specific skills is also challenged. Firm-specific skills are deemed neither necessary nor sufficient for the existence of workers’ bargaining power. Likewise, trade union organisation is not contingent on firm-specific skill formation.
The alternative proposition offered is that “[t]he exercise of
bargaining power by workers rests on the formation of countervailing organizations (including trade unions) against the use of authority by employers.” (p.146) Furthermore, Marginson argues, “[e]mployers will try to minimize the threat to their authority posed by workers’ (trade union) organization.” (p.146) Marginson also challenges the transaction cost approach’s contention that the labour contract is no different to any other. He identifies much more ex post bargaining over precise allocation of tasks and effort levels than typical transactions.
This difference derives from the distinction made also by
Malcomson (1984, p.120) between the capacity to work purchased by the employer and the actual work performed. The contract is mutually left open, as employers seek the prerogative to direct work in the most profitable fashion, and workers attempt to secure control over the pace and content of their work (Marginson 1993, pp.146-9). This allows for a form of conflict over terms and
62
conditions of the contract that is conceptually distinct from opportunistic behaviour per se (p.159). The emphasis on control as a management strategy in the more radical approaches is criticised as just as limiting as the consensual slant of the neoinstitutional theory. Marginson instead suggests that there is a range of methods adopted to extract the ideal level of labour effort. Included amongst these are institutional and normative factors outside the control-consensus dichotomy, such as professionalisation and socialisation induced effort norms and conventions. The strategies adopted will depend on the extent to which the employer desires not only raw effort from employees but also some level of creativity and flexibility (pp.155-8). Edwards (1990) questions the presumption in both the transaction cost and radical models that management is always a rational activity. He prefers an alternative that sees “…management as the management of uncertainty [where] managers have continuously to manage contradictory forces, such as the need to release workers’ creativity while also sustaining control over workers.” (p.55). This leads to recognition that not all management action will be the rational carrying out of carefully formulated strategies.
Edwards also warns against
assuming that the effect of a policy now was the raison d’être at the time of implementation.24
By emphasising “…the multi-faceted nature of the labor
relation and the social construction of customs and understandings” (p.59), he implicitly acknowledges the role of path dependence in shaping labour market relations. While not stating it explicitly, both Jacoby and Doeringer and Piore discuss the path dependent nature of ILM development. That is to say that the process of ILM development has progressed to such a point at a macro level that it has
24
He cites the example of continuity of employment rules on English docks that limited employer scope to redistribute tasks. Management originally introduced the rule to prevent workers from dropping unattractive jobs mid-shift in favour of better-paying work (p.57).
63
become very difficult, if not impossible, to unravel. The key argument behind this statement is that as more workers are removed from the external labour market, both employers and employees are locked into an ILM, given interdependencies.
From the employer’s perspective there will be fewer
workers to choose from, and presumably poorer quality workers at that, thereby increasing search and turnover costs. From a worker’s position the removal of jobs, in particular secure long-term jobs, from the external labour market reduces their options and therefore their economic security.
Doeringer and
Piore (1985, p.38) claim that this is particularly the case in periods of economic downturn or potential dramatic change. The skill specificity issues discussed earlier will act to further segregate workers, such that those in an ILM will seek only to further protect themselves. Employers, having made substantial human capital investments, and perhaps also facing laws reflecting the norms of ILMs, such as severance pay or compulsory pension schemes, will also become increasingly committed to ILMs. Having earlier acknowledged the sunk costs involved (Jacoby 1985, p.283-4), Jacoby (p.285) best summarises the argument why ILMs tend to proliferate in a proportion of the economy: “...the basic practices which make up the internal labour market are likely to persist, not because they are carved in microeconomic stone, but because over the years they have become embedded in a structure of law, managerial principles, and employee expectations.” The path dependent nature of ILM development and its role in shaping employment relations and labour market structures at a macroeconomic level makes it crucial to understand the origins of ILMs in Australia. The Victorian Railways was a large, visible organisation and as a result, helped shape the industrial relations environment of this young colony.
Frameworks to describe ILMs Much of the economics literature focuses on the theoretical bases for ILM existence without providing clear definitions of ILM structures.
The field of
Human Resource Management (HRM), embracing the methodology of several
64
of its feeder disciplines, notably sociology and strategic management,25 has quickly developed several useful taxonomies for identifying ILM structures. Rather than deal with each characteristic of the ILM individually, as tends to be the case in much of the economics literature, the models deal with ILMs as “…employment systems because they consist of interdependent attributes and produce multiple, interdependent outcomes” (Pinfield & Berner 1994, p.54). Furthermore, the models do not imply that there is only one viable configuration of elements and outcomes.
Rather it is claimed that there “…are multiple
dynamic equilibria depending on the nature and combinations of ILM elements present, as well as the economic and social context within which the ILM operates” (Pinfield & Berner 1994, p.57). ILMs are thus a logical system of rules for a given scenario, but may differ significantly from incident to incident, such that “...ILMs conceived in these broader terms come to represent the overall human resource management strategy of an enterprise” (Osterman 1992, p.276). Osterman (1987, p.49) provides the most widely used model in the HRM literature, identifying “…four employment subsystems which capture most of the choices available to firms [which] may be characterized as industrial, salaried, craft, and secondary.” The industrial model bears most of the familiar characteristics of blue-collar ILMs - tightly defined jobs, wages attached to jobs, promotions and lateral shifts governed by rules such as seniority provisions. There is no formal job security in this subsystem although there may be reverse 25
HRM has been described as “…a set of policies designed to maximise organizational integration, employee commitment, flexibility and quality of work” (Guest 1987, p.503). Claydon (1997, p.76) expands on this definition: “Human resource management has emerged as a set of prescriptions for managing people at work. Its central claim is that by matching the size and skills of the workforce to the productive requirements of the organisation, and by raising the quality of individual employees’ contributions to production, organisations can make significant improvements to their performance.”
HRM has emerged from the business school side of academia, and has been presented as a hybrid of industrial relations and strategic management. The latter are viewed as applied disciplines influenced themselves by other applied disciplines such as organisational behaviour and industrial law, and purer disciplines such as economics, labour history, political studies, sociology, psychology and anthropology (Boxall & Dowling, 1990, Fig. 1, p.206).
65
seniority rules governing lay-offs (p.49). The salaried subsystem “…combines more flexible and personalistic administrative procedures with greater commitment to employment security.” (p.50) Pay and promotion practices are much less rigid, with greater variation between employees. The pay-off is the reasonable expectation of life time employment, once a probationary period has been completed. Osterman suggest this subsystem may extend beyond whitecollar to blue-collar workers in some “...innovative” firms (p.51). Pinfield and Berner (1994, pp.93-71) provide a further delineation of these ILM structures, arriving at three distinct within-firm ILM sub-systems:26 waged; lower-tiered salaried; and upper-tiered salaried.
Distinctions between these
groups include declining rigidity of rules across the three subsystems, increasing individualism, increasing skill and wage differentials, higher mobility, greater flexibility, greater advancement through merit, and higher internalisation of commitment to the employer. Lower-tiered salaried workers conform least to the generic ILM model however as there tends to be more contact with the external labour market and less clear career paths. Two smaller subsystems are identified as existing in core firms.27 The craft model has workers such as tradesmen, some professionals and salespersons, comfortably shifting between employers and in many instances benefiting from such shifts (pp.51-2). The final subsystem Osterman identifies is the pool of workers in positions with few, if any, career prospects – the secondary workers (p.52). The choice to adopt a particular subsystem, or arrive at a particular dynamic equilibrium is framed as a response to three issues: cost minimisation, 26
The notion of within-firm ILMs derives from the sociological literature, where several distinct conceptualisations of ILMs have been identified. These are: when all the jobs in the firm are considered part of the ILM; when not all jobs in a firm are part of a single ILM; and when the ILM characteristics apply to an occupation, either within or across firms, known as occupational internal labor markets (Althauser 1989). This latter group matches Osterman’s craft subsystem. 27 Osterman is, without explicitly saying so, focused on employees in core firms. In fact, the subsystems he outlines are used to illustrate the arbitrariness of the primary/secondary market dichotomy, as indicated by his placement of some secondary workers in primary firms.
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predictability and flexibility (pp.54-9). Four factors act as constraints on the choices available: physical technology, social technology, the characteristics of the labour force, and government policies (pp.59-63). This framework starts to provide an effective language with which to describe observed outcomes and policies, and take steps, albeit small, towards establishing some causality in the process. When combined with the lessons from empirical studies of various historical and contemporary ILM structures, the development of a clear method of analysis and classification of labour market structures should be possible.
Empirical studies of ILMs Although not numerous, a number of studies have been undertaken using personnel data of the kind available regarding Victorian Railways employees. This relative paucity reflects the difficulty in accessing such information, particularly for privately owned enterprises and ongoing concerns, and the sheer volume of data collection and manipulation necessary to reap adequate sample sizes. Contemporary studies are also hindered by stringent privacy requirements such that crucial background information is lacking. As a result the subsequent analyses can be forcibly abstract or vague. Several studies (Baker, Gibbs & Holmstrom 1994a & 1994b, Carter & Carter 1985, Lazear 1992, Seltzer & Merrett 1996, Sundstrom 1988) have used information contained in personnel and company records to attempt to identify the existence or otherwise of ILMs in particular enterprises, industries, or at particular points in time. Further authors have used such records to tackle specific labour market issues, such as discrimination (Sundstrom 1990, Maloney & Whatley 1995, Whatley, Wright & Foote 1995), wage rates (MacKinnon 1996), and separation and tenure characteristics (Hamilton & MacKinnon 1996a & 1996b). The methodology and interpretations adopted in
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these works are of relevance to this study.
Several of these studies
(MacKinnon 1996, Sundstrom 1990, Hamilton & MacKinnon 1996a & 1996b) are of further interest as they involve records of railway companies and railway employees. The Baker, Gibbs and Holmstrom (1994a & 1994b) study of the personnel tapes of a medium-sized U.S. firm over the period 1969-1988 involves more than 68000 employee years of data concerning managerial staff. Unfortunately the reader is not privy to the identity of the firm or even its industry, beyond the fact that it is in the service sector. Their first significant finding is the lack of any clear ports of entry or exit within the organisation. They do not view this as evidence of no ILM, as they claim “[t]he most basic element of an internal labor market is the concept of a career.” (1994a, p.896) In attempting to identify the career in this ILM, they introduce the notion of a transition matrix of major job titles (1994a, pp.888-90), and find a stable set of move patterns over time within the organisation (1994a, p.896). This transition matrix allows them to identify a hierarchy of eight levels within the firm into which their 276 position titles could be allocated. The allocation was decided by observing the most common job transitions within the firm (1994a, pp.888-90).
They find evidence of fast
tracking and a greater variability of career outcomes for new hires as opposed to incumbents. This is presented as an indication of screening processes at each job level (1994a, pp.900-1).
Regressions of salary outcomes against
human capital and hierarchical level variables find much greater explanatory power in a worker’s level. They also find that the replacement of position titles for levels only marginally increases explanatory power (1994a, pp.907-8). The salary-level curves are strongly convex, consistent with tournament and hierarchical compensation theories (1994a, pp.905-6). The findings on fast track employees indicate a process where quick promotion at one level increases the likelihood of fast promotion at the next. They claim this illustrates that, in discussing the employment relationship, “…the most useful way to think about worker’s abilities is as the rate at which they
68
accumulate human capital.” (1994a, p.916) Exit rates are used to illustrate that administrative constraints upon the firm force many of these fast tracked employees to leave, due to the inability of the firm to provide adequate remuneration (1994a, pp.911-3). In analysing the wage policy of the firm more closely, Baker et.al. present four main findings. They identify clear evidence of cohort effects, in that “... much of the variation between cohort wages seems to come from the starting wages and to persist from that point on.” (1994b, p.935) Individual real wages are also found to be “…anything but downward rigid” (1994b, p.923), with 15 per cent of a particular cohort earning less than their real starting wage after a decade of tenure. Very few workers experience nominal wage drops, however (1994b, pp.940-2). They also find that “...there is substantial serial correlation in real wage increases for individuals... showing that there are predictable winners and losers.” (1994b, p.923) Overall, they claim there is “... a strong association between job levels and wages, implying that promotions are central for wage growth.” although promotion premiums are low (1994b, p.923). Lazear (1992) reports on a similar study of a large corporation that he suggests may be a manufacturer of durable goods. The data set stretches over the period 1977-90, and about 100,000 employees and 500,000 records. His focus is on highlighting the theoretical importance of the job in labour economics. In attempting to define the job, Lazear develops a five-digit code system of 788 different job titles.
A series of less specific and lower digit codes are then
introduced, and he finds that a two-digit classification of 45 jobs a suitable level of analysis as 79 per cent of wage variation can be explained at this level by job held (pp.194-5). Lazear’s findings are similar to Baker et.al.’s in that there is no evidence of clear ports of entry. He also finds the key to increasing wages is to change jobs within the firm, and identifies two types of workers, movers and stayers. The former change jobs within the firm at least once, while stayers only ever hold one job. In running wealth equation simulations based on the wage regressions of the two types he finds a 16 per cent differential in favour of
69
a mover over their careers (pp.197-9). Lazear’s movers and stayers resemble Baker et.al.’s winners and losers respectively. This notion of movers and stayers is followed through to the jobs themselves, with certain jobs identified as feeders and others as dead ends. Most of the dead end jobs, that is the positions from which few or no workers are exported, have few incumbents. When the definition of feeder jobs is changed to those in which the incumbents have any probability of eventually holding a top job (defined as a job with a mean salary in the firm’s top 2 per cent), the split between feeder and dead-end jobs evens up significantly (pp.202-5). Lazear presents several interesting findings with regards to salary.
He
observes that the salary levels fall the longer an individual remains in a job, and that having held fewer jobs prior to the current position increases salary (pp.208-9). This reflects his point that job changes are the primary means of salary increase. One other point of note is that the hierarchical structure of the firm is identified as not very pyramid-shaped, when plotted by numbers at each salary level. There are high numbers of workers in the low-level jobs, but also a bulge in the mid-range. Seltzer and Merrett (1996, and Seltzer 1996) investigate an organisation most comparable to the Victorian railways in terms of historical setting.
They
examine the human resource management practices of the Union Bank of Australia (UBA), using the payroll and personnel to track the careers of the 471 employees entering the company between 1887 and 1894.
Using similar
analytical techniques to Lazear and Baker et.al., they present evidence that “…the UBA possessed all the salient features of an internal labour market… in 1887” (Seltzer & Merrett, p.3 ). A clear low-level port of entry is identified, along with an apparent port of exit at the same level (pp.13-4, 28). The low-level port of exit, they argue, is consistent with a matching model and also the predictions of deferred compensation models (p.28). Regressions of separations against GDP growth rates finds no evidence of an effect of business cycles on turnover,
70
reflecting a shielding of workers from the external market (pp.29-30). Seltzer also presents evidence of considerable wage-shielding with few instances of nominal pay cuts even during substantial economic downturns, although there was a great deal more negative real wage increments (1996, p.10). On the issue of remuneration, Seltzer and Merrett find wages were not tied to jobs as there was considerable overlapping of wages between levels (p.22). Regressions on wage levels using only position dummies have much less explanatory power than those of Baker et.al., with individual characteristics such as tenure and experience much more useful (pp.26-7). Nevertheless there was sizeable promotion increment and clear hierarchy within the organisation. The tenure-wage profile shows the early concavity and later convexity consistent with matching and deferred compensation theories (pp.17-8). The existence of tournaments is argued, citing the high ratios of pay rates between the 99th and 90th percentile of the wage distribution (p.24). Ultimately the authors opt for an explanation of wage determination based on a mix of human capital, matching, tournament and deferred compensation models (pp.30-1). Carter and Carter (1985) use cross-sectional data on two large New York department stores, Lord & Taylor’s and Hearn’s, collected for a State government inquiry in 1913.
They find evidence of different labour market
structures operating in different parts of the two organisations. Lord & Taylor’s had an ILM structure for its male office employees but not for its sales employees, while Hearn’s maintained less insulated ILMs for both its office and sales employees.
High levels of tenure and young entry ages and the
importance of such factors in determining wage outcomes provide evidence of the office ILM in Lord & Taylor’s (pp.596-7). Similarly high ratios of internal experience to overall experience, an effective measure of internal promotion policies, are found in Hearn’s sales and office areas, along with positive returns to tenure (pp.591-3, 595-6). These ILMs are described as somewhat weaker however, as the wage levels are lower in general and turnover is quite high. As the majority of Hearn’s employees are female it is suggested that the firm was
71
able to offer stability of employment and the potential for advancement as substitutes for market-level wages, safe in the knowledge that the hierarchy would not become top-heavy due to exit of many women upon marriage (p.593). Lord & Taylor’s did not develop an ILM for its predominantly male sales employees as the skills required for the job were occupation rather than firm specific.
Good salespeople could be recruited externally attracted by
higher wages and the scope for individual bonuses meant more of the wage outcomes are unexplained by simple tenure, experience or age dummies (p.592). The hypothesis offered is that “…internal-labor-market patterns would be absent where skills are a product principally of individual talent and learning and where individual productivity differences are readily measurable...” (p.598). Carter and Carter present this study as a challenge to the conventional views of the timing of ILM development, and also as an illustration that ILMs may serve as a mechanism to lower wage costs given particular groups of workers’ desire for employment stability. Sundstrom (1988) examines ILMs at a different level, using evidence from surveys undertaken by New York and Iowa state bureaus of labour statistics of employers’ recruitment and training practices published in 1909 and 1914 respectively. He argues that “...internal labor markets of an informal type were not uncommon before World War I” (p.424), as his data show a high proportion of companies reporting a heavy reliance on internal recruitment of employees (pp.428-9).
His regression analyses find the level of this reliance to be
positively related to the size of the establishment and skill requirements of their industry, and he argues that ILM structures developed when the work was predominantly semi-skilled and required on-the-job training.
Sundstrom’s
evidence stands in direct contrast to Jacoby’s claims that ILMs were a postWorld War I phenomenon. Rather than unions, personnel managers and public policy as the driving forces behind ILMs, Sundstrom identifies scale and skill requirements.
Given that establishment size growth and mechanisation
advancements were dramatic through the latter half of the nineteenth century, he asserts that “... the evolution of the bureaucratic labor systems we observe
72
in large corporations today was a long, dialectical process with its roots in the informal internal labor markets of the 19th century.” (p.426) Sundstrom (1990) concentrates on labour market structures in the railroads of the American South. While he is focussed on identifying the institutionalised racial bias in promotion and payment patterns, he provides insights into the ILM practices in US railroad companies around the turn of the century. He claims that “Railroad companies were among the first private enterprises in the United States to develop internal labor markets. Especially for employees on the trains and engines, by the eighteen-eighties railroad work had become a career characterized by complex rules, job ladders, and collective bargaining.” (p.423) He cites various references to established career patterns, and using both census data and trade union surveys of wage and work rules shows that the southern rail companies developed modified ILM structures.
Black workers
could progress only as far as the semi-skilled fireman and brakeman positions on the career ladder, and the companies had to develop alternative strategies for recruiting white workers to the next step in the hierarchy, engineers and conductors. The companies either established specific apprentice versions of these jobs or recruited externally. Over time the pattern returned to internal promotion,
however,
with
white
workers’
promotability
rewarded
with
substantially higher wages for the same positions (pp.436-7). Also of interest are Sundstrom’s regressions of daily wage figures against position and regional dummies and age and race distributions (p.433). He finds that occupational dummies pick up very large amounts of the variance in regional wages, illustrating “…the high degree of standardization within occupations and a wage structure administered by broad collective agreements…” (p.432). Maloney and Whatley (1995) and Whatley et.al.(1995?) examine similar racial discrimination issues using personnel records for workers at Detroit Ford plants between 1918 and 1947. The studies focus on the denial of access of black workers to premium positions rather than explicit wage discrimination. Of most
73
interest is a proportional hazards model of turnover that calculates probabilities of turnover at given tenure points by age, marital status and race (Maloney and Whatley 1995, pp.484-5).
Married black workers had substantially higher
survival probabilities yet there was no notable premium for such employees. This was despite there being such a premium in general in the industry, and reflects a further instance of stability of employment being substituted for higher remuneration. Hamilton and MacKinnon (1996a & 1996b) follow Sundstrom’s lead also in that they focus on rail workers. Using personnel data from the Canadian Pacific Railway (CPR) for the period 1903-38 in the first instance and 1903-29 in the latter, the papers concentrate on the corresponding issues of separation behaviour (1996a) and tenure (1996b). The authors attempt to identify why tenure increased at CPR over the period and including whether there were changes in departure patterns.
They find that while average job duration
increased after World War I, when worker characteristics and cyclical factors are controlled for there were not significant differences in exit probabilities between those hired prior to 1914 and those recruited between 1922-29. It appears CPR chose to hire more stable types of workers (1996b, p.360). Hazard functions are generated which describe the probability of leaving CPR after m months conditional on having worked there at least m-1 months (1996b, p.365). The authors note that the use of longitudinal data avoids the undersampling of short spells and the over-sampling of long spells that occurs when cross-sectional data is used (1996b, pp.365-6). When separation behaviour is examined, using cause-specific hazard functions, they find that “…after World War I, there was a pronounced general trend away from worker-initiated to firm-initiated departures.” (1996a, p.364) This is viewed as a response, in part, to the success of the company in hiring more stable workers. Faced with lowered quit rates the company had to resort to a higher number of layoffs to deal with cyclical fluctuations in labour demands. The layoffs were often followed by a rehire. Quit and layoff probabilities are also
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generated for various worker types. These worker types are of interest as they serve as useful classifications for any study of rail workers: “Most skilled workers were machinists, carpenters, boilermakers, and blacksmiths. Locomotive engineers are also classified as skilled workers. Semi-skilled workers assisted skilled workers, operated a single machine, or engaged in routine maintenance. Locomotive firemen are classed as semiskilled. Unskilled workers were mainly laborers and cleaners.” (1996a, p.351ff)
A workable analytical method Synthesising the labour market theories discussed above, Osterman’s subsystems taxonomy and the empirical work by economists and economic historians surveyed, a workable method of analysis develops. A clear set of issues or characteristics needs to be examined with respect to the employment practices of the Victorian Railways. These can be broken down as follows: (i.)
Identifiable career paths;
(ii.)
Consistent entry behaviour;
(iii.)
Promotion patterns;
(iv.)
Wage structures;
(v.)
Shielding from the external market; and
(vi.)
Exit behaviour.
These aspects come together as identifiers of a describable and explainable employment system, in the fashion of Osterman’s industrial, salaried, craft, and secondary subsystems. It is possible to identify patterns of job movement such that distinctive career paths are revealed. Noting the most common changes in position title and matching these with wage increments can assist in the development of more general hierarchical levels on which to place individual position titles. This is of particular interest in situations where there exists a family of ILMs within the organisation that share some administrative rules and wage policies but have little or no lateral movement. The career paths identified can be matched to the
75
known skill requirements of particular positions such that the impact of skill acquisition processes and the resultant contracting issues can be analysed. Entry points form a crucial part of career path identification. If there are only low level entrants to a career path this needs to be explained from the perspective of skill or responsibility characteristics of the subsequent positions, as the employers seek to match workers to roles and/or monitor workers’ attributes and performance.
Multiple entry ports up the career hierarchy will require
examination of the attributes and subsequent performance of higher-level entrants, along with consideration of the potential impact of such policies on the expected wage profiles and incentives of their lower level counterparts. Similarly the criteria for promotion may be identifiable, such that the tenure distribution of movers in the organisation will indicate whether seniority plays a major role. Fast-tracking of some employees may occur and again this will need to be reconciled with the impact on general worker expectations about career paths versus the need to provide incentives for high-skilled employees. The characteristics of particular positions will impact on the propensity for fasttracking of employees on that career path. A substantial focus of the analysis is the identification of wage structures. The labour market contract differs significantly depending on whether the wages are attached predominantly to jobs or to workers. The degree to which position titles explain wage outcomes is a fair indication of the level to which bureaucratic rules hold sway in the organisation. If wages seem more attached to individual employees then an investigation of the characteristics being rewarded needs to be undertaken.
High returns to tenure may reflect a
consistent process of firm-specific human capital formation. Certain patterns of such returns may illustrate a deferred compensation scheme, which raises questions about the perceived benefits of such schemes – what benefits does the employer see in lengthy employee tenure? Is the employer seeking to discourage particular forms of worker opportunism? Returns to general work
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experience will indicate the generality of the skill requirements for some positions or, given that age is sometimes a proxy for experience, that the firm actively seeks more responsible, older workers. Consistent winner and losers in wage rises and/or promotions would provide further evidence of fast-tracking and will tend to indicate an employer belief that individuals acquire human capital at different rates and that this should be rewarded. Finally, if there are substantial wage differentials between levels in the hierarchy it may be argued that the workers are engaged in tournaments for higher positions, particularly in instances where seniority bears little influence.
Such tournaments would
presumably occur because the employer felt they drew out greater information and worker effort. Gauging the impact of external economic variables on the wage and career outcomes of employees measures the degree to which these workers are shielded from the vagaries of the external market.
If neither wages nor
employment levels illustrate procyclicality with general macroeconomic conditions then it can be strongly argued that there are institutional barriers between the internal and external labour market arenas. Evidence of entry year effects on career wages would indicate that the entry ports represent the last effective contact point between the ILM and the outside world. The final aspect of the approach is the examination of the separation behaviour of employees in the organisation. In general, separations can be broken down into quits and layoffs, that is employee or employer induced respectively. A prevalence of quits and layoffs during the early phases of the employees’ careers may indicate a matching process where the attributes and performances of the individuals to their current and potential positions are being assessed by both sides.
Comparing the timing of such separations to the
average time to first promotion may indicate the motives behind the departures. Layoffs at later points in the career or further up the job ladder may indicate a slower or ongoing matching process or perhaps an up or out type process where workers are given a period of time to achieve certain standards or face
77
dismissal. Quits occurring after a number of years and job changes may also reflect slower matching, or alternatively the lack of adequate incentives in the remuneration system. It would also indicate that there are at least comparable rewards in the external market for the internally acquired skills, raising questions about the employer motives for developing an ILM structure. Large numbers of quits that are in fact retirements would indicate employer success in constructing an adequate remuneration package to encourage lengthy tenure. Brought together, these targets of analysis should provide a clear picture of the nature of the employment relationship in place, and offer insights into the motives for such a structure. Outcomes of the analysis can be bundled together as contracting packages that match Osterman’s or Pinfield and Berner’s subsystems. A structure dominated by administrative rules such that there are rigid career paths where all or most workers enter at the same point, where seniority is the chief determinant of promotion and where wages are stringently attached to jobs or tenure fits the industrial or waged sub-system. A more flexible system with scope for fast-tracking, variation in outcomes that appear based on human-capital differences, and with tournaments and greater matching activity would be consistent with the salaried subsystems.
The
absence of several characteristics may reflect the presence of craft or secondary subsystems.
Combinations of apparently contradictory attributes
would require further examination of the motives of the employers.
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CHAPTER FOUR: THE DATA
Introduction This chapter outlines the data used in this study, including the sources, method of data collection and types of analyses to be undertaken in the later chapters. The assumptions made with regard to certain variables and problems encountered in collecting and interpreting certain data are noted, and the limitations of the data are discussed. Finally a preliminary outline of the basic characteristics of the data is given, looking at the overall distributions of particular variables.
The sources The information on Victorian Railways workers is compiled using a variety of sources. Firstly there is triennial data from the Victorian Government Gazette (hereafter referred to as the Gazette). The Railways Management Bill (Act. No.767, 1 Nov 1883, s.38) required the Railways to publish triennial lists of all permanent employees. These reports commenced in 1884, and ran through on a three-yearly basis until 1914, when there was then a four-year gap, due to wartime disruptions, before returning to the normal pattern in 1921.
The
information contained in the Gazette increased over the period. The first four reports (1884-1893) contain the name, branch and position of each employee. Date of birth and date of entry was added in 1896. 1899 saw the Department allocate employee numbers, and from 1902 salary or wage rates were also reported. Figure 4.1 provides an example of such a document from 1902. Further information has been gathered from reports made to Parliament in various years from 1864 onwards. These data are far less complete, generally
79
only recording the name, entry date, branch, position and salary of those employees considered Officers. As such, it is confined to salaried, as opposed to daily waged, employees. These are generally white-collar positions. The information is reported sporadically between 1864 and 1877, and then annually through to 1902.
On two occasions these data also included a list of the
appointments during the previous year. The third set of information comes from the Annual reports of the Railways. From 1883 to 1902 the names, birth date, entry date, position, branch and wage/salary was recorded for new entrants into the organisation.
Likewise
similar information plus exit date and reason for leaving was listed for exiting employees. This reportage ceased in 1902. Figure 4.1: A Government Gazette record
The data collected The information on those workers with family names starting with the letters A, B and C was collected from all these records. The sample covers a total of 6,171 workers and 33,415 employee years of data over the period (1864-1921). These data are longitudinal, with workers reappearing year after year. From
80
every Gazette the sample is consistently in excess of 1,600 workers. From the further records of salaried staff the sample varies from 32 to 281 employees. The Annual Reports provide start data for 2308 employees and exit data for 1164. The Government Gazette portion of the sample accounts for somewhere between 18 and 22 percent of permanent employees in each given year. As illustrated in Table 4.1, the sample is representative with respect to the administrative structure of the organisation in terms of the distribution of workers by department, when compared to the total figures published in Annual Reports.
The sample is almost completely males (96 percent).
Females
represent only 1.7 per cent of the employee years.28 Table 4.1: Comparison of sample to total Branch Traffic Existing Lines Locomotive Accountant's Telegraph Audit Engineer-in-Chief Secretary's Stores Total
Total 1893-4 3,628 3,411 2,929 133 101 53 48 18
Sample Total Sample % 1893 % 1899-1900 % 1899 % 35.2 759 37.9 3,320 37.0 642 37.0 33.1 603 30.1 2,430 27.1 504 29.0 28.4 580 29.0 2,847 31.7 515 29.7 1.3 16 .8 109 1.2 20 1.2 1.0 20 1.0 120 1.3 22 1.3 0.5 10 0.5 54 0.6 8 0.5 0.5 8 0.4 30 0.3 9 0.5 0.2 5 0.2 20 0.2 7 0.4 51 0.6 9 0.5 10321 100.00 2001 100.0 8981 100.00 1736 100.0
Note: Figures are for permanent Staff. For the Existing Line and Traffic Branches wives employed are included in the Total and sample figures although the Department did not consider them permanent. Source: Victorian Railways Annual Reports and The Victorian Government Gazette
In entering the data, codes were generated for position and branch.
The
position codes exceed 750 in number. The top eight accounted for over fifty percent of the sample, and the top twenty-five, listed in Table 4.2 made up over seventy percent of the sample. The figures for salaried positions such as clerk, stationmaster, junior clerk, draftsman and inspector are boosted by their 28
During this period there were almost no jobs for females on their own merit. Wives, daughters or widows of stationmasters, gangers and repairers were sometimes employed as gatekeepers. Only at the very end of our sample do we start to see the emergence of some female positions such as seamstresses. In subsequent years there emerged a secretarial pool of female typists and also opportunities in Refreshment Services.
81
appearance in a greater number of source documents. The branch codes, not surprisingly, were far fewer, with seventeen in total.
The big three: Traffic,
Locomotive, and Existing Lines, contained 92.9 of the workers, and eleven of the branches accounted for 99.8 percent of the total workers. Table 4.2: The top twenty-five position codes by frequency Position Repairer Clerk Labourer Porter Driver Stationmaster Ganger Fireman Cleaner Fitter Signalman Gatekeeper Junior clerk Goods guard Shunter Carpenter Skilled labourer Guard Carriage Builder Operating Porter Inspector Carriage cleaner Draftsman Striker Total
Frequency
Percent
3325 3053 2356 2090 1702 1688 1396 1393 924 800 767 709 525 498 455 447 424 256 243 242 242 235 228 218 24216
9.8 9.0 7.0 6.2 5.0 5.0 4.1 4.1 2.7 2.4 2.3 2.1 1.6 1.5 1.3 1.3 1.3 0.8 0.7 0.7 0.7 0.7 0.7 0.7
Cumulative Percent 9.8 18.9 25.8 32.0 37.0 42.0 46.2 50.3 53.0 55.4 57.6 59.7 61.3 62.8 64.1 65.4 66.7 67.4 68.2 68.9 69.6 70.3 71.0 71.6
The aim of the study is to track workers over their career.
As such, the
information collected can be broken down into two types.
Firstly, some
information only needed to be entered once, namely those variables that do not change from observation to observation: name; date of birth/entry/exit; gender; and a railway ID number. Secondly, each new observation provided information specific to that period of time, such as: branch; position; and, when available, wage or salary; and with exit data, reason for exit. These data were entered such that a particular worker may have a series of observation-specific position
82
and branch entries for example, each (typically) three years apart. The career of an individual worker could then be tracked over the period. Using these raw data, a large number of subsequent variables were generated, such as age on entry/exit, tenure levels at each observation, real wage figures and dummy variables for ever having held a particular position or the types of changes (position-wise) being observed. Also further numerical variables were produced such as the timing of such positional changes, time spent in particular positions and ordinal versions of each variable (for example: first-position; second-wage; or third-real-salary).
The method of analysis The resulting database was then sorted two different ways. Chapters 5 and 6 examine particular groups of workers in the Locomotive, and Transportation Branches respectively.
The goal was to track the career history of these
workers, attempting to establish patterns and commonalities within the group over time. The variables on entry positions, subsequent positions held, timing and types of positional changes and exit behaviour were of prime concern, allowing an analysis of entry ports, career paths, exit behaviour and basic wage structures. Some preliminary assumptions as to likely entry points and career paths came from other documentary sources such as the various Rules and Regulations for employees, in particular the 1884, 1907 and 1919 versions.
For Chapter 8, which examines remuneration, a different version of the same raw data was used. As the method of analysis here was principally regressions, the database needed to be presented in a different fashion. Each individual observation when a wage or salary variable appeared was treated as a distinct case (23,464 in total), such that the individual-specific information such as name, date of birth and so on was repeated as often as an individual reappears. The data that did change were position, branch, salary or wage.
83
Tenure
variables and year dummies were added, as were potential outside experience variables (start age minus 14 years), and the squared and cubed versions of this and the tenure figures. Dummy variables arose for entry year, various prominent positions (such as driver, clerk, porter), branches (such as Locomotive or Telegraph), and gender. The tenure levels and branch dummies were interacted. A further variable for current unemployment rates, the rate on entry and the minimum level experienced thus far in the worker’s career was introduced.29
These figures are used to gauge shielding levels in the
organisation. Real wage and salary values were calculated using the Retail Price Index (PC-31) from Australians Historical Statistics (1987, p.214), and the dependent variables of subsequent regressions were the logs thereof.
An
attempt to merge the two into some consistent figure has been made, using an assumed working year of fifty five-and-a-half-day weeks.
These were the
typical working hours of a Railways employee over the period of the study.
Data Constraints There are constraints with the data. The three-year gap between observations required some assumptions to be made about the timing of such events as promotions. The mid-point between the observation dates was taken as the date of such events, thereby minimising the size of the square of the misestimations. The large number of position titles and changes in some titles between periods forced some recoding, such that similar positions were grouped together.
For example in the discussion of porters and clerks in
Chapter 6, the clerk group included store clerk, tally clerk, and chief dispatch clerk among its ranks.
Likewise the porter grouping also captures such
positions as operating porter, receiving porter, foreman porter and equipment porter.
29
Unemployment rates were taken from column A of the Table titled ‘New composite estimates of long-run labour series’ (Withers, Endres & Perry 1985, p.203).
84
There were problems in tracking some individuals, in particular those with common names appearing in reports prior to the introduction of ID numbers. Dates of entry or birth have served as useful identification tools, with the last resort being assumptions about likely career patterns. There may be a small number of replicated individuals due to unexpected career changes. Likewise a very small portion of those workers with extremely common names, such as several of those named John Brown, has been excluded due to the complete inability to differentiate them from report to report. There are other problems that could not be rectified by recoding or assumptions. The Gazette records and the reports on Officers recorded the position a worker held on the January 1st in the given year. It is not possible to determine whether that was the position the worker normally held, as some employees may have been in temporary or acting positions given that the reportage falls during the Christmas-New Year period. However, a number of the workers were recorded as holding acting or relieving roles, which may indicate that, unless stated, a reported position was a worker’s permanent role.
The Data Much of the ensuing analytical chapters look at the characteristics of workers in particular segments of the organisation, rather than as a whole.
Before
examining the workers in these segments an overview of the whole data set is given. Table 4.3 shows the distribution of various age and tenure variables. These variables provide a picture of the basic structuredness of the workplace: namely the degree to which this organisation has internalised the labour management process. The Start Age variable indicates that the Railways hired relatively young workers, with 25 percent 18 years or younger and fifty percent 22.8 years old or younger. These numbers are certainly compatible with a management policy of
85
internal training and promotion. The median age of workers on exit was almost 36, with the top quartile 51 years or older. Again this outcome is consistent with an environment where workers were encouraged to pursue a career with the organisation and a large proportion of workers were sticking with the same employer until retirement.
The tenure on exit figures show 50 percent of
workers staying with the railways for at least 11.6 years.
This figure
understates the lengthiness of stays with the organisation, however, as it only captures workers exiting the organisation between 1883 and 1902. Over 41 percent of the sample were still with the Railways in 1921, and 25 percent of the workers at the point had at least 31 years tenure. This understatement needs to be weighed up against likely under-sampling of workers outside the 18831902 period.
Without entry data and with only information in three-year
intervals for waged staff, there will be a bias upwards in any tenure measures, as short-staying workers may not show up at all. Table 4.3: Age and tenure for sample 1864-1921
Variable Start Age Exit Age Exit Tenure
5th Percentile 15.4 19.7 0.3
25th Percentile 18.0 27.1 3.7
Median 22.8 35.8 11.6
75th Percentile 28.0 51.4 20.0
95th Percentile 39.1 60.3 29.6
The reasons given for worker exits provide valuable information about the nature of a workplace.
There were fourteen different reasons given in the
records for 1883-1902. These can be broken down into four broad categories: Lay-offs, which includes, dismissed, dispensed with, discharged, removed, and Act 1846 (the strikebreaking Act discussed in Chapter 3); Retired, which also includes superannuated and pensioned staff; Resigned, which also takes in left of own accord; and Other, which includes deceased, killed, killed in duty, as well as the very small number (1.3 percent) transferred to another public department. Table 4.4 collates all these reasons. The high level of retirees (32.6 percent) is further evidence of a workplace where employees are pursuing long careers, something that would not occur without explicit efforts on the part of management to retain workers, such as is expected in ILMs. These exit
86
figures are broken down further in Chapters 5 and 6 to identify matching processes on the part of both employees and management, in a fashion similar to those used by Hamilton and MacKinnon (1996). Table 4.4: Reasons for exit 1883-1902 Reason Lay-offs Retired Resigned Other
Frequency 290 381 260 236
Percentage 24.9 32.6 22.3 20.2
Table 4.5: Wage and salary distributions 1864-1921 th
5 Percentile 3.38
th
25 Percentile 6.67
th
75 Percentile 9.30
th
95 Percentile 12.22
Variable Median Real Wage 7.94 (shillings per day) Real Salary 47.83 116.79 162.79 217.39 384.17 (pounds per year) Combined Real Salary 49.11 94.83 115.42 147.78 244.99 Note: The conversion of real wage figures into Combined Real Salary was based on an assumed working year of 50 five and a half day weeks.
Wage patterns provide further insights into the nature of a labour market, with clearly defined policies and hierarchies one of the foundations of an ILM. There is some preliminary discussion of particular wage hierarchies in Chapters 5 and 6 and a lengthy analysis of wage patterns and outcomes in Chapter 8. Table 4.5 provides a sketch of the distribution of the real wage and salary observations in the overall sample.
The figures are in 1911-12 pounds (or
shillings). It shows a much wider breadth in salary payments than for wage remuneration, indicating the salaried positions were on a steeper hierarchy with a larger number of career steps.
The third combined figure provides an
estimate of comparable figures via a conversion of wages based on a working year of fifty weeks and a working week of five and a half days. The combined figures appears to have most of the waged staff bunching in the bottom portion of the distribution, with all but the 5th percentile amounts dragged down compared to the salary results.
This again points out that there is some
distinction between these two groups of workers, with waged employees less
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well paid and more tightly bunched at the bottom of the wage ladder. This may reflect the existence also of more than one such ILM, a scenario that is examined more over the ensuing chapters.
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CHAPTER FIVE: ON THE TRAIN – AN INVESTIGATION OF SPECIFIC POSITIONS WITHIN THE LOCOMOTIVE BRANCH
Introduction A number of areas in the Victorian Railways seem likely candidates for ILM status. Many of the skills required were specific to the railways, a new industry in the colony, and an industry, which, for the period under discussion, had only one employer. The large size of the Railways and the diversity of functions between and within the branches mean there are likely to have been a number of different ILMs in operation. This chapter focuses on a group of core workers within the organisation: a group of employees generally viewed as the personification of railway work; namely those up front in the locomotives, or aspiring to be there. The chapter is structured as follows. The typical career path is outlined, in particular the tasks involved, skill levels and skill accumulation processes. A sample of workers employed on this career path is introduced. The main body of the chapter then investigates various aspects of the sample, looking at entry, career patterns, tenure and exit behaviour, plus preliminary discussions of wage structures. The impact of unionisation on this group of workers is also considered, including the ramifications of the 1903 strike on existing and new workers.
The tasks at hand Within the Locomotive branch three positions stand as a career path quite common in the railways: engine cleaner, fireman and engine driver.30
This
progression was a common one throughout the railway world. More (1980, pp.127-8) notes the progression from cleaner to fireman to driver in British 30
While engine cleaner and engine driver are the official position titles used by the Railways, for greater ease the terms cleaner and driver will be used hereafter.
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railways while Richardson (1963, pp.102-3) discusses the establishment of fireman as the promotional path to becoming a locomotive engineer (driver) in the U.S. railways. pp.111-2).
Chinese railways also adopted this path (Morgan 1995,
As early as 1884, the Rules and Regulations of the Victorian
Railways outlined a process of eligibility for promotion up this path, whereby cleaners were expected to advance “to the footplate as Firemen” and drivers would be selected from firemen (Government Gazette 1884, Vol.1, p.335). This career path meets some of the preliminary criteria for ILM development, as the work was increasingly of a firm-specific nature. The skills acquired as a driver were not particularly transferable to other occupations or employers, at least within the colony or state. Furthermore, as Licht (1983, p.38) has pointed out, “[l]ike airplane pilots in our own century…[t]he skills required by their jobs were new and had few antecedents”. As discussed below the path is based, to a fair degree, on the accumulation of sufficient skills to be given control of a very expensive piece of machinery. Cleaners worked primarily in the engine sheds, preparing and maintaining the locomotives for service. This work gave the cleaners a solid understanding of the intricacies of the engines which they might later stoke and drive, while also instilling in them some grasp of the administrative practices of the organisation, and the disciplines of a modern workplace. A fireman travelled on the tracks, “…shovelling heavy lumps of coal into the firebox, supplying water to the boiler, and maintaining a sufficient head of steam…” (Bowden 1970, p.xiii). This was arduous work. Ducker (1983, p.5) speaks of U.S. firemen shovelling at least five tons of coal a day. Firemen were also likely to share some of the easier driving, particularly on long country journeys. There was an obvious progression on to becoming a driver, who “... controlled the locomotive, maintaining vigilance over the steam pressure, boiler water level, fire-box temperature, and the other workings of the machinery even as he
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watched for obstructions on the rails ahead.” (Ducker 1983, p.5) This work involved a large amount of responsibility. Expensive rollingstock needed to be run at the maximum speed without increasing wear and tear to either the engine or the track, while at the same time passengers and/or freight had to arrive at their destination unscathed and on schedule. Drivers and firemen needed to be reliable and adaptable to the idiosyncrasies of different sorts of runs. It must be remembered also that technology varied from locomotive to locomotive and that over their careers these workers would have experienced the introduction and development of several innovations, including, very late in the piece, the electrification of certain suburban lines.
The data set The data set analysed in this chapter has 763 employees who held at least one of these three position titles. The number of workers in each of the triennial Government Gazette records varies quite substantially, as does the distribution between jobs (see Table 5.1).
“Other” denotes employees in the sample
working in other positions in that particular year that had held or would go on to hold a position on the cleaner-fireman-driver career path (hereafter referred to as the Locomotive career path). The low number of cleaners by the 1921 sample may reflect that many of the workers performing this role in this period were not permanent workers. As early as 1907 rail unions were complaining that “[t]he appointment of casual cleaners has been the bane of the service… the shortage of permanent cleaners is a matter which requires the urgent attention of the powers that be.” (The Railway Gazette, January 1907, p.10) Churchward (1983, p.105) notes that from 1916 the enginemen’s union (the EDFCA) admitted casual cleaners and firemen. Furthermore, the period immediately following the report date (1921-2), saw roughly 7000 workers shift from casual to permanent employment with the Railways. These workers were predominantly returned soldiers employed under
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a State government directive. It seems fair to assume that a proportion of these 7000 would have elected to pursue a career position such as cleaner, and may have held such positions as casual staff since 1919/20, thereby explaining the extraordinarily low numbers of permanent cleaners in 1921. The predominance of the higher-level jobs over cleaners reflects the lower tenure periods of the cleaner position, as discussed below. Table 5.1: The Locomotive sample
Positio n Cleaner Fireman Driver Other Total
Year 1884 1887 1890 1893 1896 1899 1902 1905 1908 1911 1914 1918 1921 44 36 64 24 168
60 49 65 36 200
85 83 92 49 309
82 88 92 48 310
54 73 93 52 282
47 85 85 62 279
46 115 92 73 326
31 114 109 56 310
46 94 108 74 322
51 86 168 65 370
60 156 203 88 507
24 178 209 80 491
7 147 215 81 451
Table 5.2 shows that the workers’ dates of entry go through peaks and troughs, generally reflecting economic cycles. The workload of employees in this area of the Locomotive Branch was directly related to the volume of traffic on the rails. Thirty percent of the employees started in the decade 1884-93, a period during which track mileage and the number of journeys more than doubled (see Tables 3.2 and 3.3). Likewise the large influx of workers (28.7 percent) between 1909 and 1913 can be matched to a substantial boost in journey numbers. There were no entrants between 1892 and 1896 reflecting the most serious economic downturn of the period. The percentage figures for the period 1884-1903 are overstated, as they include actual entry data on 295 employees taken from the Railways’ Annual Reports. As a result this portion of the data set contains a larger amount of workers with short stays than the others, as will be discussed in the Tenure section below.
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Table 5.2: Distribution of sample by entry year Entry Year 1855-1868 1869-1878 1879-1883 1884-1888 1889-1893 1894-1898 1899-1903 1904-1908 1909-1913 1914-1921 Total
Number 27 50 63 116 104 12 105 47 221 0 735
Percent 3.7 6.8 8.5 15.8 14.2 1.6 14.3 6.4 28.7 0 100
Note: There are 28 individuals in the sample without entry dates, all of whom are likely to have started before 1883.
Exit information has been collected on 138 employees leaving the organisation between 1884-1903. Overall, this data set allows for an investigation of the labour market facing this group of rail workers, particularly with regard to ports of entry, career structure, tenure, and exit behaviour.
Entry As discussed earlier, the 1883 Railways Management Bill outlined a process of public notice of new positions in the railways and examination of all applicants. It also stated that “[a]ll appointments shall be made to the lowest grade in each of the various branches…”, notwithstanding the Commissioner’s right to appoint “…persons of known ability not engaged in the Railway service” (s.28). ButlerBowden (1991, p.10) has noted the magnitude of this process: “...people clamoured to establish a career in the railways. Getting a job was a feat in itself. The number of applications was far greater than the number of positions available. In the 1880s there were between five and ten applicants for each vacancy; in May 1891, with economic crisis looming, there were 11,176 applicants for 624 positions.” In 1910 the Minister for Railways reported that, of 2601 applicants, 192 cleaners were appointed (Victorian Railways News, November 1910, p.5).
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Prior to the passing of the 1883 Act the appointment process had varied between branches. George Brown joined the Railways in 1866, eventually became an engine driver and was a major player in the 1903 strike. He described the Locomotive Branch’s process as follows: “The system of cleaners entering the service was this: Any young man between the age of 17 and 21 could personally apply to the loco. supt. for employment with the promise of being able to rise to the position of enginedriver. He had to produce a reference from some reputable person, and pass a medical examination. Cleaners were generally taken on at the commencement of the busy season. They were subject to being put off at slack time. Their names and addresses were taken, and they were called back in turn by seniority for the next busy season. I, myself, was off one winter. Sometimes they might be off in this manner two or three times before they were constantly employed.” (as quoted in AFULE 1975, p.8) This system appears to have been phased out by the 1883 Act, as by 1907 the enginemen’s union (EDFCA) was calling for the return of “…the system in vogue 30 years ago…” in preference to the use of supernumerary cleaners (The Railway Gazette, January 1907, p.10). The Railways set particular requirements of appointees to certain positions. The 1884 Rules and Regulations stated that prospective engine cleaners must be able to read and write, pass a medical examination, be no less than five feet six inches tall, and be neither under twenty nor over twenty three years of age “…unless he has already received a skilled training” (Government Gazette 1884, Vol.1, p.335). The 1907 Rules and Regulations restricted engine drivers to those aged twenty-one or older (p.11). These rules can be seen as preliminary attempts by the employer to screen potential employees, if age serves as a proxy for responsibility. In investigating start behaviour several problems are encountered.
Start
information is recorded only for the period 1884-1903, plus a few workers showing up in earlier documents. This serves as the only definitive entry data set.
Analysis of any other workers requires increasing assumptions and
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extrapolation. Table 5.3 shows the entry positions for the 319 new starters over this period.
No workers entered as firemen or drivers.
68.7 percent
commenced as cleaners. The remaining 31.3 percent entered at similar level positions, such as labourers, repairers and junior variations thereof. Of these employees 58 percent can be observed later holding the cleaner position. Overall a minimum of 86 percent of the workers entering in this 20-year period were at some point cleaners, making this a very clear port of entry.
It is
evident that even if a worker was not hired as a cleaner the norm was that they shift into this position before moving up the Locomotive career path. Table 5.3: Entry positions where entry data is available Entry position Engine Cleaner Fireman Engine Driver Lad Engine Cleaner Repairer Junior Labouring Positions Labouring Positions Other Junior Positions Other Positions Total
Frequency 219 1 21 27
Percent 68.7 0.3 6.6 8.4
22 10 19 319
6.9 3 5.8 100
Note: Twenty-five of these entrants started in years before 1884, one in 1873, the remainder in 1881-3.
The entire data set stretches over a much larger time-span than the twentyyear period for which there are data on specific entry dates/positions. Other than those workers already employed at the time of the first Government Gazette records in 1884, it is possible to observe the first position reported for each employee. Given that this reportage is on a three-year cycle, the workers entering during the three years prior to the 1884 records can also be included. This larger group of workers, 637 in total, displays somewhat different outcomes. Table 5.4 has just over half of the sample showing cleaner as their first position.
A small number (2.7 percent) were drivers by the first
observation of their position. A sizeable portion (17.6 percent) shows up as
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firemen. The prevalence in Table 5.4 of fireman as a first position prompts further investigation. It is possible that the potential for an almost three year lag between entry and a position observation saw some workers promoted to fireman by the first observation. The 1884-1903 sample had a small portion (8.7 percent) that commenced as cleaners but were firemen by their first Gazette appearance. The mean tenure of this group at that point was roughly 2.5 years. Likewise, of the workers entering after 1903 that had fireman as their first position only 6.4 percent had tenure less than 1.5 years at that point. Choosing to limit the firstposition sample to those workers with tenure no greater than 1.5 years at first observation sees cleaner as a clear port of entry over the breadth of this period. Furthermore the prevalence of cleaner as an entry position is in stark contrast to the figures in Table 5.1, where cleaners never made up more than 30 percent of the sample in a given year, and were often much lower. Table 5.4: First observed positions for Locomotive subset 1881-1921
First position Engine Cleaner Fireman Engine Driver Lad Engine Cleaner Repairer Junior Labouring Positions Labouring Positions Other Junior Positions Other Positions Total
All data Frequency Percent 368 57.8 112 17.6 13 2.0 1 0.2 43 6.8 35 5.5 29 14 22 637
4.5 1.2 3.5
Tenure-controlled (1.5 yrs)a Frequency Percent 246 70.3 7 2.0 6 1.7 27 7.7 22 6.3 19 9 14 350
5.4 2.6 5.2
Note: First position data for those entering between 1884 and 1903 are starting positions. For other years they are first position recorded. a limits the sample to those workers with tenure no greater than 1.5 years at first observation.
Overall, it is clear that cleaner served as the key port of entry for the Locomotive career path. It serves such a function externally, that is for new hires. It also performs the function internally, that is for shifts across from other lower level positions.
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Career Path The Wage Structure section later in this chapter outlines a hierarchy of positions through which workers in this segment of the Locomotive Branch were expected to progress, with various classes of the fireman and driver positions. If a worker, commencing as a cleaner, progressed through each band in the minimum period receiving automatic promotions, he would take sixteen years to become a driver (first class). The criteria for promotion along the career path was also laid down by the Rules and Regulations: “Promotions…will be made with due regard to efficiency, good conduct, and seniority; but the latter qualification is not alone to be considered as a prior claim to advancement” (1884, p.338). ILM theory would expect some consistency in the positions through which workers progress, while allowing for fast tracking of particularly able workers. Looking at the 637 workers in the sample whose early careers are adequately captured in the data, namely those entering in or after 1881, it is possible to describe their progression along the career path.
Table 5.5 breaks the
workers’ experiences down into various combinations of positions held and shows that the majority (69.9 percent) of workers followed the expected path, that is they entered the Locomotive ILM as cleaners and progressed as far as possible. The remainder (30.1 percent) skipped at least one step along the career path, particularly the cleaner step. Controlling for tenure, however, as above, sees a much larger proportion (82.6 percent) progress along the expected path. Only 4.6 percent of these potential fast tracks started as cleaner, while 18.5 percent skipped fireman. Caution should be taken in reading the percentages below as a measure of proportions reaching each rung on the career ladder, as the majority of these workers had not finished their careers in 1921.
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Table 5.5: Positions held over career Positions Held cleaner-fireman-driver cleaner-firemen cleaner only Sub-Total following expected path cleaner-driver fireman only fireman-driver driver only Sub-Total “skipping” step(s) Total
First position data Number Percentage 213 33.4 154 24.2 78 12.3 445 69.9 5 0.8 116 18.2 51 8.0 20 3.1 192 30.1 637 100
Tenure-controlled Number Percentage 135 38.6 111 31.7 43 12.3 289 82.6 3 0.9 27 7.7 22 6.3 9 2.6 61 17.4 350 100
One further element of consistency in the career path is the issue of how much time workers could expect to spend in each position before progressing. For those workers for whom there are published entry dates estimates of time spent in each position are shown in Table 5.6. Given the method of data collection, for any position other than their first the minimum observable time spent in a position is three years. As the data stops in 1921, it is also the case that the fireman-engine driver mean may be understated, as many of the slower progressions are not being captured.31 Table 5.6: Time spent in position before promotion Time (years) ≤2 >2 and ≤ 3 >3 and ≤ 6 >6 and ≤ 9 >9 and ≤12 >12 and ≤15 > 15 Median Mean Number
Cleaner - Fireman Percent Cumulative 17.5 17.5 31.1 48.6 33.6 82.2 8.5 90.7 9.3 100 3.00 3.99 354
31
Fireman - Driver Percent Cumulative 1.7 1.7 27.6 29.3 33.4 62.7 18.5 81.2 15.3 96.5 3.5 100 7.01 7.39 287
The bias here lowers the median and mean time spent as fireman before becoming a driver. As such, the differences between the cleaner-fireman and fireman-driver outcomes are being understated.
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As expected, promotion from cleaner to fireman was quicker than from fireman to driver, with only 1.7 percent of promotions from fireman to driver taking three years or less. While 82.2 percent of the promotions from cleaner to fireman occurred by the six-year mark, it took just over twelve years to achieve a similar level from fireman to driver.
Engine cleaner was an unskilled position.32
Therefore, once workers had shown sufficient familiarisation with the basics of locomotive technology, those exhibiting appropriate diligence, effort and ability were promoted to a position where they could continue to acquire skills. This screening process continued at the fireman level. As this job involved a greater level of skill acquisition and more on-the-job training, it is to be expected that workers would spend more time in the fireman rather than the cleaner position. Also cleaners may have already gained some experience if earlier engaged as supernumeraries. The skill acquisition process was much more formalised for firemen than for engine cleaners, particularly after 1903 when a regulation was introduced explicitly outlining the hierarchy of work allocation for the various grades of firemen and engine drivers. The lowest grade of engine work was goods and switching, then some suburban and country branch lines, mixed work (passenger and goods), suburban passenger runs, and, the highest level, country passenger runs. For a fireman to acquire the broad range of knowledge of various types of engines and track conditions, he had to work through all these types of services, explaining the longer tenure for fireman than cleaners. Also the employer may have sought a longer screening process for prospective engine drivers. The Railways had much to lose in giving control of expensive machinery, the lives of passengers and the safe passage of goods to inexperienced, under-trained and/or unproven drivers.
It is therefore
understandable that a longer period of observation was required in the last career rung before this position.
32
Hamilton and MacKinnon (1996, p.351ff) classify cleaners as unskilled, firemen as semiskilled, and engine drivers as skilled workers.
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One other constraint on speedy progression was the fact that there were a limited number of positions available at any given time. Periods of economic downturn constrained progression of prospective firemen and drivers, as incumbents would have been less likely to move outside the railways. The number of journeys also declined during such periods, reducing driver and fireman workloads, meaning there was less scope for promotions. Furthermore the Victorian Railways was an organisation reliant on the funds for wages bills coming out of state government coffers.
Periods of economic hardship
restrained wages growth, and therefore promotion of workers.
Chapter 8
discusses the impact of entry year and current year on wage outcomes. The evidence presented in this section points to a consistent career path for workers in this area of the Locomotive branch. The progression from cleaner to fireman and on to driver is a logical one given the training requirements of the tasks involved at each level.
The hierarchy also provides the appropriate
screening mechanisms consistent with the increased risk, principally financial, being taken on by the employer with each promotion. Further evidence of this screening aspect is presented in the discussion of exit behaviour below.
Tenure A further indicator of an ILM is lengthy tenure. When workers elect to stay with an employer for a long period of time, and an employer encourages such an arrangement, then this indicates the existence of something other than a typical competitive model employment relationship. As Baker and Holmstrom (1995, p.256) contest “…if all job opportunities in the economy were available to all employees at all times on an equal competitive basis, one would expect shorter careers than we observe”. The expectation of the distribution of the tenure data is bimodal distribution, with a concentration of separations in the early part of careers, due to matching on
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the part of both employer and employee, but a decline in separation rates as workers settle into the aforementioned career structure. The exit rates will rise dramatically around retirement age, after thirty to forty years of service. Table 5.7: Tenure Tenure (years)a
35 Median Mean Number Employed in 1921
%
Entry Year 1889-1893 1894-1898 Cum. Cum. % % %
13.9 4.9 13.9 4.9 4.0 6.9 51.5
13.9 18.8 32.7 37.6 41.6 48.5 100
30.27 22.35 101b 55.4 %
%
25.0 25.0 8.3 0 41.7
25.0 50.0 58.3 58.3 100
10.14 13.45 12 41.7 %
1899-1903 Cum. %
1904-1913 Cum. %
19.0 8.6 5.7 42.9 23.8
4.7 61.2 33.3 0.8
%
19.0 27.6 33.3 76.2 100
17.66 14.75 105 67.6 %
%
4.7 65.9 99.2 100
9.73 9.37 258 89.9 %
a
b
Note: The period “5 to 10” should be read as >5 and ≤ 10, and so on. 2 of the 1884-8 entrants and 3 of the 1889-93 entrants fail to appear post-entry and therefore have no tenure data.
Table 5.7 shows the tenure distribution for workers entering in different years. It needs to be interpreted with caution given the nature of the data. Only between 1884-1903 do all of the short stayers show up in the data. In other years poor matches, that is those workers who stay with the organisation less than three years, may fall between observations. Any very short-stayers entering prior to 1884 do not appear. Furthermore a large number of workers from each entry grouping were still with the organisation in 1921. These workers are included in Table 5.7, and as such final tenure is understated. The left end of the tenure distribution is thus losing a portion of its height, while the right end is being cut artificially short. Despite both these factors acting to reduce bimodality, a bimodal distribution nevertheless is apparent for most of the periods.33 For example, of the workers entering between 1884-8 14 percent left within five 33
There is also a smaller peak at the 10-15 year interval in a number of the sets of 5-year entry cohorts.
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years yet only 38.6 percent had exited after 20 years. Over half of these employees (57 percent) were still employed in 1921 presumably heading for retirement, with tenure approaching or just in excess of 35 years. The small number of employees entering between 1894-8 were more likely to exit in early years, perhaps because they believed greater promotion and remuneration options existed outside the Railways in the post-Depression years. Apart from this period, the distribution of each five-year grouping of workers (by entry year) is skewed substantially to the right, with the median tenure larger than the mean, and close to the maximum likely level given the 1921 cut-off. These workers were certainly very attached to the organisation. Table 5.8: Tenure by highest position reached Highest Position
Number
Driver Fireman Cleaner
305 113 59a
Median Tenure (years) 30.39 13.61 4.11
Mean Tenure (years) 27.61 16.46 8.97
Still in Railways in 1921 (%) 57.0 29.2 17.0
Still in this position in 1921 85.6 21.2 0
Note: a Five employees reaching the fireman stage have no tenure data.
Table 5.8 breaks down the tenure data by highest position reached. The sample used here is those employees entering on or before 1903. As well as ensuring short stayers are included, this allows most workers to have reached their highest position held by 1921. Workers reaching driver levels had much higher median and mean tenure levels (30.39 and 27.61 years respectively) than those at fireman (13.61 and 16.46 years) and cleaner (4.11 and 8.97 years) levels. Also, a larger percentage of the drivers were still employed with the Railways at the 1921 observation (57.0 percent). Non-drivers were less likely even if still Railways employees to be still holding down their position on the Locomotive career path. Only 21.2 percent of those workers who reached only the fireman stage and were still employed at the Railways were still in that position in 1921. No cleaners remained as such by 1921. This would appear to indicate that there was some maximum time provided to workers to prove themselves in a position. If the workers did not achieve promotion they generally were shifted, or perhaps
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chose to shift, to alternative positions off the career path. There was almost no consistency in this choice of position. The physical nature of the fireman role in particular may have precluded workers from staying in this position for a prolonged period.
Exit Behaviour The discussion of tenure invariably raises the issue of separation, as the exit behaviour of employees indicates much about the nature of a labour market. The points at which either the employees or employers make decisions about ending an employment relationship reflect a great deal about matching and monitoring practices. Table 5.9: Exit behaviour
Lay-offs Quits - Resigned - Retired Other (death)
Frequency (%) 44 (31.9) 25 (18.1) 44 (31.9) 25 (18.1)
Median Tenure at Exit 13.5 3.9 24.1 14.2
Mean tenure at Exit 13.82 6.2 24.5 14.3
Analysis of the available exit data strengthens further the ILM argument. Exit information is available between 1884 and June 1903. Table 5.9 breaks down the reasons for exit into four basic areas. The median tenure of the workers choosing to resign (3.9 years) was much lower than retirees (24.1 years) or any other form of exits (13.5 years for lay-offs and 14.2 years for other reasons). This decreasing propensity to resign as tenure increases fits with a matching model, at least on the part of employees. The high tenure of those laid off is curious. It may reflect some longer matching period on the employer side of the equation. It may be that a portion of these lay-offs may be retirements as retired as a reason for exit seems understated for the early years of data. Retirements made up only 20.3 percent of exits before 1894 yet accounted for 40.5 percent after that date. It is not definite that this is a case of incorrect labelling, as it is
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possible that retirements increase in later years as the workforce itself gets older, not an unlikely outcome in a workplace that only commenced large scale operations in the preceding decade or two. Table 5.10: Exit behaviour by final position
Frequency Median tenure (years) Mean Tenure Lay-offs - frequency (%) - median tenure - mean tenure Resigned - frequency (%) - median tenure - mean tenure Retired - frequency (%) - median tenure - mean tenure Other - frequency (%) - median tenure - mean tenure
Cleaner 27 2.7 3.1 29.6 2.6 2.7 44.4 3.2 3.0 7.4 5.8 5.8 18.5 1.6 3.6
Final Position Fireman Driver 30 60 8.5 22.7 9.6 22.6 43.3 25.8 7.0 20.6 7.3 20.9 26.7 1.7 8.1 * 9.1 13.7 6.7 51.7 * 23.3 12.9 25.3 23.3 20.7 12.5 22.1 10.2 20.6
Other 20 23.2 21.2 34.7 16.1 23.2 17.4 6.2 5.5 43.4 25.4 26.0 4.3 * 14.1
Note: * indicates that there is only one case.
Breaking down the exits by the position held at the time provides a clearer picture.
It appears from Table 5.10 that employees made their matching
decisions at the cleaner level, as the highest proportions of resignations occurred at this stage. The mean tenure for cleaner resignations (3.0 years) was lower than for promoted cleaners (4.2 years, see Table 5.6), indicating that the decision to leave was probably not driven by dissatisfaction at the failure to progress. Or, alternatively, the workers were able to gauge the likelihood of their progression, and those who saw little prospect chose to cut their losses and left. It was at the fireman level that it seems the employer made its matching decisions, as lay-offs prevail. The mean tenure (7.3 years) for fireman lay-offs was lower than the promotion norm (11.48 year), suggesting a screening point within the fireman position, where unsatisfactory staff were taken out of future promotion tournaments.
The lengthy tenure of workers exiting from other
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positions is consistent with this observation, as the alternative to laying off staff was to shift them sideways within the organisation. Again the mean tenure for resigning fireman (9.1 years) is less than the promotion mean.
This is
consistent with workers observing the employer’s screening activities and gauging the likelihood of promotion, exiting if the odds were low.
That the
fireman position functioned as the prime screening point for the employer is understandable given the specific investments and equipment risk involved in the next step: becoming a driver. Given that driver appears to be the highest rung of the career ladder it is no shock that the highest number of exits occurred at this level.
Retirements
increase dramatically as expected. That lay-offs still made up roughly a quarter of driver exits may reflect several possibilities: that workers were still screened through the various levels of engines, and expelled for non-progression in an ‘up-or-out’ type scenario;34 that the punishment for accidents or inept performance was dismissal; or that the lay-off data include some retirements. Nevertheless, there are distinct differences in exit behaviour between the various positions, and consistent matching practices by both parties.
Wage Structures Official wage guidelines were outlined in public documents on various occasions. The policy process has been described as follows: “Regulations were drawn up by the Commissioners setting out basic wage, margins and conditions, and Parliament voted on the adoption of the regulations as part of the railway estimates” (Churchward, 1989, p.8).
34
That the mean tenure for lay-offs (20.9 years) is lower than overall driver exit mean (22.6 years) supports this option.
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These Rules and Regulations outlined a career progression in terms of wage increases within and between each class of workers on the Locomotive career path.
In 1884 there were three wage bands for cleaners, which rose
“…according to the efficiency of the employé [sic] at the rate of 6d. per diem per annum…” (1884, p 335). There were then three firemen classes, with capable employees eligible for a shift up the classes and wage scale after each successive twelve-month period.
Promotion to driver saw further wage
increases and the final position of driver (fifth class).
Figure 5.1: Distribution of wages by position 16
Real Wage - shillings (1911/2=100)
15 14 13 12 11
Percentile 05 Percentile 95 Median Percentile 25 Percentile 75
10 9 8 7 6 5 4 3 Cleaner
Fireman
Driver
Position
Data on payments to individual waged workers are reported in the triennial Gazette records from 1902 onwards. The information given is wage rates per day. A comparison of the real wage rates between the positions is possible. Figure 5.1 plots the wage distributions within each position. The analysis does not take into account differences in hours of work or access to overtime. It indicates that it was relatively uncommon for workers to have moved onto the
106
wage distribution of the next position, with the 75th percentile of both the cleaner and fireman distribution only around the 5th percentile of next position’s distribution. As such promotion was the most likely means of achieving significant wage progression. The regulations point to greater dispersion in the fireman distribution than cleaner ranks, and in the driver position compared to firemen. While the latter difference does show up in Figure 5.1, the cleaner distribution does not shape up as expected. Cursory glances at the cleaner distribution identify a wide gap in the middle two quartiles (2.51 shillings), compared to a paltry 1.31 shilling difference on the fireman side. This is incompatible with the unskilled nature of the cleaner position and the need to reward skill formation in the higher level jobs. More in-depth investigation of the data identifies the cause of this problem however. Few cleaners were employed in the years 1918 and 1921, while firemen (and drivers) still abounded. The retail price deflators for this period are high35, while there appears to have been little movement in nominal wages. This results in a situation where the median real wage figures for cleaners, firemen and drivers up to 1911 were 5.82, 9.19 and 13.04 shillings respectively, while from 1914 on the figures were 7.48, 7.94 and 10.22 shillings. The later year real wage figures act to narrow the spread of the fireman and driver distributions. It becomes difficult to compare these results to those for cleaner. It is clear that there was considerable scope for significant wage differentials within the driver position. This is to be expected given the higher number of classes within the position, the levels of seniority differences between drivers, and the lack of obvious and consistent promotion paths beyond driver. The data do not pick up other variances in remuneration to drivers, such as preferential treatment of more senior staff in terms of allocation of hours, preferred routes and class of runs.
35
137 in 1918, 168 in 1921 (1911/12=100).
107
The regression analyses in Chapter 8 sheds greater light on other important wage pattern issues for the Locomotive career path, such as the impact of variables such as tenure, speed of progression and date of entry. Victorian Railways employees entering before 1883 had access to a noncontributory pension. New entrants after this date were required to contribute to an insurance scheme (The Railways Management Bill, 1883, s.29), an effective forerunner to superannuation. This access to remuneration upon retirement was a crucial element of these workers’ compensation packages.
It would also
contribute to an upward sloping age-wage curve expected of ILMs. The lack of data for workers prior to 1902 precludes any meaningful analysis of wage profiles.
The limited conclusion is that initial wages analysis indicates no
evidence contravening the ILM theory in Chapter 2.
Unionisation The question of who was driving this structure is outside the scope of this study. One such issue does need to be broached however. There is little evidence that the relevant unions covering this group of workers significantly influenced the policies of the Railways, at least in the period during which many of these management practices were being introduced.
The relevant union in this
instance emerged very slowly through the period. The workers in this group formed various associations, and changed monikers regularly.
The Engine
Drivers and Fireman Association was formed in 1870, expanding to become the Engine Drivers, Fireman and Cleaners Association in 1906. Feelings of solidarity with other rail workers appear to have been low. This union remained separate from attempts in the early decades of this century to amalgamate the various branch and craft based unions into a cohesive bargaining unit (Churchward 1989), snubbing the Australian Railways Union in favour of forming the Australian Federated Union of Locomotive Enginemen. Also the one example of industrial action, a strike of enginemen in 1903, failed dramatically, with legislative action severely punishing participants and no resolution of the issues
108
(Benham & Rickard 1973). The role of the unions is preserving these practices well into the mid-twentieth century should not be underplayed however.
Conclusion The evidence presented in this chapter points to a distinct labour market operating within the Victorian Railways’ Locomotive Branch.
Employees
commencing as engine cleaners, or managing to get internally shifted into this position, placed themselves on the bottom rung of a career ladder that could lead them to the relatively prestigious engine driver role. These new entrants would have been able to observe the skill accumulation process of more experienced workers and the rewards thereto, such that motivation existed to follow suit, aspiring first to the fireman role, and then on to driver. The existence of a uniform low level entry port, a consistent career path, a compatible wage structure, lengthy tenure and ILM-consistent exit behaviour, all support the case for the operation of an ILM in this instance. Such a situation is well explained by ILM theory, particularly given the specificity of the skills involved here, and the cumulative nature of the skill acquisition process. The presence of an ILM in this area is no great shock. As mentioned earlier such management practices are consistent across railway organisations in a variety of countries.
It is a simple linear structure easily observable and
understood. The adaptation of such a process to more complex areas, involving more positions and a greater variety of job requirements requires more subtle and deeper analysis, as will be attempted in Chapter 6.
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CHAPTER SIX: AT THE STATION - AN INVESTIGATION OF THE CAREER STRUCTURES WITHIN THE TRAFFIC BRANCH
Introduction The attention in this chapter shifts from the organisation of the employees who rode the rails to those how manned the stations.
When Alfred Chandler
described the railways as one of the birthplaces of modern management techniques he pointed to those managers coordinating station activity.
He
noted that "…the movement of carriers had to be carefully coordinated and controlled if the goods and passengers were to be moved in safety and with a modicum of efficiency". (1975, p.81) He also highlighted one of the key administrative issues - that "…every day railroad managers had to make decisions controlling the activities of many men to whom they rarely talked or even saw." (1965b, p.19)
While spending much time on the subsequent
accounting and bookkeeping pioneered by the railways in response to these issues, he neglected to consider the labour market response. This chapter focuses on those Victorian Railways employees engaged in station activity. It is found that the ILM that emerged in this branch (Traffic) was more elaborate than that for the Locomotive Branch. Employees could fill a variety of quite different positions with the work varying from the white-collar bookkeeping and administrative tasks of clerks and stationmasters to the arduous and dangerous physical labour of a shunter. The status and conditions attached to these jobs varied, as salaried and waged staff rubbed shoulders. The findings presented in this chapter illustrate that workers entered two distinct streams in the ILM - ostensibly one white-collar and the other blue-collar, but that there was crossover and shared positions between these streams including the highest position of stationmaster. It was common for workers to shift between blue- and white-collar positions, and interestingly there was little difference between the speed of progression of either stream.
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The chapter follows a similar structure to Chapter 5. The nature of the tasks involved in station work and of the positions within the Traffic Branch is explored, as is the basic structure of the Branch. The size and scope of the data set used in this chapter is then discussed.
This sample of Traffic Branch
workers is then analysed, looking at entry, career patterns, hierarchical levels (in particular salary relativities), speed of progression, and tenure and exit behaviour. The unionisation experience of these workers is also considered. The conclusion finds this to be a much more complex ILM than that found in the Locomotive Branch, with the complexity driven by the increased technical, motivational and monitoring demands of the tasks involved.
The tasks at hand Railway stations are complex work environments. A constant stream of loading and unloading of goods, packages and passengers must be coordinated within the strict confines of the timetable. New carriages and trucks are added to trains while others are removed. Several trains frequently travel through the station at one time, requiring sophisticated signalling and shunting manoeuvres. Alongside these day-to-day pressures, staff are also expected to forecast seasonal demands for goods transportation, as well as dealing with passengers queries about future timetabling, fare rates and the like. This in itself requires specialised accounting and budgeting methods. Within the Victorian Railways the responsibility for such tasks rested with the Traffic Branch. Traffic was one of the three major branches of the organisation, and was responsible for the “[o]peration of passenger, goods, livestock, and parcels traffic by rail and road” (Harrigan 1962, p.126). The existence of such a branch was a common feature of large-scale railways as noted by Chandler (1965, p.99), particularly those adopting the "departmental" structure common amongst British and European railroads (Chandler 1975, p.107). Within the Victorian Railways structure, the Traffic Branch was one of the larger branches
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in terms of employees and certainly had the highest number of workplaces. Along with several administrative locations, Traffic Branch employees worked at stations, sidings and yards across the state. In 1900, the Branch employed 3,163 men on a permanent basis, across 779 stations (Report of the Victorian Railways Commissioner for the year ending 30th June 1900, Appendices 15 & 17). By 1912 the number of stations had risen to approximately 1000 (Report for the year ending 30th June 1912, Appendix 24). The nature of the Branch's duties, and the geographic dispersion of the workplaces, meant that all employees needed to have a very clear understanding of the procedures involved in coordinating the transit of passengers and goods, in terms of ticketing, timetabling, packing and unpacking, shunting and signalling. This all had to be performed in a consistent fashion from day-to-day and station-to-station.
Furthermore, fluctuations in
demand from season-to-season had to be accommodated within the regimentation of statewide timetables and allocations of rollingstock and staff. These skills were central to the safe and efficient operation of the railroad and were not easily nor quickly communicable or transferable. The systems in place were specific to the Victorian Railways, and as such, workers would have acquired little more than some general clerical or administrative skills from employment elsewhere. A skill formation process was necessary that ensured an accumulation of the appropriate skills for given positions.
Likewise, the
success of employees in developing the necessary skills needed to be monitored and rewarded, and employees matched to the tasks best suited to this acquired knowledge base. The railways adopted a work organisation and labour management practices that attempted to ensure such processes occurred. Ducker (1983, p.5) described the lot of a station worker at considerable length: "He sold tickets, helped passengers with their baggage, checked freight shipments, received and sent telegraph messages, received and sent telegraph messages, relayed dispatchers' orders to trainmen, took responsibility for the local mail, lent a hand in switching cars on his side track, and made at least a
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passing effort to keep his station tidy enough for the most fastidious visiting grandmother." The major positions in the Traffic Branch encompassed these tasks and more, with the key titles being porter, clerk, shunter, signalman, guard, assistant stationmaster and stationmaster. For the purpose of this study all other titles have been tagged as Other, with the most prominent position being gatekeeper. The work varied from white-collar bookkeeping (clerk, stationmaster) to arduous and dangerous physical labour (shunter). Employees had to interact with the public (porter, guard, clerk, stationmaster), yet be aware of the complexities of ensuring safe and timely passage of the rollingstock (signalman, stationmaster, shunter). To more clearly understand the machinations of this ILM, the nature of each position will be briefly discussed. Porters were by far the most common employees in the Traffic Branch. The position was the entry point for most employees and a stepping point for a large number of the other positions in this ILM. As official position descriptions appear to have vanished, it has been necessary to look elsewhere for such information. A poem titled "A porter's life" by a South Australian railwayman (W.C. Robinson, as quoted in Adam-Smith 1976, p.245) may be the best description available: "Cleaning cars - polishing brass Sweeping brakes and cleaning glass Juggling samples - pushing brooms Cleaning points and sweeping rooms Chasing trucks around the yard Waiting on a big fat guard Nipping tickets - collecting freights Shining scales and cleaning weights Unloading trucks - folding sheets Trimming lamps and dusting seats Climbing signals - trimming wicks Using shovels, rakes and picks Turning cheese knobs - shunting trains Dodging showers when it rains Pulling staffs - handling hoops Loading fowl and chicken coops Loading wool and weighing trucks Handling turkeys, geese and ducks Dodging bosses - watching rails Loading parcels, goods and mails
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Selling tickets, weighing logs Waybilling prams, goats and dogs Climbing ladders without fear Filling tanks and loading beer Pushing pens - answering phones Filing numbers, labelling bones Filling tenders up with water Now who wouldn't be a Porter?" As can be seen from this lengthy list, the position entailed manual type tasks as well as more clerical duties. Porters were called upon to fill in for absent staff and to help others out when the station was busy. The 1912 Regulations (Schedule III) list twenty-five different types of porters within the Traffic Branch. A number of these distinctions were hierarchical, such as junior porter, head porter, porter in charge and operating porter. Most were specialised forms, such as checking porter, cloak room porter, luggage porter, signal porter, or yard porter. These specialised roles were only available at the largest stations. For example, there were only six first class parcels porter jobs listed in the 1912 Regulations (Appendix 5), all at the two largest stations in the state. As is discussed further below, other than operating porter and porter in charge, which have been coded as assistant stationmaster positions, all of these positions have been coded as porter for the purpose of this analysis. Another entry position was that of shunter. Shunters spent their days breaking up and marshalling trains, and coupling and decoupling carriages, trucks and engines. This was arduous, dangerous work. Butler-Bowdon (1991, p.69) notes that this "[w]as regarded by many as the most strenuous, nerve-racking and dangerous job in the service." He goes on to explain the dangers: "One might fall between moving vehicles…[or] trip while running after the hand-brake attached to the side of a vehicle…When it rained, shunters had to be careful to avoid slippery sleepers…But by far the most lethal accidents were those involving spring buffers." (Butler-Bowdon 1991, pp.69-70) Most of the accidents involving several vehicles would have happened in the various shunting yards such as the Melbourne yard where up to 400 men working around the clock. Many smaller stations would have had no need for
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shunters as they rarely added or removed carriages, or may have lacked the necessary siding facilities. A distinction was made in the classifications of 1896 and 1912 between country and Melbourne shunters, with the busier Melbournebased employees earning slightly more. The data used in this study does not distinguish between country and Melbourne shunters. There is also a leading shunter classification, which is higher paid again. These employees have been coded as shunters in this chapter. A more technically demanding job was that of signalman. The 1919 Regulations (p.?) defined a signalman as “…an employé in charge of the working of Signals or an interlocking apparatus.” Butler-Bowdon (1991, p.1) claims that "[w]orking the signals and points was a highly responsible job; the signal box was the lighthouse of the railroad, and one wrong move could lead to disaster." This was not an entry position. Prospective signalmen needed to pass exams on the regulations and code of practice regarding the operation of signals.
These
regulations were very lengthy. Of the 445 pages in the 1919 Regulations governing the conduct of employees, 247 concerned signals operation. There was a hierarchy of classifications within the signalman position, from fourth class up to first class and special, with increasing wages attached. The 1912 Regulations (p.4380) lists the classification of signal-boxes across the network. Six boxes were classified as special, all at the biggest metropolitan stations. There were thirteen first class boxes, seven second class and thirty-one third class, plus one that shifted from third to second in busy season. The overwhelming majority of these boxes were on the suburban lines. By fourth class, with fifty-four boxes listed, plus two boxes that were graded "when busy", about half were rural. A position that shared experiences of the drivers and firemen in the previous chapter was the guard. While members of the Traffic Branch, these workers did not spend their day at a station, or in a nearby signal box or shunting yard. Rather they travelled in the trains, like the drivers and firemen. Butler-Bowdon (1991, p.3) again summarises their work experience well:
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"The guard's work had a paradoxical character. One the one hand it was the most social job in the railways, on the other hand the most solitary. There were long stretches completely alone in the guard's van, punctuated by brief stops at country stations. There, the locomotive crew usually stayed on the footplate, leaving the guard to act as an intermediary and bearer of news." The guard was expected to monitor the track as he travelled on the train, prepare goods for delivery at the next station, act as the liaison between station staff and engine staff, ensure the train was keeping to the timetable, pick up and drop off packages.
Guards also had to pass examinations to take up the
position, as they too had numerous regulations to follow to ensure safe passage.
Guards could work on suburban runs or on goods or passenger
trains, and the pay classifications distinguished between these employees (although the collected data usually does not). Passenger work (presumably on country routes) was the highest paying of the positions, followed by goods work and then suburban work. One of the Railways Commissioners, in discussions with the guards' union about pay rates, affirmed this view by arguing that he “…could not consent to thus classing a senior goods guard and a senior passenger guard to the same footing as he always considered the promotion to main-line passenger train guard was honor due to capable and old servant.” (The Railway Gazette November1907, p.7). There would have been certain benefits of suburban positions for many workers, however, as they presumably would have spent few nights away from home. In all of the above positions employees earned wages, that is they were paid daily rates. The second most common entry position, clerk, was a salaried position, and very much white-collar. The tasks of a clerk included bookkeeping, internal communications, billing, filing, and the preparation of paperwork for transit of goods and passengers. As is shown below, these employees, while employed in the same Branch formed an alternative stream within the Traffic Branch ILM. Clerks were required to be more literate and educated than their more blue-collar colleagues.
As Butler-Bowdon (1991, p.22) points out this
meant this created a class division as "…most recruits [into the clerk position]
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came from middle-class families who could afford to support their children into high school." There were further divisions created by the differing conditions faced by these employees. As salaried officers, clerks were entitled to more leave and also first-class rail passes.36 Also, unlike the daily-paid employees, there was significant scope for remuneration increases within the clerk position. The 1896 and 1912 classifications listed six classes of clerk (fifth through to first plus special), while in 1919 these had changed to seven classes (seventh through to first). The range of salaries listed in these classifications was very wide, as shown in Table 6.1. However, the majority of clerks were in the lower grades.
Juniors invariably earned the lowest rates.
There were annual
increments in the early years of clerks' careers but it soon plateaued out to such an extent that the nascent Traffic Union claimed in 1892 that "…a clerk is considered lucky if he reaches £150 in ten years." (Victorian Railway Gazette March 1892, p.9)
The 1912 Classification (Appendix 1) lists ninety-five
individual station positions in which clerks would earn £150 or more per annum. Examples of the various titles attached to these jobs included Passenger and Goods Clerks, Booking Clerk, and Senior Parcels Clerk. Only two were first class positions, four were second class, with fifteen third class, and seventy-four fourth class. These jobs were spread across thirty-one stations, of which only five were urban stations. There are further discussions of the actual remuneration outcomes of clerks, and the other positions discussed thus far, later in the chapter. Except for the discussion of entry positions, where junior clerk is differentiated, throughout this chapter's analysis the various forms of clerk have generally been pooled into a single clerk position.
36
The 1883 Regulations outline an entitlement of 21 days leave for salaried officers with greater than two years service. This would have included assistant stationmasters and stationmasters as well as clerks. While guards with more than seven years experience in the position were also entitled to 21 days leave, most daily-paid staff had an entitlement of between 6 and 14 days. Butler Bowdon (1991, p.21) notes that daily-paid staff were only provided with second class rail passes.
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Table 6.1: Official rates of pay for clerks Class Special 1st class 2nd class rd 3 class 4th class 5th class 6th class 7th class
1896 £375-600 £285-350 £225-270 £165-210 £110-150 £40-100a
1912 £425-500 £325-400 £255-300 £195-240 £165,180 £50-150b
1919 £400 £385,400 £350,365 £320,335 £290,305 £245-275 £85-235 c
Notes: Rates separated by a comma indicates there were only two rates in the range, a dash indicates greater than two. a with entry restricted to 14 - 17 year olds b with 21 year olds with at least 3 years experience receiving a minimum of £120 c with 21 year olds receiving a minimum of £200
Another salaried position within the branch was that of assistant stationmaster. While relatively common in the latter two decades of the sample, there is little discussion in the literature of the duties or experiences of these employees. There is no such position in the 1896 Classification, but in 1912 it does appear with three classes, with the highest class only comparable to the bottom of the fourth class clerk in terms of remuneration. Further analysis reveals it was a more common for employees who had previously been porters to move into this position than those who had been clerks. In terms of coding, both operating porters and porter-assistants have been coded as assistant stationmasters. This reflects many comments made in various trade union journals that these workers
were
effectively
working
as
assistant
stationmasters,
if
not
stationmasters. For example it was claimed that “…it is a well known fact that an operating porter on most of the stations on which he is employed has to be equivalent to a station master, both in clerical and outside duties.” (The Railway Gazette August 1911, p.6) A long campaign was waged by the unions to get the two positions reclassified as assistant stationmaster, with the change finally announced in March 1911.37
37
Mention of this campaign can be found in the Victorian Railway News on February 1906, August 1906, February 1907, March 1907, and finally in March 1911. The lot of the porter assistant was raised in January 1906 thus: “…these men, who are undoubtedly the worst treated body of men in the service, performing the duties of a stationmaster, with the pay and status of a platform porter.” (Victorian Railway News, p.8)
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This brings us to the highest position generally observed in this ILM, the stationmaster. Responsible for the workings of his station, the stationmaster needed a very detailed understanding of rail regulations, policies and formalities, knowledge that comes from years of experience, study and observation. He monitored the flow of traffic, freight, parcels and passengers, and the performance of his staff. He liased with central administration about his station's needs, and also sold the railway's services to the surrounding community.
Butler-Bowdon (1991, pp.58-9) noted that "[i]n the country
especially, the station master was accorded much respect, and was almost always referred to as Mr So-and-so." A former stationmaster claims "[t]he station master was really considered the equal of a bank manager." (Tom Yates, as quoted in Butler-Bowdon 1991, p.63) Not surprisingly the railways sought experienced and well-performed employees for such positions. There was a hierarchy within the stationmaster position also. Stations were graded, according to the volume of through traffic, amount of revenue taken, and the amount of goods loaded and unloaded. A stationmaster's remuneration and status were determined by the station over which they had control. In the four available classification documents (1883, 1896, 1912 and 1919), there were always at least eight grades, with a ninth added by 1912. document also listed the grading of each station.
The 1912
Using data from
contemporaneous Annual Reports, it is possible to identify apparent threshold or benchmark throughput levels for each station grade. Table 6.2 shows the numbers in each classification and the revenue, tonnage and passenger volumes experienced by these stations. Passenger levels, rather than revenue, were the determining factor in the classification of stations.
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Table 6.2: The number of Stationmasters (by grade) in 1912 and the benchmarks for station grades I 6
No. of Stationmasters No. of Relieving Stationmasters City & Suburban stations 3 Rural stations 3 Station Urban Grade Revenue Passengers 9 1000-5000 >4000
II 6 1 1 5
III 10 1 1 9
Class (Station) IV V VI 11 18 36 1 1 4 2 8 15 9 10 21
Tonnage >1000
Revenue 1000-5000
>2000
4000-8000
8
2500-9000
>10000
7
10000-20000
>400000
6
10000-30000
>400000
>15000
5 4 3 2
>15000 >200000 >175000
>1000000 >1000000 >1500000 >500000
1
>100000
>3000000
>30000 >10000 >20000 In 50000 Out 350000 >100000
1000020000 1000030000 >20000 >15000 >25000 >25000 >100000
VII VIII IX 79 152 152 7 13 20 21 28 10 58 124 142 Rural Passengers Tonnage 1000-6000 In > 2000 Out >800 5000-15000 In >8000 Out >1500 >10000 >5000 >20000
>7000
>10000 >20000 >35000 >35000
>10000 >8000 >10000 >10000
>250000
>50000
Note: Definitions of suburban stations taken from 1912 Classifications (p.4292). The benchmarks have been estimated from the figures for selected stations in the 1913 Annual Report (Appendix 24).
There were roughly 1000 stations listed in the 1913 Annual Report, yet only 470 had graded stationmaster positions. This means that a large number of stations were run by staff ranked lower than stationmaster. It is most likely that these were operating porters or clerks.38 Most of these stations were in rural areas, as only twenty-four suburban stations were not listed as having stationmasters. The majority of the network's stations were in rural areas. Stationmasters were expected to work their way up through the grades of stations. The lowest grades were termed junior stationmasters, at least in the trade union journals. Given that most low graded stations were in the bush, most stationmasters started out at these rural locations. A union journal of the time complained that taking up a junior stationmaster position meant giving up city life “…for the
38
The April 1911 Railway Gazette (p.17) featured a letter in which an employee complained of the injustices done to operating porters, earning less than some shunters and guards yet potentially being in charge of a small station.
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indefinite and well nigh interminable hours demanded of a man in charge of a one-horse country job…” (Victorian Railway News July 1907, p.14) The same union journal summarised the stationmaster's employment experience very well: “To obtain appointment to junior stationmaster not only requires at least 20 years of service, but the aspirant must be possessed of qualifications far in excess of anything that is required in seeking promotion through any other avenue, such as signalman or guard. Actual promotion to the position must be preceded by many years of probation to the work, as an operating porter or porter assistant. There is no man in the department who obtains the same all-round experience, or who is fortified with as many certificates.” (Victorian Railway News July 1907, p.14) The summary of the tasks involved in each of the major positions in the Traffic Branch serves to highlight the variety of work that needed to be allocated, undertaken and monitored over significant distances and involving a very large group of employees. The regulations governing classifications provide a picture of how management wanted this branch to operate. The analysis in the remainder of this chapter seeks to explore the outcomes achieved by these regulations and the experiences of employees in this branch over the period.
The data set The sample analysed in this chapter consists of 1611 employees, with information running over a longer period than for the cleaners, firemen and drivers of the previous chapter. As well as the triennial Government Gazette data and the start and exit information from Annual Reports, information on salaried staff has been gathered from occasional lists of civil servants published in the Parliamentary Papers between 1864 and 1901. These latter data were only collected on individuals already in the main sample.
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The distribution of workers amongst the major positions in the Gazette sample is shown in Table 6.3, and for the Parliamentary Papers data in Table 6.4. As mentioned above, the positions of Porter and Clerk include a portion of specialised variations of the positions, such as goods porter, parcels porter, tally clerk and booking clerk.
Unless otherwise stated, junior versions are also
included in the generic positions. Also Assistant Stationmaster also includes those listed as Porter Assistant or Porter-in-Charge. Table 6.3: The Traffic sample from the Government Gazette Year
Porter
Clerk
Guard
1884 1887 1890 1893 1896 1899 1902 1905 1908 1911 1914 1918 1921
% 27.5 30.9 41.0 40.2 38.8 37.8 31.4 25.2 26.5 21.3 23.8 15.3 11.0
% 16.3 15.3 14.4 13.0 13.2 13.1 14.2 15.5 19.0 19.3 18.3 21.2 20.3
% 13.3 11.9 8.1 8.8 7.9 7.9 9.9 9.8 9.0 13.3 13.0 14.9 16.9
Signal- Shunter man % % 0.8 5.9 4.2 2.8 4.8 4.3 7.5 4.2 7.6 4.6 7.3 4.9 7.2 4.4 7.2 4.5 6.6 5.4 7.0 6.0 7.1 4.9 8.5 4.4 9.3 2.2
Asst. St'ster % 8.5 6.7 0.8 0.1 0.2 0.2 3.1 3.5 3.4 4.3 4.6 4.7 5.8
StationMaster % 6.4 9.8 12.7 12.6 13.1 14.2 12.6 11.2 10.9 11.1 10.5 12.9 15.4
Other % 21.3 18.4 13.9 13.7 14.7 14.7 17.0 22.9 19.2 17.8 17.8 18.1 19.1
Total 375 430 749 717 659 633 704 650 699 747 940 868 764
The employee numbers in this Branch followed a similar pattern to those in the Locomotive sample. The workforce grew dramatically in the 1880s, peaking in the early 1890s, and then declined through the depression and post-depression years. Only with the onset of the First World War did the numbers rise above the 1890 total. As Table 6.3 shows, the distribution of workers among the major positions shifted over time. The ratio of clerks to porters ranged from as low as less than 1:3 in 1893, to close to 2:1 in 1921. The ratio of stationmasters to the total number of porters and clerks stayed around 1:4 until 1918 when it rose sharply, such it was almost 1:2 by 1921. This may represent a casualisation of the porter position in anticipation of the influx of returned soldiers. The various Parliamentary Papers reports tended to record only salaried officers and as
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such the figures in Table 6.4 are dominated by the salaried positions of clerk and stationmaster. Table 6.4: The Traffic sample from Parliamentary Papers Year
Porter
Clerk
Guard
1864 1865 1867 1868 1877 1879 1880 1881 1882 1883 1888 1889 1890 1891 1892 1895 1898 1901
% 16.7 -
% 48.1 33.3 25.0 39.1 47.8 47.8 50.0 0.0 56.4 51.1 58.9 54.5 56.1 57.0 57.0 61.7 44.6 48.3
% 25 -
Assistant S-Master % 21.7 2.7 1.5 1.4 0.6 0.6
StationMaster % 48.1 57.1 41.7 30.4 47.8 47.8 42.1 75.0 43.6 42.2 33.9 38.8 37.2 37.6 35.8 35.2 51.8 47.2
Other
Total
% 3.7 9.5 16.7 8.7 4.3 4.3 7.9 6.7 4.5 5.2 5.4 5.4 7.3 3.1 3.0 3.9
27 21 24 23 23 23 38 4 39 45 112 134 148 149 151 128 168 180
Table 6.5 shows the distribution of the entry dates of the employees in this sample. The pattern here is similar to that of the Locomotive sample, with large peaks around the decade 1884-1893, a trough over the next decade and another peak in the decade up to 1913. There is a higher proportion entering before 1884 (26.4 percent) than in the Locomotive sample, reflecting the access to earlier records. Nevertheless, there are a disproportionate number of workers in the sample that enter between 1884 and 1903. Unlike other years in this study, there is actual entry data on 682 employees taken from the Railways’ Annual Reports for this period. Start information has been gathered on a further 73 employees. All of these entered before 1884, 51 in 1883. As a result this portion of the data set contains a larger amount of workers with short stays than the others, as will be discussed in the Tenure section below.
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Table 6.5: Distribution of sample by entry year Entry Year 1855-1868 1869-1878 1879-1883 1884-1888 1889-1893 1894-1898 1899-1903 1904-1908 1909-1913 1914-1921 Total
Number 78 131 197 311 207 36 130 108 335 3 1536
Percent 5.1 8.5 12.8 20.2 13.5 2.3 8.5 7.0 21.8 0.2 100
Note: There are 75 individuals in the sample without entry dates, all of whom are likely to have started before 1883.
Entry Unlike the Locomotive Branch, there appear to be no clear guidelines available regarding the requirements of applicants seeking employment with the Traffic Branch.
Butler-Bowdon (1991, p.22) mentions a desire for greater literacy
among clerk entrants. The 1896 Regulations seemed to imply that clerks must be 14-17 years on entry, but this requirement was not mentioned in later years' Regulations. Lad Porters were listed with the same entry age band as the clerks, while porters had a minium age at entry of twenty-one, and a maximum of thirty-five. One indication of which positions were entry points into the branch is a list of the number of applicants and appointments made in 1909-10, as reported in one of the union journals.
Of the major positions in the Traffic
Branch it notes 1030 applications for junior clerk positions and 225 appointments to that position, 646 and 82 for lad porter, 800 and 156 for porter, and 202 and 52 for shunter (Victorian Railways News November 1910, p.5). Table 6.6 presents the observed entry behaviour for the employees in the sample for which entry data is available. It shows that no workers entered as stationmasters or assistant stationmasters. In fact, consistent with numbers reported above, of the major positions, only porter, clerk and shunter, or their
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junior variations, acted as entry positions. These positions accounted for 78.8 percent of entrants.
Of the remainder, a small portion (2.6 percent) held
positions associated with station work, such as gatekeeper, junior messenger, ticket collector and junior block recorder. The further 18.5 percent entered as manual workers of some sort. Of the 160 workers that did not enter as porter, clerk or shunter, 134 (84 percent) went on to hold a porter or clerk position. None of the workers who entered as shunters went on to a stationmaster role. Table 6.6: Entry positions where entry data is available Entry position Porter Clerk Junior Porter Junior Clerk Shunter Signalman Guard Assistant Stationmaster Stationmaster Other Positions - Station Work Other Positions - Manual Total
Frequency 414 79 50 28 24 0 0 0 0 20 140 755
Percent 54.8 10.5 6.6 3.7 3.2 0 0 0 0 2.6 18.5
Note: Twenty-one of these entrants started in years before 1883, one each year in 1867, 1868 and 1878, the remainder in 1881-2.
This entry information only covers a portion of the sample period, however. Again it is possible to look at the first available position data for each individual39. This information is shown in Table 6.7. Given that progression between the major positions is somewhat slower in this ILM (see below), the tenure cut-off used here is three years.
The positions of porter, clerk and
shunter represent 82.7 percent of first positions. The percentage working as shunters (6.9%) is substantially higher than in Table 6.7 (3.2%).
This may
reflect a number of workers hired in other positions such as porter being quickly shifted to the more dangerous and less glamorous shunter role. The number of employees in junior porter and clerk positions is also substantially higher, and the ratio of porters to clerks (including juniors) is roughly 3:1 rather than the 4:1 39
The rationale for using these data was explained at much greater length in Chapter 5.
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ratio in Table 6.5. Also 12 workers occupied the other major station positions of guard, signalman, assistant stationmaster and stationmaster. One final observable difference is the lower percentage of entrants in manual positions in Table 6.6, down from 18.5 percent to 13.8 percent. These differences suggest that there were changes in employment practices over the period. Table 6.7: First positions (combination of starts and first positions with tenure less than three years) Entry position Porter Clerk Junior Porter Junior Clerk Shunter Signalman Guard Assistant Stationmaster Stationmaster Other Positions - Station Work Other Positions - Manual Total
Frequency 595 127 168 114 91 1 2 2 7 34 183 1324
Percent 44.9 9.6 12.7 8.6 6.9 0.1 0.2 0.2 0.5 2.6 13.8
Table 6.8 divides the first position information from Table 6.7 into entry years. It reveals several important aspects of entry behaviour.
The majority of the
shunters entered after 1903. The earlier hypothesis that these workers were demoted porters or clerks seems unlikely, as the median tenure of this group at first observation is only about 11 months. The data suggest that there was a shift to recruiting workers straight into the shunter position. The official figures on entry for 1909-10 back this up, as there were fifty-two recorded appointments to the shunter position. This group tended to stay as shunters also, with 72.4 percent not progressing to any of the other major positions over their subsequent careers, and none becoming stationmasters. The number of junior clerks and porters rose substantially in the later decades of the study. By the 1904-21 grouping almost all clerk entrants and almost half of the porters were juniors. In 1909-10 there were no listed applications or appointments to non-junior clerk positions. This shift towards hiring junior staff
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over time is also reflected in the drop in median entry age from almost 22 in 1884-1903 to less than 20 in 1904-1921. The percentage of entrants under the age of eighteen was also much higher in the latter period. In part this reflects cost cutting on the Railways’ part and a belief that the external-acquired skills of older entrants were of little use.
This latter point is investigated at greater
length in the discussion of returns to potential outside experience (see Chapter 8). Table 6.8: First observed positions by entry year First position Porter Clerk Junior Porter Junior Clerk Shunter Signalman Guard Assistant Stationmaster Stationmaster Other positions - Station Work Other Positions - Manual Work Total Median Entry Age (yrs) Under 18 yrs old
1855-1883 Freq. % 69 37.3 45 24.3 0 0 1 0.5 10 5.4 1 0.5 2 1.1 2 1.1 7 3.8 17 9.2 31 16.8 185 20.75 23.9%
Entry Year 1884-1903 Freq. % 377 53.9 76 10.9 50 7.1 27 3.9 23 3.3 0 0 0 0 0 0 0 0 13 1.9 134 19.1 700 21.96 19.1%
1904-1921 Freq. % 149 33.9 6 1.4 118 26.9 86 19.6 58 13.2 0 0 0 0 0 0 0 0 3 0.7 18 4.1 439 19.90 35.8%
Table 6.8 also sheds greater light on the issue of the changes in the ratio of porters to clerks. The ratio was at its lowest prior to 1884 (1.5:1) but this is due to more information being available on salaried staff (such as clerks) during this period than on waged employees (such as porters). The ratio for 1884-1903 (4.1:1) was representative of the practices through that period as it includes all entrants. By 1904-21 the ratio had dropped to 2.9:1, indicating a shift in preference towards clerks.
This shift towards clerks represents a white-
collarisation of the workplace, an argument that is strengthened by the substantial drop in the proportion of entrants entering this ILM through other manual positions, from 19.1 percent in 1884-1903 to only 4.1 percent in 190421. The tightening up of the entry processes into the ILM is also visible post-
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1883, as no more workers enter into the major positions of guard, signalman, assistant stationmaster or stationmaster. Also very few workers enter through other station positions. No doubt the 1884 Management Bill influenced this change. What is clear is that workers were entering the Branch via two major ports - as a porter or a clerk, junior or otherwise - or the less significant port shunter. Closer examination reveals more about the differences between these career paths.
Career Path The highest position on this ILM, with the exception of a small number of Superintendent roles, was stationmaster. Rather than attempt to decipher the numerous possible combinations of positions any individuals could have held within the branch, it is simpler to look at which paths led to the stationmaster outcome. Table 6.9 breaks the potential paths into four groups – porter, clerk, combined and other. Each group is then divided into those who held only the lower level and stationmaster position, those that were also assistant stationmasters, and those that also held other positions. The other positions in this instance were the other major positions in this ILM: namely guard, shunter and signalman. The most common grouping is the Porter path, with 44.2 percent of stationmasters in the sample having followed this path. Once tenure at first observation is limited to less than three years, this path increases to 60.8 percent of the sample. Within this group are the most frequent (tenurecontrolled)
specific
paths:
stationmaster-stationmaster.
porter-stationmaster,
and
porter-assistant
The next most frequent combination is Clerk-
Stationmaster. A small number (6.4 percent) combined both clerk and porter roles. Not controlling for tenure, over a quarter of the stationmasters had not previously held a porter or clerk position, but once the three-year limit was imposed this number fell to 7 percent.
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The non-tenure-controlled figure
represents
those
already
employed
as
stationmasters
(or
assistant
stationmasters) when they first appear in the data. Table 6.9: Path to stationmaster Positions Held
First position data
Porter & Stationmaster Porter & Ass’t Stationmaster & Stationmaster Porter & Stationmaster & Other positions Sub-Total following Porter path Clerk & Stationmaster Clerk & Ass’t Stationmaster & Stationmaster Clerk & Stationmaster & Other positions Sub-Total following Clerk path Porter & Clerk & Stationmaster Porter & Clerk & Ass’t Stationmaster & Stationmaster Sub-Total following “combined” path Just Stationmaster Just Stationmaster & Ass’t Stationmaster Stationmaster and Other Positions Sub-Total following “other” path Total
Freq. 64 50 8 122 56 5 2 63 11 1 12 37 33 9 79 276
% 23.2 18.1 2.9 44.2 20.4 1.8 0.7 22.8 4.0 0.4 4.3 13.4 12.0 3.3 28.6
TenureControlled (
