Allocating job losses: the mass layoffs at the Swedish Tobacco Monopoly in 1921

Abstract

This article analyses the mass layoffs carried through by the Swedish Tobacco Monopoly in 1921. As a state-owned enterprise, the Tobacco Monopoly was expected to treat its employees with particular care but was not restricted by formal rules regarding the order of selection. Drawing on both qualitative and quantitative evidence, it is shown that the company's layoff policy shifted dramatically over the course of the year. In the spring, the company acted according to existing praxis and applied the seniority principle when releasing workers. In the autumn, when machines for cigar production were about to be installed, the same principle was abandoned. This policy shift should be seen in the light of technological change. As cigar machines were introduced, the company no longer needed experienced workers for training new workers. The seniority principle for layoffs was never applied again in the industry for the rest of the inter-war period.

Keywords:

• layoffs
• tobacco industry
• labour management
• downsizing
• Sweden
• twentieth century

Acknowledgements

For their comments and suggestions I thank Christer Lundh, Maria Stanfors, Anders Nilsson, Klas Fregert, Susanna Fellman, Tommy Isidorsson, seminar participants at the Departments of Economic History in Lund and Gothenburg and two anonymous referees. For help with language corrections I thank Jaya Reddy. Finally, I would like to express my gratitude to Malmö City Archives, the Labour Movement Archives and Library, and the Libraries in Stockholm and Swedish Match for giving me access to source material, and to the Crafoord Foundation for financial support.

Notes

1. OECD, Employment Outlook (Paris: OECD, 2004), ch. 2.

2. Gayle J. Allard, Measuring Job Security over Time: In Search of a Historical Indicator for EPL (Employment Protection Legislation) (working paper WP05-17, Madrid: Instituto de Empresa, 2005).

3. The legislation is much debated and has been changed in some respects over time. See Per Skedinger, Effekter av anställningsskydd: Vad säger forskningen? (Stockholm: SNS, 2008), 42.

4. Mats Glavå, Arbetsbrist och kravet på saklig grund (Stockholm: Norstedts juridik, 1999); Berit Bengtsson, Kampen mot §23: Facklig makt vid anställning och avsked i Sverige före 1940 (Uppsala: Acta Universitatis Upsaliensis, 2006).

5. For historical case study evidence of layoff criteria, see Barton Hamilton and Mary MacKinnon, ‘Quits and Layoffs in Early Twentieth Century Labor Markets’, Explorations in Economic History 33 (1996): 3. For more recent case study evidence, see Daniel Cornfield, ‘Chances of Layoff in a Corporation: A Case Study’, Administrative Science Quarterly 28 (1983): 4; and Marta Elvira and Christopher Zatzick, ‘Who's Displaced First? The Role of Race in Layoff Decisions’, Industrial Relations 41 (2002): 2.

6. Jon Elster, ‘Layoffs as a Problem of Local Justice’, in Layoffs and Local Justice, ed. F. Engelstad, ISF Report 94: 4 (Oslo: Institute for Social Research, 1994).

7. Frederick H. Harbison, ‘Seniority in Mass-Production Industries’, Journal of Political Economy 48 (1940): 6; Carl Gersuny, ‘Employment Seniority: From Iago to Weber’, Journal of Labor Research 3 (1982): 1; Katharine G. Abraham and James T. Medoff, ‘Length of Service and Layoffs in Union and Non-union Work-groups’, Industrial & Labor Relations Review 38 (1984): 1; Sanford Jacoby, Employing Bureaucracy: Managers, Unions and the Transformation of Work in the 20th Century (Mahwah, NJ: Lawrence Erlbaum Associate Publishers, 2004 [1985]); Sangheon Lee, ‘Seniority as an Employment Norm: The Case of Layoffs and Promotion in the US Employment Relationship’, Socio-Economic Review 2 (2004): 1; Elster, ‘Layoffs as a Problem of Local Justice’; Fredrik Engelstad, ‘The Significance of Seniority in Layoffs: A Comparative Analysis’, Social Justice Research 11 (1998): 2.

8. Glavå, Arbetsbrist och kravet på saklig grund; Bengtsson, Kampen mot § 23, 115.

9. Arbetslöshetsutredningens betänkande. 1, Arbetslöshetens omfattning, karaktär och orsaker (Stockholm: Nord. bokh. i distr., 1931), 388.

10. Bengtsson, Kampen mot § 23.

11. Fredrik Engelstad, ‘Needs and Social Justice: The Criterion of Needs when Exempting Employees from Layoffs’, Social Justice Research 10 (1997): 2.

12. With regard to inter-war Sweden, unions organizing trade, construction, transport and food industry workers at some point managed to include stipulations about preferential job rights for their members. Bengtsson, Kampen mot § 23, 116.

13. Bengtsson, Kampen mot § 23, 111.

14. Renée Frangeur, Yrkeskvinna eller makens tjänarinna? Striden om yrkesrätten för gifta kvinnor i mellankrigstidens Sverige (Lund: Arkiv, 1998).

15. Betänkande angående gift kvinnas förvärvsarbete m.m. (Stockholm, 1938), 314.

16. Age is related to both the seniority principle and the need principle. Older workers tend to have spent more time with the same employer and faced greater difficulties if they lost their jobs.

17. For examples of this practice from the inter-war Swedish labour market, see Bengtsson, Kampen mot § 23, 116.

18. Arbetslöshetsutredningens betänkande. 1, 376–7; Lars Harrysson, ‘Disponent i brytningstid: En problematisering av AB Robertsfors Bruks lednings ambitioner och möjligheter vad avser utveckling av lönevillkor och sociala anordningar i Robertsfors åren 1925–35, Meddelanden från Socialhögskolan, vol. 1, 1997 (Lund: Lunds universitet, Socialhögskolan, 1997), 69, 92.

19. For an example, where no less than 12 criteria were applied, see Eva Blomberg, Män i mörker: Arbetsgivare, reformister och syndikalister: Politik och identitet i svensk gruvindustri (Stockholm: Almqvist och Wiksell International, 1995), 234.

20. Elster, Layoffs as a Problem of Local Justice, 23.

21. Lee, ‘Seniority as an Employment Norm’, 75.

22. Arbetslöshetsutredningens betänkande. 1, 388; Bengtsson, Kampen mot § 23, 111.

23. Harbison, ‘Seniority in Mass-Production Industries’.

24. Gary Becker, ‘Investment in Human Capital: A Theoretical Analysis’, Journal of Political Economy 70 (1962): 5; Donald Parsons, ‘Specific Human Capital: An Application to Quit Rates and Layoff Rates’, Journal of Political Economy 80 (1972): 6.

25. Lorne Carmichael, ‘Does Rising Productivity Explain Seniority Rules for Layoffs?’, American Economic Review 73 (1983): 5.

26. Edward Lazear, Personnel Economics for Managers (New York: Wiley, 1998), 170–3.

27. This issue has been discussed by labour historians inspired by Walter Korpi's power resources approach. C.f. Klas Åmark, Facklig makt och fackligt medlemskap: De svenska fackförbundens medlemsutveckling 1890–1940 (Lund: Arkiv, 1986).

28. Peter B. Doeringer and Michael J. Piore, Internal Labor Markets and Manpower Analysis (Lexington, MA: Heath, 1971), 17–22.

29. Lester Thurow, ‘A Job Competition Model’, in Unemployment and Inflation: Institutionalist and Structuralist Views, ed. Michael J. Piore (White Plains, NY: M.E. Sharpe, 1979), 22–3; Patrica Reagan, ‘On-the-Job Training, Layoff by Inverse Seniority, and the Incidence of Unemployment’, Journal of Economics and Business 44 (1992): 4.

30. If not stated otherwise, this section is based upon the following literature: Tobias Karlsson, Downsizing: Personnel Reductions at the Swedish Tobacco Monopoly, 1915–1940 (Lund: Department of Economic History, Lund University, 2008), ch. 4; Minnesskrift med anledning av Svenska tobaksmonopolets tjugofemåriga verksamhet den 1 juni 1940, 1915–1940 (Stockholm: Svenska tobaksmonopolet, 1940); Om tobak i Sverige: Jubileumsskrift 1915–1965 (Stockholm: Svenska Tobaks Aktiebolaget, 1965).

31. The social responsibility was, among other things, manifested in a number of welfare schemes – such as banking services, libraries, courses, child care, health insurance and old age pension – introduced by the company. Karlsson, Downsizing, 64–8.

32. Tage Lindbom and Evert Kuhm, Tobaksarbetarnas förbund i Sverige 1889–1939 (Stockholm: Svenska tobaksindustriarbetareförbundet, 1940).

33. Karlsson, Downsizing, 184–8.

34. Arbetarrörelsens arkiv och bibliotek (ARAB), Svenska tobaksindustriarbetareförbundets arkiv (STF), Inkomna skrivelser från Tobaksmonopolet, E03: 1, November 29, 1920. All translations are mine; the original quotations in Swedish are found in Karlsson, Downsizing.

35. Karlsson, Downsizing, 68–72.

36. Om tobak i Sverige, 39.

37. Mark Pruz, ‘Mechanisation and the Gender-Based Division of Labour in the US Cigar Industry’, Cambridge Journal of Economics 14 (1990): 1, 73–4.

38. Arbetslöshetsutredningens betänkande. 1, Bilagor, Bd 2 (Stockholm: Nord. bokh. i distr., 1931), 69.

39. Karlsson, Downsizing, 157.

40. Om tobak i Sverige, 70–5, 356.

41. Swedish Match (SM), Svenska tobaksmonopolets arkiv (STM), Styrelsens protokoll, March 14, 1921.

42. SM, STM, Styrelsens protokoll, April 18, 1921.

43. SM, STM, Styrelsens protokoll, September 26, 1921.

44. ARAB, STF, Styrelsens protokoll, A02: 4, September 24, 1921; ARAB, STF, Styrelsens protokoll, A02: 4, October 1, 1921.

45. ARAB, STF, Styrelsens protokoll, A02: 4, October 13, 1921.

46. ARAB, STF, Cirkulär, B03: 3, December 7, 1921.

47. ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, November 7, 1921.

48. SM, STM, Styrelsens protokoll, September 26, 1921; ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E0: 1, September 30, 1921.

49. ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 1, November 7, 1921.

50. MS, FHK, Matriklar över slutade arbetare, D4A: 1–8.

51. For similar applications of logistic regression analysis to layoffs, see Cornfield, ‘Chances of Layoff in a Corporation’, and Elvira and Zatzick, ‘Who's Displaced First?’

52. The reason for focusing on this group is to limit the number of variables. Keeping the age group constant is also preferred since it facilitates comparisons between the reductions. It is not deemed meaningful to analyse the layoff risks for the old workers who were temporarily laid off in October, since these layoffs basically meant that all workers above a certain age (which was different for men and women) were released.

53. Definitions of the variables and descriptive statistics for the samples used in the logistic regressions are found in Appendix 1.

54. See MS, FHK, Arbets- och löneavtal, F8F: 1, Öfverenskommelse mellan Svenska cigarrfabrikantföreningen och Internationella tobaksarbetareförbundet i Sverige, 16.

55. The day labourers in the Tobacco Monopoly's service were included in the company's pension schemes and were eligible for redundancy compensation. Furthermore, day labourers were laid off ‘due to shortage of work’ in the personnel records of Malmö Cigar Factory, which was not the case with workers hired on temporary terms. For a more in-depth discussion, see Karlsson, Downsizing, 161–3.

56. The issue of transfers is also frequently discussed in the qualitative sources.

57. This finding is not caused by the assumption that day labourers were preparation workers. Separate regressions have been run on preparation workers only, but the significant negative effect of being a day labourer remains.

58. Karlsson, Downsizing, 192–8, 209–12.

59. ARAB, STF, Inkomna skrivelser från Tobaksmonopolet, E03: 2, January 27, 1927.

60. ARAB, STF, Styrelsens protokoll, A02: 5, March 2–3, 1927.