The significance of direct democracy to ensure social peace (part 4)

The significance of direct democracy to ensure social peace (part 4)

The peace agreement of 19 July 1937 in the machine engineering and metal industry

by Dr. rer. publ. W. Wüthrich

A brief resume at the beginning: Part 1 of this series of articles (CC 14 of 2 June 2015) showed how tensions between the workers and their organisations and the political leadership in Switzerland increasingly intensified during the last years of the First World War and how finally the general strike was proclaimed in November 1918. After this national crisis many referendums have contributed to establish social peace.
Part 2 (CC 15/16 of 16 June 2015) advanced to the roots of our economic constitution and stressed the significance of direct democracy for a peaceful economic development.
Part 3 (CC 17 of 30 June 2015) showed how, after the First World War, the Federal Council and Parliament too often circumvented the people’s rights in the economic field via  emergency law, and how the population resisted.
Part 4 now deals with the 1937 peace agreement between the associations of employees and employers in the metal industry and its significance for Switzerland. However, such a development would also be desirable for any other country.

Historical background: referenduma as an alternative to class struggle

In the months and years after the general strike the workers in Switzerland experienced again and again that their concerns were taken seriously by the whole population and that they prevailed in the polls. The 48-hour week and the introduction of the proportional representation (with which the Social Democrats were able to double their seats in the National Council), are some examples. The number of strikes decreased and the majority of affairs in the world of work were now regulated by collective agreements. The strike however remained the main weapon of the unions until well into the economic crisis of the thirties. But even in this period there were numerous referenduma in which the workers experienced  their concerns to be taken seriously by the entire population. Here are two impressive examples: At that time, the Federal Council pursued the policy of the “good housefather” who avoids making debts and adapts expenditure to income. Since tax income had collapsed during the crisis, the Federal Council wanted to reduce the wages of the Federal personnel. Moreover, lower wages would reduce costs in general and strengthen the competitiveness of Swiss products abroad. The Council’s reasoning toward the staff was as follows: The prices were indeed generally declined in deflation and thus the purchasing power of money had increased and so they could also reduce wages. Quite understandably, the unions did not agree, launched a referendum, collected nearly 300,000 signatures (ten times more than required). 80 per cent of voters went to the polls on 28.5.1933 and the unions won their case. Note: at that time the referendum could be taken even against the government’s policy on wages in Switzerland. Another success was added. In 1934 the trade unions and the Social Democrats launched a popular initiative, the so-called crisis initiative. Within six months they collected eight times as many signatures as required, and experienced, that as much as 85 per cent of voters went to the polls. Their popular initiative was rejected but reached a high level of support and had an effect on the future reform of the economic constitution. In these years, the workers repeatedly experienced that they were associated with the rest, and that class struggle and thinking in terms of classes were no longer necessary in direct democratic Switzerland.

The 1937 Peace Agreement – historical background

Immediately after the Social Democrats had approved of military defense of the country, Konrad Ilg, president of the Swiss metal and watches’ Union SMUV addressed Hans Dübi, president of the Association of Swiss Engeneering Employers ASM and suggested to set the relationship between employees’ and employers’ organisations on a new basis. Konrad Ilg, who raised in Salenstein in the Canton of Thurgau, was a locksmith who passionately fought for the interests of workers. Even as a young worker he organised a strike for the construction workers and founded the Trade Union of Metalworkers in Lausanne. He preferably studied the writings of Pierre Proudhon and the French Socialist Jaurès, whose deep humaneness impressed him. In 1909, as a young man of 32 years, he became Secretary of the Swiss metal and watches’ Union SMUV, and in 1917 – 8 years later – he was elected the union’s president. From 1918 to 1919 and from 1922 to 1947, he was a member of the National Council for the Social Democrats.
In 1918 Konrad Ilg was vice president in the Olten action committee, which organised the general strike. His later statements and speeches suggested that he acted in a mitigative manner, exerting his influence on some overly revolutionary-minded colleagues. Above all, he disagreed with the Marxist-oriented colleagues, who argued that there was an unbridgeable opposition between labour and capital. The opposite was true, he said, namely that there was a mutual relationship of common interest between the two groups. In any business the funds that the workers needed to live on, and the means that the business needed for its existence and for its construction, were derived from the same source – namely the sale of products produced together in the factory. Both sides were equally interested in a successful sale. This insight was all the more important, because Switzerland had to buy the entire raw materials for its industrial products abroad and could compensate for this disadvantage only with a higher quality. Everyone – entrepreneurs, workers, cadres – had to work together and ensure the efficiency of the business.
This was the attitude with which Konrad Ilg started negotiations with the employers’ association for an agreement. His counterpart was Ernst Dübi, director of Von Roll in Gerlafingen – a Colonel in the army and Chief of Artillery in the 4th Army Corps. Ernst Dübi, in turn, was working on changes on the employers’ side. It was his concern that some employers dissociated from the “master of the house” attitude. They should no longer perceive the typical “workers’ worries” about wages, working hours, holidays, insurance and other things in a defensive manner as exaggerated claims of the counterparty, but realise them as important factors that improved the quality of products and secured the company’s existence.
Both – Konrad Ilg and Ernst Dübi – initiated a change of attitude, even more so a cultural change in the relationship between employers and employees. They should no longer face each other as paramount and subordinate in a social and professional hierarchy, but meet as equals and human beings on a par. Thus they initiated a development that has continued until today. Today no one speaks of workers and employees – but of co-workers. The peace agreement in 1937 was a first and major step in this direction. It facilitated the possibility of getting closer in a difficult time. In 1942 Konrad Ilg and Ernst Dübi were both awarded an honorary doctorate from the University of Berne.
The peace agreement was welcomed by the majority of the population. Only the Communists kept up their opinion that the antagonism between labour and capital was unbridgeable. This agreement became a model for numerous collective employment agreements until today. In the next twenty years no less than 1,500 collective employment agreements were concluded in all branches and industries in the country, all of which included the intention to improve the living conditions. While in the years prior to the Second World War about 90,000 working days per year were lost for strikes, this figure dropped in the years after the Second World War to zero, although in the boom (when the order books are full) it would actually have been easier to exert pressure on employers by a strike.

Test for the peace agreement after the Second World War

In the negotiations on the peace agreement, the parties had agreed not only on refraining from strikes, but also on increasingly regulating the issues of the employment relationship within the framework of collective employment agreements – including  issues that were previously regulated by law. Collective employment agreements were more flexible than the Factories Act, they could make use of a decentralised approach and also take into account operational and regional differences – all  the way following the principle of subsidiarity: the acts should only include issues that the social partners could not settle themselves.
Numerous polls and popular initiatives in the run-up to the peace agreement in 1937 encouraged a rapprochement between unions and employers’ associations. However, after the Second World War, the agreement had to pass a serious test. The cause of this crisis was in fact a popular initiative. The former party of the Ring of the Independents launched an initiative in 1954 to introduce the 44-hour week. It should pave the way for the five-day week. Regular working hours in the industry at that time was 48 hours on 6 days. Gottlieb Duttweiler, founder and patron of the Migros cooperative, was considered the father of this initiative, so that the initiative was referred to in the coming confrontations as “Duttweiler-Initiative”. It was surprising that this attempt to reduce working time was launched by employers. Today, Migros is the largest employer in Switzerland.
Duttweiler intended to complement the Federal Constitution with the following sentence, “The ordinary working hours in the factories must not exceed 44 hours. (...) This provision shall enter into force one year after the adoption by the referendum”. The Factory Act would have to be altered accordingly after adoption. As an employer, Duttweiler followed a long tradition of the labour movement, which had so often demonstrated on 1 May for the eight-hour day. After the First World War the people had twice voted on the 48-hour week in the Factory Act and both times they had voted Yes. It seemed that the Duttweiler initiative fit seamlessly into this tradition, however, it did not go down particularly well with the Swiss Federation of Trade Unions SGB. Walter Steiner, SGB president, rejected the request. Times had been changing since the settlement of the peace agreement, he said.
Walter Steiner was a close associate of Konrad Ilg and had conducted negotiations on the peace agreement with him in 1937. Now Steiner said No to the invitation of Gottlieb Duttweiler to participate in the collection of signatures, and put it more precisely: it was not a No to the 44-hour week, but a No to a centralised, unified solution. The 44-hour week could not be brought about from above by government coercion through a legislative amendment. The unions would conduct negotiations in the tradition of the peace agreement, which would achieve the goal – even though this took more time than a change of law. This way was much more flexible and would take into account the differing circumstances in the various sectors and industries. That was the path the trade unions had decided upon jointly with employers in 1937, which they would hold on to, now.
The question now was if the voters including the unionists would give their consent in a referendum to the way of collective employment agreements and reject the constitutional and legislative changes that would probably bring about the objective faster? The employers at that time preferred talking about wage increases instead of the reduction of working hours, since the order books were still full and the number of allowable overtime was exhausted. The free Saturday was very tempting for many. – The outcome of this vote would set the course. A Yes would immediately have had a new popular initiative as a result which would thus improve the working conditions for the employees.
SGB-President Walter Steiner had to fight some resistance, especially in his own ranks, until the assembly of delegates of the Federation of Trade Unions decided on the No-parole for the vote. However, the people conceded that Steiner was right – and on 26 October 1958 clearly rejected the Duttweiler initiative with 65 per cent of No-votes. This result expressed that the vast majority of the population supported the SGB president’s ways and that they were aware of what the peace agreement meant for Switzerland. Despite the people’s No, working time was shortened in varying pace in the years after 1958 and the five-day week was introduced – but voluntarily and flexibly in the context of collective employment agreements and not from above by government compulsion.

Setting the course for the future

The vote of 26 October 1958 strengthened the tradition of the peace agreement. There have been and still are occasional strikes and even popular initiatives, which have demanded shorter working hours, longer holidays and other union requirements such as worker participation or minimum wage in a legal way and still do so – until today. The people however repeatedly voted No. In 1976 the 40-hour week was rejected by 78 per cent No votes. In the same year, two referendums were held which would have equipped the Confederation with the competence of enacting regulations on the “participation of the workers and their organisations in businesses, enterprises and administrative bodies”. The people voted No on the referendum as well as on the counter proposal of Parliament. In 1985, 65 per cent voted No for extending the vacation to a four weeks’ period for younger and a five weeks’ period for older workers. In 1988, 64 per cent of the people said again No to the 40-hour week. In 2002, 75 percent of the people voted No to a flexible reduction of working time to 1872 hours a year – which would have corresponded to an average of a 36 hour week. In 2012 – three years ago – 67 percent of the voters said No to the initiative “6 weeks’ holiday for everyone” and in 2014 the people voted again No on a legally binding minimum wage.
The voting results on working time were occasionally interpreted abroad in a way that the Swiss were just a hard working people and would rather work and have a higher income than have leisure time or longer holidays. – That’s not true. The No has always been a Yes to tradition of the peace agreement of 1937 – until today. Each vote has confirmed and solidified this tradition – so that it has now become a firmly established institution, embedded in the nation. A return to the culture before 1937 – with strikes and uniform legal regulations – seems almost impossible nowadays – (although the speeches of today’s union leaders sometimes sound different). However, working time and holidays are legally registered. In the last few decades they have been regulated in the Labour Code and by the Swiss Code of Obligations – but only as a minimum standard, which leaves room for further solutions in the collective employment agreements. And this is done in various ways.
The tradition of the peace agreement corresponds to the Swiss model: the general population prefers decentralised and liberal solutions that take into account the diverse regional and cultural differences. The citizens themselves are active and are looking for solutions and ways, so that a legal provision is not necessary. This can be observed in the economic field and in many other areas of society – for example, in the 2,600 communes of Switzerland.
After these remarks on the 1937 Peace Agreement and the industrial peace, we will return in the fifth and final part of this series of articles to the 1930s, when urgent issues of the economy and a fundamental reform of the economic constitution of 1874 were discussed during the crisis. It was about issues like: Should we stick to the liberal economic system? To which extent must the industry be guided and directed more strongly by the state? To which extent can the citizens help themselves in times of crisis and search for ways out of the crisis by getting together and establishing cooperatives? All these questions are still relevant today. – These debates were always about social cohesion and the safeguarding of social peace. Four popular initiatives played a very crucial role. More on this in part 5, the last part of this series of articles.    •

Historisches Lexikon der Schweiz;
David Lasserre, Schicksalsstunden des Föderalismus 1963 (Originaltitel “Etapes du Fédéralisme”);
W. Wüthrich, Ökonomische, rechtliche und verbandspolitische Fragen der
Arbeitszeitverkürzung in der Hochkonjunktur in der Schweiz und in Oesterreich (Dissertation)
Wolf Lindner, Christian Bolliger, Yvan Rielle, Handbuch der eidgenössischen Volksabstimmungen 1848-2007.
Diverse brochures on the cooperative system.

Contents of the peace agreement

The introduction of the agreement says, “in an effort to preserve the labour peace which is in the interest of all those who share the preservation and development of the Swiss mechanical and metal industry, the employers’ organisation and the workers’ organisations commit themselves to mutually clarify important differences of opinion and any disputes in good faith according to the regulations laid down in this agreement, and to preserve peace by all means for the duration of the agreement. Consequently, any militant action, such as embargo, strike or lockout are excluded ...” Further provisions: Wage negotiations should be conducted for a single enterprise and not for an entire branch. Conflicts should be resolved in a multistage process: first in the enterprise, then in the associations and third in an arbitration board with equal representation of mutually accepted confidants from both sides – without involvement of politics and state agencies.
(Translation Current Concerns)

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