Cotton Agreement – Unemployment – Prices – Stock Exchange

«The Economist», 17 settembre 1932, pp. 506-507

Turin, September 5

Great prominence has been given by the daily press to the various agreements which have been reached between employers’ and employees’ federations, of which the most important refers to the cotton industry. The success is compared rather proudly with the Lancashire strike and references are made to the heavy losses sustained in England by the Trade Unions, the industry and the community at large. The problem in Italy was very similar to that in England. The last collective labour contract was made in 1924. Since then technical conditions have changed and there has been a shifting of labour between individual firms and localities. Employers more alert in the introduction of semi-automatic and automatic looms and of the multiple-looms system, were obliged, in order to attract hands, to increase wages above the collective minimum; while the less enterprising managed to pay reduced wages to hands tied, for one reason or another, to particular places. Workers complained that wages had not increased in proportion to the greater strain and attention necessitated by the diffusion of the multiple-looms system; employers retorted that the 1924 tariff was not flexible enough and did not take sufficient account of the quality of the fibre, the speed of the machinery and the several counts of fabrics woven. Above all the minimum wage guaranteed by the 1924 agreement no longer corresponded to the changed level of prices and the lower cost of living. The new agreement was concluded after many local discussions only through the influence of the central Corporations Department, in prolonged sittings presided over by the Under-Secretary of State, signor Biagi, a former employees’ organiser. The agreement relates to some 250,000 workers, whose probabilities of getting work are thereby enhanced. It appears that the maximum reduction was fixed at 10 per cent, for wages higher than the contractual basis, and that reasonable terms were reached as regards the multiple-looms system and the equalisation of wages as between different districts. It is an achievement to have been able, under a legislative system which treats strikes and lockouts as penal offences and resolves industrial conflicts by means of compulsory arbitration, to avoid the economic and social loss involved in industrial disputes: in order, however, to allow an impartial appraisal of the practical working of the system, a thorough study into changes of hours, wages and other conditions of labour, with reasons thereof, and consequences on the rate of employment, would be necessary. Such a study is badly needed.

As in other years, after touching its lowest level in June, unemployment has again risen in July:

Another interesting, if somewhat belated index, published by the Corporations Department, taking as a basis (100) the number of hands employed in September, 1926, gives for the end of May of successive years the indices of 94.6 for 1929, 88.6 for 1930, 74.9 for 1931, 65.4 for 1932. The number of hands occupied at the same dates for a number of working hours higher than the normal was 16.4, 12.3, 12.2, 7.7 per cent, of the total, while the number of hands working on short time was 8.3, 23.1, 24.1, 29.5 per cent. Thus both the frequency and the constancy of employment are decreasing.

The State Railways are struggling very hard against the crisis and the growing competition of motor cars. By the introduction of 762 week-end “popular” trains with exceedingly low fares, 590,570 passengers have been carried from June 5th to August 22nd. How far these efforts will check the decline is uncertain. The number of passengers decreased from 112.2 millions in 1928 to 88.4 in 1931, and in the first semester of 1932 the figure was further reduced to 36.6, against 41.7 millions in the corresponding period of 1931.

The index of wholesale prices at last appears to have been checked in its downward course. After decreasing almost uninterruptedly from a yearly average of 654.4 in 1926 (1913=100) to 299.93 in July, in the fourth week of August the index closed at 299.77′, after rising to 300.10 in the third week. It is, however, too slender a basis on which to build hopes of revival in industry and in the stock exchanges. Perhaps largely in a spirit of imitation of the New York boom some movements have been also engineered in the Italian bourses. It is yet too soon to gauge the intrinsic soundness and durability of the change. The daily average of future transactions in fixed interest securities effected in the Italian bourses decreased from 29.4 million lire in 1928 to 15.3 in 1929, 18.3 in 1930, 12.3 in 1931, and 3.9 in the first seven months of 1932. Similar figures for variable dividend securities were: -122.4, 72.6, 37.7, 20.0 and 9. Probably we have reached the bottom of inactivity, but it will presumably take a long time before we go back to anything like the former level; and in the meantime any improvement in quotations threatens to be merely speculative, as it lacks the sound basis of a widespread market.