‘Lead Bonus Happy’: Profit‐Sharing, Productivity and Industrial Relations in the Broken Hill Mining Industry, 1925–83

Abstract

Economic and labour historians have thus far shown little interest in analysing the operation and impact of variable, performancebased payment systems in Australia. This is particularly so of collective forms of performance-based remuneration such as profit-sharing. This article assesses the operation and impact of Australia's oldest continuous profit-sharing scheme, the Broken Hill`lead bonus'. Outcomes are assessed against three broad sets of management objectives: economic, cultural/ideological, and industrial. The study argues that whilst the bonus effectively cushioned company labour costs during periods of depressed market demand and metal prices, outcomes at a microeconomic level were negative. Prior to the advent of sustained high inflation, high bonus earnings served to negate the productive potential of the industry's system of small-group payment by results. Productivity growth emanated mainly from management-driven changes in mining techniques and technology, the intensity of which was related inversely to the lead price and, hence, bonus payments. The study concludes that management's continued adherence to the bonus system was motivated less by microeconomic or cultural/ ideological considerations than by its perceived value as a counter to major industrial disruption.