Abstract: Downsizing, State Ownership, and Modern Labor Management: Severance Pay at the Swedish Tobacco Monopoly, 1915–1928

Tobias Karlsson


Among several forces contributing to early twentieth-century modernization of labor management was increased state involvement in the economy. In this essay, I consider the first known case of severance pay in Sweden: compensation to redundant workers associated with the 1915 nationalization of the tobacco industry. The tobacco monopoly, obliged to make severance payments during the first five years of its existence, continued to do so in the 1920s when downsizing the work force, reflecting the importance of implicit seniority norms and of expectations that the state be an ideal employer. Investigating compensation by worker category, I find that workers with firm-specific skills received a substantial premium and that men were more generously compensated than women. Parliament discussed the severance payments, and large unions representing non-tobacco workers demanded equivalent benefits for members directly and indirectly employed by the monopoly. State intervention in the tobacco industry probably had wider—though unintended—implications for labor management practices in interwar Sweden.

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