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employees. The salaries were considerably higher on these three roads than for the smaller roads, and the total contributions for the benefit of the employees of the smaller roads were very small, since these smaller roads do not have any organized provident institutions.
NUMBER OF EMPLOYEES, SALARIES, AND CONTRIBUTIONS OF RAILROADS TO
BENEFIT INSTITUTIONS, 1891 TO 1903. (Source: Annuario Statistico Italiano, 1905-1907.
1891 1892. 1893. 1894. 1835. .1896. 1897 1898 1893 1900. 1901 1902
03: Mediterranean rail
road. Adriatic railroad. Sicilian railroad..
98,180 $22,262,387 $226. 75 $813, 468 96, 573 21,845, 473 226. 21 833,544 96,873 | 21,907, 168 226. 14 839, 152 96, 924 22,054,087 227. 54 828, 713 93,550 22, 454, 024 240. 02 849, 537 96, 801 22,816, 100 235. 70 839, 318 101,065 23, 529, 483 232.81 872, 808 101, 110 23, 452, 256 231. 95
866, 735 101,871 24,020,649 235. 79 865, 695 105, 372 24, 726, 268 234.66 1,007, 209 108, 690 25,522,854 234. 82 996, 422 111,271 26,548, 146 238. 59 1,340, 459
Total. All other.
263. 68 188. 36
Grand total, 1903...
112,694 27,563,783 244. 59 1,451, 621
Since 1905 the Italian Government has operated not only all the railroads it owns, but also some which are the property of private owners,
Of the entire railroad net of 10,711 miles on June 30, 1907, 8,699 miles, or over four-fifths, were operated by the State and only 2,012 miles by private companies.
ORGANIZATION OF PROVIDENT INSTITUTIONS.
In 1885, before the nationalization of most Italian railroads took place, there existed in Italy four large railroad systems: The Upper Italian (Ferrovie Alta Italia), the Southern (Ferrovie Meridionali), the Roman (Ferrovie Romane), and the Calabrian Sicilian (Ferrovie Calabro-Sicule).
Within the 20 years, 1860 to 1880, pension funds and mutual aid associations were organized for each one of these four railroad systems as follows:
While there were certain differences between the respective funds of the different railroads, such as relating to the amount of contributions, pensions, subsidies, conditions of membership, etc., yet these two groups of funds belonged to two well-defined types. The purpose of the pension funds was to grant pensions (annuities) to the employees for old-age and ordinary invalidity, exceptional (increased) pensions for invalidity due to some injury sustained in service, pensions to widows and orphans, and lump-sum benefits to the members or their families in case all the requirements for pensions were not complied with.
The mutual aid society rather belonged to the type of sick benefit funds. Their purpose included medical care and treatment, cost of medicines and appliances, sick benefits, funeral benefits, but also invalidity pensions in case of complete disability, and small lumpsum death benefits. The two different forms of mutual provision were shaped to the needs of the two classes of employees. The higher grades of employees held membership in the pension funds, while those of the lower grades were inscribed in the mutual aid societies, in which both contributions and benefits were lower, but which also provid: 1 a system of sick insurance, for which a greater need is felt among the lower grades of employees.
The funds of the Upper Italian Railway presented an important exception to the rule in that most of its employees belonged both to the pension fund and to the mutual benefit society.
In all funds and societies membership was compulsory for all permanently employed, and all these funds and societies were subsidized by the railroad companies to a considerable extent.
In August, 1875, the upper Italian railroad system, the largest of the four, was purchased by the Government, and as the movement for the government ownership of the railroads gained headway during the following 10 years, the Italian Government acquired ownership of most Italian railroads by the law of April 27, 1885. The entire network of government railroads was divided into three systems, the Mediterranean and the Adriatic systems on the mainland, and the Sicilian system on the island, and these three systems were leased for operation to three private corporations for 60 years with reserved right to cancel the leases after 20 years.
REORGANIZATION OF PROVIDENT INSTITUTIONS.
In accordance with this reorganization of the railroads, a corresponding reorganization of the pension funds and benefit societies was thought necessary and was ordered by the law of April 27, 1885, (9) which required a pension fund and a mutual benefit society for each of the three new operating companies, and uniform constitutions and by-laws for these funds and societies. The reorganization was not effected without some delay, provisional uniform constitutions going into effect on January 1, 1890. The essential feature of both the pension and the mutual benefit funds was their mutual character, combined with the absence of strict actuarial rules. The contributions made by and for the many members were paid into a common fund, from which payments of pensions and benefits were made, and the amounts of pensions and benefits were dependent upon the length of service and the salary toward the end of the service rather than the amounts paid in by the member. Under such circumstances difficulties were bound to arise as soon as obligations began to mature.
The balance sheets began to show large deficits and a law was passed by the Parliament and approved on August 15, 1897, which ordered a reorganization of the funds.(This act ordered that the activity of the existing pension funds and mutual benefit societies be limited to persons in service on December 31, 1896, and that for employees entering the railroad service since January 1, 1897, new provident institutions be organized not later than January 1, 1898. By this act the Government was also ordered to introduce, within six months, a bill into Parliament for the better regulation of the existing railroad pension funds and mutual benefit societies.
Meanwhile, to counteract the effect of the deficits of the pension funds and the mutual benefit societies, the Government was forced to establish by this act a small surtax upon passenger and freight rates for the benefit of the funds, as follows: For through trains, 5 per cent upon passenger tickets for distances over 20 but under 30 kilometers (over 12.4 but under 18.6 miles), and 10 per cent for distances of 30 kilometers (18.6 miles) and over, and for mixed and accommodation trains 1 per cent for all distances over 20 miles, and for the freight
a Raccolta Ufficiale delle Leggi e dei Decreti del Regno d'Italia, 1885, vol. 75.
Raccolta Ufficiale delle Leggi e dei Decreti del Regno d'Italia, 1897, vol. 3,
rate a surcharge of 10 centesimi (1.9 cents) per ton for each loading or unloading. These provisions of the law were ordered to go into effect three months after publication (August 26, 1897) for internal communication and commerce, and five months after publication for international communication and commerce, to remain in force only until December 31, 1898; but to be abolished after six months if within that time the Government should fail to introduce a bill for the regulation of the existing pension institutions. It was found necessary subsequently to extend the action of this special surtax by repeated enactments to March 31, 1900.(*)
The law of March 29, 1900,() which established definite legislation concerning the old as well as the new provident institutions, substituted other more or less permanent sources of revenue for the covering of old deficits. The conditions of the act of 1897 were complied with, and on March 29, 1900, the law creating the new provident institutions, establishing certain new regulations for the existing pension funds and mutual benefit societies, and providing for new sources of revenue to cover old deficits, was finally approved by the Crown.
The minister of public works was ordered to ascertain, within one year, the amounts of deficits of the pension funds and mutual benefit societies of the four large railroad systems on June 30, 1885, according to all obligations assumed and also the deficits of the existing three funds and societies on the date of the adoption of the new constitutions, the old deficits to be made good by the State, while the new deficits were to be met by the operating societies according to the law of August 15, 1897. To meet these old deficits of June 30, 1885, the following new taxes were created by the law for the government railroads operated by the three corporations. An increase of the surtax upon fast freight rates from 13 to 16 per cent, and upon slow freight rates from 2 to 3 per cent. The tax was ordered to go into effect on May 1, 1900 (for international trade five months later). The proceeds were required to be deposited with the State Loan and Deposit Bank, to be distributed among the existing funds and societies according to the same rules which were applicable to the redistribution of the assets of the old pension funds and mutual benefit societies among the new ones organized in 1885.
The new regulations for pension funds and mutual benefit societies will be discussed more fully in connection with a detailed analysis of the constitutions. Briefly, they conferred the right to a pension at the age of 60 and after 30 years of membership for sedentary
a Raccolta Ufficiale delle Leggi e dei Decreti del Regno d'Italia, 1898, vol. 3, p. 2796; ibid., 1899, vol. 2, p. 1240; ibid., 1899, vol. 2, p. 1730; ibid., 1899, vol.
3, p. 3045.
6 Raccolta Ufficiale delle Leggi e dei Decreti del Regno d'Italia, 1900, vol. 1, occupations, and at the age of 55, after 25 years of membership, for active occupations; invalidity pensions after 10 years of membership, this qualification being waived in case of invalidity due to injury; and regulated the pensions of widows and orphans. Concerning the mutual benefit societies, the main provisions which the law established were the prohibition of pensions to survivors of members and the prohibition of any sick benefits during the first five days of illness.
The organization of a commission, including representatives of the Government, the railroads, and the members of these institutions, was ordered for the preparation of new constitutions, to be uniform for all pension funds and for all mutual benefit societies, this commission to determine the necessary revenues to correspond to the assumed obligations. The law also required that at the expiration of a period of the contract for operation of the railways a technical balance be struck and the ascertained amount of deficit be charged to the operating society.
Regulations for the new provident institutions form the main part of the law of March 29, 1900. Such institutions were ordered to be organized within six months after the promulgation of the law, to include all employees who entered railway service after January 1, 1897. The essential difference between the new provident institutions and the old funds and societies is the introduction of the system of individual accounts. Two sections were organized in each provident institution, one corresponding to the pension fund and the other to the mutual benefit society. The membership in the first section was compulsory to employees receiving annual or monthly salaries; in the second section, to employees paid a daily wage. The sources of revenue-i. e., the contributions of the members and of the railroad companies and the subsidiary sources—were practically the same for the two sections, but the main revenues were credited to individual accounts, which were to form the basis of the pensions or lump sum-benefits, while the other revenues were paid into a collective fund and were to be used for special increased pensions, etc. The second section, similar to the mutual benefit society, also renders medical and pharmaceutical service and grants sick benefits to its members. The constitutions of these provident institutions were approved by the royal decree of January 31, 1901.
The constitutions of all these three sets of institutions were modified several times during the last decade, though the modifications were slight. As the laws of 1897 and 1900, besides requiring the organization of the new provident institutions, also established certain new conditions of administration for the old existing institutions, namely, the participation of the members in the administration hitherto entirely left to the railroad companies, and also a certain