Need of a Job-Finding Organization
As ancillary to any scheme for provision against unemployment, there must be some effective organization in existence whose duty it is to endeavour to ascertain where there are any vacancies for workmen in which men who are unemployed can be started. Obviously this is necessary both in the interests of the industry and of the actuarial solvency of the fund provided against unemployment. Unfortunately a substantial number of persons will always exist who prefer not to do work but yet be paid for it.
Insurance by State or Industry
The next question is by whom shall the provision for unemployment be made? Shall it be by the State or by industry, that is to say, all industries acting collectively, or by each industry for itself, or shall it be by individual firms? We shall consider these cases separately.
It is characteristic of the times that when persons have omitted to do what they should have done and then find themselves in difficulties by reason of their omission, they call upon the State to remedy their deficiency. Eliminating the question whether the State out of its own financial resources should make any addition to the fund contributed by employers and employed for provision against unemployment, Government administration of the fund is necessarily less efficient and more expensive than administration by industries or by firms. Some striking figures have been published in The Times of January 25, 1922. It was stated at the National Federation of Employees Approved Societies by a gentleman representing the British Xylonite Company that his firm’s scheme of unemployment insurance cost only £334 per £10,000 to administer as against the Government’s £1,000 per £10,000. It must be remembered, however, that the Government scheme has to cover multifarious trades—organized, semi-organized and those not organized at all. But still, after making all due allowance for that fact, there appears to be no question that a Government scheme does necessarily, from the inability to maintain close supervision, afford opportunities for waste and abuse which would not arise under a system of closer control.
State Insurance
The details of the Government scheme have been described. The Labour Exchanges have, in the face of great difficulties, performed the administration with efficiency, but no one with experience of industrial conditions during the last two years could fail to realize that the administration of unemployment insurance is not proper work to be undertaken by any Government Department. The proper function for the State is to see that all possible provision is made against unemployment but not to undertake the work itself. In 1920 a Committee of Inquiry was appointed by the Minister of Labour to inquire into and report upon the Labour Exchanges. The majority of that Committee reported that “the administration of unemployment insurance by industries on behalf of their own members was the most desirable system in the end, particularly from the point of view of obtaining technical knowledge in the placing of workmen, the creation of a corporate pride in each industry, and a sense of responsibility for unemployment in the industry.” The Geddes Committee has recommended that this question should be further explored, and the Minister of Labour is taking steps to do so.
Insurance by Industry or Industries
That industry should provide for its unemployment is obviously reasonable. The taxpayer has no control over industrial conditions, or over the wages which are paid, or the conditions of employment in operation, and in respect of such matters industry is under no responsibility to the taxpayer. Should this provision be made by each industry in particular or by industry as a whole? It would be impossible to form a scheme under which each industry would provide against its own unemployment. There are many industries, ranging from those most highly organized with employers and Trade Unions acting, and accustomed to act, collectively and with some experience of the ratio of their unemployment, down to industries which have no organization whatever nor any collective machinery available for the operation of an insurance fund nor any knowledge of their own unemployment. It is only a highly organized industry that could undertake to provide for its own unemployed, and not all highly organized industries, but merely a selected few—those which are clearly separated off from other industries. To all but the initiated it is surprising how industries are interlocked. If we take, for example, the engineering industry, and industries like iron and steel, nuts and bolts, bicycle parts and innumerable others, there is great interchange of labour, especially unskilled. A large West-end store will be engaged in fifty to sixty different industries. How would its interests in each industry be separated? There is no doubt that it is to the financial advantage of a highly organized clearly demarcated industry to provide for its own unemployment insurance as compared with participation in a State Scheme.