# 1911 Encyclopædia Britannica/Unemployment

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​UNEMPLOYMENT, a modern term for the state of being unemployed among the working-classes. The social question involved is intimately bound up with that of relief of the poor, and its earlier history is outlined in the article Charity and Charities. It is more particularly within the 20th century that the problem of unemployment has become specially insistent, not by reason of its greater intensity—for it is open to considerable doubt whether, comparatively speaking, there was not more unemployment in the organized industrial communities of the early middle ages—but because the greater facilities for publicity, the growth of industrial democracy, the more scientific methods applied to the solution of economic questions, the larger humanitarian spirit of the times all demand that remedies differing considerably from those of the past should at least be tried. In most civilized countries attempts have been made to solve this or that particular phase of the problem by improved methods. There is, however, always a great difficulty in knowing the extent of unemployment even in any one particular country. No census has ever been taken in any country of those of the whole population who were employed and unemployed on any particular day, and even if it were possible to take such a census modern conditions of industry might render its results valueless almost immediately after. It would be complicated, too, by having of necessity to include the shiftless and unemployable sections of the population, as well as those on the borderland of employment (those who are worth some sort of wage in times of pressure), while at the same time it would be necessary, to make the census of practical value, to obtain returns of the demand for labour, in order to value the true character of the supply. Such statistics are obtainable possibly only in theory, but every country makes an endeavour to obtain statistics of a sort. In England the Board of Trade, for example, has compiled valuable memoranda on the percentages of unemployment in the more important trade union groups of trades, which may be taken as a measure of unemployment in the more highly organized industries; while other memoranda throwing light on the subject deal with the amount of time lost by workpeople through want of employment and other causes; with cyclical trade depressions; the extent to which female labour has displaced adult male labour of late years; seasonal industries and industries carried on by casual labour; emigration and immigration, &c., all intimately bound up with the study of the problem. The statistics issued by the Labour Bureaus of many of the states in the United States are of considerable value, in particular, those of Massachusetts, New Jersey, New York, Connecticut and Wisconsin. Germany, France and Belgium also publish statistics, but like the figures of other countries, they far from represent the actual state of unemployment.
The actual causes of unemployment in any one country will always remain to a certain extent controversial, as will the comparative weight to be assigned to each cause. Putting aside the much disputed theories of economists as to the causes of cyclical depressions of trade, there are certain well-observed facts which present themselves in connexion with the question of unemployment, and to each one of them some contributory Causes of Unemployment. portion of blame may be assigned. These facts may be classified as (a) those over which the worker has no control, and (b) those which may be said to lie in the worker himself. Some of those under (a), of which it is impossible to give more than the more obvious examples, have, of course, been operating, especially in the United Kingdom, sometimes potently, sometimes slowly and almost unnoticed, over a long range of years. They are seasonal industries and industries carried on by casual labour. There are many industries affected by certain states of the weather or by the changes of the seasons, as the building and allied trades, the furriers' trade, confectionery trades, &c. But more important are those industries which depend largely in times of pressure on casual and unskilled labour, such as port and riverside work of all kinds, construction works and to a certain extent the iron and steel industries. Then there are a number of skilled trades which have about them continually a fringe of casual labour, for which employment is very intermittent.
To quote from the report of the British Royal Commission on the Poor Laws (1909):—
“The class of under-employed includes not merely the whole of the men in such occupations as dock and wharf labour and market porters, and a waxing and waning share of the lower grades of the building operations, but also a very extensive fringe of men more or less attached to particular industries, and working at them only by way of brief and casual jobs. “To go in” for one half-day, one day, two, three, four or five days out of the five and a half is common to boot making, coopering, galvanizing, tank-making, oil pressing, sugar boiling, piano-making, as it is to dock-labouring, stevedoring, crane-lifting, building. Some trades, like that of the London bakers, regularly employ more men on one or two days of the week than on others. In London a large body of men is always required for the Friday night baking when the work in preparation for Saturday and Sunday is we are told, exceedingly heavy. The usual hours of ​working are fifteen or sixteen instead of the ten of other nights and twice as many men are required. These Friday night men, many hundreds in number, pick up odd jobs the rest of the week. At the factory gates every night during the week, a number of men are always hanging about ready to be taken on in an emergency, or to fill the place of any man who, according to a very common custom, has “ taken a night off.” In busy marketing neighbourhoods, a whole class of butchers' assistants are engaged only for Fridays and Saturdays. Analogous arrangements exist in many other trades. Moreover, in every trade there are men whom the employer takes on only when he has a sudden and temporary press of business. They may be the “ glut men " of the customs department or the Christmas hands of the post office. Every tramway undertaking, municipal or commercial, has its reserve of extra drivers, conductors, yard-men, washers, &c., who get a day's work now and then when they are wanted. At Liverpool, and indeed in all large towns, there is a whole class of casual carmen, who are taken on for the job as required."
Then there are the accidental circumstances which incidentally produce unemployment, such as the displacement of labour by the progress of invention and improvement. The example of the distress brought upon the hand-loom weavers by the invention of the power-loom is only one of many, but the process is continually going on. The change, for example, from horse carriages to motor cars has brought much unemployment in its train. Then there is the unemployment due to decaying or declining trades, brought about through a persistent falling off of the demand, or through some change of process or of fashion; the removal of an industry from one place to another, the displacement of adult labour by that of women and boys, the continuous migration of unskilled labour from the country to the towns, and the depression in general trade caused by the occurrence of something unforeseen, as war. Then too, there are to be added the numberless frictions of industrial life, all contributing their quota to unemployment, such as the bankruptcy of an employer, changes in management, the arbitrariness of a foreman, &c. There are also what may be termed the political causes of unemployment, which depend on the commercial policy of the nation, in so far as it adopts Free Trade or Protection.
Recognizing the existence of the problem of unemployment, and putting aside the possibility of knowing exactly its extent, Remedies for Unem- ployment.we have to consider the remedies which have been advanced for its solution. These may be classified as temporary and permanent. Temporary expedients, whether in the nature of voluntary relief by individuals or organized societies, or on the larger scale of municipal or state organized relief works, more properly fall under the description of charity (see Charity and Charities). Two particular methods of permanent remedy, however, are especially favoured. The first of these is the establishment of a system of labour exchanges, national in character if possible, by which it is claimed that machinery would at once be set in motion for assisting that mobility which is so effective for the proper utilization of labour and which, even with the modern facilities for travel, labour so lacks at the present time. Labour exchanges would also, it is argued, Labour Exchanges. facilitate the collection of data for the enumeration and classification of the unemployed. Labour exchanges have been long established in Germany. “ There is a network of labour exchanges of various types. The most important . . . are the public and municipal exchanges. There are over 200 such, among the 700 odd exchanges, filling now 150,000 places a month, which report regularly to the imperial statistical officer. Practically there is a public general exchange in every town of over 50,000 inhabitants, and in a very large proportion of the smaller towns. Most of the public labour exchanges date from 1894 to 1896 or received a fresh impulse then ” (Report of Commission on Poor Laws, 1909). The causes of the success of the German system of labour exchanges are attributed by the Poor Law Commissioners to (a) the high standing given to the movement by the advocacy and practical assistance of all public authorities, town councils, state governments, imperial government, &c.; (b) the association through combined committees of employers and employees in the management of the exchanges; (c) the unequivocal character of the exchanges as industrial and not relief institutions; (d) the excellent arrangements for the use of telephonic, telegraphic and postal facilities by the exchanges, and (e) the preferential railway fares for men sent to a situation.
An attempt was made in England to start labour exchanges by the Labour Bureaux (London) Act 1902, which gave metropolitan boroughs power to establish and maintain bureaux, to be paid for out of the general rate. Before this act, however, certain municipalities here and there had made experiments in the way of exchanges, but they were never very successful, for they had no knowledge of what they intended to do; they were not properly staffed; they were hampered by bad rules; they were nearly all started in times of depression, exactly the wrong time to start a labour exchange, the time to start it being when trade is going up. The act of 1902 was a= failure because it merely permitted, and did not compel borough councils to establish bureaux, and consequently only a very small part of the metropolis was covered, and there was no interchange of ideas amongst those established. However, a fresh attempt was made to establish exchanges over a greater part of the United Kingdom by the Labour Exchanges Act 1909. The Labour Exchanges Act defines a labour exchange as any office or place used for the purpose of collecting and furnishing information, either by the keeping of registers or otherwise, respecting employers who desire to engage workpeople and workpeople who seek engagement or employment. The act gave the Board of Trade power to establish and maintain labour exchanges in such places as they might think fit, and to collect and furnish information to employers and workpeople. An important provision of the act was the authorization of advances by way of loan towards meeting the expenses of workpeople travelling to places where employment is found for them through a labour exchange. The regulations of the exchanges provide that no person shall suffer any disqualification or be otherwise prejudiced on account of refusing to accept employment found for him through a labour exchange where the grotuid of refusal is that a trade dispute which affects his trade exists, or that the wages offered are lower than those current in the trade in the district where the employment is found. The act also empowers the Board of Trade to establish advisory committees in connexion with the exchanges and imposes penalties for making false statements for the purpose of obtaining employment or procuring workpeople. For the carrying out of the act the whole of the United Kingdom was mapped out into divisions, with a divisional inspector at the head of each. In all the more important towns of each division exchanges were established, classified according to the population of the town. All the exchanges are in telephonic communication either with each other or with a divisional clearinghouse, the divisional clearing-house in turn being in communication with a central clearing-house in London. The advantage of the English system of labour exchanges will be found in the fact that it is a national system, with the support of the state behind it. Unless, as has been proposed, it is made compulsory in all large trades, much of its success will depend on the patronage extended to it by employers, which in its turn must be justified by the efficiency of the service rendered. Patronage by government and municipal authorities, while making an imposing addition to the returns of situations found, will not necessarily be an effective guarantee that the true objects of the exchanges are being fulfilled.
The German labour registries are of seven principal types: ther private registry office, maintained by ordinary agents for purposes of gain, and occupying itself chiefly with the placing of domestic servants; the travellers' homes and relief stations, which endeavour to find situations for their inmates-their success is not great, as the better elements of the labouring classes avoid them; trade union registries maintained by trade unions to assist their members in ​obtaining employment; gild labour registries or associations of employers (mainly small employers) for the promotion of the interests of the trade in which they are engaged; agricultural labour registries maintained in different parts of Germany by the chambers of agriculture; employers' labour registries, established as a counter move against the trade union registries—they are chiefly in industries employing large capital, particularly the metal industries; and public labour registries, established either by voluntary associations or by municipalities. These latter have been very successful and have provided the model for the English registries. In Austria labour registries have also been established on the German model by many district and municipal authorities, those of Vienna and Prague bein especially successful. Switzerland has a few registries established by public authorities, notably those at Basel, Bern, Schaffhausen and Zurich. In Belgium there are a considerable number of public registries, some established by associations, some philanthropic, some political, some organized by employers, some by employees, some jointly by employers and emplo ed. Some of these registries are in receipt of subventions granted by municipalities, while in a few cases the municipalities themselves have started registries. In France labour registries are of many types. There are the ordinary registry offices, carried on for gain, and requiring a licence from the municipal authorities. They are very numerous and according to returns to the French Labour Department fill over 1,000,000 situations yearly in various occupations. There are also registries maintained by trade gilds, by individual trade unions, by a number of trade unions jointly, by joint associations of employers and employed, by associations of employers, by friendly societies, by philanthropic institutions and b municipalities. These last are being rapidly increased, and will without doubt eventually supersede all the others. In the United States the states of Colorado, Connecticut, Illinois, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Ohio, West Virginia and Wisconsin have established free public employment offices, and in many of the other states the private registries are under strict supervision and licensing.
The second permanent remedy is that of insurance against unemployment. Certain schemes have been tried in Switzerland, Insurance against Unemploy- meant. notably the voluntary municipal scheme of against Berne, the compulsory municipal scheme of St Gall and a trade union scheme at Basel, while there is in Germany a system of insurance against sickness, accident and incapacity (seeGermany). Much attention has been devoted in England to the possibilities of insurance against unemployment, and in 1910 a scheme was being worked out by the government with a view to its discussion by parliament in 1911. The lines on which such a scheme must work were clearly laid down by Sir H. Llewellyn Smith, the permanent secretary to the Board of Trade, in his presidential address to the Economic Science and Statistics section of the British Association at Sheffield in September 1910.
“ The crucial question from a practical point of view,” said Sir H. Llewellyn Smith, “ is whether it is possible to devise a scheme of insurance which, while nominally covering unemployment due to all causes other than those which can be definitely excluded, shall automatically discriminate as between the classes of unemployment for which insurance is or is not an appropriate remedy. We can advance a step towards answering this crucial question by enumerating some of the essential characteristics of any unemployment insurance scheme which seem to follow directly or by necessary implication from the conditions of the problem as here laid down.
“ 1. The scheme must be compulsory; otherwise the bad personal risks against which we must always be on our guard would be certain to predominate.
“ 2. The scheme must be contributory, for only by exacting rigorously as a necessary qualification for benefit that a sufficient number of weeks' contribution shall have been paid by each recipient can we possibly hope to put limits on the exceptionally bad risks.
“ 3. With the same object in view there must be a maximum limit to the amount of benefit which can be drawn, both absolutely and in relation to the amount of contribution paid; or, in other words, we must in some way or other secure that the number of weeks for which a workman contributes should bear some relation to his claim upon the fund. Armed with this double weapon of a maximum limit to benefit and of a minimum contribution, the operation of the scheme itself will automatically exclude the loafer.
“ 4. The scheme must avoid encouraging unemployment, and for this purpose it is essential that the rate of unemployment benefit payable shall be relatively low. It would be fatal to any scheme to offer compensation for unemployment at a rate approximating to that of ordinary wages.
“ 5. For the same reason it is essential to enlist the interest of all those engaged in the insured trades, whether as employers or as workmen, in reducing unemployment, by associating them with the scheme both as regards contribution and management.
“ 6. As it appears on examination that some trades are more suitable to be dealt with by insurance than others, either because the unemployment in these trades contains a large insurable element, or because it takes the form of total discharge rather than short time, or for other reasons, it follows that, for the scheme to have the best chance of success, it should be based upon the trade group, and should at the outset be partial in operation.
“ 7. The group of trades to which the scheme is to be applied must, however, be a large one, and must extend throughout the United Kingdom, as it is essential that industrial mobility as between occupations and districts should not be unduly checked.
“ 8. A state subvention and guarantee will be necessary, in addition to contributions from the trades affected, in order to give the necessary stability and security, and also in order to justify the amount of state control that will be necessary.
“ 9. The scheme must aim at encouraging the regular employer and workman, and discriminating against casual engagements. Otherwise it will be subject to the criticism of placing an undue burden on the regular for the benefit of the irregular members of the trade.
“ 10. The scheme must not act as a discouragement to voluntary provision for unemployment, and for that purpose some well-devised plan of co-operation is essential between the state organization and the voluntary associations which at present provide unemployed benefit for their members. Our analysis, therefore, leads us step by step to the contemplation of a national contributory scheme of insurance, universal in its operation within the limits of a large group of trades-a group so far as possible self-contained and carefully selected as favourable for the experiment, the funds being derived from compulsory contributions from all those engaged in these trades, with a subsidy and guarantee from the state, and the rules relating to benefit being so devised as to discriminate effectively against unemployment which is mainly due to personal defects, while giving a substantial allowance to those whose unemployment results from industrial causes beyond the control of the individual. Is such a scheme practicable? This is a question partly actuarial, partly administrative, and partly political. I may say that so far as can be judged from such data as exist (and those data are admittedly imperfect and rest on a somewhat narrow basis) a scheme framed on the lines I have indicated is actuarially possible, at least for such a group of trades as building, engineering and shipbuilding.”
In addition to insurance against unemployment by the state, there are various voluntary associations, such as friendly societies and trade unions, which make a feature of grants to their members when out of employment.
In September 1910 the first International Conference on Unemployment was convened in Paris, the subjects of statistics of unemployment, labour registries and state insurance being the chief topics. The outcome of the conference was the formation of a society to study all phases of the problem, and to keep in touch with public and private bodies and the various governments.
Authorities.—Report of Royal Commission on Labour (1894); Report of House of Commons Committee on Distress from Want of Employment (1895); Report of Royal Commission on Poor Laws (1909); Report of the Massachusetts Board to Investigate the Subject of the Unemployed. The following recent books will be found useful: P. Alden, The Unemployed (1905); W. H. Beveridge, Unemployment: A Problem of Industry (1909); N. B. Dearle, Problems of employment in the London Building Trades (1909);]. A. Hobson, The Problem of the Unemployed (1904); F. W. Lewis, State Insurance a Social and Industrial Need (1909); D. F. Schloss, Insurance Against Unemployment (1909); F. I. Taylor, A Bibliographiy of Unemployment and the Unemployed (1909). (T. A. I.)
* ↑ The German system of labour exchanges is exhaustively dealtwith in Report to the Board of Trade on Agencies and Methods for Dealing with the Unemployed in certain Foreign Countries, by D. F. Schloss (1904).
* ↑ For a detailed description of these schemes see G. Schanz, Zur Frage der Afbeitslosen-Versicherung (Bamberg, 1895); Neue Beiträge zur Frage der Arbeitslosen- Versicherung (Berlin, 1897); and Dritter Beitrag zur Frage der Arbeitslosen-Versicherung und der Bekämpfung der Arbeitslosigkeit (Berlin, 1901).