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APPENDIX I
The Ways and Means of Ernest Bevin’s Proposals
By COLIN CLARK
Lecturer in Statistics, Cambridge University ; Prospective Parliamentary Labour Candidate, South Norfolk.
Raising the School Age
At the present moment (mid 1933) the numbers who would be affected in Great Britain, namely, boys and girls of fourteen and fifteen years of age is 1,190,000, comprising 600,000 boys and 590,000 girls.
But in this year the number happens to be particularly low, because, as a moment's thought will show, these mainly represent children born in 1917 and 1918, when the birthrate was very low owing to the war. Two years hence the situation will be very different.
If the raising of the school age is begun now, by keeping children on at school as they reach 14, so that the whole process of raising the school age to sixteen is completed by 1935, the number of children affected will be 1,530,000. Of course, at the present time, some of the boys and a good many of the girls do not enter the paid labour market at this age, being engaged in home industries, secondary education, etc. But this measure would be calculated to relieve the labour market to the extent of 500,000 boys and 340,000 girls, or the equivalent, on the basis which has been suggested of 330,000 men and 230,000 women.
Pensions at 65 Conditional on Retirement
It is very difficult to say accurately how many people over the age of 65 are at present engaged in paid employment. When pensions for persons between the ages of 65 and 70 were first made payable in 1928, only insured persons being eligible, 355,000 men and 175,000 women obtained pensions.
Practically all of these were in work then at the time the pension scheme was instituted, and, so far as can be seen, people on the average do not retire from work as a result of the present pension scheme at an appreciably earlier age than they used to.
The numbers eligible have been increasing very rapidly since 1928, and we must also take into account those over 70, or engaged in non-insurable occupations.
If we reckon that a third of those between 65 and 70 who do not receive pensions of 10s. per week retire as a result of the pension (and probably not nearly so many actually do retire) we reach the conclusion that there are as many as 900,000 people over 65 in work at the present time. Some of these, not a very large number, will be engaged in intermittent or part-time work, and in full work are not, of course, the industrial equivalents of younger men, but they represent the industrial equivalent of some 600,000 younger people, and if only half of them could be induced to retire by the new pension scale it would still mean some 300,000 new jobs.
The number of old people continues to increase rapidly and for 1938 the figures will be 350,000.
Optional Pensions at 60
The grounds for these pensions are: that an unemployed man over the age of 60 has very little chance of getting another job. There are at present about 125,000 men out of work between the ages of 60 and 65, with a small number of women, and clearly the vast majority of these would accept the optional pension.
Invalidity Pensions
It is difficult to make a calculation in this case, but the minimum estimate would be some 100,000 men who are not fit for work in any circumstances, while as a maximum figure it appears that about 250,000 unemployed men have some physical defect other than old age. A certain number of women might also be concerned, and we may make an estimate of 150,000 to 200,000.
Enforcement of the 48-Hour Week
The two worst offenders against the 48-hour week at present are the distributive trades and the catering trades. These employed in 1932, 1,727,000 and 325,000 respectively, and are among the largest of the non-manufacturing industries.
From an official inquiry held in 1925, it appears that some 40 per cent, of the employees in the drapery trade, 80 per cent, in the butchery trade, and 90 per cent, in the grocery trade work over 48 hours per week. The hours worked in excess of 48 averaged from 2 to 5 per week in the different trades.
We know from common knowledge that in many branches in the distributive trades, e.g., tobacconists and confectioners, still longer hours are worked.
In the catering trades another official inquiry in 1929 revealed in some ways an even worse position: 36 per cent, of hotel workers, 20 per cent, of the employees in public-houses, and 52 per cent, of the employees in non-licensed restaurants worked over 60 hours a week, and many over 66 hours a week.
The numbers working for 48 hours or less ranged from 15 per cent, in hotels to 55 per cent, in public-houses, but, taking the catering trade as a whole, 68 per cent, worked over 48 hours, the average number of hours worked in excess of 48 being 11.3.
Other trades affected would be entertainments, laundries, shift workers, road haulage, and certain railwaymen. These represent trades in which the 48-hour week could be strictly enforced, leaving aside the more difficult trades of agriculture, domestic service, and shipping.
In the distributive and catering trades the enforcement of a 48-hour week would probably lead to some curtailment of services rather than the engagement of extra workers.
If there were no curtailment we might expect 300,000 extra workers to be taken on as a result of the 48-hour week, and 150,000 would appear to be a modest estimate of the numbers that would be taken on even after allowing for this factor.
It should be noted that both the distributive and catering trades, the two principal offenders, have been making big profits of recent years and can well afford to grant this concession.
The 40-Hour Week
The universal enforcement of the 40-hour week is naturally a much bigger problem than the enforcement of a 48-hour week in certain fairly prosperous industries. Of course, a shorter week with a corresponding reduction in wages— which amounts to nothing more than a sharing-out of the available work—would be comparatively easy to arrange. But nobody wants it except a few abstract reformers. The main mass of Labour and Trade Union opinion is solidly against this proposal. Quite rightly, because in the present standard of the working-class there is nothing to give away.
A universal extension, to all industrial, transport, distributive and office workers of a 44-hour week, would bring some 600,000 extra into employment, and a 40-hour week some 1,300,000, if we assume that output would remain unaffected. But, actually, there would probably be some fall in output unless the measure was accompanied by a considerable degree of industrial organisation. For in some of the more depressed industries the rise in costs might lead to a fall in output and consequent unemployment. Some other industrial costs might also be increased.
Against this, wc have the improvement of markets, due to the spending power in the hands of people previously unemployed, but there is a danger that, if created in this way, the increased purchasing power might lead to a rise in the cost of living.
Bearing all these factors in mind, however, it is still true to say that a reduction in hours would lead to a considerable increase in the numbers in employment, though not so great as indicated by the figures above.
A universal enforcement of the 48-hour week should be brought about immediately; but further measures, in view of the amount of industrial reorganisation which would be required, should be introduced by stages, keeping in mind all the time our objective of a universal 40-hour week to be achieved in a few years.
Summary of Employment Proposals
The following are the numbers by which we could hope to reduce the unemployment totals by immediate measures:—
Raising School Age 560,000
Retirement Pensions at 65 300,000
Optional Pensions at 60 125,000
Invalidity Pensions 175,000
Enforcement of 48-hour week 150,000
TOTAL1,310,000
Also,
Enforcement of 40-hour week (about) 700,000
The reader will be aware that these estimates have been framed on a most conservative basis throughout, and might quite likely be exceeded in many directions. There are also two other items which have not yet been brought to account, and which should be added to our public works programme, namely, the building of houses for pensioners and the large amount of new school accommodation which will be required.
We are right in aiming at some such total as 2,000,000 for the numbers to be taken out of the “pool of labour” by the various measures described above. This is for a very profound reason described below.
In addition to proposals of the kind described above, the Labour Movement has declared for an expansionist currency and credit policy, a programme of public works and a distribution of consuming power to the workers, so as to promote the greatest possible activity of our existing industrial resources. But with the present degree of rationalisation, and with the organisation as it is to-day, there are limits to the possible increase in employment.
If we carry out our financial policy to the full, even up to the extent where we are in danger of causing a rise in the cost of living, I calculate we are unlikely to increase our employment by more than some 1,250,000, even after taking fully into account the stimulus given to employment by increased consuming power.
Fundamental changes in the organisation and planning of our industries would be required before we could increase employment further, and these cannot be brought about all at once or by purely financial measures.
Although it may seem strange to some, the capacity of industry to produce and employ is definitely limited. It may appear that modern rationalised industry has an indefinite capacity to produce, but any works manager will soon tell you that this is not so in practice.
Industry is working a long way below its best possible capacity at the present time, and the purpose of our financial policy is to raise it to this capacity, but anyone who thinks that financial measures alone can bring about a new world is rightly dubbed a crank.
But with this figure in view as the greatest expansion likely to be possible in industrial employment in the next few years, and with a series of proposals such as have been described above, we shall not be far off finding a solution for the unemployment problem.
The Finance of the Proposals
The cost of raising the school age should be approximately £15,000,000 annually. The payment of a maintenance allowance of 5s. a week to each child would require some £17,000,000 annually extra. Besides these would be a considerable nonrecurrent expenditure for new school buildings, to be met out of loans, as part of a programme of public works.
It is difficult to estimate the cost of the retirement pensions at 65 and the optional pensions at 60, on the basis of £1 a week for a single person and 35s. for a married couple or persons with dependents, without full actuarial calculations and certain new investigations, but it would seem to be in the neighbourhood of £33,000,000 a year additional to present expenditure. An invalidity pension of 30s. per week would cost some £14,000,000.
The entire cost of these pensions could be met almost exactly by an extra contribution of 1s. 6d. per week for men and smaller contributions, proportional to the present rates of Health Insurance contributions, for women and juvenile workers. Some part of this extra contribution should be met by the Exchequer and some part by the employer and employed.
The extension of Social Insurance to cover salaried earners between £250 and £1,000 a year would bring in a considerable sum in contributions, and with their comparatively light claims for both sickness and unemployment some relief would be given to both funds. This could be set against the Exchequer contributions, but on balance the inclusion of this class in the scope of social insurance would bring little gain or loss to public funds.
If we assume that as a result of our proposals some 1,300,000 are taken off the unemployment register or the Poor Law (i.e., before reckoning any of the results of the introduction of a working week below 48 hours) even at the present low scales of benefit and relief the national and local revenues would be benefited to the extent of £50,000,000. The major part of this would benefit the national revenues, but local finances in the hard-pressed areas would be immediately relieved.
The State could thus meet the full cost of the pension proposals, in addition to raising the school age, at a net extra charge of only £30,000,000 a year. If the cost of the Pension proposals were divided equally between employers and employed and the State there would only be a very small net charge on the Budget.