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THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTVS GOVERNMENT Printed for the Cabinet.
June 1956
SECRET
CP.
Copy N o .
(56) 151
22nd June, 1956 II CABINET
U N E M P L O Y M E N T BENEFIT
MEMORANDUM BY THE MINISTER OF LABOUR AND NATIONAL
SERVICE AND THE
MINISTER OF PENSIONS AND NATIONAL INSURANCE
A Committee of officials was appointed ( C M . (56) 35th Conclusions.
Minute 5): " To promote and co-ordinate any action which may be necessary or
desirable for the Government to take in regard to automation and the developments
to which it may give rise."
2. The Committee have now made a Report, which we circulate herewith,
on: —
(a) The possibility of improving the unemployment benefit provision for
workers made redundant in their employment by automation.
(b) The general rules governing the payment of unemployment benefit to
workers on short time, whether arising from automation or not.
On the second subject the Committee suggest a change which might require legis­
lation and we therefore discuss this first.
Short-time Working
3. A worker who is on short time or whose work is temporarily suspended
cannot be treated as unemployed on any day on which he works or for which he
receives payment from his employer. Recent rulings of the National Insurance
Commissioner have, however, made it clear that a guaranteed week agreement need
not imply payment by the employer for each day of the week and, for days on which
no work is done and no payment is made; claims for benefit can be made under
the same rules as apply to the man who is without an employer and seeking a new
job. After three waiting days, benefit is payable for any two days of unemployment
in six consecutive weekdays, so that as the rules stand benefit (and two days at that)
is payable to a worker who has earnings for four full days' employment in a week,
even though he may normally work only one day more. This situation has
attracted much criticism where the worker's earnings are still high by ordinary
standards, and is unsatisfactory both from the insurance point of view and in its
effect on the mobility of labour.
4. From the insurance point of view it was never intended that benefit should
be paid where only one day's work a week has been lost, but this principle has
been increasingly undermined by the adoption of the 5-day week in industry. The
availability for other employment of such workers is difficult to test effectively and
many people think it wrong that short-time workers with high earnings should
have them subsidised out of the contributions of workers whose full-time earnings
are lower. On the other hand, there seems to have been no criticism of the payment
of benefit in the cotton industry, where wages are low, to short-time workers who
have equally lost only one day's earnings, and it would seem very questionable
policy to make insurance benefits less available to those with high earning power.
5. As regards labour mobility, in some industries, particularly motor-cars,
the effect of the Governments economic measures has shown itself so far in
50071
short-time working rather than the discharge of workers. The ability to
supplement earnings with benefit is not of course the only reason causing workers
to prefer short-time working rather than seek fresh employment, particularly when
they are employed in firms or industries where their earnings are relatively high.
But to make an insurance change primarily in order to increase the mobility of
labour would clearly lay the Government open to political attack on the ground
that it was indifferent to the interests of the workers and determined to create
unemployment. It would seem therefore that the justification for any further
restriction on the insurance benefits of short-time workers would have to be on
wider grounds of general equity.
6. After considering various possibilities the Committee of officials have
recommended that the method of dealing with the situation which would cause
the least difficulty would be to treat Saturday as a day in respect of which
unemployment benefit is not payable. The rule would then be that benefit could
only be paid if the worker were unemployed in a week on two days other than
Saturday and Sunday. For the days of unemployment which counted, benefit
would then be paid at one-fifth (instead of one-sixth) of the weekly rate. A variant
of this proposal would be to eliminate the first day of proved unemployment in
any calendar week and pay one-fifth of the weekly rate for each of the remaining
days if in excess of one. While this would avoid the suggestion that Saturday is
to be regarded as a non-working day, it would be more difficult to administer. The
intention of either change would be to limit the payment of benefit during
short-time working to those cases in which the worker was not working more than
three days a week. The result would, in our view, be to limit considerably the
extent to which workers on short time would receive benefit. Assuming the present
level and pattern of short-time working, such a change might save the National
Insurance Fund perhaps £2 million a year, though too much importance should
.' not, owing to the uncertainty of the situation, be attached to this figure.
7. Either of the general changes suggested would require legislation and
we should mention that an automatic effect of the adoption of a five-day benefit
week (unless countervailing action was taken) would be to increase by one-fifth
the present periods, from 30 weeks upwards, for which unemployment benefit
can be drawn. Either change would also have to apply to sickness benefit because,
for various purposes of the insurance scheme, days of sickness and days of
unemployment are interchangeable. The practical effect in relation to sickness
benefit would, however, be quite small.
8. An alternative to a general change in the benefit rules would be to make
special conditions for five-day-week workers on short time. This could be effected
by regulations. Any such regulations would, however, have to be submitted in
draft to the National Insurance Advisory Committee and, as they would be obliged
to consider representations on the subject, it would probably be three to six months
before they were able to report.
9. It is important in this connection to note that in a report last autumn the
National Insurance Advisory Committee, while recognising the present anomalies,
expressly recommended that no change should be made in the arrangements
relating to short-time working. The likely attitude of the Committee to draft
regulations on these lines might therefore not be altogether favourable.
10. While there is undoubtedly public uneasiness about the payment of
benefit to some short-time workers, we do not consider that a sufficiently strong
and clear case exists for action to change the insurance rules at present. A further
reason for delay is that the decisions so far given by the National Insurance
Commissioner on guaranteed week agreements only relate to those of individual
firms in the engineering industry. The proper interpretation of the main agreement
covering some 2\ million workers in federated firms arises on an appeal which
will shortly be coming before him. The amount of short time being worked is
not increasing. We would therefore propose to keep^ the subject under review
and, if in the autumn it still seemed desirable that some change should be made,
it might perhaps be undertaken in a less controversial atmosphere in conjunction
with other changes in the insurance scheme, which may in any case have to be
the subject of legislation next Session. We might in this way also expect to get
the benefit of some exchange of views on the subject with representatives of
employers and trade unions.
Position of Discharged Workers
11. The introduction of automation may lead to the discharge of workers
on redundancy and the Committee of officials accordingly considered the
possibility of improving the present rate of benefit to help meet this situation.
They point out, however, that automation is only one possible cause of redundancy
(and in present circumstances we think a less likely one than some others) and
that any adjustment in the benefit rates would have to apply to all unemployed
workers. Secondly, they take the view that any improvement in the general rules
of unemployment benefit could only be considered along with the rates of national
insurance pensions and benefits generally, and also of war pensions. We agree
with the officials on both points and also share their view that no practicable
improvement in benefit rates would significantly weaken the resistance of workers
to losing their employment.
12. The report points out, however, that where a worker's employment has
been finally terminated, he is not prevented from getting benefit by the fact that he
is also getting compensation from his former employer for the loss of his former
remuneration, so long as the compensation, together with his own benefit (ignoring
any payments for dependants), does not exceed two-thirds of his previous
remuneration. We think it desirable that this arrangement should be more widely
known so that, where an employer wishes to compensate a worker who is being
discharged after long satisfactory service, he should not be discouraged from
assisting the worker's resettlement by the belief that it would prevent the payment
of benefit.
13. We therefore recommend t h a t ­
(1) no immediate action should be taken to restrict the right to benefit of
short-time workers but the subject should be kept under review as set
out in paragraph 10, and the whole subject looked at again in the
autumn;
(2) on the possibility of improving the rate of unemployment benefit, the views
set out in paragraph 11 should be accepted;
(3) the fact that employers are not prevented from supplementing the benefits
of discharged workers should be made more widely known.
I. M.
2.1st June, 1956.
J. A. B.-C.
OFFICIAL COMMITTEE ON AUTOMATION
REPORT ON UNEMPLOYMENT BENEFIT
SUMMARY OF REPORT
1,
Workers who have "been d i s c h a r g e d and are c o m p e l l e d t o
seek f r e s h employment are n o r m a l l y e n t i t l e d to unemployment
benefit.
This b e n e f i t may b e drawn "by w o r k e r s who a r e
r e c e i v i n g compensation payments from t h e i r l a t e employers
p r o v i d e d t h a t t h e s e payments do n o t e x c e e d c e r t a i n l i m i t s .
The p r o v i s i o n . f o r s u p p l e m e n t a t i o n o f b e n e f i t b y employers f o r
t h e i r f o r m e r workers i s r e a s o n a b l e where employment has been
f i n a l l y t e r m i n a t e d and t h e r e f o r e we do n o t s u g g e s t any change
i n t h e s e arrangements,
2.
Under p r e s e n t a r r a n g e m e n t s , s u p p l e m e n t a t i o n o f b e n e f i t
by employers i s n o t p e r m i t t e d where workers a r e on s h o r t
time o r a r e t e m p o r a r i l y suspended.
We a c c e p t the v i e w t h a t
employers should not be encouraged t o r e t a i n workers who a r e
t e m p o r a r i l y under-employed a t the expense o f the N a t i o n a l
I n s u r a n c e Fund and a c c o r d i n g l y recommend t h a t the e x i s t i n g
arrangements should be endorsed,
3.
Unemployment b e n e f i t has always been a v a i l a b l e t o persons
who a r e t e m p o r a r i l y under-employed, p r o v i d e d t h a t t h e y a r e
w i l l i n g t o work e l s e w h e r e on t h e days when t h e i r r e g u l a r
employer cannet use them and s u b j e c t t o the normal t e s t s f o r
r e c e i p t o f unemployment b e n e f i t .
Where guaranteed week
agreements p r o v i d e f o r no- more than f o u r days pay, b e n e f i t may
be p a y a b l e f o r the two days o f the week on which no work i s
done - even where the worker i s on a f i v e day week.
This
g i v e s r i s e t o two s e r i o u s a n o m a l i e s :
( a )
( b )
Two days b e n e f i t can b e earned b y the l o s s o f one d a y ' s work; I n p r a c t i c e , the s t a t u t o r y t e s t . o f a v a i l a b i l i t y
employment cannot be e f f e c t i v e l y a p p l i e d .
kWe have c o n s i d e r e d v a r i o u s methods o f remedying
unfortunate s i t u a t i o n :
( i )
( i i )
( i i i )
for
this
By p r o v i d i n g ( b y r e g u l a t i o n ) t h a t b e n e f i t s h o u l d not
b e p a i d where a g u a r a n t e e d week was i n o p e r a t i o n ;
By i n t r o d u c i n g an e a r n i n g s r u l e which would p r e v e n t
b e n e f i t b e i n g p a i d i n any week t o any one w i t h
c o m p a r a t i v e l y h i g h e a r n i n g s i n t h a t week;
By a l t e r i n g the c o n d i t i o n s f o r r e c e i p t of b e n e f i t so
t h a t no more than one d a y ' s b e n e f i t c o u l d b e p a i d t o
a f i v e day week worker who has l o s t one d a y ' s work.
5.
A l l t h e s e p r o p o s a l s would g i v e r i s e t o a d m i n i s t r a t i v e
d i f f i c u l t i e s and would p r o b a b l y l e a d t o new anomalies w i t h o u t
d e a l i n g e f f e c t i v e l y w i t h the problem o f t h e payment o f b e n e f i t
t o workers on s h o r t t i m e
M o r e o v e r , ( i ) would be r e p r e s e n t e d
as an a t t a c k on the g u a r a n t e e d wage p r i n c i p l e and ( i i ) would
be a t t a c k e d as a means t e s t .
0
6.
We have t h e r e f o r e s u g g e s t e d t h a t the problem c o u l d b e s t be
t a c k l e d b y e x c l u d i n g Saturday f o r b e n e f i t purposes i n the same
way as Sunday i s now e x c l u d e d .
B e n e f i t v/ould then b e p a y a b l e
f o r the f i v e r e m a i n i n g days o f the week a t o n e - f i f t h o f the
weekly r a t e ;
c o n s e q u e n t i a l adjustments o f the c o n d i t i o n s would
be r e q u i r e d .
The change p r o p o s e d would e x c l u d e from b e n e f i t
a l l s h o r t time workers now e n t i t l e d t o pay from t h e i r employers
f o r f o u r working d a y s .
L e g i s l a t i o n would be n e c e s s a r y ,
7.
D e t a i l s a r e g i v e n i n the R e p o r t
below,
UNEMPLOYMENT BENEFIT 1.
Our terms o f r e f e r e n c e have l e d us t o c o n s i d e r s p e c i a l l y
t h e p r o v i s i o n , "by way o f unemployment b e n e f i t or o t h e r w i s e ,
o f compensation payments t o w o r k e r s d i s p l a c e d by a u t o m a t i o n ,
and a l s o the g e n e r a l r u l e s g o v e r n i n g t h e r e c e i p t o f
unemployment b e n e f i t by workers on s h o r t t i m e .
D i s p l a c e d Workers, c o m p e l l e d t o s e e k f r e s h
Compensation payments by f o r m e r
employment
employer
2.
A w o r k e r who has been d i s c h a r g e d by h i s employer on
redundancy and c o m p e l l e d t o seek f r e s h employment, w i l l
n o r m a l l y be e n t i t l e d t o unemployment b e n e f i t a t t h e r a t e o f
l+Os. s i n g l e , 6 5 s . m a r r i e d , w i t h a d d i t i o n a l payments f o r
dependent c h i l d r e n .
He can at t h e same t i m e b e i n r e c e i p t
o f p e r i o d i c compensation payments from h i s p r e v i o u s e m p l o y e r ,
p r o v i d e d such payments do n o t e x c e e d t w o - t h i r d s o f t h e
remuneration l o s t l e s s t h e s i n g l e p e r s / n ' s r a t e o f b e n e f i t
(l+Os.).
The f a c t t h a t i t i s p e r m i s s i b l e f o r b e n e f i t ' t o "be
p a i d c o n c u r r e n t l y w i t h compensation payments i n t h i s way i s
not perhaps so w i d e l y u n d e r s t o o d as i t might b e .
The
p r e s e n t r u l e s w e r e endorsed by t h e N a t i o n a l I n s u r a n c e
A d v i s o r y Committee i n 135k, when t h e r e g u l a t i o n s w e r e s l i g h t l y
v a r i e d from t h o s e p r e v i o u s l y i n f o r c e i n o r d e r t o f i t t h e
p r o v i s i o n made f o r w o r k e r s d i s p l a c e d i n consequence o f t h e
Transport A c t , 1 9 5 3 .
They, a l s o f i t a g r e e m e n t s , which have
s t a t u t o r y M i n i s t e r i a l a p p r o v a l , a r r i v e d at f o r payments t o
c o l l i e r y w o r k e r s who become redundant as a r e s u l t o f major
r e o r g a n i s a t i o n s , and we understand t h a t s i m i l a r arrangements
f o r c u s h i o n i n g redundance d i s c h a r g e s have been i n o p e r a t i o n
f o r a considerable time in c e r t a i n ather i n d u s t r i e s .
3.
Where w o r k e r s who have g i v e n s a t i s f a c t o r y s e r v i c e o v e r a
s u b s t a n t i a l p e r i o d are discharged because of r e o r g a n i s a t i o n
v o l u n t a r i l y undertaken by t h e employer i n o r d e r t o make h i s
b u s i n e s s more p r o f i t a b l e , t h e r e would seem t o be b o t h a
moral o b l i g a t i o n on t h e employer and a l s o t h e means a v a i l a b l e ,
f o r him t o make compensation payments a d d i t i o n a l t o n a t i o n a l
i n s u r a n c e b e n e f i t t o a s s i s t t h e smoother r e s e t t l e m e n t o f t h e
w o r k e r s i n f r e s h employment, and we understand t h a t such
p r e v i s i o n s ( o f t e n c a l l e d " s e v e r a n c e monejr") and a l s o i n some
cases a s s i s t a n c e i n o t h e r d i r e c t i o n s , such as removal
e x p e n s e s , have been f a i r l y w i d e l y a d o p t e d i n t h e U . S . A . and
in other countries.
I n t h i s c o u n t y t h e Government can
h a r d l y d i s c o u r a g e s i m i l a r a c t i o n i n v i e w o f what has a l r e a d y
"Ween done f o r w o r k e r s d i s p l a c e d not o n l y under t h e T r a n s p o r t
A c t , 1 9 5 3 , but under t h e v a r i o u s n a t i o n a l i s a t i o n
statutes
i n c l u d i n g the p r o v i s i o n f o r c o l l i e r y workers already mentioned.
I t does n o t , h o w e v e r , seem t o us t h a t any c a s e can b e made
out f o r making b e t t e r p r o v i s i o n from i n s u r a n c e o r o t h e r
p u b l i c funds f o r workers d i s p l a c e d by automation o r o t h e r
forms o f t e c h n o l o g i c a l change, t h a n a r i s e s where a worker
w i t h e q u a l l y l o n g and s a t i s f a c t o r y s e r v i c e l o s e s h i s j o b
because h i s e m p l o y e r ' s a c t i v i t i e s have c o n t r a c t e d , o r , i n
extreme c a s e s , t h e employer has been f o r c e d out o f b u s i n e s s .
I n d e e d , i t c o u l d be argued t h a t t h e l a t t e r c a s e i s more
d e s e r v i n g o f s y m p a t h e t i c S t a t e a c t i o n because t h e employer
i s then much l e s s l i k e l y t o have t h e f i n a n c i a l r e s o u r c e s w i t h
which t o a s s i s t h i s d i s p l a c e d w o r k e r s .
Where employment
has been f i n a l l y terminated, t h e r e f o r e we see no o b j e c t i o n
t o employers a r r a n g i n g t o supplement t h e unemployment b e n e f i t
o f t h e i r f o r m e r workers t o t h e e x t e n t a l l o w e d by t h e p r e s e n t
r e g u l a t i o n s , which seem t o us t o impose a l i m i t which i s .
r e a s o n a b l e i n i t s e l f and a l s o a c c e p t a b l e t o t r a d e union
opinion.
Rate o f Unemployment
Benefit
We have a l s o c o n s i d e r e d whether i t would a s s i s t i n
U.
m e e t i n g any redundancy problems l i k e l y t o be thrown up ty t h e
spread o f automation i f t h e p r e s e n t r a t e s o f unemployment
b e n e f i t c o u l d be i n c r e a s e d .
We do not s e e how t h e r a t e s o f
t h i s b e n e f i t , p r o v i d e d as i t i s from funds t o which a l l
c o n t r i b u t e e q u a l l y , could b e v a r i e d a c c o r d i n g t o t h e p a r t i c u l a r
economic c i r c u m s t a n c e s which l e d t o t h e worker l o s i n g h i s
employment o r a c c o r d i n g t o h i s -previous e a r n i n g s .
Any
i n c r e a s e i n t h e r a t e o f unemployment a l o n e would not b e
politically possible.
But a g e n e r a l i n c r e a s e i n t h e
standard r a t e o f b e n e f i t , i n c l u d i n g r e t i r e m e n t p e n s i o n ,
would be a v e r y c o s t l y o p e r a t i o n which, i n v i e w o f t h e need
f o r s t r i n g e n t economjr i n Government e x p e n d i t u r e , could not b e
c o n t e m p l a t e d at p r e s e n t .
Even a minimum i n c r e a s e o f 5 s .
on t h e s t a n d a r d r a t e - t o g e t h e r w i t h t h e i n e v i t a b l e
c o n s e q u e n t i a l improvement i n war p e n s i o n r a t e s - would
impose an a d d i t i o n a l charge o f t h e o r d e r o f £20 m i l l i o n s
on t h e Exchequer i n t h e f i r s t f u l l y e a r .
The immediate
i n c r e a s e i n e x p e n d i t u r e from t h e N a t i o n a l I n s u r a n c e Fund
would be about £80 m i l l i o n s but t h i s would r i s e s t e a d i l y
t h e r e b y adding t o t h e d e f i c i t s which w i l l have t o be met by t h e
Exchequer i n f u t u r e j r e a r s .
I n c r e a s e d b e n e f i t s would have
t o be accompanied by i n c r e a s e d c o n t r i b u t i o n s and t h e s e
would add t o t h e p r e s s u r e on wage r a t e s .
An i n c r e a s e o f
5 s . on a w e e k l y r a t e o f UOs. would s t i l l l e a v e t h e r a t e o f
unemployment b e n e f i t f a r b e l o w t h e a v e r a g e e a r n i n g s o f men.
As r e g a r d s t h e l i k e l y e f f e c t on t h e a t t i t u d e . o f t h e
redundant w o r k e r , a h i g h r a t e o f unemployment b e n e f i t might
be d i s a d v a n t a g e o u s i n t h a t , "by making s h o r t t i m e working
more a t t r a c t i v e t o t h e w o r k e r s , employers would b e under
But o t h e r w i s e ,
i n c r e a s e d p r e s s u r e t o r e t a i n redundant s t a f f .
the r a t e o f S t a t e unemployment b e n e f i t a v a i l a b l e does not seem
t o us l i k e l y t o have much e f f e c t on t h e w o r k e r ' s w i l l i n g n e s s
t o a c c e p t d i s p l a c e m e n t from h i s employment by automation o r
o t h e r t e c h n o l o g i c a l change.
I f h i s unemplos/rnent i s likely t o
be p r o l o n g e d t h e w o r k e r w i l l do e v e r y t h i n g he can t o r e s i , : t
t h e changes which would b r i n g i t about w h a t e v e r t h e r a t e
o f t h e unemployment b e n e f i t .
I f ( a s i n p r e s e n t circumstances
must n e a r l y always be t h e c a s e ) h e can e x p e c t t o be o f f e r e d
f u l l t i m e employment elsew/here v e r y q u i c k l y , h i s a t t i t u d e
towards d i s p l a c e m e n t w i l l not be determined by t h e r a t e o f
b e n e f i t p a y a b l e during t h e i n t e r v a l but b2 t h e p r o s p e c t s
o f f e r e d i n t h e new employment as compared w i t h t h e o l d , any
d i s t u r b a n c e c o s t s i n v o l v e d , and, where a change o f home i s
i n v o l v e d , housing, e d u c a t i o n a l and o t h e r f a m i l y p r o b l e m s .
P e n s i o n schemes f o r manual w o r k e r s supplementing t h e n a t i o n a l
i n s u r a n c e p r o v i s i o n have become
widespread, and any l o s s o f
p e n s i o n r i g h t s which cannot b e made good i n t h e new employment
may a l s o have an important e f f e c t on t h e w o r k e r ' s a t t i t u d e .
r
Workers on s h o r t t i m e o r t e m p o r a r i l y
Supplementation o f b e n e f i t
suspended.
by Employers
5.
Except i n t h e c a s e where employment has b e e n f i n a l l y
t e r m i n a t e d , t h e r e i s no p r o v i s i o n a l l o w i n g employers t o
supplement any unemployment b e n e f i t t o which t h e i r w o r k e r s
are e n t i t l e d during s h o r t t i m e o r s u s p e n s i o n .
As b e n e f i t
i s p a y a b l e on a d a i l y b a s i s , i t i s however p o s s i b l e f o r
an employer t o be making payments i n r e s p e c t o f c e r t a i n days
i n a week, whether work i s done on them or n o t , w h i l e b e n e f i t
i s payable f o r o t h e r s .
The r u l e s have not a l w a y s been so
restrictive.
Between 1 9 3 9 and I 9 U 8 t h e r e was s t a t u t o r y
p r o v i s i o n f o r M i n i s t e r i a l a p p r o v a l f o r s u p p l e m e n t a t i o n of
b e n e f i t by e m p l o y e r s , o f which advantage was taken by the
f l o u r - m i l l i n g i n d u s t r y and t h e U n i l e v e r g r o u p .
The N a t i o n a l
Insurance A d v i s o r y Committee was s p e c i a l l y asked i n 1 9 ^ 7 t o
c o n s i d e r whether c o r r e s p o n d i n g p r o v i s i o n should be made b y
r e g u l a t i o n s under t h e N a t i o n a l I n s u r a n c e A c t , 1 9 M 5 .
After
h e a r i n g t h e arguments of t h o s e who had taken advantage of t h e
o l d p r o v i s i o n and t h o s e who w i s h e d t o do so, the Committee
recommended a g a i n s t any such p r o v i s i o n b e i n g made, and t h e i r
a d v i c e was a c c e p t e d .
The r e l e v a n t p a r t o f t h e i r r e p o r t ( w h i c h
was p u b l i s h e d and l a i d b e f o r e P a r l i a m e n t ( H . o f C. N o . 1 6 1 of?: 19^6)
i s r e p r o d u c e d as an A p p e n d i x .
I t w i l l be seen t h a t the
Committee t o o k the v i e w t h a t in p o s t - w a r c o n d i t i o n s i t was
wrong t o u s e n a t i o n a l insurance funds t o h e l p ' employers t o
r e t a i n workers t o whom t h e y were u n a b l e t o o f f e r work.
Apart from the economic arguments a g a i n s t e n c o u r a g i n g u n d e r ­
employment, the Committee drew a t t e n t i o n t o t h e f a c t t h a t a
l a r g e s e c t i o n o f the i n s u r e d p o p u l a t i o n and t h e i r e m p l o y e r s
would, because o f t h e terms o f t h e i r employment, b e u n a b l e t o
t a k e a d v a n t a g e o f such arrangements i f p e r m i t t e d , and p o i n t e d
out t h a t i n some c a s e s t h e bar was s t a t u t o r y , e . g . i n t h e
case o f workers c o v e r e d b y the Dock Workers ( R e g u l a t i o n o f
Employment) A c t , I9L1.6, o r by t h e A g r i c u l t u r a l Wages A c t s .
6,
We f i n d the arguments used b y t h e N a t i o n a l I n s u r a n c e
A d v i s o r y Committee i n 1 9U8 s t i l l c o n v i n c i n g , and we would
add that i t might be thought p a r t i c u l a r l y u n f a i r b y o t h e r
i n s u r e d w o r k e r s and t h e i r employers i f an e x c e p t i o n t o t h e
g e n e r a l r u l e were made i n f a v o u r o f c o n c e r n s whose w o r k e r s
were t e m p o r a r i l y u n d e r - e m p l o y e d d u r i n g the i n t r o d u c t i o n o f
p r o c e s s e s d e s i g n e d t o make the c o n c e r n more p r o f i t a b l e .
We
t h i n k p a r t i c u l a r a t t e n t i o n should be drawn t o the p o s i t i o n
in t h e p o r t t r a n s p o r t i n d u s t r y s i n c e , i t i f were now d e c i d e d
t o r e v e r t t o the unemployment i n s u r a n c e p o s i t i o n which
o b t a i n e d between 1 9 3 9 and 1 9 U 8 , an unanswerable c a s e c o u l d
be made f o r a r e v i s i o n o f the Dock Workers ( R e g u l a t i o n o f
Smployment) Act arrangements t o p e r m i t the payment o f b e n e f i t
( o r sums i n l i e u ) t o d i s e n g a g e d d o c k e r s i n r e l i e f o f t h e
p r e s e n t " f a l l back" g u a r a n t e e payments now made out o f t h e
proceeds o f a g e n e r a l l e v y on p o r t t r a n s p o r t e m p l o y e r s .
A
Committee i s at p r e s e n t examining t h e w o r k i n g of t h e s e
arrangements.
Benefit
Historical
d u r i n g s h o r t time
working
and General
7.
Unemployemnt insurance has always c a t e r e d , n o t o n l y f o r the
w h o l l y unemployed s e e k i n g f r e s h employment, h u t f o r those who
are t e m p o r a r i l y under-employed, p r o v i d e d they a r e w i l l i n g t o
work e l s e w h e r e on the days when t h e i r r e g u l a r e m p l o y e r cannot
employ them, and s u b j e c t t o r u l e s which n o r m a l l y p r e v e n t the
payment o f b e n e f i t f o r the f i r s t t h r e e days o f unemployment
( t h e " w a i t i n g d a y s " ) and f o r i s o l a t e d days which do n o t
s a t i s f y the " c o n t i n u i t y
rule.
Down t o 1940 the c o n t i n u i t y
r u l e p r e v e n t e d the payment o f b e n e f i t u n l e s s t h e r e were a t
l e a s t t h r e e days o f unemployment i n any s i x c o n s e c u t i v e days
( e x c l u d i n g Sunday which i s d i s r e g a r d e d f o r a l l p u r p o s e s ) .
The d a i l y r a t e i s o n e - s i x t h o f the w e e k l y r a t e .
Since 1940
o n l y two days o f unemployment i n any s i x have been r e q u i r e d
to e n a b l e b e n e f i t t o b e p a i d f o r them, and w i t h the s p r e a d o f
the f i v e day week i n t h o s e manufacturing i n d u s t r i e s where
short time working i s most o f t e n r e s o r t e d t o , i t has become'
common f o r workers who have l o s t o n l y one d a y ' s work n o t o n l y
to g e t b e n e f i t but t o g e t i t f o r two d a y s , s i n c e Saturday can
then be c l a i m e d as a day o f unemployment.
I n the case o f the
more h i g h l y p a i d workers (and the e a r n i n g s o f some o f t h o s e
r e c e n t l y on s h o r t time have b-een b i g g e r than those o f many
f u l l time w o r k e r s ) the e x c e p t i o n o f unemployment b e n e f i t from
income t a x i s an added a t t r a c t i o n .
1 1
8.
I t was a t one time thought t h a t the g u a r a n t e e d week
agreements which have b e e n w i d e l y adopted i n m a n u f a c t u r i n g
i n d u s t r i e s s i n c e the w a r , would p r e c l u d e the payment o f b e n e f i t
t o Workers c o v e r e d by them on the ground t h a t the g u a r a n t e e
must be r e g a r d e d as a payment b y the employer f o r each day o f
the week.
But where the g u a r a n t e e i s f o r no more than f o u r
days, which i s the commonest f o r m , i t has b e e n found p o s s i b l e
to draw the agreements i n such a way t h a t t h e y do n o t p r e v e n t
claims f o r be.uej.it f o r two days o f the week on which no work
i s done.
9.
The s i t u a t i o n which has r e s u l t e d from the i n t e r a c t i o n o f
t h e s e f a c t o r s - whereby a t a x f r e e b e n e f i t i s p a y a b l e i n
a d d i t i o n t o c o m p a r a t i v e l y h i g h wages earned f o r a s h o r t week ­
is economically i n d e f e n s i b l e .
I n c o n d i t i o n s o f f u l l employment
and s h o r t a g e o f l a b o u r the a v a i l a b i l i t y o f b e n e f i t i n t h e s e
circumstances i s an inducement t o f i r m s which have a c h i e v e d
improvements i n p r o d u c t i v i t y t o hoard l a b o u r b y w o r k i n g s h o r t
t i m e . ' T h i s n u l l i f i e s the b e n e f i t s which the economy as a
whole should d e r i v e from i n d u s t r i a l p r o s p e r i t y b y k e e p i n g up
c o s t s which should be reduced and b y w i t h h o l d i n g much needed
r e l i e f t o the g e n e r a l s c a r c i t y o f l a b o u r .
M o r e o v e r , the
p r e s s u r e f o r m i l d s h o r t time w o r k i n g u s u a l l y comes from the
workers who a r e n o t w o r r i e d b y i t so l o n g as b e n e f i t i s
available.
1 0 . Nor i s the p o s i t i o n s a t i s f a c t o r y from t h e i n s u r a n c e p o i n t
of view.
The . a v a i l a b i l i t y f o r employment o f a w o r k e r who has
l o s t a t most one d a y ' s pay through s h o r t time w o r k i n g must be
suspect b u t cannot u s u a l l y be e f f e c t i v e l y t e s t e d ;
and, u n l e s s
h i s normal wage i s l o w , he can r a r e l y b e o f f e r e d f u l l time
employment e l s e w h e r e which he w i l l not have a c c e p t a b l e
reasons f o r r e f u s i n g .
Nor does i t seem c o n s i s t e n t w i t h the
" t w o - i n - a i x " r u l e o r w i t h the l i m i t a t i o n on b e n e f i t payments t o
unemployed w o r k e r s i n r e c e i p t o f compensation from t h e i r f o r m e r
employers ( s e e paragraph 2 a b o v e ) , t h a t a w o r k e r s h o u l d g e t
b e n e f i t a t a l l , s t i l l l e s s f o r two d a y s , when he has o n l y l o s t
one d a y ' s work and i s e a r n i n g 80 p e r c e n t o f h i s normal wage.
11.
W h i l e the payment of b e n e f i t during r e c e n t s h o r t time
working i n h i g h wage i n d u s t r i e s has a t t r a c t e d a good d e a l
o f p u b l i c c r i t i c i s m , t h e r e would c e r t a i n l y be s t r o n g
r e s i s t a n c e from the t r a d e unions and a l s o f r o m some o f the
employers concerned i f i t were proposed t o a l t e r t o the
d i s a d v a n t a g e o f short t i m e w o r k e r s the c o n d i t i o n s on which
unemployment b e n e f i t can be p a i d .
Because o f d i f f i c u l t i e s
a r i s i n g out o f e a r l i e r s h o r t time w o r k i n g , t h e N a t i o n a l
Insurance A d v i s o r y ' Committee were asked i n 1 9 5 3 t o r e v i e w
the whole q u e s t i o n o f the payment o f b e n e f i t f o r v e r y s h o r t
s p e l l s o f s i c k n e s s or unemployment.
They went i n t o the
q u e s t i o n v e r y f u l l y but were unable t o a r r i v e at any agreed
s o l u t i o n o f the d i f f i c u l t i e s , and t h e i r R e p o r t , w h i l e
f r a n k l y admitting the a n o m a l i e s , a c c o r d i n g l y made no
recommendation f o r changes
The R e p o r t was p u b l i s h e d as a
Command P a p e r i n November, 1 9 5 3 , (Gmd. 9 6 0 9 ) w i t h o u t any
i n d i c a t i o n whether the Government a c c e p t e d the C o m m i t t e e ^
conclusions.
12.
We h a v e , as d i r e c t e d , n e v e r t h e l e s s r e v i e w e d the whole
p o s i t i o n a g a i n i n the l i g h t of the e x p e r i e n c e g a i n e d during
r e c e n t short time w o r k i n g .
We have not l i m i t e d o u r s e l v e s t o
the s u g g e s t i o n s examined i n t h e A d v i s o r y C o m m i t t e e ^ R e p o r t .
Guaranteed Week Agreements
13.
F o l l o w i n g d e c i s i o n s r e c e n t l y g i v e n by t h e N a t i o n a l
Insurance Commissioner, t h e r e i s nothing t o p r e v e n t any
guaranteed week agreements b e i n g r e - w o r d e d , where t h i s
has not a l r e a d y happened, so as t o ensure t h a t where t h e
guarantee i s f o r no more than f o u r d a y s p a y , two d a y ' s
b e n e f i t can be drawn i f f o u r days or l e s s a r e being worked.
A r e g u l a t i o n could p r o b a b l y be framed t o p r e v e n t t h e payment
of b e n e f i t where a g u a r a n t e e d week was i n o p e r a t i o n , but i t
could be r e p r e s e n t e d as an a t t a c k on the g u a r a n t e e d wage
p r i n c i p l e and we doubt w h e t h e r i t would be e f f e c t i v e or ­
f r e e from anomalies i n l i m i t i n g the payment o f b e n e f i t t o
short t i m e workers?
Our doubts a r i s e because t h e agreements
can u s u a l l y be suspended at s h o r t n o t i c e on a v a r i e t y o f
grounds and because i n any f i r m on s h o r t time t h e r e a r e
always some workers not c o v e r e d by the g u a r a n t e e , e , g . because
o f s h o r t s e r v i c e , who would then be f r e e t o c l a i m b e n e f i t
w h i l e e a r n i n g as much as t h o s e p r e v e n t e d from c l a i m i n g
by t h e i r g u a r a n t e e .
!
An E a r n i n g s R u l e
1U.
The R o y a l Commission on Unemployment I n s u r a n c e which
r e p o r t e d i n 1 9 3 2 , recommended t h a t the payment o f b e n e f i t
t o s h o r t time and c a s u a l w o r k e r s should be l i m i t e d by on
e a r n i n g s r u l e which would p r e v e n t b e n e f i t b e i n g paid i n any.
week to any one w i t h c o m p a r a t i v e l y high e a r n i n g s i n t h a t
week, i r r e s p e c t i v e o f the p r o p o r t i o n which t h o s e e a r n i n g s
bore t o the normal wage.
The recommendation was n o t
implemented.
The i d e a behind t h i s approach was, t o l i m i t
payments t o t h o s e whose t o t a l income f r o m e a r n i n g s and
b e n e f i t was such t h a t t h e y c o u l d be said t o be s u f f e r i n g
hardship and who could t h e r e f o r e be presumed t o be w i l l i n g
t o a c c e p t o t h e r more r e g u l a r employment.
An e a r n i n g s r u l e
o f t h i s kind would meet t h o s e c r i t i c s o f t h e payment o f
b e n e f i t during r e c e n t s h o r t time working who c o n s i d e r t h a t
unemployment b e n e f i t should not be paid t o p e o p l e whose ,
e a r n i n g s are high i n r e l a t i o n t o those o f many f u l l t i m e
workers who, through t h e i r c o n t r i b u t i o n s , a r e m e e t i n g t h e
c o s t of the b e n e f i t .
An e a r n i n g s r u l e a l s o has c e r t a i n
a t t r a c t i o n s from the p o i n t o f v i e w o f s e c u r i n g f a i r n e s s , both as between d i f f e r e n t c l a s s e s of c l a i m a n t s and as between c l a i m a n t s and c o n t r i b u t o r s but i t seems open t o t h e following objections ­
(1)
A l t h o u g h , as the R o y a l Commission e x p l a i n e d , an
e a r n i n g s r u l e would be no more than a measure of
employment, which i s o b v i o u s l y r e l e v a n t t o a c l a i m
f o r unemployment b e n e f i t , the p r o p o s a l would d o u b t l e s s
be a t t a c k e d as a means t e s t .
(2)
U n l e s s the r u l e was so s e v e r e as t o e x c l u d e many
c l a i m s which can now be made, t h e r e would be much e x t r a
work f o r Employment Exchanges and f o r e m p l o y e r s i n
a s c e r t a i n i n g t h e c l a i m a n t s e a r n i n g s week by week and
t h e r e might w e l l be d e l a y s i n payment b e n e f i t .
f
(3)
I n s e l e c t i n g a s u i t a b l e base f o r a d j u s t i n g
b e n e f i t t o e a r n i n g s t h e r e would be the same d i f f i c u l t i e s
as now a r i s e i n c o n n e c t i o n w i t h the e a r n i n g s r u l e
for
r e t i r e m e n t p e n s i o n s , from the d i s p a r i t y o f men's and
women's e a r n i n g s .
(k)
As t h e amount o f b e n e f i t would be r e l a t e d t o
t o t a l e a r n i n g s week by week, i t might be d i f f i c u l t t o
r e s i s t c l a i m s f o r s u p p l e m e n t a t i o n o f low w e e k l y
e a r n i n g s where no c l a i m f o r unemployment
b e n e f i t could
succeed under t h e p r e s e n t r u l e s .
(5)
I t might be d i f f i c u l t t o defend an e a r n i n g s r u l e
f o r unemployment b o n e f i t w i t h o u t a d m i t t i n g the v a l i d i t y
o f an e a r n i n g s r u l e f o r s i c k n e s s b e n e f i t , y e t t h i s
would e n c o u n t e r t h e f i e r c e s t o p p o s i t i o n .
Nearly
5 0 p e r c e n t o f new c l a i m s f o r s i c k n e s s b e n e f i t a r e
. made by p e o p l e who are a l s o r e c e i v i n g payments f r o m
t h e i r employers.
Changing the C o n t i n u i t y R u l e
"15.
I t might be p o s s i b l e t o frame a r e g u l a t i o n which would
p r e v e n t the payment o f more t h a n one d a y ' s b e n e f i t t o a
f i v e day week worker who has l o s t o n l y one d a y ' s work, but
t h i s would s t i l l l e a v e s e r i o u s anomalies b e t w e e n the
t r e a t m e n t o f f i v e day and s i x day week w o r k e r s , and between
f i v e day week w o r k e r s who l o s t one d a y ' s work and those who
l o s t more.
The most' s e r i o u s o b j e c t i o n t o such a change i s ,
however, t h a t i t would seem t o e s t a b l i s h t h e p r i n c i p l e t h a t
b e n e f i t should be p a i d g e n e r a l l y f o r s i n g l e days o f
unemployment.
Further, w h i l e i r r i t a t i n g the workers
a f f e c t e d , the change would not s a t i s f y t h o s e who c r i t i c i s e
HM. payment o f b e n e f i t where o n l y one d a y ' s work has been
lost.
16. We c o n s i d e r t h a t i f a change i s t o be made, i t should
go f u r t h e r a n d . s e e k t o i n c r e a s e the p r o p o r t i o n o f 0 normal
w e e k ' s work which must be l o s t b e f o r e any b e n e f i t can be paid
and thereby g e t t o a p o s i t i o n i n which the s h o r t time worker
can only q u a l i f y f o r b e n e f i t i n c i r c u m s t a n c e s where i t can
r e a s o n a b l y bs supposed t h a t i f the s h o r t time continued f o r l o n g , he would be p r e p a r e d t o move t o f u l l time employment elsewhere.
Any d i m i n u t i o n o f e x i s t i n g b e n e f i t r i g h t s would of c o u r s e be opposed but the e f f e c t o f c r i t i c i s m would be weakened i f the new r u l e could be defended ­
( a )
as no more than the development o f the p r i n c i p l e s
o f the p r e s e n t r u l e t o meet changing i n d u s t r i a l
conditions;
( b )
as b e i n g i n l i n e w i t h the e s t a b l i s h e d r u l e which
r e g u l a t e s t h e payment o f b e n e f i t w i t h compensation
from a p r e v i o u s e m p l o y e r , e x p l a i n e d i n paragraph 2.
A New P r o p o s a l
17*
The b e s t p r o p o s a l we a r e a b l e t o make i s t h a t Saturday
should i n f u t u r e be t r e a t e d f o r b e n e f i t purposes g e n e r a l l y i n
the same way as Sunday now i s , t h a t i s excluded from r e c k o n i n g
altogether,,
B e n e f i t would then be p a y a b l e f o r the f i v e
remaining days o f t h e week a t o n e - f i f t h o f t h e w e e k l y r a t e ,
s u b j e c t t o the c o n t i n u i t y r u l e which would be a l t e r e d i n
c o n f o r m i t y w i t h t h e new s i t u a t i o n t o s e c u r e t h a t b e n e f i t was
not paid u n l e s s t h e r e were two or more days o f unemployment
i n any f i v e days ( e x c l u d i n g Saturday and S u n d a y ) .
L e g i s l a t i o n would be n e c e s s a r y .
We understand t h a t the
N a t i o n a l I n s u r a n c e A d v i s o r y Committee l o o k e d a t , but did
not pursue, t h i s p o s s i b i l i t y because they t h o u g h t t h e
Government would not wish t o appear t o be e n d o r s i n g the
f i v e day week f o r g e n e r a l a d o p t i o n ;
t h e ' f a c t t h a t the
C i v i l S e r v i c e i s now t o be put on a f i v e day b a s i s would
seem t o have weakened the f o r c e o f such an o b j e c t i o n .
"18. The r u l e put f o r w a r d would e f f e c t i v e l y e x c l u d e from
b e n e f i t a l l s h o r t time workers now e n t i t l e d t o pay from
t h e i r employers f o r f o u r working d a y s , t h e r e b y s u b s t a n t i a l l y
removing the u n f a i r n e s s e s as between f i v e day and s i x day
week workers and t h o s e a r i s i n g from g u a r a n t e e d wage a g r e e ­
m e n t s , t o which t h e A d v i s o r y Committee drew a t t e n t i o n i n .
t h e i r Report,
An i n c i d e n t a l advantage would be t o r e l i e v e
p r e s s u r e on Employment Exchanges, and, i f the r u l e a l s o
a p p l i e d to s i c k n e s s b e n e f i t , on N a t i o n a l I n s u r a n c e o f f i c e s
and on g e n e r a l p r a c t i t i o n e r s on S a t u r d a y s .
Even f o r the
s i x day a week w o r k e r , i n a b i l i t y t o work on h i s Saturday
h a l f - d a y could h a r d l y nowadays be r e g a r d e d as a m a t t e r
r e q u i r i n g compensation from t h e N a t i o n a l I n s u r a n c e Fund.
APPENDIX
S u p p l e m e n t a t i o n of Unemployment
Benefit
E x t r a c t from t h e N . I . A . C . Report on the d r a f t Unemployment and
S i c k n e s s B e n e f i t R e g u l a t i o n s , 1948*
"Our a t t e n t i o n was drawn "by the M i n i s t r y of N a t i o n a l Insurance t o the o m i s s i o n from t h e s e r e g u l a t i o n s of any p r o v i s i o n s i m i l a r t o t h a t c o n t a i n e d i n the A p p r o v a l of Arrangements R e g u l a t i o n s , 19I+O, made under s e c t i o n 2 o f the Unemployment I n s u r a n c e A c t , 1939, e n a b l i n g arrangements t o he made, s u b j e c t to the a p p r o v a l of the M i n i s t e r , f o r the supplementation by employers of unemployment b e n e f i t d u r i n g p e r i o d s when a w o r k e r ' s employment i s suspended or t e r m i n a t e d . There i s no p r o v i s i o n i n the N a t i o n a l I n s u r a n c e A c t , 1946, c o r r e s p o n d i n g to s e c t i o n 2 o f the Unemployment Insurance A c t , 1939* b u t t h e r e . i s power under s e c t i o n 1 1 ( 3 ) o f the 1946 A c t to make r e g u l a t i o n s d e f i n i n g what can or cannot be t r e a t e d as a day o f unemployment which could be used t o a c h i e v e a s i m i l a r effect. A number of f i r m s o r i n d u s t r i e s e s p e c i a l l y concerned i n
t h i s q u e s t i o n , e i t h e r b e c a u s e they had such arrangements i n
f o r c e , or because they were s e e k i n g or known t o be s e e k i n g
approval of such a r r a n g e m e n t s , were informed by the M i n i s t r y
of t h i s o m i s s i o n from the r e g u l a t i o n s and of t h e i r r i g h t t o
make r e p r e s e n t a t i o n s t o us on the q u e s t i o n .
As a r e s u l t a l l
those so n o t i f i e d d i d make r e p r e s e n t a t i o n s to us u r g i n g , i n
every c a s e , t h a t p r o v i s i o n should be made e n a b l i n g approved
arrangements o f the same kind t o b e made i n t h e new scheme o f
national insurance.
Almost the whole o f the o r a l e v i d e n c e
which we r e c e i v e d on t h e p r o v i s i o n s o f t h e s e r e g u l a t i o n s was
d i r e c t e d to s u p p o r t i n g t h i s r e q u e s t .
The c o n d i t i o n s under which i n accordance w i t h the A p p r o v a l
of Arrangements R e g u l a t i o n s , 1940, such arrangements may at
p r e s e n t be a p p r o v e d a r e : ­
( a )
t h e w o r k e r s must be f r e e t o a c c e p t a l t e r n a t i v e
employment, and the employer must n o t be i n a p o s i t i o n
t o r e q u i r e t h e workers t o resume employment w i t h him
u n l e s s t h e y are unemployed at t h e t i m e of the o f f e r ;
( b )
t h e payments p l u s b e n e f i t r e c e i v a b l e must n o t , e x c e p t
f o r 13 weeks i n the y e a r , e x c e e d t h r e e q u a r t e r s o f
the normal wage;
and
( c )
t h e c o n d i t i o n s o f the M i n i s t e r ' s a p p r o v a l must be
n o t i f i e d t o the workers i n a way approved by the
Minister.
The c o n d i t i o n t h a t the worker must b e f r e e t o a c c e p t
a l t e r n a t i v e employment h a s , i n t h e arrangements made, u s u a l l y
been imposed i n t h e form t h a t supplementary payments are made
only so l o n g as the worker r e g i s t e r s ' a t the Employment
Exchange, i s a v a i l a b l e f o r work, and does n o t u n r e a s o n a b l y
r e f u s e an o f f e r o f s u i t a b l e employment.
...
The main r e a s o n s advanced by t h e M i n i s t r y f o r t h e o m i s s i o n
from t h e s e r e g u l a t i o n s o f a n y . p r o v i s i o n e n a b l i n g arrangements
f o r t h e s u p p l e m e n t a t i o n of unemployment b e n e f i t by e m p l o y e r s
to be approved by t h e M i n i s t e r w e r e , b r i e f l y , t h a t t h e
c o n t i n u a t i o n and p o s s i b l y e x t e n s i o n o f such arrangements would
both d e t r a c t from m o b i l i t y and the f u l l use o f l a b o u r and would
weaken c o l l e c t i v e n e g o t i a t i o n of g u a r a n t e e d wage agreements
d e s i g n e d to e n s u r e p r o p e r wages w h i l e employment l a s t s .
The p r i n c i p a l arguments advanced i n f a v o u r o f t h e s e
arrangements b e i n g p e r m i t t e d w e r e , put e q u a l l y b r i e f l y , t h a t
far, from d e t r a c t i n g from the f u l l use o f l a b o u r the c o n d i t i o n
that supplementation was p a y a b l e o n l y so l o n g as an employee
made h i m s e l f a v a i l a b l e f o r and d i d not u n r e a s o n a b l y r e f u s e o t h e r
work secured t h a t s u r p l u s l a b o u r was f r e e l y a v a i l a b l e f o r o t h e r
work and, on the M i n i s t r y ' s second p o i n t , t h a t the supplementary
payments made under.-these arrangements gave a g r e a t e r measure
o f s e c u r i t y than was p r o v i d e d under g u a r a n t e e d week agreements.
I n one case at l e a s t , t h e arrangements had been made i n
a d d i t i o n t o a g u a r a n t e e d week agreement.
We r e c o g n i s e t h a t i n making arrangements of t h i s kind t h e s e
i n d u s t r i e s and f i r m s were i n d e e d p r o g r e s s i v e i n p r o v i d i n g a
measure of s e c u r i t y f o r t h e i r e m p l o y e e s , p a r t i c u l a r l y i n t h o s e
c a s e s where the arrangements were made at t i m e s when unemploy­
ment was much more w i d e s p r e a d than i t i s t o - d a y and s h o r t - t i m e
working was more common. We have f e l t c o n s i d e r a b l e sympathy
w i t h the d e s i r e o f b o t h the e m p l o y e r s and employees concerned
t o secure t h a t t h e s e arrangements a r e c o n t i n u e d .
We doubt whether the f a c t t h a t c e r t a i n i n d u s t r i e s or f i r m s
pay sums t o former employees d u r i n g p e r i o d of unemployment does
g r e a t l y a f f e c t the a v a i l a b i l i t y o f t h e s e e m p l o y e e s f o r
a l t e r n a t i v e employment during s h o r t p e r i o d s of unemployment.
We think t h a t i n t h e main w o r k e r s , e s p e c i a l l y workers w i t h some
s p e c i a l s k i l l , w i l l always tend to l o o k f o r work i n t h e i r usual
o c c u p a t i o n and w h i l e unemployed t o w a i t f o r re-employment i n
t h a t o c c u p a t i o n r a t h e r than seek new employment.
T h i s we t h i n k
w i l l c e r t a i n l y be the c a s e where a p e r i o d o f unemployment i s
s h o r t , perhaps n o t more than a few d a y s , and where a worker
i s aware t h a t h i s unemployment i s due t o some temporary c a u s e ,
f o r example, weather c o n d i t i o n s or s h o r t a g e of s u p p l i e s .
So f a r as concerns s h o r t - t i m e working of t h i s k i n d , we
t h e r e f o r e do n o t t h i n k t h a t approved arrangements w i l l d e t r a c t
from m o b i l i t y of l a b o u r t o any m a t e r i a l e x t e n t .
T h e r e can be
no doubt, h o w e v e r , t h a t t h e r e has been a g e n e r a l improvement
o f c o n d i t i o n s of employment throughout i n d u s t r y .
Employers
i n some i n d u s t r i e s , e i t h e r by s t a t u t e or by agreement, are now
under an o b l i g a t i o n t o g u a r a n t e e a w e e k ' s employment and a
minimum wage t o a l l employees r e t a i n e d on t h e i r b o o k s .
Not o n l y
does t h i s a c t as a discouragement t o i n d u s t r i e s and t o employers
t o r e t a i n more workers than n e c e s s a r y but i t has the e f f e c t
t h a t these employers meet the whole c o s t o f o r d i n a r y s h o r t - t i m e
working a r i s i n g from temporary i n d u s t r i a l c o n d i t i o n s .
It is
t h e r e f o r e i n our v i e w wrong t h a t the I n s u r a n c e Fund should be
u s e d , by means of t h e a p p r o v e d arrangements which we are
d i s c u s s i n g , t o s u b s i d i s e s h o r t - t i m e working i n o t h e r f i r m s
where t h e . g u a r a n t e e d week i n one form or a n o t h e r i s n o t i n
o p e r a t i o n e i t h e r by agreement or as a r e s u l t o f l e g i s l a t i o n .
Further the f a c t t h a t t h e c o s t of s h o r t - t i m e working i s not
met w h o l l y by the employer where approved arrangements are i n
o p e r a t i o n may to some e x t e n t r e s u l t i n d i s g u i s i n g u n d e r ­
employment i n t h e s e i n d u s t r i e s or f i r m s .
We c o n s i d e r now the o p e r a t i o n o f t h e s e arrangements d u r i n g
unemployment o f a more enduring n a t u r e .
We r e c o g n i s e t h a t
where a worker i s c l e a r l y redundant i n h i s i n d u s t r y or f i r m ,
i t i s during h i s i n i t i a l p e r i o d of unemployment t h a t t h e r e i s
the b e s t chance o f p l a c i n g him i n o t h e r employment.
I f however .
during t h i s p e r i o d a worker r e c e i v e s payments from h i s f o r m e r
employer which c o n t i n u e o n l y w h i l e h e . i s unemployed, t h i s
must, we t h i n k , l e a d him t o hope and to w a i t f o r re-employment
i n t h a t o c c u p a t i o n and reduce h i s i n c e n t i v e t o seek and a c c e p t
a l t e r n a t i v e employment.
I n t h i s way we f e e l t h a t t h e s e
arrangements f o r s u p p l e m e n t a t i o n o f unemployment b e n e f i t must,
t o some e x t e n t , o p e r a t e a g a i n s t the f u l l use o f l a b o u r .
In
view of the c o u n t r y ' s g r e a t need f o r the f u l l e s t p o s s i b l e use
of labour we a r e t h e r e f o r e u n a b l e t o support t h e c a s e f o r
supplementation by employers of unemployment b e n e f i t d u r i n g
p r o l o n g e d p e r i o d s o f unemployment."
s