Still The Sick Man Of Europe

Press, Volume CX, Issue 32396, 8 September 1970, Page 12

Still The Sick Man Of Europe

There are more than 600,000 unemployed in Britain, yet prices and wages continue to rise faster than industrial production. Recently the National Institute for Social and Economic Planning issued a warning that a further devaluation of sterling might be needed if other remedial measures did not revive the British economy. The Conservative Party won the election in June on a platform of “ Action, not “ Words ”, and many of the party’s supporters are impatiently waiting for the action to begin. The 600.000 unemployed 2.6 per cent of the labour force represent a post-war record. Interpretations of this figure differ widely. “Better “ unemployment benefits and other improved social “ security provisions for the unemployed seem, “although it is not yet absolutely proved, to have “ at least made people willing to spend a little longer “ looking for new jobs and perhaps even more “ willing to accept redundancy in the first place ”, said “ The Times ” in a leading article. “ The growth

“of indiscriminate State hand-outs has made it “ easier, for those who so wish, and particularly " those with large families, to survive indefinitely “ without having to get a job ”, according to the “ Daffy Telegraph ”. The “ Guardian ” had a different analysis:

The first fact is that the unemployment figures do not . . . overstate the real problem: they understate it There is evidence that a number of working wives, who do not qualify for benefit have given up registering as unemployed because they have lost hope of a job. Practically the whole increase in registered unemployment in the last four years has.been among men . . Not only this, but the unemployed find it harder to get jobs. In 1963 when unemployment was being treated as a national disaster, 56 per cent of the unemployed had been out of work for more than two months. Now, when Whitehall tries to pretend that there isn’t really a problem, that total has risen to 59 per cent—and more than half this number have been out of work for more than six months. It is important for the British Government to discover which of the two schools of thought is correct —the “Daily Telegraph” and “The Times” theory of voluntary idleness or the “ Guardian ” theory of involuntary unemployment If surveys of unemployed workers supported the former theory, reductions of unemployment benefits might encourage idle workers to get back to work sooner; if the surveys substantiated the theory put forward by the “ Guardian ” the remedy would be more difficult to find. It would probably need to be a combination of retraining and relocation of workers, and subsidising and relocating industry. For whatever the cause of this persistent unemployment, its effect is a significant loss of industrial production and export potential.

Divided on the causes of unemployment in Britain, the Government’s critics are united on the effects of recent and current pay claims by numerous sections of workers in the State and private sectors: they are too inflationary, and this Government must take a firmer line than its predecessor. “The Government’s test will come with the miners’ claim “ for increases of up to 33 per cent, or £6 a week, “ and the railwaymen’s for 25 per cent ”, said the “ Economist “ The Government must be prepared “ to go to the limit in facing strikes to bring these “ claims down to an acceptable size ”.

The National Institute’s warning of the possibility of a further devaluation sent the £ down to its lowest value this year on foreign exchange markets. Clearly the Government cannot delay much longer the remedial measures demanded by the precarious state of the British economy.