UNEMPLOYMENT INSURANCE

Dominion, Volume 21, Issue 260, 3 August 1928, Page 15

UNEMPLOYMENT INSURANCE

4 WHAT HAS BEEN DONE IN GREAT BRITAIN PAST HISTORY AND PRESENT POSITION » A New Zealander who daring visits to the Old Country has taken an interest In workers’ insurance schemes suggests that there is a good deal of- ignorance in New Zealand concerning unemployment insurance and contributes the following on the past history and present position of unemployment insurance in England, Wale?, Scotland and Northern Ireland:— Together with the National Health Insurance Act, Mr. Lloyd George introduced in 1911, as an experiment, an Unemployment Insurance Act, applying only to a few; industries (shipbuilding, building, etc.) which had then been most subject to prosperity variations. The Act insured about 21 million workmen. Air. George based his calculations largely on. the experience of certain British trade unions, which had for a number of years been allowing their members unemployment benefits. The fund was financed by small weekly contributions by workmen and employers in those trades, plus a State contribution. The unemployment benefit was correspondingly small. (7s. per week for 15 weeks in each year) and was merely a supplement to savings. Up to 1914 the fund showed a surplus. During the abnormal waif period and thereafter, when gratuities and repatriation payments were being made, unemployment was not in evidence. In 1916 the Act was extended to munition industries, etc., and in 19.J.9 the benefit was raised to Ils. per week to both men and women. In 1911 the actuary assumed 8 per cent, of unemployment among the total then insured. Up to 1914 only 4 per cent, were unemployed, and at Armistice date • under 1 per cent. By. 1920 the fund had a surplus of over 21 million pounds, and the success of the experiment induced the Government to extend the Act to everyone earning under £250 per annum, excepting a few classes, which were considered then to be in no danger of unemployment, viz., agricultural labourers, private domestic servants, and most railway men. These classes excluded four million workers, leaving nearly 12 million workers under the Act. The scale of benefits was also raised. Soon after the Act of 1920 came into force the post-war slump began. Instead of 8 per cent, of unemployment, as provided for, from 1921 to 1924 there was an average of over 11 per cent. Several new Acts were passed and contributions were raised all round in an endeavour to keep the fund financial. The larger part of the fund has all along been contributed by employers and workers, from 1911 to July, 1926, £202,775,000; and by the State, £70,454,000 in the same period of fifteen years. In one year, 1925-26. employers and workers' contributed £33,867,000 and the State £13,000,000. The cost of administration of such a huge scheme is, of course, large, viz., about 10 per cent, of total contributions,_ i.e., over four millions per annum, which is paid out of the fund. • . In spite of unemployment having been round about 10 per cent, (i.e., a million or more unemployed), by April, 1926, the fund only showed a deficit of seven millions, a small sum relatively to total contributions. Then came the general strike and coal strike*- Workers on strike have no claim on the fund, but the dislocation of trade caused much increased unemployment, and by December, 1926, the fund had a deficit of 21 million pounds. From 1920 onwards several unemploy-ment-Acts have been passed to meet unlocked for and altered conditions, increased cost of living, etc. In 1911 the total weekly contribution for each man, from'employer, worker, and the State, was only 16 2-3 d. In 1926 it was Is. 9d„ and the 1926 benefit was 18s. per week for a man, plus ss. per week for a wife, and 2s. for each dependent child. „ , The benefit is called the “standard benefit,” and was paid after six days out of work for a period of 15 weeks in any one year, provided that a certain number of weekly payments had been made during the time the worker had been employed. “Standard benefits’’ are also provided for women workers, and for youths and girl workers, on lower scales. Workers entitled to these benefits, not as charity, but as a right, they and their employers having provided two-thirds of the fund.Owing to increasing pressure of unemployment over long periods, the Minister was authorised to relax the above “standard’ conditions, and the-15 weeks’ period was ultimately extended without any limit of time, with certain safeguards. Thus “extended benefits” came into force, and it is estimated that about onehalf of the unemployed workers have been paid benefits for more than 15 weeks in ope year, in varying degrees. The fund has stood these “extended benefits” fairly well, and the deficit of 1926. is gradually being paid off. The misnomer “dole” can thus hardly be applied even to these extra payments. In November. 1925. a committee was appointed by the Government to investigate the scheme and to report. The chairman was Lord Blancsbnrgh (of the Court of Appeal and Privy Council), and 12 other members, including Miss'Bondfield, M.P., Viscountess Milner, and Mr. Frank Hodges. Employers and statisticians also acted. The inquiry lasted over a year, and in 1927 the committee presented an unanimous report in favour of continuance of the scheme. . The committee advised that certain reductions should be made in benefits .to workers under 21 years of ago, certain alterations in “stan-. dard benefits.” and that the “extended benefits” should cease. ■. ■

It would take up too much space to give full details. lint the unanimous conclusion was. that the risk of genuine unemployment must, lie insured, and that the.fund must lie worked on a sound basis, without deficits and with moderate contributions.

The actuaries consulted assumed an average', of 700,000 unemployed workers, as trade.was.slowly improving. The number has not yet. gone below a million, and the Government has thus not yet been able- to carry out all the proposals, though some wtre given’effect to last session. The'committeefound that the tripartite contributions should continue, and no employer asked to be relieved of his share. The worker’s contribution justifies him in feeling he purchases his beiielils, even although the employer and the State make a larger benefit, possible. ‘'lndirectly, employers and the State benefit, if they help to preserve the well-being and self? respect of workers.”. The committee strongly urges that although the sc’mmm. must assist, genuine unemployment, it must never degenerate into a so-called "dole” or a pension fund, and that, whatever else can be. said, the fund lias so. far, substantially paid its way. ■

■ The purpose of the scheme is to provide an insurance against unemployment, with certain limitations, not to provide an out-of-work donation—an important distinction, for it stipulates that a beneficiary must, be both willing and able to work, and that he is not out. of work from choice. Further, the benefits are a good deal less than the workers’ rate of wage, ami the benefits are not. big enough to tempt workers to be improvident when getting good wages. The Act of 1920 gave power to industries. in which there was little or no unemployment to "contract out” of the general scheme. Such industries had to set up self-contained schemes of their own. without State contribution, -Only insurance and banking (about 120,000 people “contracted out,” and no further contracting out was allowed. Since 1920, unemployment has appeared in industries then immune, and almost all sections now oppose '‘contracting out.” It is held Hint the insurance should be spread over all, so as to equalise the burden, and that a national

scheme is based on the independence of all industries. ■

The above notes may be of interest in considering the present position in New Zealand. It may be, that under very different conditions, with a small population, and Avith possibilities of dcvclopinenl, a more complete and timely organisation could promptly meet seasonal, or other unemployment, by offering useful and productive Avork. In any event, it is clear that, before any reliable actuarial basis of insurance can be arrived at in any country, complete statistics of employment and unemployment in each industry, also of unemployed, able and willing to work, and of the total-number of Avorkers earning under the annual wage limit decided on, must be got. In New Zealand, many questions Avould arise out of such an investigation, for instance that of -industries without, and not likely to experience unemployment, of concerns having provident funds, of Government and public body employees, etcThe employers and workers in industries, already depressed, mirht find contributions a hardship, although such workers would be the biggest charge on the fund. No insurance fund can pay out (plus interest on any surplus, and less expense of administration) more Ilian is paid in. Contributions must mean a tax on employers. workers, and the Slate, enough lo provide not much more than bare sustemitiee. but yet a tax justified to help men and women, out of work, through no fault of their own. Probably the wages for two day’s honest work 'would bo more than the payment from a week’s unemployment benefit, and would certainly yield more moral satisfaction to the vast majority of New Zealand workers.”