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UNEMPLOYMENT: ITS CAUSES AND THEIRREMEDIES.

B Y J. C. M . EA SON , B.A.[Read before the Society on Thursday, 11th February, 1926.]

Is unemployment inevitable? If so, are there any remedieswhich will mitigate its evil effect?These are the questions which are on the lips of those whoare compelled to face one of the most vital of the many prob-lems with which civilisation has to grapple.The problem is not a new one; men have been found at alltimes and in all countries standing idle in the market placebecause there was no one to hire them. It is not a symptomassociated with any particular form of society, industry oreconomic development. Co untries which are wide apa rt asregards their fiscal policies or their industrial conditions sufferalike from this problemcountries which have been recentlyopened up for development and old countries with establishedcivilisations are confronted with unemploymentthough nodoubt in many varying degrees of intensity.The factor which has made it particularly urgent andpressing in these days is the world-wide dislocation of trade,the inevitable sequence of the European war.Within the area of the ,Saorstat we have had an additionalcause in the shape of civil disturbance during 1920-1923, which,in so far as it led to a further dislocation of trade and a re-moval of spending power, has superimposed many complica-tions upon what in any event was bound to prove a sufficientlytroublesome matter.The presence of an exceptionally large number of unem-ployed makes it urge nt. W he the r the figure be taken at 30,000or 60,000, and some say it is even higher than that, matterslittle; it is still most serious.


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By /. C. M. Eason, B.A. 231Changes in method of travelling or traction, now seen in thecompetition between motors and the railways, lead to thecessation of the demand for one class of labour and thecreation of a demand for another type; (b) to cause such de-mand to be of an irregular character, although that irregularitymay be quite constant. U nde r the heading of irregu larity mustbe put all seasonal demands, and those changes which takeplace in connection with trade booms, etc., movements whichmay be spread over quite a long period, but which at the sametime manifest certain clear regularity.

SUBJECTIVE CAUSES.From the standpoint of the worker these are all objectivecauses, but he is open to the influence of what may be calledsubjective causes in the shape of ill-health, accidents arisingfrom his occupation, his family circumstances, his defectsof character and ability, all of which must be carefullyconsidered and given their proper importance when reviewingthe general problem.

REMEDIAL MEASURES.For each of these phases of unemployment appropriateremedial measures have had to be designed. T o meet a situa-tion which has arisen from some cause affecting industryas a whole and not a particular trade special action on a largescale by the Government authorities and public bodies becomesnecessary . It is no t possible to go into the de tails as to the

various kinds of relief work which can be set up, or the extentto which public works of a useful character can be postponeduntil they are necessary, or hastened forward earlier than wouldotherwise be w arran ted. In practice the tendency has been tospend money on public works when business is good and re-strict expenditure when it is badthe reverse of what shouldtake place. This method of dealing with unem ployment is notnew ; in fact, it is the oldest of all methods. U nde r ce rtaincircumstances it is the only one available. Su ch schemes be-come harmful, not helpful, if they withdraw from industry thefunds required to extend and develop it or if they retain in theiremployment labour which is required elsewhere.Both tendencies are inevitable. (1) The na tura l desire tohave som ething done to relieve distress calls for action byGovernment, and the money is provided by the taxpayertheemployer who should be extending his business activities. (2)The natural reluctance of the worker to leave a job and sur-render himself to the chances of the labour market to obtain a


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232 Unem ployment: Its Causes and their Remedies.new one, even though it be a change from, temporary to per-manent wo rk, must be reckoned with. Above all the schemesmust take into consideration the type of labour disemployed.T o provide labouring, work fo r a skilled craftsm an is to waste,many years of careful training.The purely modern remedy for unemployment, which, itmay be remarked, is really a remedy for its consequences ratherthan for the evil itself, is State Insurance, on a contributorybasis, covering all indu stry. Its wide scope ensures a measureof stability which could not be attained by any scheme re-stricted in its application. Its co ntribu tory basis establishes afeeling of independence and self-respect. It is of course acharge on industry, ,but experience will prove, and indeed Ithink has already indicated, that in the long run it relieves in-dustry from a burden which it would otherwise have to carryin some more costly form.As a means of dealing with cyclical or seasonal unemploy-mentnormal unemploymentit has established itself per-manently in all countries where it has been tried.The labour exchanges which operate the scheme shouldalso in theory play a really useful part in overcoming the mal-adjustm ent arising from w ant of fluidity in labour. In practicethey fail largely because of fixity of habits, personal ties, hous-ing difficulties, etc., which prevent the free movement of theworker.There is, further, the unemployment which arises fromvariations in the type of labour demanded. Th e remedy hereis not easy to discover. M odern progress m akes new calls uponthe individua l's capacity. The response is determined by hiseducation, character and training, by Trade Union rules, withtheir narrow and unyielding lines of demarcation of work, andby a number of extraneous conditions.The consideration of these hardly comes under the scopeof our paper this evening; they are of a very general character,but with the pres'ent-day rapid developments in new and un-expected directions they deserve consideration,

Following the order of causes detailed above, we come tothose which affect the individual and not the industry.Insu ranc e again comes to our assistance. H ealth andaccident schemes specially designed to tide over periodsof life, when earnings cannot be maintained, merely awaitfurther useful development. There may be some differences ofopinion as to the comprehensiveness of such schemes and thearea within which the exigencies of economic circumstances,would allow them to function usefully, but I think there is no


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By J. C. M . E ason, B.A. 233alternative to them as methods of meeting that portion of un-employment which arises from individual circumstances andnot from those of the industry.While, however, it is true that from one point of view theindividual circumstances can be isolated in this way and con-sidered apart from the objective side of unemployment, thereal crux arises from the fact that in the last resort one isdealing with a multitude of different individuals, and not acollection of puppets who can be moved from place to placeor used from time to time regardless of their personalities.

Whether you are dealing with unemployment by reliefwork or by insurance, the effect upon the individual determinesw heth er the scheme is sound or not. If a large num ber of in-dividuals are affected by some definite and widespread generaldepression over a prolonged period it becomes increasingly diffi-cult to give employment relief without at the same time under-mining the very qualities which it is vital should be maintained.A man who at the beginning of the period could have taken uphis work after a short interval of unemployment is found aftera period of months to be a different man from every point ofview. H is efficiency has been im pa ired; he has lost certa inaptitudes, or at least they are not preserved at the same pitchof perfection as when he left off work. The very work offeredmay be unsuitable for him and injure his peculiar skill. T helonger he is at such work the less inclination he may show toretu rn and look for a new job. Th ese effects cannot be reducedto statistics, and yet they are most important factors to be con-sidered when arranging for relief.

The man who is unemployed from purely seasonal andtemporary causes is in "a stronge r position. H e has probably al-ready reckoned with this factor as part of his normal life; itseffect upon his character is therefore largely discounted, andprovided a scheme is in force which will tide him over theintervening period he will resume with a minimum of loss.Even under the most favourable circumstances the per-centage of the unemployed in any particular trade or occupa-

tion will not fall to zero. The re will remain a reserve of atleast 2\ per cent, to 5 per cent, if one is to judge by what tookplace in the past. - The character of this reserve is worth con-sideration. W he n restriction in trade takes place and an em-ployer has to consider whose services he has to dispense withhe will select those who are least productivehe must do soif his business is to survive; those who are least productive,are those who are deficient in education, training and generalcharacter; the man who has been an irregular timekeeper, who


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234 Unemployment: Its Ccmses and their Remedies.perhaps has absented himself without reason, whose work hasbeen deficient, is the first to go. These "ins and outs" of the in-dustrial world create the real problem of Unemployment Insur-ance, because these are the very men who are least able to with-stand periods of unemployment, physically, mentally andfinancially. Remuneration during a period of unemploymentmust not exceed the average rate of earnings, otherwise therewould be an inducem ent to the individual to be more frequentlyunemployed. Th ese men's average is low. Th erefo re thestandard weekly payment is low.

It has been suggested that some distinction could be drawnas regards unemployment insurance payments which would pro -vide a higher weekly sum for the superior skilled man who ismom entarily displaced. One answ er to tha t suggestion is thatsuch a man will himself, by reason of his own superior habits ofthrift and prudence, put himself in a better position to stand thestress of unemployment than those others of whom we arespeaking. No matter what our sympathies might dictate, ourreason will insist that individuals must be brought to realise thatthey are, to a certain extent, masters of the ir own fate. Anyother course would be demoralising, and in fact I think anyonewith experience of workers as a whole would maintain that suchis their view. The re is a strong spirit of independence. But themost distressing phenomenon of unemployment in recent yearshas been the extraordinarily large number of men unable to getwork, of none of whom could it be said that they were in theslightest degree incompetent or unworthy of being retained.They have been unemployed for long periods, and insurancewhich normally might be expected in their case to tide overthe interval having failed completely, supplementary action hasbecome necessary . This is the justification for the " do le."PREVENTIVE MEASURES.

These are the principal remedial measures which help tocure unemploym ent when it has arisen. A re there any positivesteps wh ich could be taken to preven t it? H ere one finds adifficulty which is in no sense new.Unemployment arises from an imperfection in the relationof supply to demand. In the last reso rt unemployment canbe attributed to ignorance : that is to say, it is to be assumedthat the manufacturer who makes or the farmer who producesmore than is required at a price which will yield him a profitwould have refrained from making so much if he could haveknown that he could not effect sales. B ut of course in additionto want of that knowledge, which in many cases would have


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By J. C. M. Eason, B.A. 235prevented certain plans of manufacture being carried out on ascale larger than was necessary, the re are difficulties wh icharise on the speculative side of human nature.Certain ideas must be put to the test before it is known orcan be proved what they are worth. Th e speculative ch aracterof even the simplest operation of buying and selling is not ap-preciated fully. Success, except in some few exceptional andoutstanding instances, is achieved as the result of a multitude ofwise decisions by many people. Fa ilure , which leads to unem -ployment, is the result of foolish or wrong decisions. Periodsof boom and depression are the result of mental processes ap-plied to financial problems and dependent on moods of opti-mism and pessimism.It is generally accepted that a larger diffusion of informa-tion in the form of statistics and a greater co-ordination ofstatistics would prev ent these. T ha t hope has been often ex -pressed. In the early 19th cen tury C arlyle wrote : " Bubbleperiods with their panics and commercial crises will again be-come infrequent, and steady modest industry will take the placeof gambling specu lation." The hope was vain. It may bequestioned whether the wider dissemination of facts regardingindustry, the effect of weather on crops, etc., and the better col-lection and reproduction of statistics have done anything morethan keep pace with the more complicated processes now neces-sary to carry on our industries^ which have made the adjust-m ents more difficult to accom plish. W e m ust conclude tha tthe difficulties w e are faced w ith large ly arise from funda-mental defects in human character and intelligence rather thanfrom the structure of industry itself.There are other influences., however, which tend to createunemployment, the effect of which upon the industry of thecountry is of vital importance. The instability of Governments,by which I do not mean a simple change of control from oneparty to another, but fundamental changes such as have beentaking place all over Europe, including this country, during re-cent years , discourage the building up of indu stries wh ichwould provide the necessary employment.

Again, high taxation, local and national, is a serious factor,because it withdraws from investment in industry funds which,,while they lie in the hands of the individual, must tend to comeinto use, become rem unerative , and yield some return. Ifwealth is not being accumulated by those who have been in thehabit of saving, enterprise will not be given its main stimulus,and little development will take place.A sound policy as regards wages is also of very great im-


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236 Unemploym ent: Its C auses and their Rem edies.portance . The narro w er the margin of profit, the less the in-ducement for enterp rise. In the Statist of January 9th a re-ference is made to a study of unemployment in Great Britainby a Professor Rueff, of the University of Pa ris : " An extra-ordinarily close correspondence between changes in the levelof real wages and changes in unemployment is shown. W he nprices fall more rapidly than money wages unemployment in-creases. W he n money wages tend to fall relatively to pricemovement the unemployment curve shows a correspondingfall."

The conclusion that follows is the necessity for a morerapid adjustm ent than now takes place. T ha t depends ohforces in industry which are difficult to measure and to con-trol and which require a very detailed examination for whichthere is now no time. If it involves labour disputes it tends tostill greater uncertainty and loss of trade.In considering the attitude of Labour towards unemploy-ment, it may be remarked that a more important matter eventhan the wages policy is its attitude as regards demar-cation in the unions and the various regulative devices whichit insists upon in order to protect itself from influenceswhich it conceives to be against its inte rests . Some of these inthe long run achieve their object and overcome opposition, butin the meantime much damage may be caused. When allworkers contribute no narrow view should be taken by anysection which would tend to aggravate unemployment. Th eacceptance of a mutual basis of contribution creates a recipro-cal obligation to make the burd en as light as possible. W e a renot in any case concerned with the matter to-day beyond notingthat if such regulative devices are applied in an unwise mannera state of mind may be created which is harmful to enterpriseand development.We now pass from this analysis of causes and remedies toconsider what lessons it has for us in regard to unemploymentas it presents itself to-day. H ow m any are unemployed ? W hoare they ? In a m atter wh ich requires a know ledge of the in-dividuals and their occupations we can obtain little informa-tion, and such facts as are available require adjustment, calcu-lation and qualification before they can be used.At the same time certain points do stand out clearly.Firstly, there is a general diminution in the demand for labouraffecting all indu stry. Th e external cause is bad trad e in Eng -land affecting our productive activities. Th e interna l causesare dislocation of normal business resulting from civil war andthe removal of a large population from our midst who kept thedistributive agencies busily employed supplying their wants.


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By J. C. M . Eason, B.A. 237Moreover, the effect of two successive bad harvests has

been to reduce the purchasing power of those who remain.To meet the situation so created the Government has sub-sidised the unemployment fund by upwards of 1,250,000.Money has been voted for relief works which will not merelyhelp the immediate needs of the moments but ultimately tendto increase the productive capacity of the country.The main hopes for improvement lie in the greater poli-tical stability, which will tend to security and confidence on thepart of investors; and the improved condition of English tradeleading to an increased demand, which gives the farmer hisopportunity for capturing the market.Such unemployment as is due to seasonal and fluctuatingdemand of a normal character cannot be measured, for figuresare not published showing how many are unemployed and inwhat trade s they are occupied. So far as it exists it m ustbe met by insurance schemes, and we note that enqu iry isproceeding at the moment as regards Health and Workmen'sCompensation Schemes with a view to their greater efficiency.

The success with which industry will overcome the diffi-culties created by the every varying demands of the public de-pends on the ente rprise of those conducting its businesses,whether manufacturing or distributing, and the adaptability ofihe available labour. Both depend to a very large degree oneducationcommercial, economic, technical, agricultural, andgeneral. These are problems which affect a m anu facturingcoun try in the highest degree. In the Saorstat the m anufac-turing piocesses are concerned with the more universal per-manent wants of society, and so we largely escape, but notentirely, and the past history of our industries suggest, I think,that we have suffered from adhering too long to old processesin the face of a clearly changing demand.On the distributing side of our business activities we findpeople who have money are spending it in new ways, and aredemanding new servicesthe cinema, the dancing hall, motor-ing, etc. The direct effect of this is obvious. The indirect effect,that is to say, the ultimate effect on employment in the countrycreated by the wider diffusion of spending power and its dif-ferent use, is less easy to trace, and deserves a special enquiry.The old-fashioned economists maintained that " a demand forcommodities is not a demand for labour/7 tha t " an individualincreases the capital of a country not by spending his wealthon his own enjoyment but by devoting it to reproductive em-ploym ent." Th is has a bearing on the problem, but it cannot bemore than referred to in this paper.


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238 Unem ployment: Its Causes and their Remedies.W ha t are we to say in conclusion? O ur two questions

have been partially answered, with much imperfection I fearand in too brief a m ann er. Some unemployment is inevitable.There are remedies, but each phase of unemployment must bemet by appropriate measures.The potentialities to create employment are he re. But hewas a wise man who said ; " If there is to be a millenium manmust make it." M ay we not adopt the saying and w rite : Ifthe Saorstat is to be prosperous its citizens alone can make it so.The springs which feed the fountain of national prosperityand well-being He in the minds and hearts of the individual. Tothe extent that they are tainted the product will be impure.Government action cannot precede individual knowledgeand understand ing of the problem. Reason, not passio n; argu-ment, not force; generosity, not selfishness; national interest,not class prejudice, must prevail if we are to solve the mostcomplicated and the most fundamental of all industrialproblems.

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