Unemployment

Slowly does it

David Howell

Unemployment 1975 style is plainly not the financial hardship it was. But if there are oddities in our social security and P.A.Y.E. system overdue for reform, let no one kid himself that losing one's job and hunting hopelessly for another has thereby become in some superior way 'acceptable'. It is nothing of the kind. It is still a loathesome business. The first rumours on the shop floor or in the office corridor, the sinking feeling as the morning wears on, the worry and panic waiting for your envelope — the mortgage? the car? the H.P.? the holiday plan? What will happen to these now?

No one who knows anything of that experience, no one who has talked with bewildered and humiliated teenagers who have looked and looked and can find nothing, could accept for one moment that more of all this should be the intentional aim of policy under any government.

Not that this will stop politicians accusing their opponents of 'wanting' more unemployment. While we have Messrs. Wilson and Healey, we will have that level of argument. But in the meanwhile the problem must be tackled intelligently. And a reasonable precondition for that is surely that we should know what the problem is. For some months now. Sir Keith Joseph's Centre for Policy Studies has been publishing corrected versions of the official unemployment statistics showing how many within the total are hunting for work and cannot find it.

This was greeted from the start with the Pavlovian reaction that the Centre was trying to belittle the issue. It has always seemed to me that it does the opposite. Whether the precise figure for long-term jobless is nearer 600,000 or 700,000 is not, I think, crucial to the argument. The analyses done by the Centre, and by other bodies now as well, bring the real issue into focus. They thus greatly improve our chances of selecting the right instruments to help the situation. To tell the genuine work-seeker, as he grows desperate, that he is part of a larger problem which will have to await larger solutions strikes me as the ultimate in callous inanity.

So, when that point sinks home, as it may now be beginning to do, what are the right instruments for unemployment in slumpflation? General reflation of consumer demand is dearly out, as Mr. Healey has perceived. It is out for the obvious reason that it would send inflation rocketing on upwards and our creditors' confidence through the floor. But it is also out for a less obvious reason — which is that, in an economy with 26 per cent inflation, even a major reflationary boost would probably have no expansionary effect. There is thus nothing the Chancellor could do in that line, even if he wanted to give way to the vociferous pressures all around him.

The reason for this is not so much the inflation rate itself as the paralysing uncertainty the current appalling levels generate. Those who say that it is not inflation but the ,

ending of inflation Which causes unemployment are theoretically correct. But in practice once we get to these rate's it is the expectation, the knowledge that whattsv\.\er happens there

can be no stability ahead, no means of assessing whether the economy will blow up or sag inwards, which freezes new plans, cuts investment and destroys jobs.

Once the business community gets into that state of mind, as it is now, it could take years for it to change back. The worst thing Denis Healey did for his country and its working people was to allow that attitude to become deeply rooted last year. The decision to cut VAT to 8 per cent and to let public expenditure roar through into 1975 killed Britain's chances of recovery at the same rate as our continental neighbours. There will be more desperate people looking for work this winter than there need have been, and more next winter as well. These are the people who will be able to turn to their families and say "We are the Healey unemployed".

In due course the revival in world demand will come. I do not agree with those purists who fear the effects of any reflation even if it is export-led. Certainly it is right that if the Chancellor reflates at home, the boost from export demand, over which he has no control, will come on top of that anyway, pushing us into hyper-inflation and disaster. But I see much less danger if we can wait and let export-led reflation do its work and bring back some jobs. Of course there will need to be the most careful handling of the home economy at the same time. The basis for this will need to be the understanding that we cannot just ride out of the slump and back to overfull employment but that we are in an entirely new employment situation. The main feature of this new situation, and the CPS analysis helps us to grasp it more clearly, will be a persisting large number of genuine, work-seeking unemployed over and above the traditional hardcore and those changing jobs, whose problems cannot be blasted aside by orthodox demand reflation' (indeed they would be made worse) and who will not be sucked into export industries because firms will have more than enough manpower to meet the export boom, and indeed will probably be looking for the opportunity to shed some more.

This is the real long-term unemployment we now face, to which all energies should be turned and policies directed. Its size — and we may be talking about something not much lower than the present levels — will be a reflection of the warped and antique structure of the British labour market. It will be a product of the bizarre and persisting trade union restrictions on work and output, of the divisive council house system which destroys labour mobility, of the extent to which unions use their power to put higher money wages before expanded job opportunities, of years of neglect in training and re-training Britain's working people to prepare them for great adaptability and new skills.

Against this background all measures designed as temporary, anti-cyclical alleviation — until 'things pick up' — will not only be pinpricks; they will be aimed at the wrong problem. The temporary employment subsidy proposal, even if it was economically attractive to employers, which is doubtful, has been brought forward in totally the wrong context. The idea of using the resource 'cost' of keeping a man on the dole in a more constructive way is sound enough. But that most emphatically does not mean keeping him in an overmanned plant on the grounds that when the recession is over we can all drift back to the luxury of overmanning and low productivity.

Those times have gone. The world will support them no longer. It is into re-training that the resources must go — both retraining of individuals and of integrated work teams capable of being slotted in, still as teams, to new plants when they start up. Britain has much to learn from Ulster, surprisingly, about new industrial training techniques. For two years I shared the responsibility there for one of the most advanced and imaginative training and re-training programmes in Europe, carried out on a scale which makes our efforts, viewed in proportion, look puny.

If we stick to this path, if we establish sane housing policies, if labour restrictions can be softened or bought out, if industrial relations can become less bitter, if ownership and growing wealth can be spread dramatically among working people (and, of course if we avoid reflating into currency collapse in the meantime) then in due time the unemployment of the .seventies will respond to treatment. Profitable new plants will arise and new services develop which will siphon off the re-trained manpower, both from the unemployed and the overmanned sectors. The products they offer will be those the world wants and not the ones Lord Ryder, Mr Varley, Mr Benn and Jack Jones think are going to be needed. If there is one certainty in all this it is that these choices these men make would be well-intentioned but wrong.

It will all take a long, long time. It will require a steadiness of nerve of which there has been sadly little sign amongst our political leaders, or their advisers, or the commentators, or the voters. But it can be done. By the late 'seventies we can reach high employment goals again, based this time not on make-believe and foreign loans but on profitable and competitive enterprise.