Unemployment
The grand illusion
Gerald Frost
No crystal ball is required to predict that one Friday morning fairly soon — the official unemployment figures being published by tradition on Thursday at noon — newspaper headlines will scream, 'Jobless top one million'. It will not be an easy week for Mr Healey. The pressure on him — to reflate the economy — from trade unions and the left wing members of his party will indeed be considerable. If, as one hopes, he withstands it, it will doubtless be at the expense of further fratricide in the Labour ranks. Moreover, the pressure will be renewed with the publication of every successive month's figures for as long as unemployment continues to rise. So it is clear that Mr Healey needs all the help he can get, if his policies are to have any effect in curbing inflation.
Accordingly, I offer him the following advice: taking the first suitable opportunity, Mr Healey should announce: "Look, there's been a terrible mistake. Ever since we started collating the unemployment figures in their present form we have been estimating unemployment on an unsound basis. As a result of this error in our book-keeping unemployment has been persistently exaggerated. There are nothing like 1,000,000 unemployed, Although all global figures for unemployment are misleading there are probably less than 600,000 (under 3 per cent). And although this is serious enough, the proportion of unemployed is much lower than most other Western countries".
As it happens, Mr Healey would be telling the truth (not that he should be discouraged by this). Of course he need not put the matter in the naive and rsimplistic form used above. Rather, he might argue, using a wealth of details and logic, all provided from inpeccable official sources, that the present unemployment total includes considerable numbers of people who simply aren't unemployed in the ordinary sense of the word, or w,ho pre between jobs.
Better still he could set up an independent
committee which given a degree of objectivity would be bound to come to the above conclusion. The figures and the manner of their presentation in the monthly press release could then be revised on the basis of the committee's report — and the huge cross currently being borne by the Chancellor would be lifted overnight.
Just in case the Chancellor believes that all this is no more than a pipe dream, he should take a close look at last week's published figures.
The total UK unemployed (including school leavers and adult students) is given as 853,000. But this figure includes 50,000 occupational pensioners between the ages of 60-64 who have had more than enough work in their lifetimes and register quite legitimately in order to obtain national insurance credits. The figure also includes a large number of people who for various reasons are simply unable to hold down regular full-time work. They include those whom the Department of Employment describes as the socially disadvantaged", and those with emotional or psychological problems. A figure of 150,000 for such people would probably be a fairly conservative estimate for the present time. The point to remember is that none of these people can be helped by attempting to boost consumer demand. This may give a few of them work for a very short period, but they will be robbed of their new-found employment when the next cruel turn of the economic cycle results in a dropping off of labour demand. If these people can be helped it is by recognising that they are deserving of special treatment designed to give them the kind of work for which they are suitable.
Then there are the people who are 'in between jobs' — in the language of the economist, the frictionally unemployed. Even in a period of comparatively full employment the numbers of such people will be significant since a growing economy requires a high degree of labour mobility. The best method of assessing their numbers is to take the number of people who have been on the register for less than four weeks. This month there were 182,800. If one adds this number to the numbers of occupational pensioners and those unable to hold down regular jobs one gets a total of 412,400. Reason and common sense suggest that these people should not be included in the total and if they are deducted one sees that the revised May figure is considerably less than half a million — compared to the bloated official total of best part of one million. Such a revision surely affords a better indicator to the current level of labour demand than does the official treatment of the statistics. Mr Wilson has already said that any such revision would amount to "an insult to the unemployed". It is surely a much greater insult to lump a man who is willing and able to work and desperate to get it in the same category as a university student who signs on for a couple of weeks in order to boost his holiday funds or a man on occupational pension whose working days are over.
The reply to those who argue against rational examination of the official figures is that it is not intended to play down the impact of unemployment — either to the individual or the community. On the contrary unemployment, being a serious economic and social problem, deserves a more accurate measure than is presently provided. Clearly Mr Benn and Mr Foot would not concur with all this and might threaten to resign if Mr Healey demanded a review of the figures. But if Mr Healey was successful, an addition of two to the UK total unemployed might subtract from, rather than add to, the sum total of misery in the land.
.Gerald Frost is engaged on research work at the Centre for Policy Studies
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