The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
CONFIDENTIAL. . -.. July 25, 19iji| BRITAIN'S POSTJAR EMPLOYMENT POLICY Some-Details of the Yftiite Paper•"Employment Policy" made available by the B r i t i s h Information Service I - A NBff APPRO/. CH The Background. The British r 7hite Paper on "Employment Policy", published on May 27, i s , in a sense, the most important of the lengthy series of postwar plans which the B r i t i s h Government have, put forward. Those plans already cover a wide f i e l d . Education, health, social security, building, monetary questions.and many other matters have been considered, end some of the plans suggested have already been t r a n s l a t e d into Acts of Parliament. But basic t o a l l i s the problem of full employment. The new; White Ptper contains the Government's o f f i c i a l proposals to ensure that kt no stage ,in the future—not oven during the d i f f i c u l t t r a n s i t i o n a l period r.fter the wor-*will unompl'oymont be allowed t o dovolop on anything approaching a serious scale. I f t h i s can be achieved, Britain w i l l have found the solution t o the disastrous booms and slumps which plagued the intor-war years, and which playod an obvious part in bringing about the international conditions which led t o the war. In addition, the prevention of unemployment w i l l moan t h a t Britain w i l l bo free t o put into offeet hor far-reaching plans for soc ial bettorment. I t i s i n t e r e s t i n g t o note that tho Government have put forward t h e i r employment plan boforo issuing t h e i r detailed proposals for social security. Tftion the Boveridgo proposals for social security were published in November 19U2, thoy wore basod on three- "assumptions"( one of which was "full employment", the other two being a comprehensive medical service, and children 1 s allowrncos. The Government announced immediately that they accepted the three "assumptions", and stressed, abovo a l l , the importance of achieving f u l l employment. This has boon tho guiding principle of the GovernmentTs planning since thr.t timo. As Lord 'Tcclton, Minister of Reconstruction, said en December 8, 19U3: "^r° must put f i r s t things f i r s t . . . . F u l l employment i s the foundation of social s e c u r i t y . " Effects in tho I n t e r a c t i o n a l Field. I t i s important, t o o , t o soo how tho Government's proposals aro intimatelv connected with dovolppwontij in tho i n t e r n a t i o n a l f i e l d . Britain has always boon a groat imparting country, ""/hen tho war i s over, she must maintain, and, indcod, increase her imports. To pay for those, she must greatly dovolop hor experts, 0specially since she has depleted herself during the war of the groator part of hor foreign invostmonts, and of tho incooo which used t o flow frcfi those invo'stnonfcf • The noro British export industries :,re developed, the norc will Britain bo able to purchase geoda iVon abroad. To put this in another -.-ay, full cnployr.or.t in Britain without boons or slunps, f.nd.based tc a considerable degree on expert industries, T:*ill norm that other countrios will bo able • to rely on r. steadily ittcroc.sing nr.rkct in Britain, which will 'help then, too, to keep full enploynont. - 2 - British Postwar The expansion of' world trr.do is one- of the ba-si'c principles of tho Atlantic Charter. I t will necessitate the creation of. improved financial machinery to ensure the reasonably stable international financial conditions on which expending world trade depends. Increasing Consumption. Finally, Britain's plan for full employment is based,on tho principle—entirely now as an official government pclicy--that a slurip should bo tackled not by "cuts" in expenditure or by remedial "punppriming", but by making sure, in advance, that consumer expenditure can be maintained. Various detailed measures are proposed in the vfliitc prvpoi" on these lines. The guiding principle of all of them is that prosperity and social progress will come not by allowing blind "economic" forces to work thcr.solvos out in booms rnd slumps, with inevitable hardships, restrictions on production, rnd unemployment, but by maintaining the productive machine at. full blest, and raising-tho standard of living of the r/holc world. - }•• Short and Long;-Term Problems. • The White Frpcr is hy no T.ioans confined to general principles. I t considers the immediate problems arising from the war. Not only are there the vast problems of the reconversion of industry, and tho changes in tho location and occupation of lrbor, but there is the timing question. If, as seems likely, Germany in defeated before Japan, there will be changes in the distribution of manpower and economic resources while tho war s t i l l continues. Control's will obviously have to continue during t h i s unsettled and unpredictable period; but in addition, oven after the defeat of Japan, i t y/ill s t i l l be imperative for the Government to make certain that tho most urgently required"civilian goods are being produced, that there is no inflationary rise in prices, and' that reconversion and roabsorption of lrbor are proceeding on the. linos, that will be healthiest for tho longor-tcrri policies of the country. On long-term matters, too, tho TThitc Paper Is specific. I t analyzes the respective parts that Government and private enterprise must . play. I t accepts tho responsibility, for the Government-, cif influencing capital expenditure at the right time, not only by public authorities, but also b\.r private enterprise. I t maintains that the Government must play a central role (through i t s financial policy) in maintaining the volume- of consumption expenditure. I t assorts that the Government must examine and correct any restrictive industrial policies which are against tho public interest. Above a l l , i t proposes that the Government should greatly develop the statistical research on which successful pi ruining must be based. • . Confidential - 3 " Erit i sh Pc stvar Inoreased Efficiency is the Key. Yet though the Government is given a central role, emphasis is laid on the fact that "er.iployr.tcnt cannot be erected by en Act of Parlia"It would bo a disaster" sayc the T/hite Paper "if the intention of the Government to maintain total expenditure was interpreted as exonerating tho citizen fron the duty of fending for himself, end resulted in the weakening of personal e n t e r p r i s e . . . . I t is with industry that the responsibility must rest for making the nest of their opportunities to recover their export market* end find fresh outlets." Tho Government will thus create the conditions for prosperity. Industry itself must bo "resilient rnd flexible" enough to take full advantage of these conditions. Britain's increased standard of living must cone ultimately from incroasod efficiency, inventiveness and product i v i t y . In t h i s , all olenents of tho coimaunity nust combine. Research and tochnicr.1 education r.re to bo greatly dovolopod. Labor must be mobile, and must oooperrto in all retraining and resettlement that tho now conditions will dona rid. Tho dopc-.idor.ee of rroo.s en single industries, must give way to a variety thr.t will allov/ for changes to. be absorbed without shock. In all those nrttors, Britain 1 s production record during tho war points the rood to her future development. On April 25, the Chancellor of the Exchequer said: "Looking back over the industrial history of tho war years, I believe that the most important fact that stands out is the inventive boldness end enterprise of our industrialists, scientists and technicians, and tho adaptibility of cur \vorkpooplc." Mr. Lyttoltcn, Minister of Production, underlined this point in a speech on May 19, when he revealed that though imports of raw -arterials in 1>U3 wore hO% less then in 193$> pnd so much of normal manpower was absorbed in tho fighting forces, total industrial production in this year was U0% higher than in 193^* This has all been achieved (in contrast to Germany1 s recn.iriiont success) by free democratic process, Britain 1 s task is riovr to show that the sci.ie dom.ocrr.tic process, hard wprk t.nd inventiveness vhich produced tho goods for.wcr ccz± produce the goods for peace. "Full employment" is the keynote. This does not mean thrt unonployrient will totally disrppoc.r, but t h r t a high level of employment must be maintained, practical account being taken of frictional and structural unonple-ymont in the process of adjusting British production in a changing v,rorld economy. Confidential British Postwar •'.BITE PAP2R Controls in the Transitional Period. • " ' " • •• The numbers involved in the chengo-over from v/artino t o peacetime production nay be in the region of 7*000,000. Thoro v/ill bo a vast trcaisfcrnation in the donand for the products of labor, end t h i s switch cf deriand w i l l not bo immediately notched by a corresponding switch of supply. Labor w i l l not bo irr.icdir.tcly available in the right areas. There w i l l be a shortage of key workers, of rax; n r . t e r i a l s , and of equipno nt . As t r e s u l t , there i s P, danger thr.t patches of uncnplcynont night develop whore the i n d u s t r i a l system failed t o adapt i t s e l f quickly enough to peacetime production. The donand Slight outrun the supply, and create an i n f l a t i o n - r y r i s e in p r i c e s . Civilian production night conoont r a t e on the wrong things fron the point cf view of national needs. Controls vri.ll therefore have t o be nai lit allied during t h i s period t o onsuro t h a t labor r.nd capacity no longer needed for ^ a r prcduct i c n arc used for the production of c i v i l i a n goods of high p r i o r i t y , plans are already being worked cut for the orderly release of promises, labor and n a t c r i a l sc ae t o keep local or temporary unenploynent t o rn ab sc lut o i.iininun. Rationing and a nor.suro of price control will have to be continued for sone t i n e . The Gcvornneiit w i l l continue t h e i r present subsidy policy to prevent r i s e s in t h e cost of l i v i n g . Saving fcaist bo continued and during t h i s period sone control will bo necessary to regulrto the flow and d i r e c t i o n of capital investment. For urgent roconstruction needs, noney will be r.ade avaiiablo at low i n t e r e s t r a t e s . Even at t h i s early ctage, Govornmont action vri 11 havo t o tc.kc into account sono of the long-torn nocd? cf tho country. ; Measures w i l l bo taken to chock the dovelcpncnt of lccalizod onplcynont in p a r t i c u l r r i n d u s t r i e s ond areas. Roconvorsicn and nov/ dcvelopnonts vdll be plrnned t c unsure the d i v e r s i t y of industry. Training will be prcvidod t o f i t workers from declining i n d u s t r i e s for jobs in expanding i n d u s t r i e s . L ong - To ri.r•' Nee d s. B r i t r i n 1 c exports---cn 7/liich hor future prosp.ority .dc^onds-.T ..:•..;.cannot exc/and v.dth,.:ut prosperity abroad. This i s p a r t i c u l a r l y true of •'•' • the exports of nanufactured go.ds .)f high quality, ivhich w i l l fern tho grorter p a r t of the t o t a l . As a basic part of E r i t a i n ' s plan, therefore, tho Gcvorrment are anxious to cccporate actively tfith ether net ion 8 in the t r a n s i t i o n poriod to r e e s t a b l i s h general C5t»onoiaic s t a b i l i t y , rnd in the longer torn for the pro-.rossivo expansion of t r a d e . Confidential British Postwar . . "The a ins of this intornrt.ionc.l-. cooperrtion" says tho Whito • : Papor, "are to promote- a boneficinl exchange c ^ gOcSfi and • : services between rations, tg ensure, rcr.scnr.bly stable rates of exchange, and fct chock swings in, world connodity trices . . which alternrtivoly inflr.to and destroy tho incomes of - • primary producers of foodstuffs and raw materials* I t will also bo necessary to arrange that countries which arc faced v;ith temporary difficulties in their balance cf paynonts shall bo able to trJco cxcoptionc.i rieasuros to regulate ri. thoir ir.iports by calling on, other nations as good neighbors to ccno to thoir help so that thoir difficulties will bo cased without recourse to measures which would poraa-noiitly arrost the flow of international trado." If the ri^ht conditions for world trade expansion can bo. . • established, the British expert 'industries v;ill play an integral part net only in naintaininr full enployr.iont : t liorio, but in helping to develop full e:;iploynor.t in other countries, and in raising the y;orldstandards of living. The British export industries have thoroforo a •;. groat responsibility to inpreve their efficiency md flexibility. Thoy will be ^rrcm hic*h priority in the allocation of rev; nr.terials, labor and factory space. At tho seme tine, tho long-torn pirns for roconstruction at hone and tho changinc, neods of the hone market m i l also demand a highly flexible approach, end. an onphasis on officiont production. Avoiding Boons rnd Slunps. The Govorrmont will play an active part in Coaling vrith tho factors which h-ve led in the past to cyclical unonploynont. The prcblor.is are: (1) To prevent tho total expenditure on goods end sorvicos frora falling to tho lovol vrhcro general unouployi.ient (2) To koop the level of vmgos end pricos relatively stable; (3) To ensure sufficient nobility of vrorkors botv/eon occupations and localitios. On the first point, tho Government will tako action at the earliest r^oseiblo r.ionent, when r. slump is thrortonod, to naintain capital cxpondituro. Tho possibility of influoncing private capital expenditure by varying interest and taxation r&toe r..rill bo kept in riow. Confidential - 6 - British In addition, ; capital.expenditure by public authorities will be used deliberately as a means of correcting cyclical changes. In the past, there sraj a tendency for capital expenditure by-public authorities to follow the same trend as private capital expenditure, thus accentuating the peaks and depressions of the trade cycle. The new policy' wi 11 be to increase public ihve stment'when private investments-are beginning to fall off at the onset of a depression.' Moreover, instead of public investment following the depression as e remedial measure, i t is proposed that all public authorities should havo immediately reedy d five-year plan for capital, expenditure, so thr.t programs can be put into operation if possible in advance, and certainly with no delay. At the some time, tho White Paper puts forward an original plan for maintaining consumption expenditure. I t i s suggested thc.t the compulsory social security contributions which employers and workers will moke, and which will bo quito considerable in size, -will be vr.ried in sympathy with the state of employment. If unemployment seems to threaten above a certain level, these contributions would bo allowed to fr.ll, thus releasing purchasing power, maintaining the demand for goods, end helping to restore employment. This plan would not bo" put into operation until after the abnormal conditions of tho immediate : postwar years. The .maintenance of the stability cf prices rnd wages arc hold by thoTCh.ito Paper to be vital to the success of the employment policy. I t involves a joint effort by the Government, employers and organized labor to ensure thc.t if the cost-of-living is kept stable, there is no rise in the real costs of production or distribution, which would bo an i n i t i a l step in tho inflationary process. With regard tc lrbor, tho VJhito Paper says: "The workers must examine their trc.de practices end customs to ensure that they do not constitute a serious impediment to an oxprasionist economy, so defecting the object o£ tho full employment program." On the employers' side, srys the TYhite Paper, efforts should be mode to seek R larger output, rather thai, higher prices, cs a reward of enterprise and good management* "There has been in recent years c. growing tendency towards combines, towards agroomonts both national and international, by which manufacturers have sought to control prices and output, end to divide markets and fix conditions of snlc t Such agreements or combines do not necessarily operate against the public interest, but the power to do so is Confidential - 7 - British Postwar there. The Government will therefore sock tho power to inform them solves of the extent end offoot cf restrictive agreements and of tho activities of combines; and to toko appropriate action to check practices which may bring advantages to sectional producing interests but work to the detriment of the country as p. wholo." For the Government to bo able to play their full part in stabilizing prices, assisting oapital expenditure and maintaining social security, the annual budgets will havo to be flexible in character. A rigid policy cf balancing the budget each year rogardloss of the state of trade will not be pursued: but no departure from tho principles that the budget must be balanced over a longer period is envisaged. The correctives that a flexible financial policy will introduce will make this possible. The Statistical nid Organizational Framework. A wide program of this kind, in which it will be essential to analyze economic trends with tho greatest sDoed and c.ccuracy, will involve the establishment of a central economic staff supplied with tho fullest information. The figures needed will include; (1) statistics of employment and unemployment based on tho returns of employers; (2) regular information on savings and projected capital expenditure, both public and private; (3) an annual census of production shewing the structure cf tho main groups cf industries, and including the quantity and value of output, stocks and work in progress; (i|) monthly figures of production, consumption, stocks and, if possible, orders in hand,; and (5) regular estimates of foreign capital movements and the balances of foreign payments. A start has alroady been made in this direction by the annual publication, since 19^2» of the "Budget T7hito Paper11, analyzing national income and expenditure, end the sources of war finance. It is now proposed that this type of information be greatly expanded, and supplemented, too, by menpowor r~nd. capital ''budgets", to "secure for the nation, the most effective use of both its manpower cud its material The Final Objective. : 'Thc Government believe" says the ",'hite Paper, "that oneo the war has boon won, we can noko a fresh approach, with better chances of success than evor before, to tho task of maintaining a high end stable level of employment without sacrificing the essential liberties of a free society....(They) seek to achieve both work for all and a progressive increase in the economic- efficiency cf the nation...." Confidential
@FedFRASER