Pay for Unemployed

Sun (Auckland), Volume III, Issue 762, 7 September 1929, Page 8

Pay for Unemployed

Cost of Job-Insurance Scheme

POLITICIANS and economists are not prepared to say, without careful study, whether or not a system ot unemployment insurance could be -worked in New Zealanc with ultimate success. . ...... Apart from the fundamental difficulties of establishing an actuarially sound basis of operation, this Dominion possesses economic peculiarities which distinguish it elearty from Great Britain so far as pay for the unemployed is concerned.

Because there has so far been no scientific endeavpur to deal fundamentally with the problem of unemployment in New Zealand, any attempt to introduce a system of insurance for people out of work is beset by difficulties at the outset, and the absence of complete statistical data over a long series of trade cycles minimises the chances of early success. Moreover, the proposal of the Minister of Justice. Mr. Wilford, to found the New Zealand scheme upon the experience of Great Britain is likely to be easier propounded than executed, for economists who have investigated the position thoroughly do not overlook the economic, social and industrial distinctions between New Zealand and the Old Country when calculating the bases of contribution and of benefit. England has learned a costly lesson by its unemployment insurance experiments. The legislation was first applied modestly in certain trades in 1911, and later was widened in its scope, until in 1920 it assumed national proportions. At the time when its ramifications were extended to almost every industry. Great Britain was on the eve of a slump of unusual severity, and the result was that, while 10.000.000 new workers were swept into the scheme, the contributions from the 4.000,000 who previously belonged provided insufficient reserve to meet the increased demands upon it. The coal strike of 1921 aggravated the stress of the fund, and thus the machinery which had been designed merely to prepare the worker for a rainy day thus became an avenue for the relief of pauperism. The original scheme of 1911 provided for a weekly allowance of 7s with no dependants’ benefits, and was limited to one week’s payment for every six contributions. The revised scheme following a report by a special committee under the chairmanship of Lord Blanesburgh—commonly referred to as “The Blanesburgh Report”— enables anyone who can show 30 contributions to his credit within the past two years to draw benefit as a legal right for two years (provided he is genuinely seeking work). The result of this, according to the London Chamber of Commerce, is that such a man, if he is married and with three children, could draw fully

£lO9 in respect o£ contributions which -would cost him only 17s 6d. As an illustration o£ how the question of -weekly contribution has been attempted in England, the following scale covering workers aged IS years and under 21 years, in the revised Act, is quoted here: — Males. Females. Worker's share .. .. 6d 5d Employer’s share .. 7d bd State’s share old rid Benefits (rising annually) , if no dependants 10s to 14s Ss to 1-s The principle of unemployment insurance as a corrective when other measures fail to eliminate economic distress is almost universally approved, but the difficulty is to fix a weekly contribution which, over a period of good, bad and average years, will provide sufficient money for benefits when there is a big labour surplus. The scheme, then, should be instituted in a time of prosperity, so that a reserve fund for benefits is accumulated before the trade cycle indicates a slump. The income and outgoings over a cycle of trade must balance: But, as Dr. E. P. Neale, secretary of the Auckland Chamber of Commerce, puts it, the less highly industrialised condition of New Zealand would probably mean that a lower proportion of the population is capable of being brought satisfactorily under the system, as it is difficult to include intellectual, seasonal and casual workers in a scheme pretending to national scope. Again, the fairly large number of arrivals from abroad would make a great many of the New Zealand workers ineligible for benefits through non-compliance with the residential qualifications which would become essential. These are but two of the wider disadvantages of a scheme of unemployment insurance for New Zealand, as distinct from that of the Old Country. Offset against them are the equally wide benefits of maintaining the worker’s moral and physical stamina, and the pressing problem of keeping the wolf from the door, when work is hard to find, while the compulsory contribution system gives practical recognition of the partial responsibility of the worker, the employer and the State in banishing the evil of unemployment. L.J.C.