The New Labour government has committed itself to a policy of creating full employment.  Is such a policy achievable?

Jacqueline Priddle

Unemployment patterns since 1930s

There is much public concern with mass unemployment, and with good reason.  Throughout most of the inter-war period, especially the 1930’s, unemployment was the central economic problem.  At the depth of the slump in 1932/3 over 3 million were out of work in Britain.  Even these figures do not tell the whole story since their were many living on reduced incomes as a result of under-employment.  (Aldcroft: 1984)

The re-emergence of unemployment as a major issue in recent years has been even more traumatic since it has followed a period of full employment during the 1960s.  From the late 1960s, unemployment started to gradually drift upwards and by the early 1980s, unemployment was on average 3 to 4 times greater than in the mid 1960s, with the UK recording a double figure rate by 1981.  At this point, unemployment showed little sign of improvement.  According to Aldcroft, a breakdown in employment trends by sector gave some indication as to where jobs were being lost.  Employment in industry and manufacturing reached a peak in the middle of 1960 and since then it has declined almost continuously.  Over 4 million jobs were lost by the mid 80s (3/4 of them coming from manufacturing) and a decline in employment opportunities throughout the 1970s only increased the statistics.

Overview of Labour Market in the 1990s

Unemployment peaked in 1993 following the trough of the recession in 1992 but saw a gradual fall from 1994.  See table 1.

Source:  Labour Force Survey, Office for National Statistics: 1996

The latest statistics (Labour Market Update - Nov. 1997) show continuing growth in the labour market at an historically high level.  The strong growth in employment continues to draw people previously economically inactive into the jobs market so ILO (International Labour Organisation) unemployment continues to fall by much less than the claimant count.

*  Note: The measurement of unemployment has been a subject of debate for some time.  In the UK, there are two different measurements which are generally used: the claimant count and one based on the International Labour Organisation (ILO) definition.  The claimant count of unemployed is produced monthly using administration records of people claiming unemployment  related benefits.  This means that information can be obtained quickly and can be valuable for providing figures for small areas. Advantages of the ILO definition is that it is internationally comparable and is integrated with  Labour Force Survey (LFS) measures of employment and economic activity (Social Trends 27: 1997).

Latest data indicates that employment has been rising by about 20-40,000 a month and unemployment falling by about 15-30,000 a month with earnings remaining  steady at 4.5%.  Septembers (97) claimant count showed levels were lowest since 1990.  The number of new claimants in the UK fell by 27,000 in September 1997 to 1.4 million.
With a steady fall in unemployment recently can the New Labour government build up their ‘work ethic’ and aim for full employment?  Beveridge described‘full employment’as: 

“Full employment does not mean literally no employment; that is to say, it  does not mean that every man and women in the country who is fit and free for work is employed productively on every day of his or her life”      (Beveridge 1944: Page 18)
Beveridge said that employment is sometimes defined as:
 “a state of affairs in which the number of unfilled vacancies is not appreciably  below the number of unemployed persons, so that unemployment at any time is  due to the normal lag between a person losing one job and finding another.” 
Beveridge goes on to say there will be seasons when particular forms of work are impossible or difficult to obtain as well as changes in demand for labour.  Full employment means that
“unemployment is reduced to short intervals of standing by, with the certainty that very soon one will be wanted in ones old job again or will be wanted in a new job that is within one’s powers”. 
One could agree with this statement (made in 1944) however, many would argue that governments have not been able to provide ‘full employment’ to an individual when required.  If we were to examine current economic activity within the labour force, we can see the rate for all people in Great Britain aged 16 and over from summer 1997 stood at 63.0 per cent ( a rise of 0.2 % since summer 1996) - Labour Market Trends: 1997.
It is vital that the government’s employment policies take into account projected figures of economically active people.  Table 2 shows projected figures of economically active people who form the labour force.  We can see a gradual increase for women which is one of the most fundamental changes in the British labour market this century, particularly the extent to which they have taken up part-time work.

Source:  Census and Labour Force Survey - Social Trends 1997.

In 1971, women made up 38% of the labour force compared with 44% in 1996.  In 2006, women are projected to make up 45% of the total labour force.  With Harriet Harman’s recent recommendations on single mothers benefit cuts, this is another attempt by the government to cut back on benefit payments and encourage single mothers back into the labour market.  Although men are still more likely than women to be economically active, the gap has closed in the last 25 years.  The labour force in 2006 will be older on average than in 1996; the projected rise of 1.8 million people aged 35 to 54 and 0.8 million people aged over 55 contrast with the fall of 1.2 million people aged under 35.  It is vital that the government is aware of projected labour force trends to enable them to look at the possibility of  full employment in the future.

Changes in Employment

If we were to look at recent changes in patterns of employment, we can see traditional patterns of work are under pressure from information and communications revolution, which is transforming every aspect of business, leisure and home-life.  According to Mandleson, technology is both creating and destroying jobs - not just low-skilled ones, but managerial and professional too.  New Labour believe the jobs we do are changing.  At the beginning of  the 80s more than 40% of employment was in skilled, semi-skilled or un-skilled manual jobs.  By 1994, these jobs accounted for just 32% of employment.  By 2001 they are expected to account for 28% of jobs.  More of us are working part-time.  90% of the job growth in 1995 was in part-time work and today almost 30% of employees are working part-time.  More women are working making up 49% of all employees in employment in 1994 and the number of female employees is expected to grow by a further 1.2 million by 2001.  As we start the millennium, New Labour believe women will make up the majority of the workforce.  This could, however, create problems for men seeking work especially those with low skills.  There is more job insecurity with  fewer people with jobs today than there were in 1979.  Since 1992, 8.7 million people have experienced a period of unemployment.  Opportunities for full-time employment have fallen, leaving some people seeking work with only the choice of part-time employment (Building Prosperity: Labour Party 1996).

These issues concern the New Labour Government and they believe they need to prepare for inevitable change.  New Labours proposals for the minimum wage hope that, once implemented, society will become more secure, more cohesive and, as a result, our society becomes more ‘equal’ and has better chances of economic success.  However, many would argue that this may put many low paid, part-time and casual workers out of a job.

New Labours Policies - Job Creation and Welfare to Work.

One of the aims of New Labour is to rebuild and nourish a sense of community responsible for the long-term unemployed.  They can only achieve this gradually by putting forward practical solutions by creating jobs and demonstrate the effectiveness of each new initiative along the way. 

According to Mandleson, New Labours ambition to conquer unemployment can be achieved by job creation.  However, the long-term cost of job creation must be kept to a minimum.  This implies that:

* Job creation expenditure to be targeted at the unemployed themselves.
*  Offsetting savings in social security budget must be achieved
*  Priority should be the long-term unemployed and the young unemployed.
*  Help to get hard-core unemployed into jobs should be coupled with an obligation
    to undertake training on the part of the employer and employee.  This would ensure
    that once in a job, the chance of keeping it is increased.
*  Policy should address the barriers in the existing social security system which hold back 
    people from taking low paid work or undertaking training.
There are five promising avenues for policy:
1.  Gordon Brown has proposed recruitment subsidies to encourage private sector to take
     on long-term unemployed.  This financial incentive should encourage companies to
     extend their corporate social-responsibility activities so as to help long-term
     unemployed back to work in their locality.
2.  Improving the service standards which regulate utilities are required to meet in a
     manner which will generate new low-skill job opportunities, i.e. railway stations staffed
     at night.
3.  Specific grants to promote job-creation in the voluntary sector made available through
     local authorities and other public bodies.  To ensure cost effective use of the grant,
     commissioning bodies would invite competitive tenders from voluntary sector for the
     provision of job-intensive public services i.e. gardening or decorating for the elderly.
4.  The creation of a nationally led task force to tackle environmental decay offering young
     people 6 months placements.
5.  Reform the present social security rules on earnings disregards, allowances for 
     childcare costs and the transition from income support to family credit.  (Mandleson 1996)
The New Labour government would hope that this range of cost-effective job measures will enable job centres to offer the long-term unemployed a chance of getting back into the labour market.  New Labour believe these policies will provide access to the bottom rung of a new ladder of opportunity which could lead to training, higher skills and a much better paid job.


Fluctuating unemployment and current employment patterns make it extremely difficult for any government to guarantee ‘full employment’ in the near future.  It is crucial that any government seriously commit themselves to finding work for the unemployed, especially the young.  It appears New Labour have clear policies on creating employment but once any proposed policies are implemented, they must be monitored carefully to ensure that they are effective.  Employment is an area any government cannot neglect.  The challenge for the Labour government is how to create security and opportunity in a modern world that is changing continuously.

Aldcroft, D. (1984) Full Employment - The Elusive Goal.  Sussex: Harvester
Beveridge W. H. (1944)  Full Employment In A Free Society.  Woking: Unwin
Building Prosperity (1996)  Labour Party:  London.
Government Statistical Service (November 1997) Labour Market Trends 
Keane, J. Owens, J (1986) After Full Employment.  London: Hutchinson
Mandleson, P. Liddle, R (1996) The Blair Revolution - Can New Labour Deliver?  London: Faber and Faber.
Social Trends 27 (1997) Labour Market

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