Before the recess I dealt with the present economic situation, with the fact that at the moment we have had relative success in regard to economic growth but stagnation in regard to total employment and a position in which prices are out of control and the balance of payments subject to severe strain. I passed then to the question as to whether it is possible for us in our circumstances to harmonise and achieve simultaneously the economic objectives of economic growth, full employment and stable prices. I put forward the view that, if we are to have any hope of achieving these, there is need for an immediate, active, thorough and unified manpower policy.
I should like now to discuss what the scope of such a manpower policy should be and to discuss what practical steps can be taken to achieve local equilibrium in the labour market in each region, in each industry, in each type of skill and in each group. This is obviously a very difficult problem and obviously one that does not lend itself to any simple solution. There must be a multiple approach to it. Many things must be tried in order to achieve it, but, though the approach must be multiple, I think one point is self-evident: the approach must be a uniform and unified one.
I was very glad to note from the speech of the Parliamentary Secretary to the Minister for Industry and Commerce, to which I referred earlier, that he realises a manpower policy is necessary and also realises that such a policy has got both economic and social ends and that it serves both community needs and individual needs. I mentioned earlier that the key question to be decided by the Government in the immediate future is the organisation of a manpower policy and how it should be organised. That is a key economic question and, to a very great extent, a key political decision which must be made by the Government.
Before I give my views on the way in which this organisation should be done, it is necessary, I think, to discuss the type of functions a manpower authority would have to exercise. There is a very wide spectrum of functions exercised by a manpower authority, either here or in any other country. First, there would be planning and information functions. These would be concerned with finding out what the resources and requirements of manpower policy are in different areas, different sectors and age groups. This would involve considerations of statistics, forecasts, information, research, public relations and public education. Secondly, we have a very big, vital group of functions which might be described as personnel functions which would be concerned with the actual matching of individual jobs and individual workers. These functions, of course, are headed by the question of placement, the actual placement of individual workers. There are other equally essential functions in regard to redundancy schemes, resettlement allowances, the problem of housing and worker mobility and there is also the problem, which might or might not be the responsibility of a manpower agency, the question of unemployment assistance.
The third group of functions comprises those which might be described as training functions. These are concerned with the development of the work force in order to meet manpower requirements. We have such matters as vocational guidance and the question of adaptation and retraining. The most successful of these has been what is now known as accelerated vocational training, usually abbreviated to AVT. I am glad to see that the Parliamentary Secretary also seems to believe that the manpower authority should have responsibility for the rehabilitation of workers and for the problems involving workers who are incapacitated to some extent.
How can we organise these three different groups of functions so that we can have a manpower authority or authorities or how can we combine manpower responsibility in such a way that we can overcome what has been the experience, I may say, of western European countries in the years since the war, that they have not been able to achieve economic growth and full employment without inflation? In order to do so, I think it is necessary to look a little more closely at some of those functions and see what is involved in them, see what should be the scope of the different functions and what the extent of the work is and how detailed it need be. Only when we are quite clear on this particular point can we come to a conclusion on how the work should be organised.
First, in regard to planning and information services, we must be careful to realise that what has to be done here is not merely gathering together certain scattered activities for the purpose of their being catered for by different agencies but rather a new departure. Comprehensive statistics and continual forecasting are essential if the manpower policy is to be any more than a sort of pious exercise in political and administrative humbug. If we merely carry on with statistics prepared for other purposes and carry on with merely occasional forecasts, we shall end up with a manpower policy that will be worth almost nothing. It is absolutely essential that we should have comprehensive and detailed statistics gathered for the purpose of manpower policy alone, that forecasting be continual and that we have continual correction of the forecasts that have been made in the effort to assess either what our resources are in regard to manpower or what our particular needs are.
Labour statistics are extremely difficult to compile and very often still more difficult to interpret and in addition there are many areas of labour statistics in which we are deficient. These defects will have to be made good if we want to have a proper manpower policy. In particular, we shall need greater information on the problem of under-employment because part of our problem in this country is not only the problem of unemployment but the very great problem of under-employment. Under-employment is something that is not easy to measure, something that is not even easy to detect. There are many types of under-employment and perhaps the best thing to do is to give the three types of under-employment used by the International Labour Office in their statistical analysis of this problem in so far as this has been done in a few countries.
There is under-employment of the type known as visible underemployment, where a worker is working in an industry for less than a full year, or less than a full week. This does not give rise to too much difficulty. We have in addition disguised under-employment where a worker is working full time, working completely throughout the year, but is not working to the limit of his skill, where the worker is in a job which does not demand the amount of skill which that particular worker has. Therefore, we have this type of disguised under-employment which is a very great economic burden for the community and the economic system to bear. If we want to correct many of our problems we will have to determine the extent and the nature of our disguised under-employment.
There is also what is known as potential under-employment, the position where workers are not producing as much as they might, due to deficiencies in the organisation and due to deficiencies in management. Here again there are many areas in this country where due to the defects in management, due to the defect that management itself is not up to date and is not following modern developments, we have a potential under-employment and again a great burden for the economy to carry. The surveying of such under-employment is part of the work that will have to be done by any manpower authority which is set up.
In regard to forecasting, it will be necessary to forecast the total in each age group who would be members of the labour force in any year in the future and this would be relatively easy. It would be more difficult to forecast the numbers with skill of a particular type but no really new departure is necessary here. Indeed, this particular job will probably be made a great deal easier if we have, as we hope we will have, a real educational policy and real educational planning in the future. If there is a proper follow-up to the pilot study of Investment in Education, the work of forecasting the particular numbers in any age group with any particular skill should be a relatively easy matter. The forecast of demands to be made will present some more difficulty. It will be absolutely essential that the manpower authority should co-operate to the full and as equals with industry, with the trade unions and the various professional groups.
This is an area in which there is a clear need for the involvement of people outside the Government, and outside the Government's planning and manpower agencies, in the producing of economic plans and forecasts. This work is difficult but it can be done. It is with pride that I say that my own engineering profession has already carried out an exercise of this type. The engineering profession have produced what I regard as an excellent report on the number of engineers of every type which would be required in 1970 in accordance with the Second Programme. This was work gladly undertaken by the engineering profession. I am quite sure that the professions, the trade unions and industry, once convinced of the value of this work, would be only too happy to co-operate.
Another one of these general planning functions in this first group is the question of an information service. I said before in this House that if our economic system is to work to the greatest efficiency, it must become not only a market system, not only a system of trade, but in a sense an information system. The decisions that bring us to any particular economic situation are not merely decisions of the Government but decisions made by groups of individuals diffused throughout the whole community. One of our weaknesses in the past was that many of those have been based on inadequate information. We would be particularly vulnerable to this lack of information in the sector of manpower planning. Therefore, the information system would be a key element in this first group. There must be a flow of information between all parties, between the trade unions, employers' organisations, the central manpower authority, the local authority manpower office, Government Departments and all sections of the general public.
This information must flow. The information is necessary if the decision-making at all levels is to be efficient, but it will not merely be sufficient for information to be transmitted unaltered; it will not be sufficient for one section of the manpower authority to take information from here and duplicate it and make it available elsewhere. This again would be less than what is required and the problem is so serious that if we do not regard it as such, we are seeking to court disaster. This is a matter for skilled staff who will have to do a great deal more than transmitting unaltered information. They will have to seek out information, modify information and combine information. Here again is an essential element which must be covered by the manpower authority: the authority must cover the more general aspects of information processing. There must be a continual use of the public media of information in order that the whole public may realise what is involved in this particular sector.
Also grouped in these planning and information services is the vital area of research. A great deal is still unknown and still uncertain about the consequences of certain actions in manpower policy and, particularly, a great deal has still to be learned about the mobility of labour, about particular motives which either promote mobility or hinder mobility. Here, I think there is need to keep an eye on research, on social research of all types. We must do two things: we must keep ourselves completely aware of what research is going on in other countries; we must be able to interpret and adapt this work to our own conditions; and we must, in certain selected areas, do our own research.
In this connection I might say that the Office of Manpower in the United States of America places almost as much emphasis on research as it does on all its other functions together. Recently the President of the United States submitted to Congress, as he does each year, a report on manpower. Attached to this is the report of the Department of Labour on which his report is based. It was interesting to read this report. Here we have a tremendous amount of research going on in order to ensure that these decisions will be the correct ones. To take an example of the research that is going on, I have details of an extremely interesting research which is relevant to one of the problems we have here. It is the problem of labour mobility and private pension plans—the whole study of the spread of private pension plans, the type of worker now being included in private pension plans, the extent to which workers can now carry pension rights from one job to another. Other recent work reported in this document from the US deals with severance pay and labour mobility— it attempts to find out the factors involved and, if possible, the relationships involved. Another report in America was on the benefits and costs of retraining unemployed people. We must, in our manpower policy, make sure that those responsible are aware of these developments and that, if necessary, similar work should be done in this country in regard to them.
Therefore, we see that in regard to the functions of planning, forecasting and the dissemination of information, there is a great deal to be done which will be at times of a more difficult nature than the scattered activities going on in different Government Departments are capable of achieving. Many things are being done in different Departments but it is necessary that they be done more thoroughly and in a more integrated fashion. Even if all these things were to be done in one Department or another, it still would not be sufficient because a manpower policy must be based on economic planning, integrated completely section by section so that the thing becomes a cohesive whole.
If we turn to the second group of functions, which we might call personnel functions—the matching of individual jobs to individual workers— we must look at what we are doing at the moment and then decide what must be done in the future and how it can best be done. The most important is the placement service. Such placement is done now through the medium of the labour exchanges. These exchanges were set up under an Act of 1909, based on the recommendations of a Royal Commission on the Poor Law. With all the improvements made, and they are substantial, our labour exchanges have not, in practice or in the people's minds, thrown off their poor law origin. We face a very real difficulty here.
If we take the public image of the labour exchanges, the public concept of them, we find a very large residue of the poor law origin of the labour exchanges still in the minds of the people. As I have said, this creates a very real difficulty. It is a fact that Government placement agencies such as we have, such as Britain has and various countries throughout Europe, have been very unsuccessful. In Europe, State employment agencies are responsible for only something between 20 per cent and 25 per cent of placements. If we are to have a proper manpower policy, we must reach a situation in which, if only for the purposes of information, 75 per cent or more of our placements will have to go through whatever placement agencies we set up.
We face a problem of great magnitude. A change in the employment agency system in Europe would be difficult but it would be even more difficult here. We have labour exchanges of a type which we inherited from Britain and which are the subject of universally unfavourable comment by writers on social policy in the UK. The great trouble in this respect is that the labour exchanges do not function as placement agencies to anything like the extent that was originally intended. More than that, their primary function now is not as employment agencies but as unemployment agencies. In the minds of the public, our employment exchange is a place of unemployment, a place at which unemployment allowances are drawn.
The Government must face this issue clearly. I do not think it will be sufficient merely to say they can be changed. The Government must look very closely at this, and if they do, they will inevitably come to the conclusion that the change is something which cannot be introduced gradually, which cannot be done completely. If this were to be attempted, what would happen is that the new placement agencies would not be able to act to the extent to which the Government hope. They would not be able to shake off their origin.
It is generally acknowledged that the most successful labour market policy in Europe is that of Sweden and it is perhaps significant that in Sweden there is absolutely no connection between the payment of unemployment allowances and the employment agencies: the position in Sweden is that unemployment insurance is handled administratively almost completely by the trade unions. It is significant also that in that one country where, once placement was started, it reached in Sweden its greatest success because employment agencies have no connection with unemployment insurance.
This is something to which the Government should direct very close attention before they attempt to decide that they can convert the labour exchanges into placement agencies. Mere placement is not all that must be done in this regard. With the introduction of redundancy, resettlement and retraining schemes, the nature of the work of the employment agencies would have to change substantially. Not only shall we have the ordinary placement of workers to cope with but all these problems of redundancy, resettlement and retraining must also be dealt with.
If our manpower policy is to become fully active, this work should become of such magnitude that if the employment issue were to be left with the administrative arrangements for unemployment insurance, the latter would be only a small fraction of the total amount of the work involved. If we give all these to the one authority, it will involve the problems of redundancy, resettlement, placement as well as unemployment insurance. In a fully working manpower policy, such as we hope we shall have, unemployment insurance will be a small portion of the work and it could be a disastrous decision if this were to be bulked administratively with work involving a whole range of functions of which unemployment insurance will be a small part.
To attempt to add all these other functions to the employment exchanges for the sake of administrative convenience could well be disastrous. We should not look at our employment exchanges as a convenient network of branch offices but rather look at what we hope will become a network of offices covering a wide range of activities under a fully active manpower policy. We should look again towards Sweden where this has been such a success. We must look beyond Britain where the system has not been successful. In the Swedish offices, there is a certain administrative arrangement which they have found necessary for manpower policy but which would not fit into our organisation of labour exchanges. In Sweden there is a permanent staff supplemented by a mobile staff who move from area to area. The staff spend some time in an area where there is a labour shortage or where particular skills are required. They spend some time familiarising themselves and then they move to another part of the country where there may be a labour surplus and where they hope there may be people available. This is something which would not work too well with the present rather rigid organisation of our labour exchanges.
