Labor Exchange

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The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Labor Exchange


an institution that serves as a middleman between workers and employers in effecting transactions in buying and selling labor.

Labor exchanges appeared in the first half of the 19th century in Germany and Great Britain, and then in France and other countries. A national labor exchange was established in Great Britain at the beginning of the 20th century. In present-day state-monopolistic capitalism, the middleman function in the hiring of labor is executed mainly by the state labor exchanges, which are subordinate to the labor ministries.

With the help of labor exchanges, bourgeois states influence the labor market in the interest of monopolies. State labor exchanges serve as middlemen in finding jobs for the unemployed and also for those wishing to change their jobs. They study the demand and supply of the labor force and provide information on occupations that are in demand. Their functions also include the occupational orientation of youth.

In a number of countries (Great Britain, Italy, and France), labor exchanges maintain a register of the unemployed and provide unemployment benefits. A refusal to accept a job offered by the labor exchange usually entails the deprivation of such benefits. State labor exchanges are bureaucratic establishments, and the toilers and trade unions are barred from their management. Corruption, bribery, blackmail, and discrimination on the basis of race, nationality, and political convictions often flourish in the activity of labor exchanges. In class conflicts between capitalists and workers, labor exchanges in many cases aided employers by supplying them with strikebreakers.

Along with state labor exchanges in capitalist countries, private employment agencies (offices) which require the payment of a fee also exist; these agencies usually serve certain categories of workers (agricultural, office clerks, teachers, and so on). There are also employment bureaus attached to trade unions and to religious and youth organizations.

The activity of a labor exchange does not exert a noticeable influence on labor market conditions under capitalism. Assignments to a job given by the labor exchange to persons on their register are not binding on the employers, who do not have to consider the specializations of persons applying for work through the labor exchange. Many enterprises, especially large and medium-sized ones, employ workers directly through the personnel departments of their enterprises. A significant part of the labor force, especially skilled workers, does not utilize the services of labor exchanges. In the USA, for example, not more than 15 percent of those becoming reemployed find work through a labor exchange. Labor exchanges cannot substantially decrease the amount of unemployment—that inevitable concomitant of capitalism.

In the majority of cases in the developing countries of Asia, Africa, and Latin America, labor exchanges were created after World War II (1939–45). Frequently they function only in large cities, for the most part registering and finding jobs for the unemployed. Increasing the activity of labor exchanges in these countries is considered to be an important means of improving the utilization of labor resources.

In Russia, labor exchanges established by town councils appeared at the beginning of the 20th century in the largest industrial centers (Moscow, St. Petersburg, Riga, and Odessa). In addition to these, private employment offices became widespread, and they exacted a high fee from the unemployed for assigning them to jobs. Trade unions did not participate in the labor exchanges.

In the USSR labor exchanges existed in the first years of Soviet power. They were a weapon of the proletarian state in its systematic struggle with unemployment—the legacy of capitalism. The decree entitled “On Labor Exchanges,” signed by V. I. Lenin and published on Jan. 31, 1918, liquidated all private and fee-paying employment bureaus and offices and established free state labor exchanges which were charged with finding jobs for the unemployed and with providing benefits to them. It also provided for registration and assignment of workers in all branches of the national economy, regulation of the demand and supply of labor, organization of public works, and the like.

Trade unions and the Komsomol participated in the administration of labor exchanges. Soviet labor exchanges played an important role in guaranteeing full employment for the population. By the end of 1930, unemployment in the USSR was liquidated and consequently labor exchanges ceased to exist. The supply and assignment of personnel in the national economy of the USSR is systematically organized and conducted by committees for the utilization of labor resources of the Councils of Ministers of Union republics, having local bodies that effect the organized selection of workers and their transfer to other areas. Enterprises themselves also hire their own labor force.

Among other socialist countries, there were labor exchanges in Yugoslavia (1970).


Ekonomika truda. Moscow, 1967.
Suvorov, K. I. Istoricheskii opyt SSSR po likvidatsii bezrabotitsy. Moscow, 1968.
Lester, R. Economics of Labor. New York, 1954.
International Labour Office. Employment Objectives and Policies. Geneva, 1969.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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