unemployment

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unemployment,

condition of one who is able to work but unable to find work. Once assumed to be voluntary, idleness was punishable by law; however it is now recognized that unemployment often arises from factors beyond the control of the individual worker. Unemployment may be due to seasonal layoffs (e.g., in agricultural jobs), technological changes in industry (particularly by increased automation), racial discrimination, lack of adequate skills by the worker, or fluctuations in the economy. For the purposes of government statistics, a unemployed person is someone who is without a job and actively looking for work; a person without a job who is not looking or has stopped looking for work is not counted as unemployed. The unemployment rate thus is not an indicator of the percentage of people of working age who do not have jobs. The term underemployment is often used to describe the condition of those who work part-time because full-time jobs are unavailable or who are employed at less-skilled work than they are qualified to do.

In developing countries, unemployment is often caused by the urban migration that generally precedes the industrial development needed to employ those migrants. In industrial nations, increases in unemployment are the result of economic slowdowns, recessions, or depressionsdepression,
in economics, period of economic crisis in commerce, finance, and industry, characterized by falling prices, restriction of credit, low output and investment, numerous bankruptcies, and a high level of unemployment.
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. In the Great DepressionGreat Depression,
in U.S. history, the severe economic crisis generally considered to have been precipitated by the U.S. stock-market crash of 1929. Although it shared the basic characteristics of other such crises (see depression), the Great Depression was unprecedented in its
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 of the 1930s unemployment rose to 25% of the workforce in Germany, Great Britain, and the United States. Similar rates occurred in Greece and Spain, due in part to different causes, during the early 2010s.

In the post–World War II era most of W Europe and Japan generally kept their unemployment levels below 3%, and by the late 1960s the rate in the United States, where there had been far more fluctuation, was down to less than 4%. Since the 1970s, however, worldwide economic changes have generally kept the U.S. unemployment rate above 5%. It was greater than 10% in 1982, the highest rate since 1940, and the rate was considerably higher among nonwhite minorities and the young, approaching 50% among African-American teenagers in urban areas. By 1990 the average unemployment rate had dropped to almost 5%. It fluctuated between 5% and 7% for most of the 1990s but dropped to around 4% by 1999 before a recession (2001) led it to rise to 6.3% in mid-2003. It subsequently dropped to 5% by mid-2005 and hovered between 4.8% and 4.4% for most of 2006–7. By late 2009, however, it had risen to 10.1% as a result of the deepest recession since the early 1980s. It slowly dropped to below 6% by late 2014, reaching 4.5% in early 2017. At the same time, however, many people left the workforce and were not counted in the employment figures. Underemployment and unemployment combined exceeded 17% in 2009, the worst such rate since at least the 1970s and perhaps since the Great Depression.

As Keynesian economics (see Keynes, John MaynardKeynes, John Maynard, Baron Keynes of Tilton
, 1883–1946, English economist and monetary expert, studied at Eton and Cambridge. Early Career and Critique of Versailles
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) gained influence among policymakers, more countries committed themselves to finding ways to approach full employment through government intervention. Governments, in addition to trying to increase employment opportunities by stimulating business, have also taken other measures to deal with the problem. In the United States, the Social Security Act of 1935 and the Employment Act of 1946 represented moves in this direction; in Great Britain, labor exchanges were set up and a contributory unemployment insurance system established. Under the Communist economic systems of the Soviet Union and the People's Republic of China, attempts were made to eliminate unemployment by socializing the means of production and distribution and by directing labor into more productive channels, but their governments typically proved unable to reallocate labor appropriately, leading instead to unneeded production or underemployment. The disintegration of the USSR and economic liberalization in China ended such efforts.

Bibliography

See C. A. Greenhalgh, ed., The Causes of Unemployment (1983); D. N. Ashton, Unemployment under Capitalism (1986); J. Hudson, Unemployment after Keynes (1988); L. H. Summers, Understanding Unemployment (1989); R. Vedder and L. Gallaway, Out of Work: Unemployment and Government in 20th Century America (1993).

unemployment

the state of not being employed in paid work, or self-employed, even though available for such activity Unemployment is higher for men than for women and affects young people, especially those from ethnic minority groups, disproportionally more than other social groups.

Employment is important for self-esteem. Jahoda (1982) suggests that it fulfils a number of vital latent functions by providing the following:

  1. regular pattern of activities and time structure to the day;
  2. source of social contacts outside the household;
  3. participation in a wider collective purpose;
  4. social status and identity.

This list of characteristics, while suggestive, has provoked debate. Firstly, as Warr (1987) suggests, the categories can have negative as well as positive psychological effects depending on the degree of exposure. Secondly, because it fails to distinguish between the experiences of men and women (Gallie and Marsh, 1994:17). Marsden's (1975) earlier qualitative study of a group of unemployed men clearly demonstrated that the impact of the loss of paid employment was devastating: anxiety about finding a new job and coping with financial worries undermined any attempt to enjoy the increased spare time they had. In the 1980s there was a major programme of research into this area. These studies showed that unemployment gave rise to higher levels of psychological distress among men. Warr (1987) reported research findings that unemployment was detrimental to the psychological wellbeing of men. Women's experience of unemployment is more complex (e.g. Marshall, 1984; Kelvin and Jarrett, 1985). In the past, women were more likely to be in less-skilled and less well-paid work with fewer career prospects. Similarly women's traditional domestic role offered an alternative identity to their paid-work role. Whether this will remain unchanged for the future is questionable. Women have become increasingly active in the LABOUR MARKET (Grint, 1998: 209-14). More generally the relationship between work and unemployment has been increasingly questioned as it has become clear that economic success at the national level does not necessarily translate into FULL EMPLOYMENT. New technologies and the service economy have far less need for labour than the older manufacturing ('smokestack’) industries. Handy (1984) argued that we needed to look to having a portfolio of activities during our adult lives, including, possibly, child care, voluntary work and study as well as paid employment. Rifkin (1995), drawing largely on US evidence, has argued for a growth in the social economy or THIRD SECTOR, of nonprofit organizations might provide a focus of activity for the otherwise ‘underemployed’ and improve the quality of life for the community and the individual too. His prognosis is an equivocal one, observing that mass unemployment can equally undermine the ‘chances of a compassionate and caring society … ’ (ibid: 247).

Rates of unemployment have fluctuated considerably over the course of the last century. In Western countries, unemployment reached a peak in the early 1930s, with some 20 per cent of the labour force being out of work in Britain. J.M. KEYNES strongly influenced public policy in Europe and USA at that time and more especially after 1945. State involvement in the economy became accepted in Western industrial societies as a means of underpinning a policy of FULL EMPLOYMENT and retaining a predominantly private sector market economy. By the mid-1970s the policy was losing its effectiveness. Rather than reducing unemployment levels increased state spending fuelled inflation rates instead. The three main factors are the following:

  1. rise in international competition -especially from Japan and other countries of the ‘Pacific Rim’;
  2. there have been several severe recessions in the global economy starting with the ‘Oil crisis’of 1973;
  3. increasing use of new technologies has reduced the demand for labour.

Whereas, the UK unemployment rate was less than 2% in the 25 years after the end of World War II in 1945, by the 1980s it had risen to 12%. It dipped slightly during the decade but rose again to 10% in 1991. Economists refer to structural and frictional unemployment to distinguish between long-term or endemic (structural) unemployment inherent to the economic system and short term adjustments to the system that gives rise to frictional unemployment as the people in the labour market adjust to the new requirements in terms of training and skills etc. The distinction between stock and flow is also highly relevant particularly for sociological research. The official statistics record the stock of people claiming benefits. The monthly net change is relatively small but this disguises the flow of people into and out of unemployment i.e. there has been an underlying stock of long-term unemployed but there is also a . flow of people who are out of work for 3 months or less. In Greater London in the mid-1980s only 20% of those registering unemployed for the first time would be out of work 3 months later (Marsh, 1988:351). But for that 20% the chances of finding working in the next 3 months was far more dismal. In fact, 86% would not find employment.

Unemployment

 

a phenomenon inherent in the capitalist social system, in which part of the working people cannot find jobs and thus become “surplus” population and a labor reserve army. As a social and economic phenomenon, unemployment is generated by the operation of the general law of capitalist accumulation, which was formulated by K. Marx and is both a product and a condition of capitalist production.

The first to experience the fate of “surplus” people in the history of capitalism were the working people of the now economically developed European countries, especially Great Britain (early 19th century). The protest of the proletariat against unemployment was at that time spontaneous. With the transition of capitalism to the imperialist phase, mass unemployment has become an inseparable feature of the economy of the majority of the capitalist countries; in periods of crises of overproduction, it extends to almost all branches of the economy. With the onset of a general crisis of capitalism, mass unemployment in the economically developed capitalist countries becomes chronic.

Outwardly, unemployment appears to be the result of a disproportion between the demand of the capitalist market for labor and the labor supply, but actually it rises from deeper internal causes. The desire for maximum surplus value and the competitive struggle compel the manufacturers to provide “live labor” with more equipment and to increase the means of production faster than they do the variable capital—that is, wages. Thus, from 1869 to 1919 the number of workers employed in the industry of the USA quadrupled, whereas output increased 13 times and the value of capital 23 times.

The especially rapid relative reduction of the variable capital is caused by the scientific and technological revolution in production. Furthermore, this production revolution causes an absolute reduction in the demand for labor. Moreover, the longer the working day and the more intensive the work, the fewer hired workers are required to set the existing means of production in motion. “Excessive work of the employed part of the working class increases the ranks of its reserves” (K. Marx, Das Kapital, vol. 1, 1955, pp. 641–42).

The periodic economic crises of capitalist production intensify the operation of the factors that relatively reduce the demand for labor. The dismissal of masses of workers, which means a direct deterioration in the condition of the workers, compels those remaining in production to accept the conditions of exploitation offered them. This situation in turn further reduces the living standard of the whole working class.

The dialectics of the capitalist mode of production is such that the “surplus” toiling population, which is a product of capitalist accumulation, becomes a lever of this accumulation and even a condition for the existence and development of capitalism. “The surplus population ... is an indispensable attribute to the capitalist economy, which could neither exist nor develop without it” (V. I. Lenin, Poln. sobr. soch., 5th ed., vol. 2, p. 173).

Part of the “surplus” population forms a reserve of cheap labor for capital. In view of the uneven cyclical development of the capitalist economy, this fact is vitally necessary for the bourgeoisie and facilitates the solution of crises. The mere fact of mass unemployment instills in every working proletarian the dread of finding himself in the ranks of the unemployed. Capitalism takes advantage of this fear. The greater the unemployment, the more intensive is the offensive of capital against the workers; tax increases, inflation, so-called rationalization of production, overtime work, and “overtime” pay for work on days off and holidays are used. Thus, unemployment in the capitalist society, by virtue of its class contradictions, has a double nature. For the capitalists, it is a reserve of cheap labor, which is often deprived of rights, a means for intensifying the exploitation of the whole working class, and a necessary condition for the existence and development of the capitalist economy. For the toiling masses, on the other hand, unemployment is a source of material, physical, and moral suffering, privations, premature old age.

Unemployment can take three forms: flowing, latent, and stagnant. There are no exact data on the number of unemployed. The methodology of defining forms of unemployment used by bourgeois political economy and statistics, as well as the methods of counting “surplus” people, lead to an underestimation of the actual extent of unemployment. Bourgeois economists make a distinction between total and nontotal (part-time) unemployment, which depends on the time a person has been out of work. (In the USA, for instance, a totally unemployed person is one who has no work for a week or more; but if he has obtained work, even for as little as one hour a week, he is no longer considered unemployed.

The data on unemployment contained in the publications of the International Labor Organization (ILO) are based on official statistical publications of different countries. These data, according to testimony of ILO experts, vary a great deal in completeness and reliability, depending on the sources of information, methods of data collection and processing, and the definition of the concept of unemployed adopted in different countries. As a rule, data on different countries are not comparable. Moreover, even within a single country there are often several systems of unemployment statistics. Thus, in the USA there are three government systems alone: the data of the Bureau of the Census (Department of Commerce), the Employment Standards Administration, and the Bureau of Labor Statistics (Department of Labor). In Italy there are two systems of unemployment statistics: the systems of the Ministry of Labor and of the Institute of Labor Statistics. Despite these and other shortcomings of bourgeois statistics, they have to be used because there are no other systematic counts of the “surplus” population. The data of some progressive trade unions, although they represent a substantial corrective to unemployment statistics, cannot completely fill the gap.

Unemployment is a constant companion of the capitalist economy. In all economically developed capitalist countries, the size of “surplus” labor resources has, for the period under consideration, either remained the same or has even increased in some years. The greatest unemployment burden has fallen on the working class of the USA. The figures presented in Table 1 do not cover those employed part-time, but their number is very great; in the USA, for instance, they average 2.5 to 3 million people a year, according to official statistics. In the years 1967–69, unemployment in the industrially developed capitalist countries remained at the level of 6 to 7 million people. The trend toward an increase in unemployment observed in the 1960’s was also caused by some special demographic features of several European countries (great losses in killed and maimed during World War II and a low birthrate).

Unemployment is also affected by economic cycles. In the 1960’s there were no sharp drops in output in capitalist Europe and Japan. However, in some years Great Britain, Italy, West Germany, and to a lesser extent France and Japan experienced crises phenomena, some slowing of the rate of development, and definite slumps. Changes in the development of the capitalist cycle in the present-day

Table 1. Totally unemployed in economically developed capitalist countries (in thousands)1
 1948195819601961196219631964196519661967
1 Only regularly registering unemployed included
2 According to data until 1960, of the Italian Ministry of Labor; after 1960, of the Italian Institute of Labor Statistics
3 Austria, Belgium, Denmark, Finland, Greece, Ireland, Holland, Norway, Spain, Sweden, and Turkey (ILO data)
4 From 1967–according to new methods of computing the unemployed, aimed at glossing over the situation
Great Britain338501393377500612413360391529
Italy1.7421,7591,5467102611504549721769689
France17931311121019797141147193
West Germany592683237161142174157139162445
Small and middle-sized countries of Europe1564943738541475493476505520700
Japan240560430440400400370390500500
USA2,2054,6813,9314,8064,0074,2003,9003,4562,9762,9754
Canada111432448469391374324280267315
Australia3271644444434131921

period, as well as the accelerated development of the nonproducing sphere, which has absorbed large human resources, in turn affect the state of unemployment. Unemployment is affected by the scientific and technological revolution, which leads, under the capitalist mode of production, to the dismissal of large numbers of workers and employees; it is affected by the specific relations of the class forces of the various countries. In view of the relatively high organization and cohesion of the proletariat of Japan and Western Europe, as well as the existence of the socialist states, the ruling classes in these countries try to prevent unemployment from reaching a magnitude that would be socially dangerous for them. The manpower market in Western Europe is affected by state monopoly integration, which enables the monopolies to utilize more effectively the manpower market of the countries in the sphere of this integration.

A grave problem of present-day unemployment is the existence of “surplus” population in economically distressed areas. Such regions exist in the USA, Great Britain, Italy, France, and other countries. As a rule, these regions are centers of old branches of industry: coal, metallurgy, textile, and several machine-building branches. The majority of the chronically unemployed in these regions, which are usually not included in the official statistics, become actual paupers.

The unemployment data published by the ILO on several developing countries of Asia, Africa, and Central and South America, where unemployment chiefly takes the form of agrarian overpopulation, are even less complete and accurate. The economic backwardness of these countries, their feudal survivals, and the dependence of the economy of many of them on imperialism mark the process of the ruin and pauperization of the small producers and influence the structure of relative overpopulation. In these countries, too, the solution of the unemployment problem depends on the dominant social and economic conditions. Only an elimination of the dependence on imperialism and the destruction of the feudal vestiges and reactionary regimes can bring about a rapid development of the economy, including the solution of the unemployment problem. A number of Asian and African countries that have attained political independence have adopted several measures that soften the consequences of unemployment. For instance, the labor legislation of Burma and Sri Lanka regulates the hiring and dismissal of working people, thus setting some limits to the arbitrary actions of employers. Such state intervention and the promotion of economic progress also soften to some extent the unemployment burden.

Unemployment has become, especially since the 1930’s, a grave threat to the very existence of the capitalist system. The social acuteness of the problem is caused in the first place by the emergence of the countries of socialism in the world and by changes in the balance of class forces within the capitalist countries, as well as in the world arena. In the 1960’s and 1970’s unemployment, despite its relatively small extent in relation to the total number of hired employees, has been a problem of great social and political severity. At the same time, from an economic point of view, it no longer plays its past role of a large labor force reserve for big capital. In the period of rapid scientific and technological progress, the overwhelming majority of unemployed do not have the skills to meet the demands of modern production.

Aware of the social danger of the working class struggle for its vital interests, the bourgeois states have tried in the past 30 years to regularize the labor market, using, in particular, various systems of aid to the unemployed, including unemployment insurance. One or another system of this aid operates in the economically developed capitalist countries, and special funds have been set up for this purpose. These funds are formed directly or indirectly by the toiling masses themselves. In view of many limitations, less than half the unemployed can take advantage of them. Thus, in the USA only 45 percent of unemployed received unemployment benefits in 1961. The contribution of the manufacturers to these funds is relatively small. The benefits paid and the total amount of aid to the unemployed compensate for only a small fraction of the financial and material losses of the working people; in the USA these benefits have not exceeded an average of one-sixth to one-seventh of the wages lost through unemployment since 1950. As for the total damage of unemployment to the working class and society as a whole, it is so large as to be beyond computation.

According to official data, between 1929 and 1966 the USA has lost through unemployment more than 9.5 billion man-weeks of work, about 3.5 billion of them after the war. The toiling masses have suffered the heaviest losses from unemployment; from 1929 to 1966 they lost about $500 billion in wages (at 1957–59 prices), and from 1946 to 1966 about $230 billion (at the same prices). These figures do not cover part-time employment. Moreover, lack of work means not only a financial loss but also loss of skills, falling behind in acquiring general and professional knowledge, and irreparable moral harm to the worker himself and the members of his family, as well as to society as a whole.

In the postwar period the fight of the proletariat in the USA, Great Britain, Italy, Japan, and other countries has been directly related to unemployment. The struggle of the workers and employees usually takes the form of strikes. One of the main demands of the striking workers is to prevent the capitalist monopolies from throwing “surplus” labor force into the street. In Great Britain, in 1960 alone, miners, automobile workers, and workers in the chemical industry struck against mass dismissals; in the fall of 1962 railroad workers declared a general strike against unemployment, and were joined by machine-building and ship building workers; and in 1966–67 automobile workers struck. The strike struggle also includes many millions of office workers of capitalist enterprises, including state and municipal enterprises.

Questions related to unemployment are at the center of attention of the trade unions. In collective-bargaining contracts with companies, some trade unions demand guaranteed work and other benefits.

However, a struggle limited to the consequences of unemployment and not directed toward the causes and conditions that give rise to it cannot abolish unemployment and all the burden it entails. The experience of history has shown that capitalist overpopulation disappears only with the collapse of the rule of capital and the creation of a society in which the basic means of production and the system of distribution are in the hands of the people. Under capitalist conditions, as V. I. Lenin emphasized, trade unions and strikes are powerless to help when manpower is a commodity for which there is no demand, when they “cannot change the conditions which convert labor-power into a commodity and which doom the masses of working people to dire need and unemployment. To change these conditions, a revolutionary struggle against the whole existing social and political system is necessary” (Poln. sobr. soch., 5th ed., vol. 5, p. 16).

Unemployment in prerevolutionary Russia. The nature of unemployment in prerevolutionary Russia did not differ essentially from unemployment in other capitalist countries. However, the lack of unemployment statistics made it impossible to estimate even approximately the number in any one year. There were considerable variations in unemployment in industry and in some cities. Unemployment increased between 1904 and 1913 (during the Russo-Japanese War, economic crises, and revolutionary events on the eve of World War I). Thus, in St. Petersburg the unemployed constituted about 2 percent of the entire population (1911); in Moscow, 1.8 percent (1912); and in Baku, 2.5 percent (1913). In the 1900–13 period the number of unemployed reached half a million in the winter season. During World War I (1914–18), there was a labor shortage caused by the mobilization of about 15 million men, as well as some increase of unemployment caused by the flight of part of the population from the theater of military actions (refugees).

Liquidation of unemployment in the USSR. Unemployment is abolished with the establishment of socialism, whose very nature makes relative overpopulation impossible. In the 1920’s the USSR still had considerable unemployment as a result of the dislocations caused by World War I, foreign intervention, and the Civil War (641,000 unemployed on Jan. 1, 1923; 1,030,000 on Aug. 1, 1926). The Soviet state rendered extensive assistance to the unemployed and took resolute measures to abolish unemployment. By the end of 1930, as a result of the victory of socialism in the USSR, unemployment was eliminated completely. The steadily developing economy of the USSR and other socialist countries calls for the systematic replenishment of the labor force. In these countries economic development is faster and on a larger scale than the increase of the able-bodied population. The high and steady rates of economic and cultural construction in the socialist countries ensure the full and effective employment of the population.

REFERENCES

Marx, K. Kapital, vols. 1–3.
Marx, K. “Teorii pribavochnoi stoimosti” (vol. 4 of Kapital). In K. Marx and F. Engels, Soch., 2nd ed., vols. 23–25, parts 1–2; vol. 26, parts 1, 2, and 3.
Lenin, V. I. “K kharakteristike ekonomicheskogo romantizma.” Poln. sobr. soch., 5th ed., vol. 2.
Lenin, V. I. “Imperializm, kak vysshaia stadiia kapitalizma.” Ibid., vol. 27, chs. 1–4, 8–10.
Valentei, D. I. Reaktsionnye teorii narodonaseleniia perioda obshchego krizisa kapitalizma. Moscow, 1963.
Goilo, V. S. Teoreticheskoe opravdanie bezrabotitsy. Moscow, 1966.
Goilo, V. S. Problemy bezrabotitsy v period obshchego krizisa kapitalizma. Moscow, 1963.
Keynes, J. M. Obshchaia teoriia zaniatosti, protsenta i deneg. Moscow, 1945. (Translated from English.)
Lumer, H. Bednost: ee korni i puti ustraneniia. Moscow, 1967. (Translated from English.)
Beveridge, W. Full Employment in Free Society. London, 1944.
Raerwald, F. Economic Progress of Problems in Labor. Scranton, 1967.
Hansen, A. The American Economy. New York, 1957.
The Measurement and Behavior of Unemployment. Princeton, 1957.
Employment Policy and the Labor Market. Berkeley, 1965.

V. S. GOILO

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