GLAUS SPHECKELS FUND INSURANCE AGAINST UNEMPLOYMENT INSURANCE AGAINST UNEMPLOYMENT. BY DAVID F. SCHLOSS (3JL LONDON P. S. KING & SON ORCHARD HOUSE, WESTMINSTER 1909 PREFACE THE question of the proper methods to be adopted for the alleviation of the dis- tress caused by unemployment presses for solution. Among such methods one of very great interest is that, under which provision is made against the loss con- sequent upon the temporary suspension of their earning power suffered by workpeople during periods of unemployment by a system of insurance. Under this system the arrange- ment made is, that, by means of premiums, contributed by the insurers, while they are in work, there is accumulated a Fund, out of which, in case of their becoming out of work, they have the right to receive allow- ances on a fixed scale. With the object of encouraging this form of thrift, and of supplementing the " unemployed benefits " paid to the insured workpeople out of the 192593 vi PREFACE resources at the disposal of these Unemploy- ment Insurance Funds, the practice has in recent years been adopted of supplementing those resources by subventions granted out of public moneys. This plan has been put into operation in a large number of Euro- pean countries (including France, Belgium, Germany, Italy, Switzerland, Holland, Nor- way and Denmark), but has so far not been tried in the United Kingdom. The only book published in this country, which gives an account of the various schemes of (assisted) Unemployment Insurance, is the Report to the Board of Trade on Agencies and Methods for Dealing with the Unem- ployed in certain Foreign Countries, by the present writer, which was issued in 1904 (Cd. 2304). Since that date, however, the practice here referred to has received a very great extension, and the present volume brings the information contained in the Report of 1904 up to date. 1 It appears to be generally supposed to be 1 While the Report here referred to was, of course, an official publication, the present volume is a private venture, for which no Government Department is in any manner responsible. PREFACE vii highly probable, that, in the near future, proposals will be made for the adoption in this country of some measure in the nature of publicly assisted Insurance against Unem- ployment. Be that as it may, this form of public assistance is certain to be among those, the merits and demerits of which will at no distant date come up for discussion ; and under these circumstances the publication of a short practical handbook of the subject will, it is trusted, be considered to serve a useful purpose. So far as the contents of the book are concerned, it will be seen, that, while no attempt is made to discuss the question, whether it is desirable or practicable to introduce into the United Kingdom the method of Unemployment Insurance here under consideration, the pages, which follow, contain a concise account of what has been done in this direction by other nations, and set forth in detail the foreign legislation on this subject, and in particular, the text of the Unemployment Insurance Laws passed within the last few years in Norway and Denmark. The rules in force in regard to the viii PREFACE administration of certain typical Unemploy- ment Insurance Funds are also printed in the Appendices ; and a concise bibliography of the subject is added. It is hoped that the materials thus furnished may afford some assistance in forming a judgment as to the value and applicability of this method of insurance and as to the general lines, upon which, in the event of its being decided to adopt such a system in this country, it would be desirable to frame the necessary legislation. London^ February 1909. CONTENTS CHAP. PAGE PREFACE V I. WHAT IS MEANT BY INSURANCE AGAINST UN- EMPLOYMENT ..... I DIFFERENT TYPES OF UNEMPLOYMENT . I DIFFERENT TYPES OF UNEMPLOYMENT INSURANCE 5 II. COMPULSORY INSURANCE .... 8 ST. GALL . . . . . . 8 III. VOLUNTARY INSURANCE . . . . 2O DIFFERENT TYPES 2O BERNE 21 BALE 25 VENICE 26 COLOGNE 27 LEIPSIC 29 GHENT ....... 30 OTHER BELGIAN MUNICIPALITIES, ETC. . 31 BELGIAN STATE SUBVENTION . . 32 MILAN 35 STRASSBURG 36 HOLLAND 38 FRANCE 39 MUNICIPAL AND DEPARTMENTAL SUB- SIDIES 39 STATE SUBSIDIES . . . .41- NORWAY 49 DENMARK 56 IV. CONCLUSIONS 72 x CONTENTS APPENDIX PAGE I. RULES OF THE BERNE MUNICIPAL UNEMPLOY- MENT INSURANCE SCHEME . . 82 ADMINISTRATIVE REGULATIONS OF THE BERNE MUNICIPAL UNEMPLOYMENT INSURANCE FUND .... 85 II. REGULATIONS RELATING TO THE SCHEME OF INSURANCE AGAINST UNEMPLOYMENT - ESTABLISHED BY THE MUNICIPALITY OF STRASSBURG. .... 89 III. NORWEGIAN LAWS CONCERNING STATE AND COMMUNAL SUBSIDIES TO UNEMPLOY- MENT INSURANCE FUNDS 93 IV. PART I. DANISH LAW CONCERNING STATE AND COMMUNAL SUBVENTIONS TO UNEM- PLOYMENT INSURANCE FUNDS . . IOO PART II. MODEL RULES FOR UNEMPLOYMENT IN- SURANCE FUNDS (TRADE FUNDS) . 112 V. LIST OF PRINCIPAL PUBLICATIONS DEALING WITH THE QUESTION OF INSURANCE AGAINST UNEMPLOYMENT . . .126 INDEX 130 INSURANCE AGAINST UNEMPLOYMENT CHAPTER I WHAT IS MEANT BY INSURANCE AGAINST UNEMPLOYMENT INSURANCE may for present purposes be taken to be a system, under which, in return for premiums paid by a number of persons, who, upon the occurrence of a specified contingency will incur financial loss, an indemnity (total or partial) is secured to the insurers against this loss. The particular form of insurance, of which it is the object of these pages to give a brief account, is that, in which the loss insured against is the loss caused to workpeople by their unemployment. It should, however, be explained that the contingency covered by this insurance is not co-extensive with all, but only with certain kinds of unemployment. Different Types of Unemployment Thus, unemployment arising from the voluntary act or default of the insured is not, as a rule, 2 INSURANCE AGAINST UNEMPLOYMENT covered by this form of insurance. If a workman, who has effected an insurance against unemploy- ment and . who, while out of work, is offered employment in his own trade at wages and ; generally 5 - under conditions accepted as "fair" by his trade union, refuses, with no good reason, to accept that employment, then his consequent un- employment will not entitle this insurer to receive any indemnity for the loss of the wages, which he might have received, had he accepted this offer. While this rule is universally accepted, a great deal of difficulty is caused by the contentions made on behalf of the members of trade organizations of workmen that, e.g.> an engineer is not bound to accept employment as a navvy, that a trade unionist ought not to be expected to take work offered on conditions inferior to those recognized by his trade union, and so on. Then as to lack of work arising from the voluntary cessation of the workman's labour in support of a trade dispute, the loss thereby entailed is, according to the view very generally accepted, a risk to be covered, not by unemployment insurance, but by a separate form of insurance under which, in such a case, the insurer receives "strike pay." When, again, un- employment is caused by the fact that an employer, in furtherance of a trade dispute, " locks-out " his workpeople, the risk in this case is in practice always treated on the same footing as in the case of a strike, it being usually considered that lock- outs ought to be treated like strikes, because a WHAT IS MEANT BY INSURANCE 3 lock-out is so often resorted to by the employer as his best defence to a strike, actual or threatened. On the other hand, in Germany, at any rate, many trade unionists claim, that unemployment caused by a lock-out, being involuntary on the part of the workmen, ought to be held to be covered by unemployment insurance. Another form of unemployment is that caused by the disablement, total or partial, of the workman owing to either accident or sickness. There can be no question, that under any complete system of workmen's insurance the risk of unemployment caused by the workman's being thus rendered totally or partially incapable of performing labour, ought to be (as in Germany it is) covered, not by unemployment insurance, but by accident, sickness and invalidity insurance ; and in fact all the exist- ing types of unemployment insurance, in principle at least, confine their operations to insurance against the risk of unemployment incurred by able- bodied workpeople. If, accordingly, we limit our conception of un- employment insurance in the manner just explained, we shall find that the risks to be covered by such insurance may conveniently be divided into five main classes. A. First we have the case of workpeople, who find it impossible to obtain employment owing to the progress of invention accompanied by the in- troduction of new machinery or the adoption of new processes of manufacture, e. g. y labourers in the 4 INSURANCE AGAINST UNEMPLOYMENT building trade displaced by the steam navvy, brick- layers displaced owing to the introduction of ferro- concrete, hand-loom weavers displaced by the power-loom, whip-makers displaced, owing to the ever increasing number of motor vehicles. In these cases the workpeople thus displaced may in some cases learn to perform the new kind of labour required (a hand-loom weaver turning into a power-loom weaver, a coachman becoming a chauffeur, etc.) ; if not, they can only obtain employment by either taking up some other branch of their old trade, or else entering an entirely new occupation. B. Next we have the workpeople, who are temporarily thrown out of work by a spasmodic depression affecting the whole of the industry in which they are engaged, e.g., depression caused by the outbreak of war, or famine, or pestilence in a country to which we export largely, or from which we import the raw materials (e.g., cotton) necessary for production, or affecting the particular factory in which these workpeople are employed (a mill fire, the breakdown of machinery, the flooding of a seam in a mine, etc.). C. Then we have the case of workpeople thrown into involuntary idleness by trade depression of a cyclical nature the antithetic aftermath of a periodically recurring " trade boom." When " good times " return, all these workpeople will probably again find work. D. In the fourth place, we have the workpeople WHAT IS MEANT BY INSURANCE 5 in the season trades, who are thrown out of work by the fact, that the processes of manufacture cannot be carried on conveniently or at all at certain times of the year, e.g., some branches of the building trade, on account of frost in winter ; fish- curing and hop-picking, on account of the raw material being only available at certain seasons; some kinds of clothing manufacture, on account of fluctuations in demand consequent upon weather conditions (light women's boots, for example, being mainly wanted in summer, dancing-shoes made by a separate class of operatives mainly in winter). These workpeople are fully employed, and, indeed, often work overtime in the busy season, but get little or nothing to do out of the busy season. Their unemployment is intermittent. E. In the last place we have the casual labourers (mainly unspecialized), who in very many cases hardly ever get a full week's work, often get only a few days' work per week, and sometimes get none at all (e.g., many dock labourers, shirt-makers, etc.). Here there is at no time work enough to go round. The condition of these workpeople is one of permanent under-employment. Different Types of Unemployment Insurance Such being the risks to be covered by unem- ployment insurance, it is to be observed, that this insurance may be of either a voluntary or a compulsory character, and that in either case the premiums paid under a scheme of unemployment 6 INSURANCE AGAINST UNEMPLOYMENT insurance may be paid (a) entirely by the work- people concerned, or (&) partly by the workpeople concerned and partly by their employers, or (c) wholly by their employers. In addition, there are certain forms of unem- ployment insurance, which are distinguished from those just enumerated by the fact, that either the premiums paid by the insurers or the benefits received by such of them as become unemployed are supplemented either by charitable donations or by subventions granted by the Public Author- ities (State or Municipal), or by both these kinds of subsidies. With respect to voluntary insurance, the most important type is that organized in this and other countries by the unassisted efforts of trade union organizations ; no detailed explanation of this well-known form of insurance is required here ; nor, again, will any attempt be made in this place to deal with the various projects for the adoption of schemes of unemployment insurance (such, for example, as those, under which it has been proposed to establish a compulsory system, with contributions from employers as well as from workpeople and from the State) which have from time to time been put forward, but which have so far not been put to the test of actual experience. It is, on the other hand, the various systems established in many countries, but so far untried in the United Kingdom, under which the thrift of the insured workpeople is supplemented by public WHAT IS MEANT BY INSURANCE 7 subventions, that will be described here. These are of two kinds. In the first place we have com- pulsory insurance maintained by premiums paid by the insured workpeople supplemented by a Municipal subvention. In the second place we have various types of voluntary insurance main- tained by premiums paid by the insured workpeople supplemented by subventions paid in some cases (as a rule, not to any important extent) by charit- able individuals or associations, 1 but in the main by Public Authorities either Municipal, Provincial, or State, or by Municipal and State Authorities jointly. 2 1 In some cases these charitable individuals or associa- tions are employers or organizations of employers ; in one case the subsidies to the benefits granted by the organiza- tions of the employees are, under a scheme adopted in 1906, entirely contributed by an association of employers in the embroidery industry in Eastern Switzerland (see Reichs- Arbeitsblatt, the journal of the German Labour Department, January 1907, pp. 39-45, and Sociale Praxis^ October 3, 1907, cols. 19, 20). 2 In a few cases Municipal subventions have been granted by way of supplement to the savings of individual workpeople. This supplement is payable only if these persons become unemployed, but in most cases they are allowed to withdraw their own deposits, whether they become unemployed or not. These cases are not examples of insurance, and will not be discussed here. CHAPTER II COMPULSORY INSURANCE St. Gall ALTHOUGH the solitary example of compulsory insurance against unemployment is one, from which, owing to the defective manner in which this experiment was carried out, it is not possible to draw any very definite conclusions with regard either to the advisability or the general prac- ticability of this form of unemployment insurance, yet on certain important points so much is unquestionably to be learned from the experience gained in this case, that a fairly full account of the working of the St. Gall Municipal Unemploy- ment Insurance Scheme (based mainly upon the account of it given in the Report to the Board of Trade on Agencies and Methods for Dealing with the Unemployed in certain Foreign Countries by the present writer), 1 will, it is believed, be of interest. The scheme of compulsory insurance adopted 1 Cd. 2304 of 1904, pp. 143-148. A few of the details in the text are taken from the Report on Unemployment Insurance by the German Labour Department, Die besteh- enden Einrichtungen zur Versicherung gegen die Folgen der Arbeitslosigkeit im Auslande und im DeutschenReich^ Part I, pp. 97-114. 8 COMPULSORY INSURANCE 9 by the Municipality of the town of St. Gall was introduced by virtue of a Law passed on May 19, 1894, by the Great Council of the Canton of St. Gall, under which power was given to Municipal and other Communal Authorities to introduce a system of insurance against unemployment, which should be obligatory for all male wage-earning workmen whose average daily earnings did not amount to more than 4^. ; any men earning more than this amount might insure themselves, if they so wished, on the same terms as the persons for whom insurance was compulsory. On the other hand, if a man could show that he was already a member of an association providing unemployed pay at least equal in amount to that provided by the Compulsory Insurance Fund, he had a right to be released from the obligation to insure with the Compulsory Fund. Any Fund to be established by virtue of this Law could provide by its rules, that women should be insured with the Fund, either voluntarily or compulsorily. The general conditions, under which any Fund established under this Law should be organized, were prescribed by the Statute. Among these conditions is the provision, that no one should receive unemployed pay unless it should be found impossible to offer him " work suitable to the trade to which he belonged, or to his strength, remun- erated by the wages current in the district." The right to receive unemployed pay was to begin only after the insurer should have paid the premiums io INSURANCE AGAINST UNEMPLOYMENT fixed by the rules of the Fund for an uninterrupted period of six months at the least ; in the case of foreigners a longer period might be required. The expenses of administration incurred in connection with the Insurance Fund were to be paid out of the moneys of the Police Force ; all other expenses of the Fund were to be met (a) by the premiums paid by the insured, (b) by voluntary subscriptions and donations, (c) by grants from the Municipalities or Communes concerned, not to exceed is. 7'2d. per insured person per year, (d) by subventions from the Canton, the amount of which was to be fixed in the Budget of that State, (e) by subventions, if any such should be granted, from the Swiss Federal Government. It was at first proposed that a Compulsory Unemployment Insurance Fund should, under the provisions of this Law, be established by the three Municipalities of St. Gall, Tablat and Straubenzell jointly. But, upon the matter being brought before a town's meeting at Tablat, the scheme was rejected by a large majority this decision being arrived at largely in consequence of the unsympa- thetic attitude towards these proposals taken up by the working-classes at Tablat ; and St. Gall determined to undertake the scheme by itself, as an experiment to be tried for two years. The scheme, which was put into operation as from July I, 1895, provided for the payment of weekly premiums varying with the daily earnings of the insured on the following scale : COMPULSORY INSURANCE n For men with earnings of is. 4*8^., or less . r^d. For men with earnings of over 2s. 4*8^., up to 3^. 2*4*/. i 'f)d. For men with earnings of over y. 2'47S by way of subvention to the Unemployment Insur- ance Funds maintained by trade societies ; but particulars as to this matter are not available. 22 INSURANCE AGAINST UNEMPLOYMENT theory at least, 1 workpeople engaged in any occu- pation are allowed to insure themselves, the funds required for the payment of the unemployed benefits, payable only in respect of unemployment during a maximum of seventy days in the winter months (December to March), 2 being provided to a small extent by the insurers, but mainly by a relatively large subsidy granted by the Municipality of Berne. The system is marked as one of a virtually Poor Law character by the fact that, although all insurers pay the same premium (6\d. per month), the unemployed benefit is on a differ- ent scale for single men and for men with families (is. 2%d. per day for men without, is. *]\d. per day for men with dependants). Originally there was no age limit and no right to refuse men with impaired working capacity ; but since 1900, persons incapable of doing a fair day's work and persons over sixty years of age have been excluded from membership. When this scheme was started in 1893, the Rules required that, in order to be entitled to claim 1 Although not in accordance with the Rules of the Fund, it is the fact (as the present writer ascertained when personally investigating the Berne system on the spot) that the Manag- ing Committee decline to insure any wood-choppers a class of workpeople with very irregular employment and not over- fond of work. 2 Every person insured with the Berne Fund, who reports himself unemployed, is required to verify the fact by attend- ing roll-call (at the Municipal Labour Exchange) twice a day. The Municipality specially reserves public works to be done in winter by persons insured with the Fund. VOLUNTARY INSURANCE 23 benefit if he became unemployed, a man must have paid his premiums regularly for six months at least ; in 1900 this was raised to eight months. In 1897 a requirement was introduced that, in order to claim unemployed benefit, a man must show that he had been employed for at least six months in the preceding year. Up to 1903 the employees of the Municipality were compelled to insure themselves with the Fund ; as soon as this compulsion was removed, they ceased to do so. 1 The net result of these alterations (it will be seen) is to exclude from membership persons whose employment is, even in the summer months, distinctly irregular. On the other hand, it is obvious, that persons, who feel fairly secure of regular employment all through the year, have nothing to gain by insuring themselves with the Berne Fund. The class of persons, who enjoy the advantages of the Berne scheme are, there- fore, neither of the very casual class nor of the very regularly employed class, but of the class of men who in winter find it difficult to obtain really continuous employment. The percentage of the insured, who at some time or other in the winter have been unemployed, has in recent years varied between 38 and 51 per cent. In 1907-8 (a period of good trade except for painters and stone- 1 In 1895 it was proposed to make insurance against unemployment at Berne compulsory ; but this plan had to be abandoned on account of the opposition of the better-paid workpeople, who regarded it as an attempt to tax them for the benefit of their less highly-paid fellows. 24 INSURANCE AGAINST UNEMPLOYMENT carvers) out of the total number of 508 insured members of the Fund, 233 (46 per cent.) became unemployed, almost the whole of them being engaged in one branch or another of the building trade (60 per cent, of all unemployed being builders' labourers and navvies, 21 per cent, being bricklayers, masons, plasterers, etc.). The Report of the Fund states that " It was found possible to pay the full benefit provided by the Rules, viz. for the first 30 days 1 is. J\d. to married men and is. 2\d. per day to men without dependants, and for unemployment lasting longer than thirty days the benefit was reduced to is. 2\d. and 7\d. per day respectively. Twenty-one unemployed received benefits amounting in each case to over 4, the highest amount being 4. 43., which was received by sixteen out of these twenty-one persons." In order to receive these small daily allowances the insured paid premiums amounting in the aggregate to 157, while the Municipal subvention was no less than 480, and various employers gave contributions amounting in all to a little over 40. Within the limited sphere of its operations the Berne scheme, although partaking rather of the character of poor relief than of insurance, cannot be considered to be unsuccessful. 1 Originally no benefit could be claimed until after a man had been unemployed for one week ; but by an alteration in the Rules made in Nov. 1907, the right to receive benefit commences at once. VOLUNTARY INSURANCE 25 The Rules and Administrative Regulations of the Berne scheme are^ printed in full in Appendix I, post, pp. 82-88. Bdle The Bale experiment (commenced early in 1901) was somewhat on the same lines as that at Berne, also with a public subvention (from the Canton of Bale) ; but both with respect to the premiums and the benefit, the Bale scheme differed from that in force at Berne. The amount of the premium at Bale varied in proportion to the earnings of the insured, e.g., for earnings not exceeding $s. 2\d. per day, ^\d. per month; for earnings up to 4^., 5fdl, and for earnings over 4$-., 6\d. (Up to 1906, the premiums were 3f d., ^\d. and 5 \d. respectively.) The amount of the benefit (payable during not more than 42 days) was the same for married as for single men. This amount was at first g\d. per day, then 15-. old., and in 1906-7 was raised to is. 2\d. At one time (in 1902-3) the membership was as high as 1,174; but in 1903-4 a rule was adopted for the exclusion of members more than six months in arrear with their subscriptions ; no less than 274 were struck off the list for this reason in 1904-5 ; and in 1906-7 (the last year during which the fund was in operation) the number of members had fallen to 457, of whom 179 (39 per cent.) became unemployed. The total amount of the unemployed benefit received by these 179 unemployed persons was 291. The premiums 26 INSURANCE AGAINST UNEMPLOYMENT paid by the insured amounted to no more than ^"84, or 29 per cent, of the amount of the benefits paid. In 1906-7 the benefits could only be paid by resorting (as had been done in previous years) to the Reserve Fund ; and it was admitted by the Administration of the Fund that its finances were in hopeless confusion. The persons insured with the Fund were mainly men in the building trades ; the bricklayers, masons and labourers received between them much more than three-fourths of all the money spent in unemployed benefit. The Bale scheme, an acknowledged failure, is stated to have been definitely abandoned. 1 Venice Of this scheme it is enough to say, that it was framed in 1901 upon the most unpractical lines, that the proportion of its members, who became 1 There has also been an experiment in unemployment insurance at Geneva, established towards the end of 1904, somewhat on the Bale lines, but with premiums of <)\d. per month for workpeople whose daily wages do not exceed 3^., and i\\d. for those with wages above 55. a day, and with benefits at the rate of is. i\d. per day for those who belong to the first, and of is. ^\d. per day for those who belong to the second of these two wage-classes ; but to these benefits is added an extra g\d. per day for each child under 14 years of age. This experiment has almost totally failed, and its operations have been upon a quite microscopic scale. The Council of the Canton of Appenzell (Ausserrhodisch) on May 1 8, 1908, voted 20 for the payment of subsidies to Unemployment Insurance Funds ; this scheme is not yet developed (Zeitschrift fur Schweizerische Statistik, 54th year, vol. i, pp. 20, 21). VOLUNTARY INSURANCE 27 unemployed, was enormously high, that the pre- miums paid by the insured covered only a minute proportion of the benefits paid, and that the necessary outlay had to be met indirectly by very large contributions from the Municipality of Venice and partly by donations from charitable individuals, and that the philanthropic society, by which it was founded, in a report issued by it in October 1904, admitted frankly, that it was a total failure. Cologne The scheme of Municipally subsidized Unem- ployment Insurance established at Cologne in 1896, provides against winter (December I to March i inclusive) unemployment only, and excludes from membership (i) all persons who have not resided at Cologne for at least one year, and (2) all persons with no definite, recognized occupation, and all casual labourers. A further exclusion of persons irregularly employed is maintained by the require- ment made, that the premiums payable by the insured must be paid for 34 weeks in the year, and that all claim to receive unemployed benefit is forfeited by any man who is four weeks in arrear with the payment of his premiums. The present scale of the premium is ^\d. per week for unskilled, and 5j5o Cabinet-makers. 6,400 " t Moulders. t 1,400 Printers. ' 3,200 ,i Boot and Shoe-makers. 2,500 Millers. ' 45 H Day Labourers. 20,000 Brush-makers. Seeland. 160 Nov. 1907. Carpenters. Denmark. 4,000 Saddlers and Upholsterers. Tobacco-workers (chewing tobacco). 1,000 335 Bookbinders. 75 Printers on metal. 65 Hat-makers. 140 Stokers. 1,160 Dec. 1907. Sugar Workers, Chocolate and ii 90 Biscuit-makers. Metal Founders. 360 Bricklayers. || 4,000 Jan. 1908. Tanners. 200 Workers in iron and other metals. 9,800 Polishers of iron and other metals. 80 Sculptors. " 130 Tobacco-workers. 3,880 Feb. 1908. Stone-cutters (marble and granite). S tucco- workers. Seeland. Denmark. 90 140 Lithographers, etc. M 300 Glove-makers. IOO Turners. 320 April T, 1908 Butchers, Sausage-makers, etc. Ship Carpenters. 1,250 350 Total 72,600 VOLUNTARY INSURANCE 67 It will be seen that these 36 Trade Funds have an aggregate membership of 72,600, and that among their members are included not alone the work- people engaged in a great variety of skilled trades, but also a very large number of less specialized forms of labour (day labourers, 20,000 ; builders' labourers, 1,600). Out of the total of 37 Funds (36 Trade and I Local) here referred to, 34 are Funds attached to trade unions, which had established these Funds before the Law came into operation. The remain- ing 3 Funds, being formed after the Law came into force, could not, owing to the conditions laid down in the Law and mentioned above, begin to pay benefits during the first financial year 1907-8 (see ante, p. 61 ; also post, p. 70, note). According to information, which Mr. Soerensen has been good enough to furnish, the amount ->aid by the State in respect of the subvention tc the officially recognized Unemployment Insurance Funds (payable under the Unemployment Insur- ance Law) in respect of so much of the financial year 1907-8 as elapsed between September i, 1907, when the first of these Funds received recognition, and the end of that year (March 31, 1908) was 8,338. The Inspector of Unemployment also reports that on November 15, 1908, the number of officially recognized Unemployment Insurance Funds was 41. Of these only one is Local, the other 40 being Trade Funds, of which 37 cover the whole of 68 INSURANCE AGAINST UNEMPLOYMENT Denmark and 3 cover only part of the Kingdom (Seeland). The total number of persons insured against unemployment with these 41 Funds is 77,000. So far as can be ascertained, the organization of all these Funds is of a trade union character. With regard to the subventions, which the Law empowers the Danish Local Authorities (Municipal and Communal) to grant as subsidies to Unemployment Insurance Funds, although it is known that a good deal has already been done in this direction, the Municipality of Copenhagen, for example, having voted 2,778 by way of subvention for the year ipoS, 1 full particulars as to all that has been done are not at present available. But from information given by the Danish newspaper Politiken in its issue of November 18, 1908, it would appear, that the question of these subven- tions is still, to a great extent, unsettled. For on November 17, 1908, a meeting of the Association of Danish Local Authorities, at which 24 mayors and other representatives of various Local Authori- ties attended, was held at Copenhagen, at which the whole subject was discussed. At this meeting the Inspector of Unemployment delivered an address, in which he endeavoured to remove the doubts, which were felt as to the position of the Local Authorities in regard to this matter. 1 This information is given by the Politiken of November 20, 1908 ; that newspaper states, that this Municipal grant will probably be increased in 1909 to ,7,222. VOLUNTARY INSURANCE 69 In order to remove these doubts, an official circular had been sent to the different Local Authorities, and the Inspector took this opportunity of adding his verbal explanations. In the course of his address Mr. Soerensen deprecated the idea of paying these subsidies directly into the hands of unemployed workpeople, on the ground that, if this were done, no certainty could be felt that the money would be used for the objects for which it was intended. A long debate followed, in which the principal subject of discussion was, whether the proper course to pursue would be to grant to the various Unemployment Insurance Funds the maxi- mum subvention allowed by the Law. Several representatives, while in favour of the adoption of this course, expressed the opinion, that it would have been better if the State had dealt with the question of subsidizing Unemployment Insurance itself and exclusively out of its own resources, without leaving any part of the subsidies to be provided by the Local Authorities. A representa- tive then proposed a resolution to the effect, that the Local Authorities should grant the maximum subventions. It was urged by another speaker, that the amount of the subvention in each case ought properly to be made to depend upon the financial situation of the particular Authority con- cerned. But the resolution to grant the maximum subventions was carried by 13 votes to i, a number of the representatives present abstaining from voting either way. 70 INSURANCE AGAINST UNEMPLOYMENT As to the extent to which it will ultimately be found possible to secure the benefits provided by the Law for the unorganized workmen, this remains to be seen. Writing to the author on December I, 1908, Mr. Cordt Trap, the Director of the Stat- istical Office of the Municipality of Copenhagen, states, that it must be assumed that the members of the Unemployment Funds, which up to that date had received official recognition under the Law, were all trade unionists. A translation of the Danish Unemployment Insurance Law is printed in Part I of Appendix IV (post, pp. 1 00- 1 1 1) 1 , while in Part II of that Appen- dix (post, pp. 112-125) will De found a translation of the Model Rules for an Unemployment Insurance 1 A law of May 27, 1908 (of which, since it is only of temporary interest, it has not seemed necessary to give a translation), provides, that any Unemployment Insurance Fund, which received official' recognition in the course of the financial year 1907-8, but which had not at the date, when the principal enactment came into operation, existed for twelve months, should, notwithstanding the provisions of that enactment, be entitled to pay benefits to such persons as were already members of the Fund when it received recognition, provided that it should be shown to the satisfac- tion of the Inspector of Unemployment, that such Fund was in possession of means adequate to enable it to commence paying benefits in accordance with its rules. Local authori- ties were empowered, at any time within the financial year in question, to grant to any such Fund an extra subvention in excess of the maximum specified in the original Law ; and the Minister of the Interior was empowered to make to any such Fund an advance by way of prepayment of the subvention of the State for the current year. VOLUNTARY INSURANCE 71 Fund enjoying official recognition, and the conse- quent right to claim the public subsidies contem- plated by this Law. These Model Rules, as has been stated by Mr. Soerensen in his Report to the Rome Congress already referred to, were drawn up by the Minister of the Interior and the In- spector of Unemployment in consultation with a Committee appointed by the Central Federation of Danish Trade Unions ; and " the result of this colla- boration has been, that all the officially recognized Unemployment Insurance Funds have adopted, almost in their entirety, the provisions contained in these Model Rules, with such modifications as were rendered necessary by the different forms of benefit paid by the different Funds, and the more or less simplified method obtaining in their administration in each case." Appendix V (post, pp. 126-129) contains a concise list of principal publications dealing with the subject of Unemployment Insurance in all countries. CHAPTER IV CONCLUSIONS THE various forms, in which insurance against unemployment assisted by subventions paid out of public moneys has been established in different Continental countries, having been described, it remains for those interested in this subject to consider, in the first place, whether it is advisable and practicable for this country to adopt some method of Unemployment Insurance, and, in the second place, what should be the lines, upon which, if it should be determined to introduce in the United Kingdom a system of insurance of this nature, it would appear desirable to frame the scheme under which this system shall be carried out. The first of these two questions it is not proposed to discuss here. With respect to the second question, it is submitted, that the system to be adopted should follow fairly closely the legisla- tion enacted in Norway and Denmark, that is to say, (i) that the resources at the disposal of Funds main- tained by the contributions of workpeople associated together for the purpose of enabling their members, if they become unemployed, to draw benefits on an agreed scale should be supplemented out of public 72 CONCLUSIONS 73 moneys, the Funds to be thus subsidized being so far as possible, organized separately for separate trades or groups of allied trades, and (2) that these arrange- ments should possess a national (inter-local) character. It also appears desirable, (3) that any scheme of publicly assisted unemployment insurance should be operated in close connection with an efficiently organ- ized system of Labour Registries. The reasons for the conclusions just stated are, briefly, of the following nature : I. THE SYSTEM MUST BE ORGANIZED PER TRADE When it is submitted that the system of (assisted) insurance against unemployment, the establish- ment of which is now under consideration, should be one, under which the public subventions shall be paid for the supplementation of the benefits provided by trade associations that is to say, associations each of which is composed of members engaged in the same trade or in one or other of a group of allied trades the reasons for this conten- tion are of a twofold nature. In the first place, it is abundantly clear that the alternative plan that of a general Insurance Fund for all trades together must tend to drive away the better class of insurers, the " good lives " who, under any well-devised system of insurance, pay for the " bad lives." It is obvious, that a workman engaged in a trade, in which the risk of unemploy- 74 INSURANCE AGAINST UNEMPLOYMENT ment is small, will be strongly disinclined to insure himself against unemployment with an Insurance Fund, with which are similarly insured, simultaneously and upon equal terms, a more or less considerable number of persons engaged in trades, in which a very large probability of unem- ployment exists. But any scheme of insurance, under which all or most of the insurers are relatively " bad lives," is foredoomed to failure. It is, of course, possible to establish a general Fund for the insurance of workpeople in all trades together, and to charge different rates of premium, e.g., to railway servants, who suffer comparatively little from unemployment, and to builders' labourers, who are often out of work. But the establishment of premium rates, which shall at once correspond with the actual risk in each case and at the same time not give rise to a great deal of dissatisfaction, would be found to be a task, the performance of which would inevitably involve the authorities called upon to administer a scheme of unemployment insurance subsidized by public grants in very serious difficulties. In the second place, the trade association method of insurance tends to reduce the chances of fraud the " simulation " of unemployment by men, who, during the whole or part of the time during which they are drawing unemployed pay, are, in fact, earning money by their labour. For since men in the same trade know a good deal about the move- ments and occupations of each other, a trade CONCLUSIONS 75 association, which insures its members against unemployment, is in many cases in a fairly good position for ascertaining the true facts ; and of course every such association has in all cases a direct incentive to prevent, so far as lies in its power, the receipt of unemployed benefit by a fraudulent claimant. At the same time, in considering the rival merits of general insurance (for all trades together) on the one hand, and trade association insurance on the other, it must be borne in mind, that trade associa- tions carrying out this business of insurance already exist, and command to a large extent the confi- dence of the working-classes ; and it is at any rate beyond question, that any scheme of assisted unemployment insurance, under which it should be proposed, that the public subvention should be granted upon terms, which would involve a railway servant, for example, in the necessity (if he wished to secure the benefit of this subvention) of either paying two sets of premiums (i. e., his weekly pay- ments to the Amalgamated Society of Railway Servants, and also his contributions to a subsi- dized all-trades-together Unemployment Insurance Fund) or throwing up his membership in his trade union, would incur the irreconcilable hostility of the members of our trade union organ- izations, and provoke much unfriendly criticism on the part of a numerous section of the community. 76 INSURANCE AGAINST UNEMPLOYMENT II. THE SYSTEM MUST BE NATIONAL The next point, to which it is proper to call attention, is the serious defects, which, in this country at any rate, would be present in any scheme of unemployment insurance, which, like the Ghent, the Strassburg, and other Continental schemes, was of a local, as distinguished from a national nature. In the first place, since one principal object, which those, who advocate the development by means of grants of public money of insurance against unemployment, consider it possible to achieve, is the encouragement of this form of thrift on the part of the working-classes, any scheme of this kind not framed upon lines fully inter-local (i. ' (1) A copy of the rules of the Fund; (2) A register of the members containing their names and callings, and in addition showing how far they may be considered to be seasonal workers. (3) A copy of the resolution, in accordance with which the recognition is applied for ; and (4) A financial report for the past year, except when the Fund making application is newly founded. 4. In order to receive public recognition, an Unem- ployment Insurance Fund must have at least fifty mem- bers. Under special circumstances the Minister may also sanction the recognition of such Funds as have a smaller membership. An Unemployment Insurance Fund must operate either in one or more particular trades, in which case it must include at least one province, or else it must be exclusively confined to one locality. A Trade Fund may be divided into local sections. A local section of a Trade Fund shall, with respect to the contribution of the Commune, be in precisely the same position as a local Fund. 5. Only workmen, whose circumstances are such as to entitle them to State aid from an officially recognized Sick Fund, can be full members (/. e., members entitled to benefit) of recognized Unemployment Insurance 102 INSURANCE AGAINST UNEMPLOYMENT Funds. Nevertheless, Funds already in existence previous to the passing of the present Act may obtain recognition by making the necessary application within six months, with the proviso that those members, to whom the above conditions do not apply, but who were admitted to membership in the Fund before the passing of the present Act, may become full members of the Fund. Nevertheless, the Fund shall not be entitled to receive State grants in respect of the premiums paid by siic'u numbers. The age-limit for admission to membership in a recog- nized Unemployment Insurance Fund shall be laid down in the -rules, but no person under eighteen or except in case of transference from one Fund to another over sixty years of age, may be admitted to membership. Admission to membership in a recognized Unemploy- ment Insurance Fund as a full member cannot be refused to any person fulfilling the conditions specified above (but cf. 6) and belonging to the trade or trades, or residing within the locality for which the Fund is estab- lished. Such persons as are not workmen, and whose circumstances are not such as to entitle them to draw State aid from a recognized Sick Fund, shall, if they possess the necessary qualifications in other respects, be entitled to become contributing members of a recognized Unemployment Insurance Fund, and shall acquire the rights of full members, so soon as all the conditions qualifying them for such rights shall be present. Any person hitherto a full member of a recognized Unem- ployment Insurance Fund, who no longer fulfills the prescribed conditions in this respect, may become a contributing member with the right again to revert to the status of full member, if he complies with all the required conditions with the exception of that with respect to the age-limit. The extent of the yearly con- tributions to be paid by such members shall be determined by the rules of the Fund. When contribut- ing members become full members, they shall pay the contribution due from full members. The Sick Fund Committee mentioned in 7, of Act 85, April 12, APPENDIX IV 103 1892, shall, with respect to i, sub-section i, decide whether any particular persons may, in accordance with the conditions prescribed in this paragraph, be accepted as member in a recognized Unemployment Insurance Fund, and under what category he may be admitted. With respect to other qualifications, the decision shall rest with the Inspector of Unemployment. An appeal against any particular decision may be lodged with the Minister of the Interior, whose decision shall be final. 6. A provision may be inserted in the rules of a recog- nized Unemployment Insurance Fund, which shall give the Administration of the Fund power to refuse admission to such persons as appear to be physically or morally incapable of continued self-support or of working [on good terms] with foremen or fellow-workmen. Similarly, it may be provided in the rules, that the Administration of the Fund shall have power to exclude such persons from membership in the Fund. Nevertheless, an appeal against any decision of the Administration of the Fund coming under this Section may be lodged with the Unemployment Insurance Committee mentioned in iS of the present Act, which shall give its decision after due consideration of the special circumstances of the case. Similarly, an appeal against the decision of the Unem- ployment Insurance Committee may be lodged with the Minister of the Interior, against whose decision there shall be no appeal. 7. No person shall at one and the same time be a member of more than one recognized Unemployment Insurance Fund. If any person, at the time of his joining a recognized Unemployment Insurance Fund, is at the same time member of a non-recognized Un- employment Insurance Fund, he must, on applying, at once inform the Managing Committee of the fact. Similarly, if a member of a recognized Unemployment Insurance Fund is, or becomes, at the same time member of a non-recognized Unemployment Insurance Fund, notification must immediately be made. No member of a recognized Unemployment Insurance Fund may, by joining several such Funds, secure daily allow- io 4 INSURANCE AGAINST UNEMPLOYMENT ances amounting in the aggregate to more than two- thirds of the average wage current in the trade or trades for, or in the districts within which the Fund operates. The contravention of any of the provisions of the foregoing paragraph, as also dishonest conduct towards the Fund, shall be punishable by expulsion. 8. The yearly premium in a recognized Unemploy- ment Insurance Fund (including the contribution out of public Funds referred to below in 9) shall be fixed at such a sum as shall appear, from an examination of the available evidence, to be sufficient, in all cases, which may arise, to supply members with the unemployed benefit provided for in the rules, the amount of which must in all cases be such that this benefit will be of some real service to them. An additional contribution corresponding to the varying needs of the Fund may, if necessary, be levied. The income and the capital of the Fund shall be kept strictly separate from the funds of other Associations, and may not be transferred by way of loan or gift, to any other Association or in any way be used for any unauthorized purpose. 9. Recognized Unemployment Insurance Funds shall receive a yearly grant from the Exchequer to the extent of one-third of the total premiums of the Funds as laid down in 8 (but cf. 5, i); but in no case shall such grants exceed the sum of ^13,889. The grant shall be distributed amongst the Funds in proportion to the amount of their respective premiums. The Commune, in which a member has his settlement, shall, without its being necessary to obtain the sanction of any higher authority, have power to give a contribution towards defraying his premium for the current financial year ; such contribution, however, must not exceed one- sixth of the premium. The receipt of such contribution shall not carry with it for the person, for whose advantage the contribution is paid, the consequences entailed by the receipt of Poor Relief. Communes, in which re- cognized Unemployment Insurance Funds have their head-quarters or branch offices for which purpose APPENDIX IV 105 Copenhagen and Fredriksborg shall be considered as one Commune shall likewise have power, without its being necessary to obtain the sanction of any higher authority, to pay a contribution to the Fund, or Funds concerned ; but such contribution may not exceed one- sixth of the yearly premium of those members of such Funds, who had their settlement in that Commune on March 31 then last. 10. In order to receive a grant out of public Funds for the past year, it shall be necessary to send in to the In- spector of Unemployment a financial report for that year, reckoning from April i to March 31 inclusive, also a report on the operations of the Fund during that period, and a register of the members of the Fund showing the proportion of the premium paid by each member, and by the Commune in which he has his settlement. The form for such a register shall be drawn up by the In- spector of Unemployment. The Inspector of Unemploy- ment shall, after examining the reports, cause the State grant for the past year to be paid out of the proper funds to every Unemployment Insurance Fund. ii. The decision as to the extent and character of the relief to be paid in any particular case, shall rest with the Administration of the Fund. The relief may consist of : 1) Travelling benefit ; 2) Assistance in paying rent ; 3) Daily allowance in cash ; 4) Assistance in kind. With respect to a trade Fund, not more than two-thirds of the average wage current in the particular trade or trades, and with respect to a local Fund, not more than two-thirds of the common daily wages of labour current in the locality, for which the Fund is established, shall be paid by way of daily relief, whether for lodging benefit, daily allowance in cash, or assistance in kind. In no case shall the relief paid amount to a smaller sum than 6f