Rhetorical revival for full employment: Nicholas Timmins looks for meaning behind a phrase that politicians on all sides have rescued from years of neglect

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Indy Politics
FULL employment is suddenly back on everybody's lips. But what the phrase will mean for the 2.6 million jobless is unclear - not least because no agreed definition of full employment exists. How things have changed, however, from the Eighties.

Full employment started life as one of three key assumptions made by Beveridge - the others were a national health service and family allowances - as necessary to underpin his 1942 plan for social security. Without it, the costs of the scheme might be insupportable, he warned.

His definition then - after unemployment had hit 23 per cent in the Thirties - was 8.5 per cent jobless. By 1944 the coalition government had accepted there must be no return to the Thirties and that year's White Paper accepted as one of the Government's 'primary aims and responsibilities, the maintenance of a high and stable level of employment after the war'.

The White Paper contained no figure. Five months later, Beveridge himself, in Full Employment in a Free Society, defined full employment as 3 per cent jobless on average, but this had no official status.

Full employment had returned in the war by the time of Beveridge's original report and unemployment rarely rose above 3 per cent until the Seventies. For much of the Fifties and Sixties it ran at 1.5 to 2 per cent against the 9.4 per cent today, on a far tighter definition of who is jobless.

The power of the idea, however, was shown by the political fury unleashed when unemployment hit 600,000 - 2.7 per cent - under Labour in the Sixties and by its contribution to the Heath government's economic U-turn when it cleared 1 million.

And when Denis Healey as Chancellor was defending Labour's recourse to the International Monetary Fund in 1976, he declared that the alternative 'would be economic policies so savage that I think they would produce riots on the streets, an immediate fall in living standards, and unemployment of 3


Even as Keith Joseph was placing monetarism at the centre of economic policy - turning inflation rather than unemployment into public enemy number one - the belief that high unemployment was politically unsustainable ran deep. When the Tories won in 1979, their most effective poster read 'Labour isn't working' and in 1977, when unemployment was 1.3 million, Margaret Thatcher said 'we'd have been drummed out of office if we'd had this level of unemployment'.

The Eighties changed all that. From 1.2 million and falling when Mrs Thatcher took office, Geoffrey Howe's 1981 Budget helped ensure it cleared first 2 million, then 3 million, to peak at 12.3 per cent, or 3.4 million, in 1986.

With industry left leaner and fitter by recession, a sense that somehow the jobless total was justified began to prevail.

A Labour pledge to cut unemployment by 1 million in two years cut little ice in the 1987 election. The jobless seemed permanently with us, and politically irrelevant. Between 1987-1992, the words 'full employment' ceased to pass the lips of Labour politicians. Norman Lamont, as Chancellor, even character ised unemployment in 1991 as 'a price worth paying'.

What changed all that was the Conservatives' second great recession, which struck not just in the North but the South. Not just among manual workers but among the middle classes. Not just in Labour heartlands but in Conservative ones, among voters all parties will need to win the next election.

A sense of the social cost of unemployment seems also to have regrown. In addition, an economic policy never intended to leave unemployment permanently above 2 million - the mark it has been at or above for all but 40 months of the past 15 years - appears, on that measure, to have failed.

But while politicians of all parties now feel the need to pay homage to full employment, it is far from clear what the rhetoric will deliver. Huge changes in the labour market and definitions of who is unemployed make any return to targets such as 3 per cent deeply unlikely.

Targets for creating new jobs, as adopted by President Bill Clinton and the European Commission, thus look a likelier bet from Labour than any pledge to hold unemployment down to a fixed level.

Action from the Conservatives to offer carrots through the benefit system, as well as sticks, to get more of the unemployed into work, even if it is work supported by benefits, looks increasingly likely.

None of this is set in the short term to provide a return to anything that those from the Fifties and Sixties would recognise as full employment. But from the point of view of those without work it is an awful lot better than it was in the Eighties.