678 TRANSACTIONS OF SECTION P. 



which does not in the main result from any deficiency in industrial demand, 

 but from the fact that their services are so worthless relatively to that of the 

 normal workman, that to all intents and purposes they may be regarded as an 

 industrially useless surplus. Their unemployment is, therefore, emphatically not 

 an ' insurable risk,' and they would need to be excluded from the scope of any 

 scheme of insurance as rigorously as exceptionally bad lives are excluded from 

 life and sickness insurance. 



But if we put aside the comparatively small section of abnormals, there 

 is ground for asserting that at all events within the great groups of trades to 

 which I have already referred the influence of variations in efficiency among 

 ordinary normal workmen on the total demand for labour at any given time, 

 though by no means negligible, is not nearly so powerful as that of variations in 

 industrial conditions which are beyond the control of the individual workman. 



If, then, the insurable elements in unemployment in these trades largely 

 predominate over the uninsurable elements, it would be comparatively simple to 

 devise an appropriate scheme for dealing with the evil, if every separate case 

 of unemployment could be readily assigned to its appropriate category, so that 

 the benefits of the scheme should be exclusively available in the case of un- 

 employment falling within the insurable category, just as a policy of marine 

 insurance excludes in terms losses due to a number of specified causes. But in 

 actual practice I need hardly say that any such separation of causes can only be 

 made to a very limited extent. In the real world of industry the various 

 elements that contribute to unemployment are inextricably intermixed. We can 

 imagine the case of a carpenter who with equal truth might ascribe his unem- 

 ployment to the competition of structural steel, to the general trade depression, 

 to the severity of the winter, to local overbuilding, or to the defects in his own 

 training. 



There are a few, but only a few, of the causes of unemployment which can 

 be definitely distinguished and excluded in terms from the benefit of an insurance 

 scheme, such, for example, as holidays, strikes and lock-outs, voluntary leaving 

 of a situation, sickness, and crime. If, then, it is necessary, as it certainly is 

 for the success of a scheme, that it should discriminate against unemployment 

 due either to exceptional defects or to causes within the control of the individual, 

 this discrimination must be effected automatically in the course of the working 

 of the scheme itself rather than by any rule professing to exclude ineligible cases 

 from its scope. 



The crucial question from a practical point of view is, therefore, whether it 

 is possible to devise a scheme of insurance which, while nominally covering un- 

 employment due to all causes other than those which can be definitely excluded, 

 shall automatically discriminate as between the classes of unemployment for 

 which insurance is or is not an appropriate remedy. 



We can advance a step towards answering this crucial question by enumerating 

 some of the essential characteristics of any unemployment insurance scheme 

 which seem to follow directly or by necessary implication from the conditions of 

 the problem as here laid down. 



1. The scheme must be compulsory ; otherwise the bad personal risks against 

 which we must always be on our guard would be certain to predominate. 



2. The scheme must be contributory, for only by exacting rigorously as a 

 necessary qualification for benefit that a sufficient number of weeks' contribution 

 shall have been paid by each recipient can we possibly hope to put limits on the 

 exceptionally bad risks. 



3. With the same object in view there must be a maximum limit to the 

 amount of benefit which can be drawn, both absolutely and in relation to the 

 amount of contribution paid ; or, in other words, we must in some way or other 

 secure that the number of weeks for which a workman contributes should bear 

 some relation to his claim upon the fund. Armed with this double weapon of 

 a maximum limit to benefit and of a minimum contribution, the operation of the 

 scheme itself will automatically exclude the loafer. 



4. The scheme must avoid encouraging unemployment, and for this purpose 

 it is essential that the rate of unemployment benefit payable shall be relatively 

 low. It would be fatal to any scheme to offer compensation for unemployment 

 at a rate approximating to that of ordinary wages. 



