Observation (CEACR) - adopted 1989, published 76th ILC session (1989)

Employment Policy Convention, 1964 (No. 122) - United Kingdom of Great Britain and Northern Ireland (Ratification: 1966)

1. In its previous observations in 1987 and 1988, the Committee referred to, amongst other things, the comments received from the Trades Union Congress (TUC) on 16 February 1987 expressing concern about various aspects of the application of the Convention. The Committee expressed its hope that full information would be provided by the Government in due time. It notes the Government's full report for the period ending 30 June 1988 received in February 1989 and the information in reply to its previous observations and to many of the TUC's comments of 1987.

2. The TUC considers that the Committee's comments have offered a constructive approach to tackling mass unemployment in Britain. It drew attention to the continuing high level of unemployment; it pointed out that many of the jobs being created were part-time rather than full-time ones. It referred to distortions caused by changes in the basis of unemployment statistics, which make it impossible to say how many are in or out of work and thus greatly reduce first the usefulness of a means of assessing employment trends formerly available and, secondly, the ability of the Government to fulfil its obligations under the Convention. Special government schemes were designed to discourage registration or temporarily remove groups of the unemployed from the official count: the TUC estimated that, without changes in the basis of calculation, unemployment would be over 400,000 higher.

The TUC indicated that the Government has consistently failed to use economic opportunities - such as those presented by self-sufficiency in energy - to reduce unemployment. The Government, it was pointed out, still refuses to give any indication as to when its strategy may be expected to reduce unemployment substantially.

As regards regional policies, the TUC indicated that the North-South incomes gap has widened, and the Government has cut regional aid. As regards the relation between wages and employment, it pointed to OECD research, which has shown there is no direct link between national wage levels and national unemployment, or between national rates of job mobility and employment: the TUC therefore does not accept government criticism of the well-established system of national pay bargaining. The TUC referred to an EEC Commission study (of March 1986), naming lack of effective demand as the greatest obstacle to the development of manufacturing industry. The TUC stated that the Government has frequently rejected its proposals for a constructive dialogue with employers and workers on employment problems. It stated that the Government has continued to have no regard to its commitment under the Convention to give priority to the achievement of full employment and has refused to review an approach which has clearly failed. The Committee has in addition taken due note of the TUC's comments in relation to Convention No. 142 concerning measures which, it is stated, will have the effect of forcing young people into jobs, education or training, by removing certain social security entitlements.

3. According to information provided by the Government in its last report, employment rose over the period of 1986-88, mainly in the service sector, while national unemployment stood at 10.7 per cent in 1987 and continued to fall until May 1988, when it was 8.5 per cent for Great Britain and 17.1 per cent for Northern Ireland. The Government supplies extracts from official publications explaining the recent revisions of the basis of unemployment statistics. The Government indicates that inflation is a major cause of high unemployment and that its macro-economic policies are designed to keep inflation low and stable, while its micro-economic policies promote an efficient and competitive market economy, thus creating new employment opportunities. In reply to the TUC observations, the Government sees a much greater role than the TUC in wage and labour market flexibility as a means to reduce unemployment and improve the operation of the labour market; but the OECD study referred to by the TUC, differs in its view of the effects of wages on employment. The Government again stresses the influences on employment beyond its control, in particular the world economy and the level of wage settlements. The Government states that its research shows that if wages were to increase more slowly 110,000 to 220,000 more jobs would be created; it will continue to draw attention to the concept of greater geographical variation in pay, despite the unfavourable response of the TUC. It indicates that frictional unemployment associated with structural change may be higher when such change is more rapid. It refers to cuts in income tax and the promotion of the mutilateral trading system as enhancing employment prospects. Its industrial policy has been marked by a series of "initiatives" aimed at encouraging wealth creation through advice and assistance. It states that it has aimed to promote small firms, particularly in the regions and in inner cities. It has reorganised the public employment service to place an emphasis on advice for those going into business for themselves. The report again refers to a variety of employment measures, said to be aimed primarily at long-term and young unemployed and includes detailed information on these and the above-mentioned measures and policies. The Government indicates that consultations on employment take place in the tripartite National Economic Development Council (NEDC). The NEDC Annual Report, 1986-87, supplied by the Government, indicates in particular that the Council spent much of its time considering how the prospects for employment could be improved and continued more intensively to explore the relationship between pay and employment.

4. The Committee notes that studies published by the OECD (in particular the 1988 Economic Survey of the United Kingdom) indicate that employment growth was confined mainly to the service sector, self-employment and part-time employment; about a third of the total workforce is estimated now to be in "flexible" categories (temporary workers, permanent part-time workers or permanent self-employed). As regards employment, the OECD Economic Survey indicates that the rate of unemployment has fallen partly due to greater strength of activity, partly due to the effects of specific government programmes such as RESTART or YTS, which have reduced the numbers of unemployed on the registers, especially the numbers of young unemployed. OECD expects unemployment to rise again slightly in 1990. Inflation has remained above the OECD average and has recently accelerated.

The Committee notes that, whilst the rate of unemployment has shown a clear improvement over the figures reached in the early 1980s, it is, as the Government observes, still high by historical standards: according to the 1988 OECD Economic Survey, the average unemployment rate from 1980 to date of 9.6 per cent is more than twice the rate in the 1973-79 cycle. In this light, in view of the relation drawn by the Government over many years between inflation and unemployment, and in view of the difficulties mentioned by the TUC - not least that of establishing a constructive dialogue with employers and workers and other persons affected by employment policies in conformity with Article 3 of the Convention - the Committee continues to entertain concern as to the extent to which an active policy for full, productive and freely chosen employment in the terms of Article 1 of the Convention has been pursued. As regards certain questions of vocational guidance and training, it would again refer to its comments under Convention No. 142. It again expresses the hope that the next report will be supplied by the due date, in order to facilitate the necessary tripartite consideration as well as the Committee's own examination.