By RONALD BRECH author of BRITAIN —1984
TN Britain we take full employment so much for granted that we often fail to realise that as a policy it is a moral necessity. In social justice, work must he available for everybody able and willing to work.
There is of course room for argument as to the statistical definition of full employment. Nowadays we regard unemployment greater than 250,000 (about 1 per cent of the working population) as implying less than full employment. Yet the pursuance of such a policy of full employment also creates social hardship and social injustice.
Since the war, levels of employment higher than 98 per cent (i.e. unemployment less than 500,000) have always been associated with periods of rising prices.
And such inflationary conditions are unjust precisely because they hurt those people who can least protect themselves —fixed income. earners and retired people.
Unfortunately our knowledge of the economic system is too incomplete to enable us to achieve the delicate balance that is required to provide work for everyone and stable prices.
For this reason Britain, along with the other highly developed countries of the Western world, is groping for an incomes policy that will enable economic growth to he sustained without the burden of higher prices,
The Church in her wisdom has always maintained that man should receive a just wage that enables him to beget a family and to rear it decentlydecently being interpreted by the conditions of society at the time.
But, in application, this principle raises a serious problem. Man is a member of the productive team, and man's reward for his efforts must in justice reflect his contribution to output—his contribution to the team's effort.
It cannot, in fact, be related to his needs except in the generality of being related to man's basic needs, since if these were not satisfied, man would die and the economic system would cease to operate.
All employers have a duty to function as efficiently as possible, not just for their own profit but for the prosperity of mankind. If, therefore, employers had to pay higher wages for those workers with large families for the same contribution to output, they would obviously not employ them. Indeed they should not!
They could of course give such workers higher wages, but the extra must come from their own earnings (i.e., the employer's earnings) and not from the team's earnings. Does this in fact mean that people with large families must be penalised?
In a recent pamphlet*. Dr. J. M. Jackson shows that despite full employment in Britain and despite our high and rising standard of living and all our social services, some "4.6 per cent of all couples with three children had an income of less than .£8 a week and that 7.2 per cent had less than £9 a week".
As £9 a week is considered the "poverty line"—the absolute minimum required to support a family with three children— these figures seem at first sight alarming. To put them into a proper statistical perspective, we should realise that the total number of wage-earners in Britain below the poverty-line is certainly no greater than I per cent —if that. Unfortunately Dr. Jackson does not mention this.
Nevertheless the fact that poverty exists at all is economically unsound and socially unjustifiable, and that it occurs more frequently with large families is disquieting.
God designed the world—and man -so that the division of labour should operate. No area (just as no human being) is endowed with everything. but every area and every human being is endowed with something —even the Sahara has petroleum.
This design clearly suggests an exchange economy where each area develops its resources and satisfies its various requirements by exchanging with its neighbours.
Since each of us is endowed by God with different talents, it is our duty to Him to develop and use those talents to the best of our ability to satisfy our own legitimate needs and those of our neighbours. We work for the prosperity of ourselves and of mankind. We should not dissipate our efforts in trying to do everything for ourselves. We
concentrate on those areas best suited to us according to our God-given gifts.
In an income-structured society such as ours, where inheritance of wealth is impeded by taxation and where equality of opportunity exists to a certain extent. the level of income will tend to reflect the level of ability and not people's basic needs.
However again, in an incomestructured society, one's position is determined by the level of income demonstrated in the acquisition of specific goods and services recognised by everybody as belonging to that particular status.
In this sense it can be argued that income reflects needs. But it is still not true that people with large families will necessarily earn more. Indeed they may earn less.
In bygone days, large families were an economic advantage in that they provided at least for a time additional earning power. Nowadays this is no longer true. despite the fact that adolescents earn both absolutely and relatively more than ever before in history.
But the growing independence of young people and the incidence of early marriage mean that this extra earning power does not necessarily augment family income although it may augment family acquisitions.
The two questions we must first face up to are: how can society ensure that wages are above the minimum needed for the physical necessities of life? And, how can society ensure that people with large families are not unduly penalised?
If the supply and demand for manpower are to be kept in balance, then at any point of time, because of the incidence of time and space, some people are certain to be out of work. If this is to be prevented then the demand for labour in total must exceed its supply, so that wages will rise faster than productivity (output per man year), and these higher manpower costs will be reflected in rising prices.
Society in justice must see that these residual unemployed people ieceive at least the minimum income to cover what are regarded as the necessities of life (including family responsibilities). Because this is the minimum income, it must he adjusted for every rise in the cost of living—the same applies to old-age pensions.
Scope for action
Once this minimum "wage" for the unemployed is determined, industry must pay more in order to "entice" people to work. In this way the government can ensure industry paying more than poverty-line wages without introducing any complicated legislation.
We have already seen that the family problem cannot in justice be solved by the employer (although it can in charity). Here is scope for government action through the provision of generous family allowances and adequate rebates on income-tax for children.
The family allowances should be such as to enable an unemployed man with, say, three children to be above the povertyline without having to resort to National Assistance. Since family allowances are subject to income-tax, the higher income groups would not benefit so much from generous allowances: Having dealt with the povertyline and the family wage, we have now two other problems to solve. The first is the maintenance of wage differentials. and the second is concerned with what might be called social employment.
The maintenance of customary differentials between wage rates of different jobs and different industries was reasonable in a stagnant or quasistagnant society. In an expand ing economy, however, it has no place. Indeed, it is contrary to social justice since man has the right to share in increased efficiency.
In other words, the maintenance of wage differentials can
be defended on grounds of social justice, only if all firms and all industries increase in efficiency in step with each other and at the same time. The same argument can be used against national wage-rates, other than the minimum "poverty-line" wage-rates.
Once this particular principle is abandoned, the problem of maintaining full employment with stable prices becomes easier. Wage negotiations would he conducted at plant level, so that wages at each plant would be related to the efficiency achieved and the national wageround would only gradually emerge.
At present one powerful union starts the bargaining — usually the one most likely to be successful and connected with a high productivity industry—and with the maintenance of the differential this becomes the pattern for the country.
There is no simple way of determining the level of wages and salaries for social employment. This must be the government's responsibility. The first step is to decide the social status that it wishes to accord each particular group—civil servants, teachers, police, etc.—and then fix the appropriate levels of income.
How then should our incomes policy work? If by incomes policy it is meant that the government determines the annual rise in wages, then in practice this will not work, and it could be argued that such a policy is contrary to social justice.
If, on the other hand, an incomes policy means that everybody's income rises by the average rise in productivity (theoretically this would achieve stable prices), this is also unjust since those who contributed most would be paid less and those who contributed least would be paid more. This also would not work, unless enforced by law, as Holland has shown in recent years.
It would seem that the only value of an incomes policy is to use it as an excuse to abolish the principle of maintaining wage differentials. Once this is achieved and provided unemployment pay and old-age pensions are not below the povertyline, and provided also that family allowances are adequate, full employment can be achieved without the inevitable corollary of rising prices. Although even here, however, the government must not allow the demand for manpower to exceed the supply.
No government can get away from the fact that if current expenditure exceeds current supply of goods and services, prices will rise. This is both the purpose and the function of the price mechanism. This does not mean that income must be curtailed; but expenditure must.
It may seem strange to those brought up on the earlier social encyclicals to find that the economic basis of society is not in conflict with Christian morality—although at any point of time society's scale of values may he different from Christ's scale of values, but at least with Mater et Magistra papal teaching has at last combined sound economics with sound ethics.
* Family Income, Catholic Social Guild, Oxford, Price 5s.