125 Int'l Lab. Rev. 87 (1986)
Meshing Labour Flexibility with Security: An Answer to British Unemployment

handle is hein.journals/intlr125 and id is 101 raw text is: International Labour Review, Vol. 125, No. 1, January-February 1986

Meshing labour flexibility with security:
An answer to British unemployment?
I. Introduction
Two points attract widespread agreement across the political spectrum
in Britain. One is that the labour market is in a mess, the other that the social
security system is in a mess. There is, of course, rather less consensus on what
should be done about either. Yet the two points are clearly linked.
Mounting concern over the operation of the labour market and the
social security system comes at a time when faith in the new economic
nostrums of the present Government is waning. The monetarist route to
price stability and full employment has been discredited by the persistence of
inflation (albeit at lower levels) and high unemployment, which has been
rising steadily for more than six years, to about 14 per cent in 1985. Over that
period economic strategy has broken sharply with the Keynesian methods of
demand management pursued between 1945 and 1979. It has essentially put
Keynesianism into reverse, relying on macro-economic policy to control
inflation and on micro-economic policy to influence employment, with the
stress on supply-side measures designed to inake the labour market and
labour force more flexible .I Critics argue that the most telling comment on
the British experiment 2 is the simple fact that, after six years, unemploy-
ment stands at record levels. Its defenders retort that it is a long-term
strategy: the Government itself is not able to determine the level of
unemployment, while the institutions and expectations that do, take time to
be remoulded. In the meantime, the social security system plus short-term
manpower policies (so-called Special Measures) will cushion the shocks and
check the rise of unemployment. But therein lies the threat of impending
crisis, for, as is argued below, growing labour flexibility is directly undermin-
ing the foundations and delivery capacity of the social security system.
One point needs to be made at the outset. Flexibility is a heavily
loaded notion, conjuring up only positive images, while terms such as
rigidity and inflexibility have pejorative connotations. It will help to
* International Labour Office. This is a substantially revised version of a paper delivered to
a conference on basic incomes and the labour market, held in June 1985 in London. Thanks are
due to Frances Williams for useful comments.

Copyright C International Labour Organisation 1986

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