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Uno (Full Employment Resolution)

Volume 485: debated on Thursday 22 March 1951

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asked the Chancellor of the Exchequer to what extent the Government has adopted a full employment standard as proposed in the resolution of the Economic and Social Council of the United Nations in August last.

The Government's decision is being conveyed to the Secretary-General of the United Nations in the following terms:

"It is the firm policy of His Majesty's Government to keep unemployment at the lowest level compatible with the avoidance of inflation. The experience of the last few years has shown a level of about 2 per cent. at the seasonal peak.
However, in adopting a standard which shall represent the international "full-employment" obligation of the United Kingdom, it is necessary to consider the possibility that factors arising outside the United Kingdom, such as a widespread fall in the demand for United Kingdom exports or a shortage of raw materials obtained from abroad, might make it impossible, for a time to keep unemployment at the low levels of recent years. All possible counter measures would be set in train but they might take time to become effective. Furthermore, the danger of provoking inflation in such a situation would be more acute than in the case of unemployment caused by a decline in internal demand.
The Government has therefore decided to make a small allowance for the factors mentioned in paragraph 2 above and to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak.
It must be stressed that the choice of this standard does not mean that the Government would allow unemployment to reach 3 per cent. before taking vigorous counter action. It will be a continuing objective of the Government's policy to counter any unfavourable trend in employment and to take special measures to deal with those areas in which unemployment has persisted at a comparatively high level. For that purpose, the Government will take from time to time whatever measures are appropriate, having regard to the causes of the unemployment and to the overall economic situation. In the event of severe difficulties arising in the sphere of foreign trade it is possible that even a level of 3 per cent. unemployment might be exceeded for short periods; but the Government would make every effort to avoid falling short of the obligation it has imposed on itself.
The figure of 3 per cent. represents the maximum number of persons registered as unemployed on a given day in any month of the year, expressed as a percentage of the total number of employees. It applies of course to the United Kingdom as a whole and does not preclude the possibility that in particular areas the percentage of unemployment might exceed 3 per cent."
A similar communication is being sent to the Secretary-General of the Council of Europe arising out of the recommendation of the Consultative Assembly on this subject on 26th August, 1950.