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IS UNE1\1PLOYMENT INSURL\NCE ENOUGH?_ A. E. GRAUER T HE Canadian Unenlployment and Social Insurance Act of 1935 has aroused a great deal of comme ;nt, - - '- mostly adverse. To a large extent this was a rea'ction from the rather exalted hopes fostered by the prime minister's speeches over the radio. The attitude reminds one somewhat of the early traveller, who, on first seeing the Pacific Ocean, was disappoin ted because it didn't look larger than any other ocean. To a still greater extent, it was due to widespread misconceptions about the nature of the measure proposed. Unelnployment insurance is not, as is popularly supposed, a relneciy for unemployment. The economic causes of unemployment lie deep in our industrial system-in' the credit mechanism, the system of distribution, the speed of technological improvenlen t, and ~o forth. Unemployment insurance _ ,gets at none of these things. I ts only remedial influence is in the building up of reserve funds that carryover SODle purchasing power from prosperous times to a depression. But, in the main, the causes of unemploYlnent operate whether a system of unemployment insurance exists or not. If the insurance is not a remedy for unemployment, what is it? It is two things: it is an admission that unemployn1ent, like sickness, is something that may happen to any worker in modern industrial society; and it is an attempt to provide security against this' hazard by having all of certain classes of workers pay premiUlTIS into a central fund, from which any who later become " unemployed may draw benefits for a stipulated period. This being so, it is obvious that unemployn1ent insur514 IS UNEMPLOYMENT INSURANCE ENOUGH? ance is not importan t as .a means of abolishing unemployment . In fact, by building up a permanent system to provide s~me security against unemployment, it rather admits that unemployment cannot be abolished. This does not mean that unemployment insurance has an insignificant rf>le to play. In view of the strikingly slow .- progress that has been made in remedying the causes of unemployment, the provision of some security for the worker against this greatest of all industrial hazards becomes ·a matter of fundamental importance. UnemploYlnent insurance is an attempt to provide such security in an organized, expedient, and dignified way. Basically, then, unemployment insurance is an attempt to meet the human problems raised by the faet of un- . employment. Does it meet these problems successfully? The most we can say is that it partially does so. Here, the system is lilnited by the fact that it is an insurance scheme. The claimants of benefits must first qualify by paying a certain · numb.~r of premiums into the fund. What good is this to the worker who has not got a job, and \vho therefore cannot qualify r Even after the worker qualifies, he is eligible, on becoming unemployed, for only a previously specified number of benefit paymen ts-a necessary provision if the fund is to remain salvent. In a prolonged depression like the presen t, what likelihood has the insured worker of getting a new job before his benefit payments run out? The conclusion inexorably follows that unemplo:nnent insurance, good as it is in its field, is not enough to meet the human needs of the contemporary unemployment situation~ It must be supplemented by an organized system of relief. This brief analysis is alnply borne out by British experience with unemployment insurance. Roughly, there have been three periods i~ that experience. 515 THE UNIVERSITY OF TORONTO QUARTERLY (I) From its inception in 191I until the post-"'Var depression of ,the early twenties) the unemploymentin 'surance fund met 'all its benefit liabilities out of its own income. I t was, in short, a bona-fide system of insurance. But, unfortunately, the continued heavy unemployment of the twenties soon made the fund insolvent. (2) There followed the expedient of government subsidies , ,and various extensions of the benefit period, which in effect saddled the insurance system with much of the burden of relief and made it still less capable of meeting benefit payments out of its own income. This is the period during which more fortunate countries were wont...


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