Art. 15.-THE EFFECT OF THE WAR ON INDUSTRY AND EMPLOYMENT.

Board of Trade Labour Gazette.

Report of the Board of Trade on the State of Employment in October 1914 [Cd. 7703].

WHEN Great Britain first declared war on Germany, the nation held its breath and braced itself to meet the industrial upheaval which it was assumed must accompany a great European war. But Christmas has come and gone, and instead of our streets being filled with processions of the unemployed, most employers are complaining that workpeople are more difficult to find than at the height of a trade boom. The man in the street, forgetting his fears of August, has swung completely round and is disposed to think that war spells prosperity for the country fortunate enough to hold command of the sea. The logic of events in this as in the Napoleonic wars proves that to a considerable extent this revised opinion is the correct one; but it is important that this outward calm should not lead us to overlook the very considerable changes that are taking place below the surface. The public generally, among whom we must include economists as well as the Chancellor of the Exchequer, has learned a great deal in the past few months about the economic life of the nation, for there has been taking place before our eyes a remarkable disturbance of the ordinary channels of trade, and sweeping readjustments have been made, some with and some without the aid of active intervention by the State. For a detailed picture of recent industrial changes we shall have to wait until full information is available after the war; but we can perceive the chief outlines.

The general course of employment since August, as shown by unemployment statistics of Trade Unions, exhibits the same tendencies, though in a very different degree, in both England and Germany. According to the December Labour Gazette, the proportion of trade unionists in receipt of out-of-work benefit has shown the following changes, the figures in both cases being exclusive of those who have joined the Army or Navy:

The Board of Trade is continually warning us against making any absolute comparison between the unemployment returns of German and English Trade Unions; but the story told by these figures is too apparent to be affected by detailed differences in the basis of compilation. At the end of November employment in the United Kingdom was distinctly better than a year ago in all trades affected by war contracts, but in other trades there was a decline. The improvement in the German percentage is stated in the Reichsarbeitsblatt' to be due to the same cause, though other non-war trades, with the exception of building, are said to be better than in the first months of the war.

The Trade Unions figures, however, only give us a part of the story, for they throw no light on the extent to which the labour market has been relieved by the withdrawal of men for naval or military service. In view of the mobilisation of eight million men for the armies of the Kaiser, the above figures indicate an extraordinary shrinkage of industrial activity in Germany. The mobilisation, which in this country has acted throughout as a mitigation of unemployment, has probably been itself a cause of unemployment in Germany, through the crippling of certain industries which form an indispensable link in the long chain of production. Moreover, it will probably be found, when we know the facts, that lack of inland transport has ranked with the withdrawal of men and the cutting-off of oversea trade as a chief cause of industrial dislocation in Germany.

But while these points are at present a matter of conjecture, we have in the Board of Trade Report on the State of Employment in October a means of estimating the contraction of production in this country. The Report shows for the United Kingdom and for particular districts the extent to which those who were at work before the war in various trades are now working shorttime or overtime, have been discharged, or have joined

the forces. It is also shown how far employers have filled the places of recruits, or have been compelled to enlarge their staff. The figures for October, which may be applied to the whole industrial population, viz. 7,000,000 men and 2,250,000 women, are these:

CONDITION IN THE MIDDLE OF OCTOBER OF THOSE EMPLOYED IN
INDUSTRY IN JULY.

In order to estimate the shrinkage of production from these figures, the proportion working overtime may be set against a similar proportion on short time, leaving a net 12.1 per cent. of males and 20.1 per cent. of females on short time. These may be assumed (from information given on pages 11 and 12 of the Report) to be losing on the average one quarter of their normal weekly hours. That is to say, we must add to the actual contraction figure a quarter of the 'net' short time, in order to get the total reduction in work done. This gives us 13-7 per cent. reduction for males and 11.2 per cent. for females. Now the number of females occupied in industry is one-third of the number of males, while their work, as shown by wage statistics, is valued at something less than half that of males. Allowing importance to the work of males and females respectively on this basis, we get a combined percentage of 13.3 per cent. as the probable reduction in the industrial output of the nation. The corresponding figure for September was 16 per cent.showing that the nation was more busily employed in October than in September.†

* Some overtime may have escaped the notice of the Board of Trade; and, in cases where no overtime is being worked, the output may be above the normal owing to an increased display of energy by the workpeople under the stimulus of a national emergency. But this tendency, if indeed it exists, is almost certain to be counterbalanced by the astonishingly small amount of work which a factory on short time contrives to do.

Since this article was in type, the Board of Trade Report on Employ. ment in December has been issued, showing that a fortnight before

This curtailment of production, although certainly much smaller than the corresponding figure for Germany, nevertheless implies an immense contraction in private business, when it is remembered what a large amount of work is being done in this country for the British and Allied Governments. It is impossible to say, with the information at present available, how much of the 540 millions sterling a year, that is being spent by the British Government in connexion with the war, is assignable to industrial contracts. Some of the money that Mr Lloyd George has had to find is going in the form of loans to foreign and Colonial Governments, some proportion of which is spent by these Governments in Great Britain for material of various kinds. Of the direct expenditure on our own requirements a considerable proportion is being spent in France; a very large sum is in respect of soldiers' pay and separation allowances; and the purchase of sugar and other important raw materials accounts for considerable sums, while payments to shippers and British railway companies are also important items. In the absence of any official statement of expenditure it is impossible to give any sort of estimate of the value of contracts placed in this country on behalf of the British Government. The figure, however, undoubtedly runs into hundreds of millions, only a comparatively small proportion of which is paid to foreign countries in respect of raw material imported from abroad. Mr Flux recently estimated, in the Census of Production, that the value of the products turned out by our factories, workshops and mines, amounted in 1907 to 1,250,000,000l. The value of Government contracts placed cannot be less than 10 per cent. of this capacity; and, if account is taken of the work done for the Allies, the figure may be nearer 20 per cent. The figures of employment show that our producing capacity has been curtailed since the war by some 13 per cent.; and, if a further 10 to 20 per cent. is at work on Government contracts, etc., our normal production for private trade would appear to have shrunk by from 23 to 33 per cent.-representing an output of

Christmas, the national output-calculated in the same manner-was only 9.2 per cent. less than before the war. This improvement would, however, seem to be due to the normal Christmas pressure and to Government contracts rather than to a general recovery in ordinary private trade.

300 to 400 millions sterling. So sweeping a change is without precedent in our modern industrial history.

On the other hand, agriculture has not been diverted to any large extent from its normal channels, except that a rather larger area than usual is being sown with wheat, and in certain other directions efforts are being made to increase the supplies of home-grown food. Labour has been withdrawn, to some extent, from rural districts for the forces; but it can well be spared in the winter months, and especially in a rather open winter like the present, when farmers have been able to choose their time for various operations. It remains to be seen whether output will be affected by lack of labour in the spring and summer; but agriculturalists are already anticipating serious difficulty in this respect.

As regards transport there has been at least as much work as usual to be done both by sea and land; and while railways, trams and omnibus companies have been under the necessity of taking on men to fill the places of those who have enlisted, the situation at sea has resulted in a serious shortage of tonnage, especially in European and American waters. In the business of retail distribution there has been a shrinkage in the amount of work to be done, proportionate to the considerable reduction of the turnover of shopkeepers. But a falling off of retail business does not lead to the discharge of employees to the same extent as a similar reduction in manufacturing output would do, since the former is so much less concentrated than the latter.

In the legal profession, and in those occupations which cater for amusement, 'output' has been reduced at least as much as in industry; and there have been no compensations in the form of Government contracts. In education and in the medical profession 'output' is as great or greater than usual.

This being in outline the situation as regards the productive activities of the nation, the question of employment needs consideration from three points of view: (1) The problems raised by the existence of a surplus or shortage of labour in various occupations at the present moment or in the immediate future; (2) The economic effects of the possible further withdrawal of