Employment Exchange

EMPLOYMENT EXCHANGE, an agency for bringing together employers requiring labour and workpeople desiring work; also variously known as a Labour Exchange, Labour Bureau or Employment Agency. The primary function is to record "vacancies," i.e., requirements of an employer, with conditions offered by him, and to register qualifications of applicants for employment, with a view to submitting suitable workpeople for the vacancies. Such an agency may be privately owned, or under municipal or State control or management, may charge fees to employers or workpeople, or both, for the introductions effected, or may defray the expenses of administration from private or public funds. Its scope may be limited as to the trades and occu pations in which notifications of vacancies are received, or as to the classes of workers (skilled, unskilled, male or female) placed in employment. An exchange may be local, national or, exceptionally, international in its range of action. Finally, the notification of vacancies may be obligatory upon employers, while refusal of suitable employment offered may entail suspension or disallowance of an applicant's out-of-work pay. (See UNEMPLOY MENT INSURANCE.) Although the functions of employment exchanges (particularly in the case of privately owned "registry offices" for domestic servants) may terminate with the "vacancy work" or "placing," other duties are usually combined with this work, especially when the exchanges are under the direction of a public authority. A combination of vacancy work with the administration of out-of work pay schemes has long been the practice of Trades Unions and is an essential feature of the National Unemployment Insur ance scheme of Great Britain. The association of exchanges with the payment of unemployment benefit enables, in Sir Wm. Beveridge's words, "the beneficial and natural test" of a situation offered through the exchange to be substituted for abstract en quiries directed to ascertaining the genuineness of an applicant's search for work. "The two systems are complementary; they are man and wife; they mutually support and sustain each other" (Mr. Winston Churchill, House of Commons, May 19, 1909).

Theory of Employment Exchanges.—The object of ex changes is to increase the mobility of labour, but at the same time to prevent its needless displacement. By concentrating the notifi cation of vacancies and the registration of applicants for employ ment at convenient centres linked together by a clearing house system, the numbers, classes, occupations, and the duration of the employment of the industrial population, together with the opportunities for further employment, are recorded and tabulated. The fluctuating requirements of the labour market, themselves a cause of unemployment, are thus measured; and supply is related to demand. If the surplus is local, by the use of a clearing house system which informs the local exchange of opportunities of em ployment elsewhere (aided by the advance of railway fares given unconditionally or by way of a loan), the surplus is enabled to transfer to areas of shortage and to find work there. If the surplus is general, as in outdoor occupations of the building trade in winter, the dovetailing of occupations, by the transfer of the seasonably unemployed to subsidiary occupations or to any alternative work for which they may be qualified, is assisted by the use of the same machinery. Where the surplus is both general in extent and permanent in character (as may happen when new industrial processes or changes in fashion modify existing methods of production) the exchanges, guide displaced workers to other forms of employment. Finally, the exchange may serve as a medium for paying unemployment benefit.

The practical application of the theory of employment ex changes would present no difficulties if every unemployed person were free to take any kind of work wherever it was available. The mobility of labour, the interchangeability of occupations, the existence of subsidiary qualifications, the ability of unemployed men to move their homes, all of which are implicit in the theory, are, however, necessarily affected by differences in wage levels, increasing trade specialization, difficulties of occupational trans fers, housing shortages, family circumstances, and a variety of psychological factors. It may be doubted, too, whether prejudices due to experiences of the exchange system in its early stages of development have yet disappeared. A loss of time and a slowing down of production are anticipated by some critics if, instead of engaging labour at the works gates, all vacancies are notified to the labour exchange and the employer waits while machinery outside his control selects for his approval and engagement apparently suitable men. Against this it is contended that industry as a whole saves time by the use of an agency which concentrates reserves of labour, assesses its industrial value, and directs to each establishment, as required, suitable men. The view expressed is that the best workmen do not register at exchanges and therefore are not available for submission. If, however, the exchanges are associated with the payment of unemployment benefit, all claim ants are automatically within the field of selection. A more serious objection has been made by trade unionist critics that the ex changes may be used to fill vacancies caused by trade disputes; also that, as no preference is shown to trade unionists in submit ting applicants for vacancies, the organization of labour to which they aspire may be hindered. These objections were taken into account when labour exchanges were established in Great Britain and the act of 1909 provided that no submissions should be made to "black-leg" vacancies without the applicants' consent and that men refusing to be so submitted or otherwise to accept employ ment below standard conditions should suffer no disability.

Employment Exchanges in Great Britain.

Under powers conferred upon local authorities in Great Britain by the Unem ployed Workmen act of 1905, exchanges had been established in London and some provincial centres, while a co-ordinating author ity for the metropolis, the Central (Unemployed) Body, had maintained, with some success, employment exchanges, including a clearing house system. Prior to this certain metropolitan borough councils and provincial local authorities had set up labour bureaux, which, however, worked independently of each other and had a limited range. Both bureaux and exchanges, however, were so generally associated with relief works that they mostly failed to secure the confidence of employers and the best type of work people. From 1905-09 the treatment of distress due to unem ployment came under the review of the Royal Commission on the Poor Laws. While criticizing the existing exchanges, both for their organization and limited scope, the commission were satisfied that their failure had been due to local and special causes and not to any inherent defect. The commission accordingly recommended that .

"I. A national system of labour exchanges should be estab lished and worked by the Board of Trade for the general purposes of assisting the mobility of labour and of collecting accurate in formation as to unemployment.

"2. The labour exchanges should be in charge of officers of the Board of Trade, assisted by committees of employers, work men, and representatives of local authorities.

"3. There should be no compulsion to use the labour ex changes, but the object of the Government and the local author ities should be to encourage and popularize them in every way, e.g., by propaganda and by making use of the exchanges in en gaging workmen.

"4. The labour exchanges should be granted free postal and telephone facilities by the State.

"5. Arrangements should be made to enable the labour ex changes to grant passes entitling workmen travelling to a situation to specially cheap railway fares; in suitable cases the cost of the passes might be provided and recovered afterwards from the workmen." The Labour Exchanges act of 1909 embodied most of the com mission's recommendations. A national system of exchanges, charging no fee to employers or workpeople making use of it, was established by the Board of Trade, and by Feb. 1910, 61 offices, including 19 taken over from the Central (Unemployed) Body, were available to the public. The introduction two years later of the State Unemployment Insurance scheme, its great extension, and the growth of unemployment after the World War led to con siderable increases in the number of exchanges. At the end of 1927 there were nearly 40o exchanges and 7o0 branch employ ment offices maintained by the Ministry of Labour, to whom the functions of the Board of Trade in this matter had been trans ferred in 1917. The previous year had seen the term "employ ment exchanges" officially substituted for the statutory des ignation.

Statutory exchanges and branch employment offices are ad ministered by the Employment and Insurance department of the ministry of Labour, consisting of a headquarters staff in London and seven divisional offices under the charge of a divisional con troller. Ordinarily, all exchanges have separate departments for men and women. Where the local education authority does not establish juvenile employment bureaux under the Choice of Em ployment Act, 1910 (embodied in Section 107 of the Education Act, 1921), the exchange has a branch for assisting juveniles to find suitable employment. It has not always been practicable to house all departments in the same building but, wherever pos sible, this is done. At each divisional office there is a senior woman officer responsible for the women's and juveniles' section. Ex changes are assisted by advisory committees consisting of equal numbers of employers' and workpeople's representatives and a certain number of individuals nominated by local authorities, ex service men's associations, juvenile advisory committees, terri torial force associations and bodies interested in social work.

Vacancy Work.

It has already been shown that, through the association in Great Britain of unemployment insurance ad ministration with exchange work, all unemployed persons claiming benefit are registered at one or other of the 1,1oo local offices of the Labour Ministry. All such persons attend at the nearest , office to sign the unemployed register as often as may be required. This attendance from day to day of unemployed workpeople of all occupations serves also to provide a "live register" of the facts of unemployment and to relate the supply of labour to the demand. If a new factory is to be erected in a semi-rural district where there has hitherto been no industrial development, the contractors, who may be strangers to the district, will notify their requirements to the nearest exchange. There will be vacancies for navvies, bricklayers, masons, carpenters, fitters, skilled and unskilled workers. Probably a sufficient number of labourers will be signing the local unemployed register to meet the employer's requirements for this part of the "order." If so, the exchange manager will give each suitable man an introduction card to the works foreman ; the foreman fills in the card and returns it to the exchange to show whether the applicant has been engaged or not. Where the area of selection of men has to be widened, the exchange manager will telephone one or more adjacent exchanges to ascertain whether any suitable applicants are within daily travelling distance of the work, and similar arrangements for interview are made. If, owing to local shortages of some of the types of labour in demand, a still wider circulation is necessary, this is obtained by communication with the divisional clearing house. The latter receives at frequent intervals from each ex change in its area "surplus labour slips," showing for each of the occupations in demand in its own or another clearing house area the numbers and special qualifications of applicants on the local register who are available for submission to distant vacancies. The clearing house may therefore be in a position to refer the "vacancy exchange" (the office to which the "order" has been given) to an "applicant exchange" (i.e., an office at which suitable men of the occupations in demand are signing the unemployed register) and thus arrange for the submission to the employer of particulars of suitably qualified men. Where the divisional clear ing house has no positive knowledge of the whereabouts of surplus labour of the required kind, it includes particulars of the "order" in the daily list of vacancies circulated to all exchanges in the area, or, if necessary, to the London headquarters for inclusion in the printed National Clearing House Gazette which is distrib uted daily to all exchanges in the country. Divisional and na tional clearing house lists are also exhibited in the "vacancy section" of all exchanges. Railway warrants are issued in neces sary cases to enable the men engaged to travel to their new em ployment, or, in some cases, to be interviewed prior to engage ment. Sometimes the fare is paid by the employer, sometimes the amount is deducted later from the wages by weekly instal ments; the vacancy exchange normally acts as the collecting office for the sums advanced. Thus, though the use of the national clearing house enables the whole labour supply of the country to be drawn upon where necessary, the local and nearer sources are exhausted first.

Exchange officers are required to act impartially in submitting applicants to vacancies, having regard only to industrial suit ability, save that, as a matter of Government policy, a preference is given to ex-service men as between equally qualified applicants. In appropriate cases the branch secretary of the trade union con cerned is consulted to see whether any unemployed members of his branch are suitable and available for the vacancy.

Statistics.

Although the Labour Exchanges act imposed no obligation on employers to notify vacancies to the exchanges, many important industrial undertakings recruit their labour en tirely through their agency. In Aug. 1927 the Mining Association of Great Britain agreed, under s. 18 of the Mining Industry Act, 1926, to restrict until the end of 1929 the engagement of new entrants into the coal-mining industry. All vacancies for adults in practically all forms of colliery employment are therefore notified to the exchanges in order that, within a period of 14 days, men formerly employed in the specified occupations can be sub mitted for engagement. If none can be found to take the employ ment offered within this period, a new entrant may be engaged. On a register of approximately r,000,000 unemployed persons, the exchanges in 1926-27 placed in employment some 25,00o to 30,00o applicants each week. In 5927-28 the average weekly un employed register was I-1 millions and again the exchanges placed in employment each week some 25,000 to 30,00o applicants.

Employment Exchanges in Other Countries.

Since the beginning of this century exchanges resembling in their main features those established in Great Britain have been operating in several European countries. The municipal and State systems of Germany served as a model for the British exchanges. The adop tion internationally of a uniform system has resulted from the proceedings of the First (Washington) Session of the Inter national Labour Conference, 1919, which had been brought into existence by the Treaty of Versailles (Part XIII.) . A draft con vention on employment adopted by the conference provided in its second article as follows : "Each member (i.e., State) which ratifies this Convention shall establish a system of free public employment agencies under the control of a central authority. Committees, which shall include representatives of employers and workers, shall be appointed to advise on matters concerning the carrying on of these agencies.

"Where both public and private free employment agencies exist, steps shall be taken to co-ordinate the operation of such agencies on a national scale.

"The operations of the various national systems shall be co ordinated by the International Labour Office in agreement with the countries concerned." In addition to Great Britain the under-mentioned members of the International Labour Organization have ratified (1928) the Employment Convention and, where their legislation was not pre viously in accord, have since taken steps, or are adapting their legislation, to give effect to it, viz., Austria, Bulgaria, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Irish Free State, Italy, Japan, Luxemburg, Norway, Poland, Rumania, Serb-Croat-Slovene Kingdom, South Africa, Spain, Sweden and Switzerland.

Certain States which are not members of the International Labour Organization or have not ratified the convention have within their territories employment exchanges under Government control and satisfying some or all of the conditions laid down by the conference. The New Zealand Government, for example, es tablished exchanges so long ago as 1891.

BIBLIOGRAPHY.-Sir

Wm. Beveridge, Unemployment, a Problem of Bibliography.-Sir Wm. Beveridge, Unemployment, a Problem of Industry (1908) ; Report of the Royal Commission on the Poor Laws and Relief of Distress (Parly. Paper Cd. 4,499 of 1909) ; Parliamentary Proceedings on Labour Exchanges Bill j9o9 (H. of C. Debates, May 19, 20, June 16, 17, July 2, 5, 6, 29, 3o, Aug. 19, 1909; H. of L. Debates, July 3o, Aug. 3, 5, 1900). Ministry of Labour, Report of the Committee of Enquiry into the work of the Employment Ex changes (Cmd. 1054) ; also Annual Reports; League of Nations, In ternational Labour Conference, Geneva, 1927; Report of the Director presented to the Conference; League of Nations, International Labour Office, Studies and Report Series (C. No. II, "Stabilisation of Employment in the United States") . (0. C. A.) United States.—In the United States public employment offices have been organized by municipalities, States and by the Federal Government. New York city established the first municipal office in 1834. Los Angeles and Seattle established municipal offices during the panic of 1893. From that time on, the demand for seasonal labour in the farming countries caused employment offices to be opened in many western cities. In 1907 and in 1913, the movement expanded again and over 4o municipal employment offices were opened. Many of these subsided as their period of usefulness ended, or they were absorbed by other agencies. The first State employment agency was established in Ohio in 189o. In 33 States were operating public employment offices. The Federal Government established an employment agency in 1907 for the placement of immigrants. This was known as the division of information of the bureau of immigration. In Jan. 1918, the U.S. employment service was organized. State agencies were con sidered as local units and many of the then existing local offices were absorbed. This rather extensive movement did not last long and in 1919 the so-called field service work of the Government was discontinued and the individual States reorganized their local employment agencies on an independent basis.

During the period 1920 to 1933, employment services in the individual States were conducted by special bureaus, bureaus spe cializing in other functions but performing placement work in addition, by members of individual commissions, and by the State commissioners of labour. Employment agencies were organized by employers and often administered through chambers of commerce, trade associations or merchants' associations. Trade unions also organized agencies for the purpose of keeping trade union mem bership employed. The private or semi-public employment agency developed during this period. These were often organized as busi ness enterprises on a fee-charging basis and developed into flour ishing businesses with large staffs and wide ranges of contacts. Much regulative legislation through licenses and bonds was di rected by States at this type of employment agency.

In 1933 the passage of the Wagner-Peyser bill inaugurated a Federal-State system of employment offices. It established the United States Employment Service with the purpose of creating a national employment plan integrating all of the State employment services. By 1937 all of the States had affiliated with the United States Employment Service.

The offices of the Service carry on extensive field work and statistical analyses in the field of employment. The offices are also of service in the registration of claimants of unemployment compensation and of persons seeking Federal work relief.

The larger employers of labour in the United States do not depend entirely on outside employment agencies, either public or private, for the continuance of their labour supply. Most large business organizations maintain extensive employment or per sonnel departments. These departments also study intensively the problems of labour turnover, wages rates and sources of la bour supply and all the related problems affecting the maintenance of an adequate operating personnel. Noteworthy are the employ ment offices maintained by several of the more progressive na tional trade unions, like the Amalgamated Clothing Workers, as a means of administering the "preferential union shop." BIBLIOGRAPHY.—Charles Burnell Fowler, "Public Employment ExBibliography.—Charles Burnell Fowler, "Public Employment Ex- changes," American Federationist (Nov. 1934) ; Shelby M. Harrison and associates, "Public Employment Offices, Their Purpose, Structure, and Methods," Russell Sage Foundation (1924); Ruth M. Kellogg, "The United States Employment Service," Bulletin of Harvard Busi ness School Alumni Association (Feb. 1935) ; G. L. Webber, "Growth and Work of State Employment Services, 1933 to December 1936," Monthly Labor Review (Feb. 1937) ; Handbook of Labor Statistics, Bureau of Labor Statistics. (S. PE.)