tion with the Federation of Swedish Industries, the principal employer association in the country. A program of loans to industrial firms is also a part of this policy. County enterprise associations obtain loans from the Government at the same rate as the Government pays for its own borrowing operation. In turn, each association provides loans to small industrial firms at relatively low interest rates, and economic and technical advisory services. Industrial firms are able to obtain guarantees from the Government for loans on the open market. (A State guarantee will reduce the interest rate from the level of comparable nonguaranteed loans.) Such guarantees can be applied to loans for investment in construction and machinery, as well as in business operations. Firms which are established in or relocate to a surplus labor area can receive allowances to cover the cost of training of new workers (until the workers earn a minimum wage, the Labor Board may pay the employer the difference between what the individual earned on a piece-rate basis and the minimum wage actually paid), and industrial buildings may be constructed through Government-subsidized emergency works (the subsidy may be as much as one-half but usually is onethird of the cost). The municipality then rents the building to industrial firms and after a number of years, the firms are given the right to purchase the buildings. State-owned firms or Government agencies may be located in surplus labor areas as part of industrial location policy, and agencies take into account the industrial location of their actions: Highway planning considers location policy; and in the choice of emergency works, the projects which improve location conditions are promoted. Stabilizing Employment Programs have been designed to increase the demand for manpower in periods of seasonal or general business recessions through emergency works, increased Government orders for goods, and tax incentives for stimulating private investment. Public Works. A program of public emergency works has been used in Sweden to maintain a steady level of employment, because such a program can be started quickly and ended quickly in order to even out both seasonal and cyclical fluctuations in manpower demand. Public emergency works usually involve construction and maintenance of roads, repair of bridges and harbors, preparation of fire breaks, and other projects which can be completed in a short period of time.1 County labor boards are responsible for assessing the need for relief works, and the decision to start such works lies with the Labor Market Board. These emergency works can be carried out as State relief work or as a municipal relief work subsidized by the Swedish Government. Much of the work is used for reducing seasonal unemployment in the northern part of the country where unemployment is high among forestry and agricultural workers. In recent years, employment in emergency works has ranged from less than a thousand in the summer to 15,000 in the winter, but the number also varies between boom and recession. For example, it ran about 15,000 in the winter and spring of 1958-59 whereas it was only about 5,000 in the same months of 1960-61. Employment on emergency works was highest during the winter and spring months of 1958-59 and 1962-63. This coincided with recessions during these months. In fiscal year 1963, the cost of these emergency public works was about $73 million (a similar program in the United States would cost about $1.5 billion). Another means of maintaining a steady level of employment is the stimulation of industrial activity by means of additional public contracts. Government orders for commodities which may have been scheduled for a given period of time can be moved up to create employment opportunities in an industry. Through the use of special funds made available to the Labor Market Board, purchases from industry may be made at the onset of a recession or when a given industry is af fected by a lack of sufficient orders to maintain employment. When the employment situation warrants, the Labor Market Board is also author. ized to subsidize the orders placed by local authorities to the amount of 20 percent. This is for machinery and equipment orders placed over and above previously established purchasing programs. Construction. About 90 percent of all Swedish housing is built with Government loans, and employment in the building industry can thus be en 1 The emergency public works supplement regular public works programs which are planned on a year-to-year basis. couraged or restricted by the easing or tightening of housing credits. Each year the Parliament decides the minimum level of building credits, but these credits may be increased if the employment situation warrants it. The housing authority and Labor Board cooperate closely in allocating the credits regionally in accordance with both housing and employment needs. Housing construction was used as an employment-creating device during the 1958-59 and 1962-63 recessions, and total construction increased by some 10,000 housing units in each of the two recessions. Several measures have been used to spread employment in construction throughout the year. A number of years ago, unemployment in the construction industry was very high in the winter time, but the Government has succeeded in reducing this seasonal variation. One measure has been to provide a winter subsidy to contractors in the construction of housing. Sometimes Government loans for the construction of apartment houses are provided on the condition that the work start, for example, before October 1. By beginning excavation-type work which does not require much labor in the fall, more manpower can be employed in the winter months in the more labor-intensive building construction. Sweden also has a compulsory system of requiring building permits. Under this system (about two-thirds of construction is covered), everyone who wants to construct a building has to obtain a permit issued by the labor boards. In issuing these permits, the labor boards can designate when the building will start and also obtain information from the employers as to the amount of manpower to be required at various stages of construction. These data are used to determine the availability of manpower compared with demand and to decide what the total volume of construction be and what has to be done to even may out the seasonality of construction activity. Investment Reserve. The Investment Reserve designed to stimulate private investment during a recession is an important economic measure to counteract cyclical unemployment. Private companies are encouraged to set aside part of their pretax profits in this reserve, and if these funds are disbursed for building, machinery, or inventories during a period when investment is deemed desir able for stimulating employment, the companies obtain substantial tax benefits. During the boom years, companies are permitted to set aside 40 percent of pre-tax income as an investment reserve. This amount is deductible from income for both national and local taxes. At least 46 percent of the amount set aside must be deposited in a non-interest-bearing account in the central bank of Sweden. Depositors are free to use 30 percent of these reserves after 5 years have elapsed, unless authorized to do so earlier. The funds are released from the bank when they are needed to stimulate investment. The investment reserve is not restorable to taxable income, and—as an added incentive—an extra investment deduction (10 percent of the reserve used) is permitted in the tax assessment of the firm in its next income tax return. During the 1958-59 recession, authorization to use more than $200 million of the investment reserve funds for housing, construction and roads, and forestry machinery and equipment was granted by the Labor Market Board. In the 1962-63 recession, the board permitted firms to draw on these investment funds for construction projects, provided the projects were started before November 1, 1962. Total expenditures covered by this authorization amounted to about $240 million. A survey carried out in that winter indicated that 9,000 persons were employed as a result of these building activities. Manpower Resources Little increase can be expected in the number of persons in the labor force in the next 10-15 years because of the relatively low birth rates in Sweden in the last 15 or 20 years, a lower rate of labor force participation by young people as they stay in school longer, and an expected lowering of the age of retirement. In anticipation of labor shortages, the Swedish Government has initiated programs to increase the labor supply. The rapid increase in the supply of married women in the labor force during the past 20 years will continue. The principal reasons for the increased participation by married women are the expansion of employment opportunities in the Nation and the 2 Beginning in July 1965, a voluntary system replaced the compulsory system on a trial basis. movement of the population into cities. The labor force participation rate for women in Sweden is now somewhat higher than that in the United States. The average of the four quarterly surveys in 1964 showed labor force participation rates for married women of 43.7 percent and for unmarried women, 47.2 percent. This compares with 35.3 percent and 41.3 percent for the two groups in the United States in 1964. The employment service is engaged in promotional work to inform women about training and retraining programs, financial assistance, and employment opportunities available. About twofifths of the persons in retraining programs in 1964 were women. The Government also has an interesting orientation program for women who enter or reenter the labor force. During the first week of this program, information is provided about the world of work, working conditions, earnings, etc. In the following week, the women visit establishments in different industries where they either perform some work function or watch others work. They then return for further orientation, selection of training programs, or placement. The employment service has also encouraged employers to hire women on a part-time basis, and efforts have been made to increase day nurseries, nursery schools, and family day-homes for children of wage-earning mothers. In order to alleviate its manpower shortages, Sweden has imported workers from other countries. About two-thirds of the foreign workers are from other Scandinavian countries, most of them from Finland. Last year about 150,000 aliens were working in Sweden. The active manpower policy also has programs to bring marginal groups into the labor force or make them more productive. The handicapped are given occupational tests and on-the-job training in workshops organized either by the county boards and communities or by private groups with assistance or grants from the State. During training, allowances are paid on the same basis as in the retraining programs. For those who cannot find jobs on the open market, work is provided in special sheltered workshops with guaranteed minimum wages. Shel The unemployment rate would be somewhat higher if measured exactly the way it is in the United States. See Monthly Labor Review, March 1965, p. 256. tered workshops are also organized by communities and foundations with the help of State grants for investments in building and machinery and a regular subsidy for operation. I noted in visiting one sheltered workshop that it was producing materials on contract for other firms-in this respect, it was competing with private enterprise. This sheltered workshop was producing enough to pay about 85 percent of its cost. Handicapped workers who wish to start a business of their own and have the necessary aptitude may obtain an establishment grant of about $1,000. The Employment Service also provides information to help these handicapped workers in establishing their own businesses. Older workers who cannot be retrained or relocated in another area are given a form of public works employment such as easy work in the clearing and cleaning of parks and forest areas, light street and road work, simple construction jobs, and certain jobs in museums and libraries. A special form of activity, provided by so-called "records jobs" in national and local government agencies, is mainly reserved for older workers. Some Observations The active manpower policy has, on the whole, produced the desired results. The country has maintained relatively full employment, and the unemployment rate has not risen above 2.8 percent in the past 15 years. In February 1965, it was only 1.2 percent 3; there were about 45,000 unemployed persons out of a labor force of more than 3.7 million. Seasonality of employment in industries such as construction has been reduced. The level of goods and services produced has expanded relatively rapidly, and the standard of living has risen. In general, the program has been helpful in adapting the labor supply to economic and technological change although it has been considerably less successful in preventing inflation. One reason for the effectiveness of the various manpower programs is the apparent general acceptance of the active manpower policy by the Swedish people. Another is that the Employment Service is relatively effective and is an integral part of the organization of most communities. This may result from the fact that it provides many services in addition to its primary one of matching people and jobs; these services include granting of housing starts permits, directing the starting and discontinuance of emergency works, and providing vocational guidance information for schools. The cost of employment policy programs during the 1962-63 fiscal year was estimated at 750 million crowns (about $150 million) or 0.8 percent of national income and 4 percent of the State budget.* The bulk of the costs (about 50 percent) was consumed by emergency works of various kinds. About 15 percent was spent on retraining and further training, and about 10 percent on unemploy ment insurance. The amounts spent to encourage geographical mobility represent between 1 and 2 percent of the total. Two to 3 percent was spent on rehabilitation measures, nearly 10 percent on administration (personnel and overheads), and the remainder was used for other purposes, such as reception of refugees. 4 These figures take no account of sums withdrawn from investment funds, nor of the cost of measures which, though affecting employment policy, are really a part of financial policy, such as increased housing construction or increased ordinary public investments. An agreement, signed May 22, 1954, by representatives of the Governments of Denmark, Finland, Norway, and Sweden marks a forward step in Nordic. cooperation and expands and formalizes certain manpower practices already existing in some of the countries. It became effective on July 1, as scheduled, following ratification. The agreement will integrate manpower in an area with a population of about 18 million, giving more than 7 million workers in the combined labor forces a wider choice of employment, a greater chance for specialization, and more training possibilities. . The agreement waives work-permit requirements for citizens from the par- -"A Common Labor Market for Four Nordic Countries,” Monthly Labor Review, Special Labor Force Report A Portrait of the Unemployed CAROL B. KALISH* TO THE INDIVIDUAL WORKER and his family, unemployment can be anything from a temporary inconvenience to a crisis of shattering proportions. In its mildest form, unemployment may represent a delay of a week or so in finding a summer job. At the other extreme, unemployment can do irreparable damage to the lives of those affected. Too often statistics on unemployment are viewed in the light of one of these two extremes: they are taken to represent only people temporarily between well-paying jobs or only persons in perpetual poverty. The seriousness of unemployment to the individual, however, can be evaluated only in the context of his total economic situation. The duration of his unemployment, the frequency with which he experiences unemployment, the number of persons dependent upon him, his earnings when he is at work, his proficiency at seeking and finding a new job, all have a direct bearing on the gravity of the situation when a worker finds himself without work. Much of the information needed to fully evaluate the seriousness of unemployment for an individual worker and his family cannot be collected in the regular monthly surveys. Because the results must be compiled so rapidly, the number of questions that can be asked in any one interview is very limited. At the same time, there is a compelling demand for valid information about the qualitative aspects of unemployment. Some of the questions most often raised are: What does unemployment mean in terms of financial hardship? How strong is the unemployed person's need to work and how strong is his attachment to the labor force? How does the individual worker respond to the predicament of losing a job? In order to answer these kinds of questions, two intensive studies of the unemployed were con ducted by the Bureau of Labor Statistics in April 1962 and April 1963. From these surveys, a considerable amount of new information was developed about the work history of unemployed persons, about their financial responsibilities and resources, and about their activities in search of employment. To eliminate from the survey the very short-term unemployed and young people not yet self-supporting, only persons 18 years of age or older who had been unemployed at least 5 weeks during the preceding calendar year were included. The results of the second survey, described in this article, provide strong confirmation for the findings of the first survey 2 and throw some additional light on the situation of the unemployed. The year 1962 was one in which economic conditions, though far from satisfactory, showed continuous improvement from the recession trough reached in February of the previous year. The unemployment rate declined to 5.6 percent, 1.1 percentage points below the previous year. And yet over 9 million persons experienced 5 weeks or more of unemployment during the year. (See table 1.) There was a marked similarity in the characteristics of the unemployed in the two surveys. The unemployed persons represented by the detailed surveys were considerably disadvantaged in many important ways compared to their employed counterparts. While many persons with significant amounts of unemployment cannot be characterized *Formerly of the Division of Employment and Unemployment Analysis, Bureau of Labor Statistics. 1 Specifically, persons who at the time of the survey were 18 years of age or older, able to work, and not in school, who had some prior work experience, and who had been unemployed for 5 weeks or more during the previous calendar year. 2 See "Work History, Attitudes and Income of the Unemployed," Monthly Labor Review, December 1963, pp. 1405-1413. |