Legal Personhood #5: The Unemployed

Welcome to the fifth blog post in a series on the theme of legal personhood. Each fortnight we will ask a La Trobe Law School academic to write about how the concept of legal personhood intersects with their research interests. Today’s post is written by Anthony O’Donnell, who researches and writes about labour law, social policy and corporate governance and currently completing a history of the evolution of unemployment law and policy in Australia.

From the end of World War II until 1974, Australia experienced unprecedented low rates of measured unemployment. But it is in this period that we can see the emergence and consolidation in Australia of an analytically and administratively rich and coherent discourse about unemployment — both how to define and measure it, and how to regulate the unemployed through a system of unemployment benefits.

In colonial and early Commonwealth censuses, “unemployment” was an imprecise term and was used at various times to describe a wide array of labour market statuses, including lack of work due to illness, accident, strike, lockout or old age. National economic statistics after World War II, however, used the idea of the “labour force” to divide the population into three mutually exclusive categories: the employed, the unemployed, and those outside the labour force. The unemployed are counted as “in the labour force” because they are engaged in the activity of looking for work, in contrast to those unavailable for work and hence “outside the labour force”.

This approach was mirrored in the new federal system of unemployment benefits inaugurated in 1945. Eligibility depended not just on being without work, but on being capable of and willing to undertake suitable work and taking reasonable steps to obtain such work. Benefits were denied to a worker who voluntarily quit a job, was fired for misconduct, or refused an offer of employment.

The rights and obligations of the unemployed claimant were shaped by the prevailing regulatory landscape and social norms while also attempting to mobilise a set of behaviours appropriate to the postwar labour market. For example, employment which was not covered by an award or collective agreement was not considered ‘suitable’ unless it carried remuneration at least equivalent to the going rate. In refusing offers of work below award standards, then, a claimant could still be considered ‘involuntarily’ unemployed. Similarly, vacancies which arose as a result of an industrial dispute were not considered ‘suitable work’. However, striking workers themselves would not be paid a benefit. This aspect of the scheme marked a clear break from pre-War trade union sponsored out-of-work benefit schemes, which financially supported workers engaged in industrial disputes.

Claimants would also be disqualified where work was not available of the type for which they possessed particular experience or qualifications and they refused to accept other employment which the employment office considered suitable, even though such employment required working outside a trade calling. In effect, the eligibility conditions reconstructed job search from one of looking for work ‘in the trade’ to a more generic search for ‘work’ per se.

These conditions were central to a categorical system of assistance, defining the ‘unemployed’ as a group separate from other claimant groups deserving of support (the retired, the widow, the disabled and so on). The conditions also mobilised the unemployed as a potential workforce for the purposes of national development. Finally, the conditions aimed to deny benefit to those unemployed who were seen as somehow responsible for their own worklessness.The labour force framework and its attendant notion of an unemployment rate has remained a largely credible institutionalised indicator of Australia’s economic wellbeing. This is despite the fact that the idea of the “labour force” as a relatively homogenous group of mostly men who entered the labour force at a young age and stayed until retirement is no longer sustainable — which means any current reference to a headline unemployment rate must increasingly be qualified by reference to shifts in the size of the labour force and the growth or decline in the number of jobs.

The idea of unemployment that emerged from the postwar unemployment benefit scheme has fared less well. The ‘unemployed’ under that original scheme were separate from other welfare claimants and were defined by their job search activity, tested against offers of ‘suitable work’. Today, people who once would not have been considered ‘unemployed’ — such as sole parents or the disabled — may now be ‘activity tested’ as a condition of their benefit. The unemployed may also justify their entitlement by activities other than seeking work — such as training or participating in an employment scheme. A person may be without any work, in casual work, engaged in setting up a self-employment venture, undertaking training or education, engaged as the primary carer of a young child, or moving back and forth between these activities over relatively short periods, and they may or may not be counted as ‘unemployed’ for the purposes of claiming income support.

So unemployment as a regulatory category is best seen as something institutionally constructed rather than a simple economic variable that waxes and wanes according to prevailing economic conditions. But how do we explain shifts over time?

The first step is to recognize the postwar experience as exceptional: labour management practices and labour law promoted the ‘standard’ employment relationship based on full-time, open-ended contracts of employment. It became increasingly difficult for managers to respond to fluctuations in demand by way of the old practices of work-rationing or the hiring and discharge of casual workers. Short-term fluctuations could now be managed through the build up of inventory; more severe downturns were managed primarily through redundancy. In effect, large, rationalised enterprises increasingly ‘externalised’ idle labour time. This postwar labour market enabled statisticians and administrators to conceive of unemployment in terms of the formal severance of one contract and a worker’s availability for rehiring at another enterprise, rather than there being pools of casual labour within specific trades or localities, or workers maintaining connection with an enterprise during downturns through short-time working and underemployment. Unemployment became ‛visible’ in a way that it hadn’t been prior to WWII.

Another aspect of the ‘constructedness’ of unemployment is that it is capable of being displaced as a robust administrative and legal category, and we could expect such displacement to be linked to changes in the political economy of the employment relationship. This is one way of understanding recent trends in welfare reform. Worklessness more generally has become of increasing concern to policy makers, especially to the extent that the jobless appear to be concentrated within households that are making increased claims on the income support system. At the same time, if ‘worklessness’ has displaced ‘unemployment’ as the problem, then the policy solution is no longer found in standard employment but in ‘activity’ or ‘participation’. This shift is made possible by a radically changed labour market characterised by a rapid growth in forms of part-time and casual employment contracts mixed with the less rapid but noticeable growth in fixed-term employment and forms of ‘self-employment’ and contracting arrangements. The combined effect is that the lines between ‘unemployment’ and non-employment on the one hand, and between ‘welfare’ and ‘work’ on the other, are increasingly blurred.

This post draws on an ongoing research project examining the regulation of worklessness in twentieth century Australia. See further: Anthony O’Donnell, ‘Unemployment in a Time of Full Employment: Counting and Regulating Worklessness in Mid-Twentieth Century Australia’ (2015) 108 Labour History 71, Anthony O’Donnell, ‘Reinventing Unemployment: Welfare Reform as Labour Market Regulation’ in Christopher Arup et al (eds), Labour Law and Labour Market Regulation (Federation Press, 2006) and Anthony O’Donnell, ‘Inventing Unemployment: Labour Market Regulation and the Establishment of the Commonwealth Employment Service’ (2003) 31 Federal Law Review 342.

Suggested Citation

Anthony O’Donnell, ‘Legal Personhood #5: The Unemployed’, Law and Justice, 27 May 2015 (La Trobe Law School Blog, http://law.blogs.latrobe.edu.au/)

Marc Trabsky